Will EU lawmakers negotiate a good Net-Zero Industry Act for solar?
The European Union has set a goal of 30 GW European solar manufacturing, at each stage of the value chain, by 2030. Right now, however, European solar manufacturers are facing a crisis. Market forces are driving down the price of solar components, making it difficult for Europe’s solar industry to sell their products. European solar manufacturers warn there could be only weeks left before further insolvencies.
This week SolarPower Europe launched its annual EU Market Outlook for Solar Power 2023-2027, mapping the annual levels of installation, and the status of solar manufacturing in Europe. 2023 installations grew 40% from 2022, with Europe set to hit a record 56 GW of solar installed this year.
Though records are set to continue, the forecast is not without clouds. Inflation, grid connection and permitting delays, skills shortages, are all making life difficult for solar projects in Europe. We’re expecting only around 11% market growth next year, a departure from the minimum 40% growth we saw in the early 2020s. That would mean that EU solar deployment in the next year would be below 70 GW, which is the annual average solar installation needed to reach the EU’s 2030 climate and energy goals.
The picture is similarly mixed at the upstream part of the supply chain. 2023’s growth in inverter, cell, and module capacity - by around 10 GW, 0.6 GW, and 5 GW respectively - is counterbalanced by 12% decline in polysilicon production and a temporary halt to the 1 GW of ingot manufacturing?and 1.3 GW of wafer manufacturing.?As it stands, less than 2% of Europe’s current demand for solar could be met with European-produced solar products.
EU Policy Friday Focus:
The EU Net-Zero Industry Act (NZIA) is one key tool to support European solar manufacturers. Last week the Member States of the EU – the Council of the European Union – agreed their negotiating position on the file. With the Council position in place, as well as the European Parliament , the EU co-legislators will enter ‘trilogue’ negotiations with the European Commission in the new year. Lawmakers will want to land the Act as soon as possible next year, before the calendar is overtaken by the EU elections in Spring.
So what is the Council position, and how does it differ from its co-legislators?
? It supports a category of strategic net-zero technologies, close to the original European Commission proposal.
This is good news – since effective industrial strategy requires focus on the most important technologies for the energy transition and those with highest import dependency, like solar. It should also act as an effective push-back against the Parliament proposal that widens the scope and even scraps the category of 'strategic net zero technologies'.
? It brings much needed realism and proportionality to the proposals on public auctions and procurement.
The Council position sets limits on the application of non-price criteria and pre-qualifications to a segment of 20% of the annual auctioned volumes per Member States. This reserves a small part of the market that reflects what could realistically be met by domestic supply in the short term.
Still, we’re asking decision-makers to tailor this segmentation to the reality of the solar PV supply chain, and to avoid applying the 20% segment as a one-size-fits-all for all technologies. We call for a segment of solar-specific ‘resilience auctions’ of of 5 GW of all auctioned volumes across the EU in 2025, growing to 30 GW in 2030, in line with the proposal from the European Solar PV Industry Alliance .
? It introduces reference to an Implementing Act dedicated to further specifying the pre-qualification and award criteria in public auctions.
An Implementing Act would provide the technical clarity on exactly how auction rules can work, and make sure its clear and consistent for authorities and industry across the EU. We want to make sure an Implementing Act would establish these rules on a technology specific basis – net-zero tech like wind and solar come from very different starting places and should be treated specifically.
Engaging the European Investment Bank
SolarPower Europe joined an important meeting earlier this week with the European Investment Bank (EIB) and the European Commission to discuss the role of the EIB in financing solar PV manufacturing facilities in Europe. We firmly raised the need for urgent engagement to ensure the existing manufacturing project pipeline reaches adequate financing, in a partnership with the European Solar PV Industry Alliance . Reflecting on the EIB’s important and exemplary engagement in supporting the wind industry in Europe, it should now turn to solar and do its share in making the European solar renaissance happen.
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Solarcoaster
The latest ups and downs in the EU solar manufacturing landscape:
INVESTEMENT/EXPANSION:?Danish coating equipment manufacturer raises capital for expansion
ALARM BELLS: Energetica industries goes bankrupt
EXPANSION: SMA expands to US
PRICES: Modules go low
Beyond Brussels
BERLIN: Support for solar manufacturing has taken a hit in Germany, with the difficulties in passing the federal budget. Previously there had been two pillars of hope for German support for manufacturing.
1.????? The ‘call of interest’ for 10 GW solar manufacturing, which is the first ever tender being tested under the EU’s new subsidy rules.
2.????? The resilience auctions and bonus system in the ‘Solar Package I’.
Political negotiations led to the slashing of funding for (1), meaning they will likely award much less than 10GW of manufacturing projects. This is particularly disappointing for any new players to the scene who were seeking support to get off the ground. For companies with existing capacity, it will be critical to have the support under (2) confirmed.
Solar Manufacturing Matters is a fortnightly newsletter on the European solar manufacturing landscape. Every other Friday, check out our latest EU policy analysis and a round up of solar manufacturing market news.
From SolarPower Europe , the award-winning European trade association with over 300 members active at every point in the solar PV value chain.
Next year let's not forget, mapping the annual levels of damage from large hail storms due to the outdated IEC PV testing standard.
Download our EU Market Outlook for Solar Power 2023-2027 here ?? https://www.solarpowereurope.org/insights/outlooks/eu-market-outlook-for-solar-power-2023-2027