This is an extract from a report “ SolarPower Europe (2023): EU Market Outlook for Solar Power 2023-2027” prepared by Solar Power Europe. In this extract we specifically focus on Spain, France and Greece.
Spain
Overview of solar PV developments
In 2022, Spain’s solar power energy sector achieved a significant milestone, with the annual installation of approximately 8.4 GW in capacity, including both ground-mounted systems and self-consumption units. This marked the country’s most successful year to date in solar PV deployment, establishing Spain as the foremost PV market in Europe. Until november 2023, Spain has augmented its capacity with over 4.5 GW of ground-mounted installations, a figure anticipated to rise in the ensuing months
Within the MIBEL electricity market zone, encompassing Spain and Portugal, the contribution of photovoltaic energy to the energy mix has seen a substantial increase. The photovoltaic production proportion grew by 10.6%, reaching 38.3% in 2023, a notable rise from 27.7% during the same period in the previous year. On a national level, the share of PV within Spain’s energy mix escalated from 10.1% in 2022 to 14.6% in 2023.
From January to October 2023, Power Purchase Agreements (PPAs) achieved a total of 99.4 TWh, marking a decrease of 11.6 TWh compared to the same period last year. These figures encompass all RES technologies, not solely photovoltaic. Despite these variations, Spain maintains a leading position in the EU’s PPA market.
Drivers for solar growth
The latest draft of the National Energy and Climate Plan (NECP), outlines ambitious goals for photovoltaics, aiming for an installed capacity of 76 GW by 2030—57 GW from ground-mounted facilities and 19 GW from self-consumption units. Additionally, the draft sets targets for energy storage and hydrogen production at 22 GW and 11 GW, respectively. These bold objectives are expected to significantly propel industry development in the near future.
Spain’s solar sector growth is underpinned by its competitiveness in both ground-mounted and self consumption installations. For ground-mounted plants, the economic viability – spurred by scale economies, favourable terrain, and abundant solar irradiation levels averaging over 1,600-1,800 kWh/kW annually-coupled with regulatory stability since 2018, has created a conducive environment that appeals to a diverse array of market participants. This includes national and European utilities, oil & gas corporations, independent power producers, solar developers, and investment funds, among others.
PPAs have been instrumental in the recent evolution of the sector. All large-scale solar capacities commissioned in 2020 (3.5 GW), 2021 (4.3 GW), and 2022 (5.3 GW) were realised independently of public subsidies or regulatory frameworks, solely through PPAs or merchant projects. The reliability proffered by PPAs is increasingly prized.
The legislative landscape for self-consumption has also evolved. The rooftop PV market expanded rapidly in 2022, due to the confluence of high electricity prices in 2022 and tax incentives from numerous local governments that motivated a wide spectrum of households and businesses to embrace self-consumption. The slowdown can be attributed to the public’s perception of lower energy costs, grid connection challenges with distributors, and prolonged waits for funding and subsidies, sometimes exceeding a year. The draft NECP has set a target of 19 GW for self-consumption by 2030, guiding the development of a supportive framework with ambitious goals.
Economically, the impetus behind rooftop PV has been amplified by soaring wholesale electricity prices, leading various sectors to consider solar power as a viable, eco-friendly solution for reducing energy costs.
The geopolitical implications of Russia’s invasion of Ukraine in April 2022 spurred the Spanish government to implement measures aimed at reducing fossil fuel dependency, moderating energy prices, and expediting renewable energy deployment. These measures included the establishment of a regulatory framework for floating PV, expedited processes for PV parks under 150 MW, enhancement of the distribution grid to support 7 GW of self-consumption, and regulations concerning the infrastructure for renewable gases, such as renewable hydrogen.
Looking ahead, the prognosis for Spain’s solar sector remains optimistic. So far, the ground-mounted segment has seen an installation of 4.5 GW in 2023. Numerous new projects, having secured environmental permits, are poised for installation in the forthcoming years, contingent upon meeting administrative requirements. To achieve the targets proposed in the new NECP draft for ground-mounted installations, an average of 6 GW per year must be installed, presenting a significant challenge linked to the design of renewable auctions, inflation rates, and market prices. In the rooftop PV market, projections for 2023 indicate a deceleration, particularly within the residential sector. To fulfil the NECP’s ambition of 19 GW by 2030, Spain will need to consistently add approximately 1.9 GWAC annually over the next seven years.
