European market to stabalise at 10GW after slowing demand
Solar photovoltaic (PV) demand from Europe is forecast to reach 10 gigawatts (GW) during 2014, representing an annual decline of 7 percent compared to 2013, according to the NPD Solarbuzz European PV Markets Quarterly report. This will be the third consecutive year that European solar PV demand has declined, after reaching a peak of 19.2 GW in 2011. During this period, Europe's contribution to global PV demand has fallen rapidly from 70 percent in 2011 to just 22 percent in 2014.
Germany, Italy, and Greece accounted for 71 percent of European demand in 2012, but these countries now provide just 37 percent of the European market. "The decline in PV demand from Europe in 2014 is due mainly to the effects of major funding reductions in Germany, Italy, Greece, and Romania" said Susanne von Aichberger, analyst at NPD Solarbuzz. "In fact, for Europe to reach 10 gigawatts of demand in 2014, the United Kingdom would need to meet expectations of doubling in size."
During the first quarter (Q1) of 2014, European PV demand grew 10 percent compared to the fourth quarter (Q4) of 2013, but declined by 8 percent compared to Q1 2013. "Historically, the first quarter has represented a weak period in Europe, but planned reductions in the U.K.'s incentive rates in April 2014 boosted final Q1 figures," Aichberger said.
The U.K. accounted for 43 percent of European demand in Q1 2014, its highest quarterly share yet; however, in the past few weeks, the U.K. market has been struck by new policy uncertainty that is likely to have an immediate effect on demand from the U.K and Europe. "2014 PV demand is expected to grow in France, the Netherlands, Austria, Portugal, and Switzerland, and Turkey is forecast to become a significant PV market this year," noted von Aichberger. "Belgium, Denmark, Romania and Ukraine, however, are forecast to experience annual declines."
During 2014, Europe's most mature PV markets (Germany, Italy, and France) will transition away from feed-in-tariff (FIT) incentives, which were widely adopted within Europe to stimulate initial PV market adoption. The new driver for PV growth in Europe is coming directly from the energy markets in each country, where PV is now competing with other forms of traditional and renewable energies. This increased competition is creating new PV opportunities, but requires overcoming regulatory and funding challenges.
"Within Europe's established PV countries, policy makers in Italy have taken the most radical steps to transition away from FITs. The Conto Energia funding scheme was discontinued in July 2013, with the final projects completed in May 2014," added von Aichberger, "In the future, demand will be driven by installations based on net-metering, power purchase agreements (PPAs), direct marketing, and tax benefits."
