The writer is head of renewables and power, EMEA research at Rystad Energy

The renewable energy landscape in Europe is undergoing a transformative shift, with 2024 shaping up as a breakthrough year. Based on the latest estimates, solar photovoltaic (PV) power is poised to surpass wind power for the first time, in terms of year-on-year generation added to Europe’s electricity mix.

Europe’s power sector has made significant strides to reduce its emissions by nearly 50% since 1990. Historically, this has been accomplished by a series of measures including phasing out coal and replacing it with less emitting natural gas, and building out wind and subsidised solar energy. However, the gears have switched and solar PV is expected to be this year’s biggest decarbonisation driver. It will add some 50 terawatt hours (TWh) to Europe’s grid — more than the 38 TWh additions from wind power.

This is part of an ongoing trend. In 2023, Europe gained an additional 60 gigawatts (GW) of solar generation capacity — more than four times that of onshore wind, demonstrating that solar PV is becoming increasingly competitive, even as far north as Europe where the solar resources are not as strong as those closer to the equator.

What is driving this growth? Firstly, this is a highly versatile technology and is suitable for a wide range of applications. Solar PV is not limited to large-scale solar parks on huge fields, but can also be put on the rooftops of commercial establishments and homes. Rystad research shows that more than 70% of European solar capacity installed in 2023 was on rooftops.

Secondly, solar PV costs have been rapidly dropping, thereby boosting its competitiveness. From being a niche application that was heavily subsidised through feed-in tariffs in the early 2000s, the costs of solar modules have since dropped by more than 95% — and halved since mid-2022.

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• Is Norway the answer to Europe’s solar woes

The China conundrum

This drastic price reduction is primarily attributable to the influx of affordable solar panels from China. Looking at the global manufacturing capacity of all the elements of module manufacturing — polysilicon, cells, wafers and modules — more than 90% is located in China. The country’s rapid ramp-up of manufacturing capacity has helped provide a cost-effective solution for European adopters and tilted the scales in favour of solar over wind energy, which has not enjoyed comparable price drops.

While the solar sector’s rapid expansion is cause for celebration, it also casts a spotlight on a critical dependency: Europe’s heavy reliance on Chinese imports for solar panels. This underscores a potential vulnerability in the continent’s energy strategy, exposing it to the risks of supply disruptions and geopolitical tensions.

The big question is whether Europe is interested in developing its own solar supply chain. So far, China’s rapid build-out of manufacturing capacity has served the continent well. But if Europe wants to do more of this at home, government action will be pivotal to nurturing a local supply chain. Policies and incentives designed to encourage local manufacturing, research and development in solar technologies, and investments in raw materials and components are essential.

On this point, the European Commission is not sitting still. The Green Deal Industrial Plan, Net-Zero Industry Act and Critical Raw Materials all have provisions that guarantee minimum levels of domestic content within clean technology components. But relying on local production will come at a cost. European manufacturers lack Chinese solar PV manufacturing’s economies of scale, which means competition on price will be impossible. 

Solar has been propelled to the forefront of Europe’s energy transition, highlighting a significant shift in the continent’s energy landscape. But without targeted government intervention, Europe’s vision for a self-sufficient solar industry could remain elusive. As the region stands at this crossroad, the decisions made now will shape the future of its renewable energy sector and its path towards energy independence and sustainability.

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