New photovoltaic (PV) installations in Europe have declined for the first time in a decade, along with a drop in investment attractiveness for the sector.
According to the latest statistics released by the European Photovoltaic Industry Association (EPIA), the new PV installation capacity in Europe in 2024 was approximately 65.5 gigawatts (GW), marking a 4% year-on-year increase but a significant decline from the 53% growth rate in 2023. This represents the first decline in new PV installations in Europe in a decade. Similarly, investment in the European PV industry has also fallen for the first time in ten years.
Impacted by the decline in electricity prices, demand for residential rooftop PV systems in Europe has decreased this year. Industry insiders generally believe that future growth in new PV installations in Europe may hinge on centralized PV power stations. However, due to the current lack of flexibility in the grid and power system, centralized PV stations also face challenges, and the development of PV projects in Europe urgently needs to find new breakthroughs.
The EPIA believes that both PV module prices and initial installation costs for PV systems have decreased this year. Despite lower capital investment, the European PV industry has not entered a new growth phase, and demand has instead contracted. Not only has the scale of new installations declined for the first time in ten years, but investment in the industry has also fallen for the first time in a decade. In 2024, the European PV industry received investments of €55 billion, a decrease of about 13% compared to 2023.
Recently, the trend in new PV installations in Europe has been significantly influenced by fluctuations in electricity prices. From June 2021 to May 2023, European electricity prices surged, with non-household consumer prices increasing by 131% and household consumer prices rising by 79%, driving up demand for PV power generation. European businesses and consumers installed PV systems for self-sufficiency or sold generated electricity online to subsidize energy expenses, sparking a wave of PV installation enthusiasm. Since June 2023, European electricity prices have gradually stabilized, with non-household consumer prices falling by 22% and household consumer prices dropping by 9% by June this year. Demand in the European PV industry has also started to cool.
The CEO of the EPIA stated that the current development of the European PV industry is not optimistic. “The slowdown in PV installation growth means slowing down Europe’s progress in achieving energy security, competitiveness, and climate goals. To achieve the cumulative installed PV capacity target by 2030, Europe needs to install at least 70 GW of PV systems annually. Corrective measures are now needed promptly.”
Foreign media have also pointed out that the sluggish electrification rate in Europe has suppressed demand for the PV market. Europe is striving to achieve the goal of a 35% electrification rate by 2030, but over the past five years, the electrification rate has remained around 23%, and most national energy systems still primarily rely on fossil fuels.
The lack of flexibility affects installations. Previously, residential rooftop PV was a significant driver of the surge in new PV installations in Europe. However, against this backdrop, the installation of residential rooftop PV in Europe has fallen sharply this year, with only 5 GW of new systems added, halving last year’s figure of 12.8 GW. Some European PV companies believe that the PV industry will continue this moderate trend in the coming years, with insufficient momentum for residential rooftop PV installations.
The EPIA predicts that centralized PV power stations will become the main driver of new PV installations in Europe before 2030. However, many uncertainties remain in the European PV market. For example, due to the insufficient flexibility of the European energy system, its power grid has restrictions on grid connection for PV systems, reducing the competitiveness of PV power and becoming one of the factors contributing to negative electricity prices. This may affect the trend of new PV installations in Europe in the coming years and could even hinder the progress of achieving Europe’s energy security goals.
Consulting firm LevelTen Energy stated that low PV power prices in Europe pose challenges to PV project development, and companies need strong financing capabilities and sustainable cash flows to ensure the normal progress of projects.
It is understood that the industry has been discussing whether long-term fixed electricity prices under the Power Purchase Agreement (PPA) model are reasonable. Some in the industry believe that fixed electricity prices do not accurately and truly reflect market changes. In this context, many European countries have also put forward new suggestions, hoping to make some policy improvements to alleviate the financial pressure on relevant parties.
