This is an extract from a recent report “Global Market Outlook for Solar Power 2024-2028” prepared by Solar Power Europe. In this extract, we specifically focus on EU-27 and Türkiye. 

European Union (EU-27)

Overview of PV developments in 2023: 2023 was a remarkable year for solar PV deployment in the EU, which added 61 GW and reached 264 GW of cumulative capacity, equal to 50% year-on-year growth, up from the 40.4 GW installed in 2022. A combination of high energy prices, political support, improved permitting and administrative framework, a higher than expected order pipeline from 2022 that was finally met with wide product and installer availability, created the conditions for the record growth in 2023. The year 2023 showed the best annual growth rate since 2018, and was the year with the highest absolute market growth ever, with over 20 GW more than the market size in 2022. Germany emerged as the top performer in 2023, with a 104% annual growth and exceeding its 9 GW national target for 2023 by a large margin. The market is showing maturity, with regulatory stability and high public acceptance of PV, as well as a balanced contribution to capacity additions from all PV segments. Contrary to earlier expectations, Spain slightly rose (5%) in 2023, bringing the market to 8.9 GW, while the Italian market more than doubled (111%) and reached 5.2 GW. Other EU GW markets were the Netherlands (4.9 GW), Poland (4.6 GW), France (3.2 GW), Austria (2.7 GW), Sweden (2 GW), Belgium (1.9 GW), Greece (1.6 GW), Hungary (1.6 GW), Portugal (1.5 GW), Romania (1.5 GW), and Bulgaria (1.2 GW). Czech Republic missed the GW mark by around 20 MW. Among the 27 Member States, 26 installed more solar capacity than the year before.

Drivers and challenges: Government policies and regulations play a critical role in shaping growth for renewable energy in the EU, particularly as the sense of urgency following the energy price crisis diminishes. Energy security concerns and high energy prices catalysed rapid growth in EU solar PV installations during 2022-2023. Today, with energy prices receding towards pre-crisis levels, the role of policymakers has become even more critical to maintain high installation rates and prevent future dependency on fossil fuels. A promising development is the recent increase in solar ambition under the National Energy and Climate Plans (NECP) targets. However, despite this progress, the targets are still 30% below SolarPower Europe’s Medium Scenario trajectory projected for 2030, and 17% below the REPowerEU target. Compounding this uncertainty are the recent and upcoming Member State and EU elections, raising concerns about policy stability and adherence to deployment targets. Sudden policy changes, particularly from governmental shifts, significantly harm investor certainty and public perception surrounding renewable energy, and pose a threat to continued solar market growth. Fortunately, EU and national policies adopted during the period of heightened urgency could help mitigate the impact of less solar-oriented government changes, and are expected to continue influencing solar deployment in the medium term. In this regard, a significant driver to solar growth in the EU is the strong increase in auctioned solar capacity, particularly in the utility-scale segment. The momentum created by larger auctioned capacities will lead to an increase in utility-scale contributions, growing from 35% in 2023 to 45% and beyond from 2026 onwards. Still, rooftop solar is expected to remain the largest market segment until the end of the forecast period in 2028.

PV technology advancements, economies of scale at production level, and large overcapacities in global PV manufacturing have contributed to a drop in product prices, which decreased overall significantly, and for solar modules by 50% over the course of 2023. These price cuts have partially masked the worsening in the business case for large-scale solar. Within a high interest rate environment and rising PV penetration shares, large-scale solar projects increasingly experience high curtailment and price cannibalisation. This is particularly visible in Southern European markets, which exemplify the challenges that await the rest of Europe if grid and flexibility constraints are insufficiently addressed. Without adequate grid development, storage deployment and demand response, the growth of the solar market is capped. After a year of record growth, these issues only magnify, revealing further vulnerabilities in the grid during peak periods. As such, the future of solar is tightly bound to policymakers’ focus on grid reinforcement and flexibility-boosting policies. This includes clear policy actions supporting battery storage and the electrification of heating, cooling and transportation.