Challenges
The Spanish solar sector, particularly regarding ground-mounted plants, faces a crucial juncture due to stringent deadlines imposed on development projects. With the mandate that all projects holding current network access permits must secure their construction permits by end of December 2023, there is a risk of dismissal for a significant number of projects, which could lead to the forfeiture of permits and associated economic fees. Currently, approximately 40 GW of photovoltaic projects are queued in the administrative process.
This situation poses two substantial challenges: firstly, administrative authorities are under intense pressure to process a massive backlog of applications to prevent a cascade of project cancellations. Secondly, should a large volume of projects concurrently receive administrative approval, it could lead to logistical bottlenecks in the construction and installation phases, potentially hindering the timely and efficient rollout of these solar projects.
Multiple elections at the local and national levels have produced political paralysis this year. Spain did not develop any new significant framework to push forward the solar industry. 2023 ended with no new tender calls (Contracts-for-Difference). The upcoming tenders are expected in 2024, and the auction design needs to improve to attract interest from developers
Certain local associations are opposing utility-scale renewable plants, requiring a significant communication effort from companies and UNEF, about the benefits of solar power on land use and biodiversity
For rooftop PV, the main challenge is the length of permitting times, due to diverging processes across municipalities, and reduced permit exemptions for network access for rooftop PV. In addition, delays in implementing the national recovery plan’s support programs are slowing down consumers’ and developers’ decision-making processes, who are now waiting for the funds to be available in their region.
Another important challenge for PV development, both ground-mounted plants and rooftop PV, is the lack of a skilled labour force which is driving an increase in costs for developers. Government professional training programs must adapt to these new market developments.
Increasing inflation rates are also impacting prices for developers, affecting projects’ profitability. Furthermore, Spain is experiencing an increase in curtailment during solar peak hours mainly due to the network physical restrictions. Spain must increase investments in its networks and accelerate its regulatory framework related to storage incentives as proposed by UNEF.
Conclusion
Spain’s high NECP targets, and the success of the national solar power market call for excellence from all parties: companies, the public administration, and policymakers.
On the policy side, it is key to ensure regulatory stability and to eliminate remaining barriers by streamlining administrative procedures, and network access, especially for smaller PV plants and self-consumption projects. On the sector side, companies need to respond to the growing NIMBY effect, and present projects with the highest standards in terms of environmental sustainability, positive social impacts, and transparency.
France
Overview of solar PV developments
The French solar fleet reached 18 GW at the end of the first semester of 2023. An additional 1.4 GW was connected, compared with 1.2 GW in the first half of 2022. Solar power generated 11.2 TWh during the first six months of 2023, recording an increase of 18% relative to the same period in 2022. This generated solar power represented 4.7% of French total electricity consumption in that period.
Solar PV targets
The solar target set in the Multi-Annual Energy Programme (MAEP) requires an operating solar PV fleet of 20.1 GW at the end of 2023. A law on energy production is expected over the next few months with new objectives. The French Renewable Association (SER) also updated its roadmap with 65 GW to be installed for 2030 and 115 GW for 2035 as the new targets for the country. This is slightly above the new draft NECP published in November 2023, which aims at reaching 54 to 60 GW by 2030 and 75 to 100 GW by 2035. The new draft NECP is significantly upping the previous solar targets of 35-44 GW by 2028 and 100 GW by 2050. Local objectives are also to be introduced to allow an orderly deployment of installations on a regional level.
Drivers for solar growth
Calls for tenders remain the main contributor for achieving solar growth targets, with 3.2 GW scheduled every year. After a series of undersubscribed tenders in 2022, the last tender call for ground-mounted PV power plants in September 2023 set an all-time record. 129 projects were selected, and a total capacity of 1.5 GW was allocated. In August 2023, the French authorities concluded a procurement exercise for C&I rooftop PV projects, allocating 378 MW of solar capacity to 60 developers, marking another successful tender scheme.
The economic framework is becoming more closely aligned with current economic realities: the feed-in tariff “S21” now reflects the inflation level and has been increased to 131 EUR/MWh. In addition, a tariff for ground-mounted projects of less than 1 MW is expected to be introduced shortly, as well as a dedicated tariff for non-interconnected zones.
