Solar energy growth in the EU slows for the first time in a decade due to subsidy cuts

Solar energy growth in the European Union is slowing for the first time in more than a decade. This is due to cuts in subsidies for rooftop solar panels in some countries. The EU is on track to install 64,2 gigawatts (GW) of new solar capacity this year, down 1,4 percent from last year. This is according to an analysis published today by SolarPower Europe, the European solar industry association.

Solar capacity of 64,2 GW is equivalent to the installed capacity of around 30 Temelín nuclear power plants. At typical levels of use, that amount could cover the annual consumption of more than 25 million households or almost all of Czechia's annual electricity consumption.

Political priorities in Europe are changing, however. Some countries have cut environmental measures and support for clean energy from budgets strained by spending on defence and support for local industry.

"There is a kind of paralysis. Interest is still there, but people are not making decisions," Peter Knut told Reuters.

He is the chief executive of German company Enerix, which installs photovoltaic systems. He said that purchases made in 2022 and 2023, rising interest rates and economic uncertainty had also contributed to the decline in demand, but falling electricity prices had not.

A year-on-year decline in new installations, if it materialises, would be the first since 2015 and could disrupt the EU's rapid progress towards clean energy. Solar capacity grew by 53 percent in 2023, but growth slowed to three percent last year.

Last month, solar power accounted for 22 percent of total electricity generation in the EU. It was therefore the region's largest single source of electricity that month.

At the current pace of construction, however, the European Union looks set to miss its target, set to meet its climate goals and end its dependence on Russian energy. The EU aims to have 750 GW of solar capacity by 2030, but SolarPower Europe says it will fall short by 27 GW.

The main cause of the slowdown is a decline in rooftop solar panel installations on residential buildings. This sector is expected to account for 15 percent of new capacity this year, half the share of around 30 percent recorded between 2020 and 2023.

Germany and France are among the countries cutting feed-in tariffs for rooftop solar power. The Netherlands is also reducing support for households that feed surplus solar power into the grid. According to Knut, plans by Germany's new government to reassess the need for renewable energy sources and its promises to expand gas-fired power plants are not helping either.