The Europe solar photovoltaic (PV) market is poised to recover during the fourth quarter of 2013, after an 18-month downturn that redefined the role of Europe within the global solar PV industry. Quarterly PV demand from Europe is now set to stabilize at the 2.5GW level during the first half of 2014, with moderate growth forecast in the second half, according to findings from Solarbuzz.
Germany, the UK, Italy, and France are forecast to drive Europe's solar PV recovery in 2014. These four countries will account for almost 8GW in 2014, which is equivalent to more than 75% of the solar PV capacity that will be installed in Europe during the year.
"Following consecutive quarterly market declines going back to the start of 2012, solar PV demand from Europe is forecast to stabilize over the next three quarters," according to Susanne von Aichberger, analyst at Solarbuzz. "The downturn in the Europe solar PV industry has now bottomed out, with the quarterly demand volatility of the past soon to be replaced by more stable end-market dynamics."
Solar PV demand from Europe declined significantly during third-quarter 2013, declining 11% compared to the previous quarter, and 43% compared to third-quarter 2012. Confirming its position as the leading Europe solar PV country, Germany accounted for 40% of Europe demand in the third quarter.
Europe solar PV demand in 2013 is forecast to decline by 37% on year to 10.5GW, which is a four-year low and almost half of the peak demand achieved by Europe back in 2011.
The Europe downturn in 2013 was primarily caused by dramatic declines in solar PV demand in Germany and Italy, which was compounded by uncertainty introduced by the solar trade dispute between Europe and China. On-year declines in 2013 are also forecast for Belgium, Bulgaria, Denmark, France, Greece, The Netherlands, Slovenia, and Spain; however, the severity of Europe's downturn in 2013 has been softened by strong on-year growth from the UK, Romania, and Austria.
Solar PV demand from Europe during 2014 will again be led by Germany and the UK. These two countries are forecast to account for half of Europe's PV demand in 2014.
The UK will emerge as the leading market in Europe during first-quarter 2014 for the first time, as developers rush to complete large-scale projects ahead of Renewable Obligation Certificate (ROC) reductions in the second quarter. The residential segment in the UK is also rebounding, with installers now adjusting to predicable feed-in-tariff (FIT) rates.
Following four consecutive quarterly declines to the end of first-quarter 2014, Germany will regain its lead ranking within Europe between the second and third quarters of 2014. While the ground-mount segment continues to be affected by low FIT levels, and the 10MW limit imposed on funded projects, most new residential installations are now self-consuming part of the onsite PV produced. The residential segment is also benefiting from recently introduced incentives for PV batteries.
PV demand in Italy is set to recover slightly in 2014, having declined to a quarterly low of 229MW during third-quarter 2013 as the Conto Energia V funding scheme was phased out. The rebound in Italy will be driven by net-metering, tax breaks, projects completed under Power Purchase Agreements (PPAs), and self-consumption by commercial users.
In 2014, France is expected to benefit from emergency measures implemented by the government, which are intended to target annual PV demand of at least 1GW. These measures include new project tendering rounds that are expected to have a positive impact on demand during the second half of 2014.
The on-year declines in 2014 from Germany, Greece, Romania, Belgium, and Switzerland will be compensated by growth from the UK and France, assisted by the recovery of Denmark and other smaller markets, and by contributions from Turkey and other emerging markets. Europe solar PV demand in 2014 will continue to be supported by Ukraine and other smaller, but more stable, markets.
Having dominated global solar PV demand between 2006-2011 at levels between 70-80%, Europe's redefined role within the industry will decline to between 25-30% from 2014 onwards. "This reset now requires industry participants to implement new strategies to compete effectively within the Europe solar PV market in the future," according to von Aichberger.
