Markus Hoehner and Rajan Kalsotra, CEO and Senior Consultant at EUPD Research in Bonn, share their insights on the evolving trajectory of the EU solar photovoltaic (PV) market, highlighting the key drivers of growth, obstacles, and prospects for the coming years, with a focus on policy support, pricing trends, module shipments, and market forecasts.

January 10, 2025 | EUPD Research | Europe

The solar energy market within the European Union (EU) has witnessed significant growth in recent years, fueled by the increasing urgency to shift towards renewable energy and enhance energy security. Solar power has become a cornerstone of the EU’s strategy to meet its climate objectives while reducing its reliance on fossil fuel imports. This momentum has been supported by various policy measures, such as financial incentives and updated renewable energy targets set by EU member states, making solar PV installations a top priority across Europe.

In 2024, the EU established a new benchmark for PV installations, driven by heightened energy demand and growing investments in renewable infrastructure. The ambitious climate goals and supportive policy frameworks, such as national energy plans and EU-led incentives, have further accelerated solar adoption. However, challenges such as changing trade dynamics and pricing pressures have begun to influence market developments and will continue to shape the industry through 2025.

Key Trends in EU Solar Installations (2024-2025)

The EU’s solar PV market saw moderate growth in 2024, with an estimated 64-65 GWdc of new PV capacity installed, reflecting a modest 5% increase compared to the 61.9 GWdc installed in 2023. This follows a major surge in 2023, driven largely by the energy crisis caused by the Russia-Ukraine conflict, which led to a 50% increase in installations year-over-year.

In 2024, the stabilization of energy prices and a return to market equilibrium reduced the urgency that had previously spurred rapid growth. Despite ongoing policy support, this subdued market expansion was still notable, particularly when compared to the significant surge of the previous year. Key markets like France, Germany, and Italy continued to expand their PV capacity, while others like the Netherlands, Spain, and Poland saw contractions.

Despite the resilience shown, the 2024 market faced several growth constraints. Challenges included grid capacity limitations, permitting delays, and fluctuating consumer demand, all influenced by falling energy prices and inflation. Supply chain disruptions and component procurement delays also impacted rooftop solar projects, complicating inventory management for installers. According to EUPD Research’s PV InstallerMonitor© 2023/2024, 22% of surveyed German installers reported substantial shipment delays. To cope, installers across Europe allocated a larger portion of modules to stock, averaging 23%, which, while mitigating supply chain risks, also exposed them to potential financial losses due to inventory devaluation.

Looking ahead to 2025, EUPD Research forecasts a return to double-digit growth, with PV installations expected to rise by approximately 10% compared to 2024. Policy adjustments, investments in grid infrastructure, and streamlined permitting processes are expected to address these bottlenecks and establish a more stable market trajectory.

Chinese PV Module Shipments to the EU

From January to October 2024, EU countries imported approximately 83 GW of PV modules from China, with total imports expected to reach 100 GW by year’s end, aligning with 2023 levels. This reflects the EU’s ongoing dependence on Chinese-made modules, as Chinese manufacturers continue to capitalize on economies of scale and cost advantages to dominate the European market.

While there was an oversupply in the late months of 2023 and early 2024, market conditions have since balanced out. Inventory levels have normalized as demand caught up with the surge in imports, with a stable installation pace of around 65 GWdc forecasted for 2024. Importantly, the excess capacity beyond installations should not be considered oversupply but part of a strategic buffer, typically maintaining 25-30% of annual installed capacity to guard against supply chain disruptions. This stabilization has eased pressure on distributors and warehouse operators, though price competition remains fierce.

Looking forward, several factors could affect the flow of Chinese PV modules to the EU. Changes in U.S. trade policies post-2024 elections could disrupt global supply chains and alter export patterns. Additionally, rising raw material costs and Chinese government measures to stabilize its domestic market may limit production or exports, potentially leading to a more balanced global supply-demand situation.

Price Trends and Falling Costs

Chinese manufacturers have aggressively driven solar module prices down to unprecedented lows in 2024, benefiting developers and end-users by reducing installation costs. However, these price reductions have created significant financial strain for suppliers, raising concerns about the long-term sustainability of the market. According to EUPD’s Price and Inventory Tracker, high-efficiency crystalline modules in Q4 2024 saw an average price drop to €0.20/W, a 31.8% decrease from €0.30/W in Q4 2023. Similarly, standard crystalline modules saw a 13.7% decline, from €0.25/W in Q4 2023 to €0.22/W in Q4 2024.

This drastic price reduction has reshaped global market dynamics and intensified competition, forcing manufacturers to grapple with financial difficulties across the supply chain. In Germany, market share shifts were notable, with the share of standard modules dropping from 79% to 26%, while high-efficiency modules surged from 17% to 74%.

To better navigate these shifts, EUPD has upgraded its Price and Inventory Tracker to provide deeper insights into technologies like mono PERC, TOPCon, HJT, and XBC, as well as more granular pricing data and brand analysis.

European companies, in particular, have struggled to compete with the low-cost modules produced by Chinese manufacturers. Many European firms have been forced to shut down operations due to the overwhelming price competition. Even Chinese companies have faced difficulties, with smaller firms going bankrupt in the wake of the price war.

JinkoSolar, a leading Chinese manufacturer, reported a 23% year-on-year revenue decline and a 37.1% drop in profits for its latest quarterly earnings. Other major Chinese manufacturers, including Longi Green Technology, Tongwei, Trina Solar, and JA Solar, have all reported financial losses, with some facing consecutive quarterly declines. This price war has driven prices so low that some manufacturers are selling below production cost, exacerbating financial losses. In response, Chinese regulators and industry bodies like the China Photovoltaic Industry Association (CPIA) are considering implementing a minimum price floor to stabilize the market.

Looking Ahead: Strategic Considerations for Stakeholders

The EU solar PV market in 2024-2025 is at a critical juncture, influenced by policy-driven growth, pricing pressures, and shifting global supply dynamics. While growth is expected, its path will depend heavily on how well challenges like grid constraints, permitting delays, and supply chain uncertainties are managed.

Three possible scenarios can be outlined for the future:

1. Optimistic Scenario: Effective policy implementation and coordinated efforts to modernize grid infrastructure and streamline permitting could drive significant growth, with PV installations rising by 10% in 2025. Stabilized module prices would benefit the entire value chain, increasing investor confidence and potentially helping European manufacturers regain a competitive edge.

2. Moderate Scenario: Continued reliance on imports and incremental improvements could lead to steady, but not extraordinary, growth. While module prices remain under pressure, lower installation costs could benefit consumers and developers. However, external factors such as raw material shortages or restrictive trade policies could lead to stagnation in installations and higher costs.

3. Constrained Scenario: If issues like supply chain disruptions and pricing pressures worsen, the EU solar market may experience slower growth, with higher costs and less investment.

Stakeholders must adopt strategic approaches to navigate this period. Manufacturers should improve operational efficiencies, forge strategic partnerships, and differentiate products through high-efficiency technologies and sustainability certifications. Policymakers should prioritize grid modernization and address permitting delays while fostering local manufacturing through targeted incentives.

The years 2024-2025 present both challenges and opportunities for the EU solar market. Aligning strategies among suppliers, manufacturers, and policymakers will be crucial to transforming obstacles into opportunities, ensuring the EU’s continued leadership in the global renewable energy transition.