The European solar photovoltaic market is poised to recover during the fourth quarter of 2013, after an 18-month downturn that redefined the role of Europe within the global solar PV industry. Quarterly PV demand from Europe is now set to stabilize at the 2.5 gigawatt (GW) level during the first half of 2014, with moderate growth forecast in the second half, according to findings from the latest NPD Solarbuzz European PV Markets Quarterly report.
Germany, the U.K., Italy, and France are forecast to drive the European solar PV recovery next year. These four countries will account for almost 8 GW in 2014, which is equivalent to more than 75 percent of the solar PV capacity that will be installed in Europe next year.
“Following consecutive quarterly market declines going back to the start of 2012, solar PV demand from Europe is forecast to stabilize over the next three quarters,” according to Susanne von Aichberger, analyst at NPD Solarbuzz. ”The downturn in the European solar PV industry has now bottomed out, with the quarterly demand volatility of the past soon to be replaced by more stable end-market dynamics.”
Solar PV demand from Europe declined significantly during Q3’13, declining 11 percent compared to the previous quarter, and 43 percent compared to Q3’12. Confirming its position as the leading European solar PV country, Germany accounted for 40 percent of European demand in Q3’13.
European solar PV demand in 2013 is forecast to decline by 37 percent year-over-year to 10.5 GW, which is a four-year low and almost half of the peak demand achieved by Europe back in 2011.
The European downturn this year was primarily caused by dramatic declines in solar PV demand in Germany and Italy, which was compounded by uncertainty introduced by the solar trade dispute between Europe and China. Year-over-year declines in 2013 are also forecast for Belgium, Bulgaria, Denmark, France, Greece, The Netherlands, Slovenia, and Spain; however, the severity of the European downturn in 2013 has been softened by strong Y/Y growth from the U.K., Romania, and Austria.
Figure 1: Quarterly European Solar Photovoltaic Demand
Source: NPD Solarbuzz European PV Markets Quarterly
Solar PV demand from Europe during 2014 will again be led by Germany and the U.K. These two countries are forecast to account for half of European PV demand next year.
The U.K. will emerge as the leading European market during Q1’14 for the first time, as developers rush to complete large-scale projects ahead of Renewable Obligation Certificate (ROC) reductions in Q2. The residential segment in the U.K. is also rebounding, with installers now adjusting to predicable feed-in-tariff (FIT) rates.
Following four consecutive quarterly declines to the end of Q1’14, Germany will regain its lead ranking within Europe between Q2 and Q4’14. While the ground-mount segment continues to be affected by low FIT levels, and the 10 megawatt (MW) limit imposed on funded projects, most new residential installations are now self-consuming part of the onsite PV produced. The residential segment is also benefiting from recently introduced incentives for PV batteries.
PV demand in Italy is set to recover slightly in 2014, having declined to a quarterly low of 229 MW during Q3’13 as the Conto Energia V funding scheme was phased out. The rebound in Italy will be driven by net-metering, tax breaks, projects completed under Power Purchase Agreements (PPAs), and self-consumption by commercial users.
In 2014, France is expected to benefit from emergency measures implemented by the government, which are intended to target annual PV demand of at least 1 GW. These measures include new project tendering rounds that are expected to have a positive impact on demand during the second half of 2014.
The Y/Y declines in 2014 from Germany, Greece, Romania, Belgium, and Switzerland will be compensated by growth from the U.K. and France, assisted by the recovery of Denmark and other smaller markets, and by contributions from Turkey and other emerging markets. European solar PV demand in 2014 will continue to be supported by Ukraine and other smaller, but more stable, markets.
Having dominated global solar PV demand between 2006 and 2011 at levels between 70 percent and 80 percent, Europe’s redefined role within the industry will decline to between 25 percent and 30 percent from 2014 onwards. “This reset now requires industry participants to implement new strategies to compete effectively within the European solar PV market in the future,” according to von Aichberger.