In the past year, Germany was the only large PV market remaining in Europe (with more than three gigawatts of newly installed capacity), despite having shrunk significantly. The European market in 2013 (10.3 GW) was not even half as big as in 2011 (22.4 GW). Will the downward trend in Europe continue this year? Or are there signs of recovery?
Indeed, the internationalization trend of PV markets was intensified in 2013. Although the development of European PV markets is clearly slowing down, the ten GW figure should be put into perspective – it is more than twice the U.S. market and, if considered as a whole, Europe ranked n°2 on the global market in 2013.
Interview The significant market decrease in a number of European countries is the result of harsh and sometimes unexpected support reductions, retrospective measures, and unplanned changes to regulatory frameworks that severely affect investors’ confidence and the viability of PV investments. However, if markets like Italy and Germany suffered in 2013, several others exceeded the gigawatt mark for the first time: namely the UK, Romania, and Greece.
Europe can regain a leading position in further developing PV markets, but this depends on targeted political support and the removal of existing market barriers. This is why Europe needs a truly ambitious climate and energy policy framework for 2030, including meaningful and nationally binding renewables targets. The European Commission’s initial proposal of at least 27 percent renewables by 2030 is clearly not sufficient, and the Commission’s own analysis indicates that a 35 percent renewables target would be both feasible and economically attractive.
The past years were characterized by sharp price reductions. Is a sideways movement in prices now to be expected?
Undoubtedly, prices went down very fast, leading to a striking cut in system prices by almost two thirds in seven years. This is the result of the rapid market development that generated economies of scale and increased competition, and is also due to the overcapacity the global PV industry has been suffering from. This trend has somehow anticipated the “natural” PV price decrease. We now expect prices to progressively return to the rate of the “traditional” PV “learning curve”. In the future, further price decreases are likely to come from technological innovations, as well as from reduced installation margins and operation and maintenance costs.
The prices fell even more quickly than the costs, with the result that the PV industry fell into crisis – not only in Europe, but also in East Asia. Can the prices be expected to recover now? And if so: Will the European PV industry profit from this?
Despite the cost pressure on the industry, we do not expect any significant increase in system prices. It is true that module prices went up slightly in 2013 compared to the lowest levels in 2012, but module prices still remain well below those observed before 2012.
The European PV industry is in relatively better shape now than a year ago, but competition remains tough and the consolidation process of the last few years is not completely over yet.
PV power plants are now being built in many countries worldwide. The European project developers (EPC companies) had been leaders for a long time, but that has changed. In 2013, nine of the ten most successful EPC companies had their headquarters in the USA or China. That certainly has something to do with strong domestic markets. Does this mean that the European EPC companies will be forced to concentrate on Europe?
As in any industrial sector, strong local demand is a critical factor for a PV company to be successful. Another factor, which is strongly related to the first, is the local financing conditions. It is true that many European project developers do not currently enjoy the most favorable conditions in their respective domestic markets, which in some cases forces them to explore possibilities elsewhere.
European and national decision makers should bear these two elements (local demand and financing) in mind. Again, truly ambitious and nationally binding renewables targets, as well as reliable and predictable regulatory framework conditions, are two of the crucial ingredients for a successful and cost-effective uptake of PV.