The “self-consumption without injection” segment is growing very strongly; it represents 11% of the total volume connected in the first quarter of 2023 and totals 316 MW. Between 2022 and 2023, the number of installations for individual self-consumption rose 77%, reaching 325,000 installations, which amount to 1.6 GW of installed capacity. Today, 11% of France’s PV capacity is used for individual self-consumption.
Among the measures to accelerate solar development, the decrees for the “acceleration of renewable energy” adopted in March 2023 are currently under discussion. The decrees cover, in particular, obligations to install PV on carports, the creation of an Agri-PV framework and value sharing.
In line with the Green Industry Act adopted in October 2023, a Solar Pact is being discussed between the industry and the government to speed up the reshoring of the solar industry. This pact represents a mutual commitment to support the development of the PV solar industrial base in France across the entire value chain and developing state-of-the-art projects from a technological, social and environmental point of view.
Challenges
There is still a long road ahead to achieve the national targets set by the MAEP (44 GW by 2028) and the most recent 2030 NECP target of 54-60 GW. At the local level, the delay in publishing the acceleration act decrees means that projects cannot be examined quickly. Besides, more restrictive local legislation is being implemented for Agri-PV projects, hindering the much-needed expansion of the segment.
Supporting mechanisms, and especially tender conditions, would greatly benefit from a more stable regulatory framework: law amendments are at times implemented too quickly, preventing project developers from adapting their projects to the new rules. Furthermore, the current market dynamics affecting the PV manufacturing industry is making it difficult for French solar companies to remain competitive. In this regard, the Solar Pact currently under discussion should provide greater support for domestic manufacturing.
Finally, the shortage of solar workforce is still a pressing issue that hampers the acceleration of deployment. This is particularly true for installers, and therefore for the self-consumption segment, even though this segment is still growing.
Greece
Overview of solar PV developments
The Greek solar PV market has gained tremendous momentum, which is expected to continue for the next few years. In 2022, 1.4 GW of new PV projects were connected to the grid, bringing the cumulative capacity to 5.5 GW. This was the best performance ever for the Greek solar sector. Still, it looks modest if compared with the expected performance of the market in 2023, which should bring online around 1.6-1.7 GW of solar capacity.
The market is still dominated by medium-size projects between 10 kW and 1,000 kW (71% market penetration). However, the utility-scale (22%) and especially the residential self-consumption (7%) segment are experiencing noteworthy growth. For the first time, annual installations in the household self-consumption segment in 2022 exceeded the 100 MW milestone, with 116 MW connected that year. Going further, 2023 is expected to be another record year for self-consumption systems, with the market expected to more than double its size.
In terms of energy generation, the bright weather across the country helped solar PV to contribute about 13.6% of total Greek electricity production in 2022. This share is expected to be over 18% in 2023
Solar PV targets in Greece and market outlook
Considering current trends, Greece is revising its 2030 national solar target: the new draft target is 13.4 GW by the end of the decade, almost doubling the one previously set. The new NECP targets are still considerably below HELAPCO’s market projections.
Challenges
The major bottleneck remains the availability of grid capacity. Most of the medium-voltage grids are now congested, and soon, the same is likely to happen with the high and ultra-high-voltage grids. The government presented a priority list for grid connection in August 2022 and then again in January 2023, raising numerous complaints from interested investors. To address these complaints, a roadmap for grid enforcement and development for the coming years was made. However, the appetite of investors transcends this plan.
Drivers for solar and storage growth
Regarding support schemes, some 4.1 GW of RES projects will be auctioned in Greece between 2023 and 2025, with PV expected to get around 3 GW.
In 2022, the Greek Parliament also passed a thorough regulatory framework for storage. Large-scale storage is selected through a bidding process, with a total tendered power capacity of 1 GW and at least 2.6 GWh of storage capacity. The allocation of the contracts to selected projects should take place before Q1 2024, and storage facilities should be completed by the end of 2025. A support scheme for self-consumption PV systems (<10.8 kW) coupled with storage in the residential and small agricultural sectors commenced in May 2023. This programme covers the full cost of batteries, to facilitate the development of a new market segment. Some 25,000 small batteries (<10.8 kWh) are expected to be deployed by the end of 2024.
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