Solar power generation is rising in Europe, new data from energy market analyst EnAppSys has shown.
In the first six months of this year, generation from this power source across Europe amounted to 68TWh – up from the 59TWh in the corresponding period in 2019 and 70% higher than the 2015 figure of 40TWh.
In the second quarter of 2020, solar output hit a record 47.6TWh – up 19% from the previous peak in Q2 2018.
The rise was attributed to the increase in solar capacity across Europe, as countries across the continent attempt to improve their environmental footprint by producing a greater proportion of electricity from renewable sources.
This rise in capacity slowed between 2017 and 2019, with solar generation totalling 38.3TWh, 40.1TWh and 39.1TWh in Q2 of 2017, 2018 and 2019 respectively. But this year it has risen again significantly, raising the question: what is happening in 2020 that was not happening over the previous three years?
Fifteen years ago, solar farms provided only a very minor contribution towards overall European power demand, with only a few GWs of solar projects across the entire continent. These provided only a nominal share of overall power production.
By 2011 solar was in the middle of a transformational phase and over a five-year period from 2009 to 2013, levels of solar capacity in Europe exploded from around 15GW at the start of 2009 to around six times that figure by the start of 2013.
This transformation was driven primarily by sharp rises in capacity particularly in Germany and Italy, but since the start of 2013 levels of increase have tailed off, with growth within Britain and a steady trickle of new capacity in Germany providing much of the growth. As growth in these regions has tailed off, more recently it has predominantly been France and Spain that have driven forwards the growth of solar production.
Other countries such as Bulgaria, Greece and Portugal have also been seeing growth in solar output recently, but these growth levels are smaller in terms of the overall size of the increments.
Germany has one of the largest levels of solar capacity (more than 50GW) in the world, behind China, the US and Japan.
Rob Lalor, director of EnAppSys, said: “The growth of solar capacity in Germany started in earnest in 2009 and was supported by generous subsidies, which led to a raft of rooftop solar installations. Near the peak in growth of solar capacity in Germany, a cap was introduced at 52GW, after which subsidy support would cease to become available or would become more tightly controlled via auctions”.
Lalor explains that after the cap was removed subsidy support has been declining in Germany slowing market growth.
“The use of auctions means that the price of renewable subsidies is no longer set by the government, but is instead market-driven, and the price of Feed-in-Tariffs (FITs) have been falling since this change in 2014 as a result.”
Lalor comments that Italy has also benefitted from government incentives although cuts were made to reduce consumer electricity bills, again causing the market to slow.
In the UK the boom occurred slightly later, notes Lalor, with developers rapidly taking subsidies as panel prices fell faster than subsidy values. The rate of build-out subsequently fell with the introduction of more restrictive subsidies.
“After cuts in subsidy regimes occurred across European markets, growth in build-out has since slowed, partly due to lower incentives, and also influenced by reduced investor confidence in the reliability of existing schemes.”
Spain is another region where initial subsidy support has been removed. However, larger auctions in the country have reduced costs, causing a solar boom once again.
France is looking to sell 2.9GW annually between 2019 and 2025. This is intended to add 17.2GW of solar by 2025, which would be a significant rise in solar capacity in this country and in Europe.
Lalor continues: “In both France and Spain, governments responded with urgent reforms in the face of increasing subsidy costs, which plunged the industry in both countries into a period of uncertainty from which it has only recently begun to recover. Retroactive reductions to feed-in tariffs for existing installations in Spain and – in the case of France – the temporary suspension of the FIT scheme in 2011 led to the dramatic burst of a speculative boom, born out of generous policies.”
Another factor behind the rapidly rising capacity figures is an increase in large solar installations. In April Iberdrola connected Europe’s largest solar farm to date, the 500MW Nuñez de Balbao facility in northern Spain. The project aims to supply electricity to local industries through corporate PPAs, signalling a shift away from government subsidies. The company has also recently begun construction of another 350MW megafarm.
Lalor emphasises the impact of new dynamics, such as projects coming to the end of subsidy support. These projects are set to being floating on market prices, a crucial dynamic as capacity starts to outweigh demand. This oversupply situation will see either increased exports or curtailment of a major power source.
“Where a subsidy exists that still applies in the case of negative pricing, such an asset will be willing to sell power for a negative price as long as the price it is effectively paying to generate is smaller than the sum it will receive as a subsidy. At the other end of the extreme, a generator without a subsidy should turn off as market prices close in on zero,” says Lalor.
“For large solar parks this management process is likely to become part of managing an older project, but for rooftop solar projects, the impact will depend on how the owner is charged for electricity. Where a project owner is charged for their actual half-hourly usage and at prices reflecting the market, solar production without a subsidy during periods of excess supply is likely to drop significantly.”
This situation together with lower costs indicate Europe is heading for a new dawn of solar expansion, says Lalor. The vital component, of course, being storage, to ensure middle-of-the-day sunshine is maximised.