Until recently, product component availability and skills were identified as crucial bottlenecks to solar growth in the EU. Today, access to components does not pose a major hurdle anymore. However, exceptions exist, such as a shortage of power transformers that continues to influence large-scale deployment timelines. On skills, solar companies have made considerable strides in enhancing the efficiency of their teams and attracting additional workforce, also from less flourishing sectors, like construction. As such, the skill shortage in the EU solar industry has become less of a barrier to growth. Finally, the change in the economic and financial landscape has been detrimental to the solar business case. The lifting of several bottlenecks and the availability of low-cost components have somewhat masked the damaging effects of a more challenging financial environment for solar. Persisting high interest rates are no longer accompanied by high energy prices and low grid congestion. 

Additionally, the continuation of administrative hurdles, regular court cases, and unstable policy frameworks has undermined investor certainty by making solar a comparatively riskier asset to invest in. Consequently, the cost of capital has increased, adding to the financial burden on solar projects. In response, de-risking contracts such as PPAs have risen in popularity. This is also notably linked to the higher cost-bearing capacity of large corporations with sustainability targets, which will continue to be a key driver. On small-scale deployment, the high inflationary environment is hurting purchasing power, postponing many households’ decisions to invest in solar PV. This is especially true for lower-income households who are unable to access affordable green loans or other policy measures to help bridge the initial investment barrier. For continued market growth, it is essential that both the business case of large-scale solar and the accessibility of small-scale solar is improved.

Outlook: After the record year registered in 2023, growth is expected to slow significantly to single digits in 2024 – the first time since the lift of trade measures in 2018. This reduction can be attributed to the high baseline set by 2023 and a changing market environment. While more mature and well-established markets are now stabilising their growth path, cyclical markets face downturns because of unadjusted policy support and regulatory instability. Consequently, 19 out of 27 markets are expected to grow year-on-year, 7 less than in 2023. In our most likely scenario, we expect the EU market to grow 5% to 63.9 GW in 2024, followed by a partial recovery in the next two years, up 12% to 71.8 GW in 2025 and 13% to 80.9 GW in 2026. By 2028, Medium Scenario anticipated 96.7 GW of annual capacity additions, although the High Scenario reaches the 100 GW mark already in 2026, and 126 GW in 2028. Cumulative installation forecast indicates that NECP targets set by Member States are still well below expected solar market developments. Even though the aggregated NECP targets are 87% higher than the original targets measured in 2019, they remain significantly below EU ambition and projected market developments. Extrapolation of the Medium Scenario to 2030 results in 890 GW of operating solar PV capacity by the end of the decade, which is 42% higher than the aggregate NECP targets. This means that the EU is expected to reach the aggregated NECP target by 2028 already.

Türkiye

Overview of PV development up to 2023: By the end of 2023, total installed power capacity in Türkiye had increased by 2,859 MW. Out of it, 1,867 MW of new solar power plants were commissioned, bringing the total solar PV installed capacity to over 11 GW (Licenced + Unlicenced). Current developments regarding PV solar power plants in Türkiye have expanded to different types such as rooftop solar power plants (SPP), land SPP for self-consumption, hybrid SPP and storage SPP. PV module production in Türkiye expanded from 3 factories to 70 within 10 years. Existing solar module manufacturers have a total annual production capacity of 25-30 GW, two companies undertaking cell development activities have reached a total capacity of 1.8 GW, and there is an increasing number of cell investors. Approximately 15,000 people are employed in solar module factories, 8,000 people in the sub-industry of module factories, nearly 5,000 people in the construction and aluminium sector, and 15,000 people in the installation sector. The Turkish solar PV sector currently employs between 40,000 and 45,000 FTEs. Turkey’s solar energy sector provides employment for 150,000 people directly and 200,000 people indirectly.

