Renewables: The European Market contracted in 2013 for both Solar Thermal and PV new installations

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sky-170968_640Drops in 2013 for both the European Solar Thermal and Photovoltaic Industries 



According to the latest Reports published in June and July 2014, respectively, by ESTIF – the European Solar Thermal Industry Federation – and by EPIA – the European Photovoltaic Industry Association -, the year 2013 has been a shrinking year for the European solar market.




As far as the solar thermal market is concerned, in 2013 the newly installed capacity in Europe went down by 12% year-on-year (y-o-y). This contraction is unfortunately in line with the decreasing trend constantly registered during the last five years: following the record-peak of 2008, from 2009 on the European solar thermal market has continued to fall, contracting, all in all, by one third since 2008.


What’s worse, and contrary to what happened in previous years, the decrease posted in 2013 affected all the main markets and not only some of them. Germany, by far the largest market accounting, alone, for one third of all the newly installed capacity in Europe, fell down by -11% y-o-y and a similar performance was registered in the second largest market, Italy (-10%). Among the top seven markets, accounting together for about 80% of the newly installed capacity in 2013 (1.7 GWth out of a total of 2.14 GWth), only Spain did not contract, however showing a pale growth by +1.3%, supported only by a positive trend in Andalusia. Among the top largest European markets, France performed the worst with a contraction of -24%. All in all, about half the European countries posted a double-digit fall in 2013 and only three countries did not diminish their newly installed capacity (Spain, Croatia and Ireland).


There is not a single reason behind this trend, but a mix of several factors. One of the key drivers for the decrease is the instable or poorly effective support scheme existing in some countries, a continuous stop-and-go that is penalizing some interesting markets such as Portugal, Poland, Italy and UK. Another reason is connected to the incentives offered to other technologies, such as the feed-in-tariff for photovoltaic systems, which have negatively affected a relevant market such as Austria.  Other minor reasons are related to high installation costs prevailing in some countries (France) and even in some reported lack of professional installers.


A more suitable legislative and regulatory framework and more stable incentive programmes could sustain the growth of the European solar thermal market, a key industry at both economic and sustainability level, which, in 2013, produced a turnover of € 2.3 billion, employed about 26.700 FTE and generated 21 TWh of solar thermal energy contributing to save 3.8 million tonnes of CO2 emissions.


photoTurning to the photovolatic industry, according to the data provided by EPIA (the European Photovoltaic Industry Association), the world market grew remarkably in 2013, but with uneven trends at geographical level, with a strong growth in Asia,  driven especially by China and Japan – which now rank as the first and second global markets respectively – and a decline in Europe.


Even if Europe remains the world’s leading region in terms of cumulative installed capacity, with 81.5 GW as of 2013, Asian countries are growing fast, driven by China and Japan. China was the top market in 2013 with 11.8 GW of new capacity installed. At single country level, the top five world markets in 2013 were China, Japan, the USA, Germany and the UK, which, all together, accounted for nearly 28.3 GW, or three quarters of the global market.


As for the European ranking, the top five markets in 2013 were Germany (by far the largest-one with 3.3 GW), the UK (1.5 GW), Italy (1.4 GW), Romania (1.1 GW) and Greece (1.04 GW). As for the market trend in Europe, after having grown rapidly over the past decade (from an annual market of less than 1 GW in 2006 to a market of 22.3 GW in 2011), the European market for PV installations started to contract in 2012 (to 17.7 GW) and continued to fall in 2013, when the market dropped to 11 GW, the lowest level since 2009. As a consequence, Europe lost its world leadership to Asia in terms of new installations: from accounting for 74% of the world’s new PV installations in 2011 and 55% the year after, in 2013 Europe represented only the 29% of the world new installations, with Asia accounting for 56% of the world market.


In Europe, the drops in Germany and Italy were the main drivers of the market slowdown in 2013, while the sum of other countries kept stable to around 6 GW, but with uneven trend at single country level, with a decreasing market in Belgium and France compensated by a strong growth in Romania and Greece and a good trend in the UK.


When trying to understand the reasons behind market trends in PV, it should be clear that in most countries, PV remains a policy-driven market; therefore a declining political support for PV incentives has led to market drops in relevant countries, such as Germany, Italy, France, Belgium, Denmark and Spain.


In some cases, some political decisions might seriously damage the PV market, as observed by EPIA with reference to Italy, where a Decree-Law adopted in August 2014 has introduced significant retroactive cuts of the guaranteed Feed-in Tariffs (FiT) and new taxes for self-consumed electricity. According to EPIA, these measures not only will damage the market in Italy, but could even be dangerous for the whole European market, negatively affecting the image of Europe as a stable investment center.


However, forecasting the PV market evolution is not an easy task, as the political factors have to be summed to potential savings that might emerge on the energy bill through self-consumption in the construction segment. EPIA’s latest projections indicate that in 2014 the European PV market could further decline to around 8-9 GW, while, in the second part of the decade, competitive PV in some countries could help in keeping the market at around 10-12 GW.

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