National Targets for Solar PV: Türkiye’s National Energy Plan aims to increase solar energy capacity to 52.9 GW by 2035 and, according to its 12th Development Plan, it will reach 30 GW by the end of 2028. To reach this capacity, 3.4 GW of solar power needs to be added in Türkiye every year through the 2024-2028 period. The 12th Development Plan will provide incentives supporting clean energy production and energy efficiency, green transformation of the industry, sustainable transportation, circular economy and green infrastructure. The 2nd Energy Efficiency Strategy Document and the 2nd National Energy Efficiency Action Plans, covering the years 2024-2030, plan to maximise energy efficiency, increase the share of renewable energy and prioritise solar and wind energy for irrigation. Renewable energy production plants can be established without a zoning plan in the areas of seas, dam lakes, artificial lakes and natural lakes declared as renewable energy resource areas by the Ministry of Energy and Natural Resources. This excludes reservoirs and wetlands providing drinking water, as well as shores and coastlines within the scope of the Coastal Law.

Drivers for solar growth: While electricity production in Türkiye increased by 36% between 2013 and 2023, the share of renewable energy in electricity production increased from 29% to 42%. In response to the current legislation in Türkiye promoting electricity generation, especially from solar energy, momentum has surged for hybrid and storage facilities, alongside agricultural SPP and floating SPP plans. Following the climate crisis and the increase in energy prices, the sales of solar energy modules installed on the roofs of homes and workplaces broke a record and increased by more than 50% in 2023. Solar power plants established for self-consumption are exempt from obtaining a production licence or establishing a company, provided that they are on residential roofs, and it is now possible to generate extra income by selling excess electricity at the consumer price through monthly net metering. Studies are increasingly conducted to identify the obstacles to local initiatives in Türkiye and to increase the number of renewable energy cooperatives that have a positive impact on local development.

Utility-scale vs. distributed and rooftop developments: Several recent regulatory developments are encouraging PV deployment in different rooftop, distributed and utility-scale applications. The gradual transition to Nearly Zero Energy Buildings (nZEB), with improved energy efficiency and a portion of their energy provided by renewable energy sources, became mandatory on 1 January 2023. In March 2022, the capacity limit for PV electricity production facilities in non-commercial areas such as apartments, sites, mosques, farms and villas increased from 10 kW to 25 kW. With the regulatory amendment published in the issue dated 23 July 2022, the Ministry of Environment, Urbanisation, and Climate Change has introduced flexibility regarding solar energy installations on buildings in areas without zoning plans. It has been established that installations intended for self consumption and agricultural irrigation, covering a surface area of up to 125 m², as well as rooftop SPP installations with a maximum height of 150 cm from ground level, are exempt from requiring a building licence and usage permit. The Public and Municipality Renewable Energy Project (KAYEP) plans to install solar power plants on open car parks and roofs of institutions in order to meet all or part of the electrical energy consumption of central government buildings (subject to self-consumption) under suitable conditions.

Challenges for the market: Stringent financial conditions delay the financing of renewable energy projects. There is a need to create a structure that no longer requires appropriate financing packages supported by public banks and state subsidies by pioneering the establishment of financing models such as low-interest loan models and tax incentives. As the number of licensed solar and storage projects grows and investments continue, the sector’s primary goal is to expand capacities to maintain those investment processes. One of the topics that primarily affects the solar sector regards the EU Carbon Border Adjustment Mechanism (CBAM) Regulation adopted on 1 October 2023, in the context of the European Green Deal. The regulation will enter into force on 1 January 2026. In this pilot implementation process, hydrogen, electricity, iron and steel, fertiliser, cement and aluminium were included in the scope of CBAM in the first stage.

Outlook for the years 2024-2028: GÜNDER, Türkiye’s Solar Energy Association, continues to provide services to ensure the proper development of the renewable energy sector and contribute to employment, in a world where investment strategies for the energy transition are rapidly being developed. We contribute to projects that promote R&D, combating climate change, qualified workforce, gender equality and energy cooperatives. GÜNDERMYM provides the opportunity to manage employment correctly and benefit from occupational safety at the highest level both in the country and in the European Union within the scope of the Europass Certificate for National Qualifications. The organisation was authorised as the examination center of the solar energy sector on 1 March 2023. METU-GÜNAM continues to lead Türkiye in contributing to new technologies and applications by carrying out R&D and innovation projects through numerous national and Horizon European projects. One of these projects, the SolarHub project, aims to strengthen the solar energy innovation ecosystems of Greece and Türkiye.

Access the complete report here