These solar panels in storage could generate enough electricity to power 20 million homes per year and the build-up is set to grow further this year, with 100 GW of solar capacity in storage by the end of 2023, according to Rystad.

Europe’s spending on solar panel imports has almost quadrupled in the last five years, surging from €5.5bn in 2018 to more than €20bn last year, while the supply source has become increasingly concentrated. An overwhelming €18.5bn, equal to 91% of all PV import expenditure, was spent on Chinese products, as volatile panel prices impacted buying decisions, the research has found. A critical shortage of solar-grade polysilicon – a crucial raw material in manufacturing PV modules – in 2021 and 2022, coupled with rising demand for installed solar PV, contributed to soaring panel prices worldwide.

As China dominates both the production and processing of polysilicon into PV modules, Chinese manufacturers have been increasingly able to undercut the competition on price. Today, panels made in China often cost as little as two-thirds of European-manufactured capacity, says the analysis.

Healthy inventory levels aren’t signalling an import slowdown on the horizon either, according to Rystad, as imports in January this year were 17% higher compared to 2022, with February up 22%, March surging 51%, April up 16%, and May growing 6% over last year. If current import levels continue, 2023 will be a record-breaking year for imports and inventory. Annual imports look set to hit 120 GW, far surpassing expected capacity installations of 63 GW, the research notes.

Marius Mordal Bakke, Senior Supply Chain Analyst, Rystad Energy, comments: ‘European countries are desperate to get their hands on affordable solar infrastructure to advance their renewable energy targets, decarbonise and avoid paying elevated prices for new capacity. Although efforts are underway to build a reliable solar supply chain in Europe, the need for panels now means leaders cannot wait until 2025 or later to buy European.’

The report notes that energy policies and the green transition continue to drive demand for European solar PV growth. Since 2022, the Green Deal Industrial Plan (GDIP), RePowerEU, and the Net Zero Industry Act have all set ambitious solar PV goals. These goals include a target for 30 GW of European manufacturing along the entire value chain by 2025 and 40% of installed solar PV being manufactured within the continent by 2030.

Despite these ambitious goals, between 2019 and 2022, locally-made modules could not keep pace with the growth of imported panels. From 2021 to 2022, the amount of Chinese solar modules imported by European countries increased by 112% to about 87 GW, the research says. The installation rate in these countries has yet to meet anticipated levels, resulting in a sizeable gap of almost 47 GW in 2022 in shipped versus installed modules.

Judging by the market in 2023 to date, Rystad expects Chinese imports to increase by 38% annually and reach 120 GW. While installations will gain momentum – jumping 57% versus last year to hit about 63 GW – the gap will widen in absolute terms, with a difference of 57.4 GW at year end.

The imports are heading to several key destinations, including the Netherlands, Spain, Germany, Poland, France, Greece, Italy, and the UK. The Netherlands was the standout leader in Chinese PV imports in 2022, bringing in almost 45 GW alone, more than 10 times the amount of panels installed domestically across the year. 

Despite last year’s stockpiling, enduring robust imports and muted solar installation activity will inevitably lead to overstocking in Europe. Rystad predicts that solar PV installation bottlenecks – like labour shortages and critical material delays – will most likely continue until 2025, but the continent’s excessive inventory means panel prices are unlikely to see any meaningful increases.

With the current technology transition in the solar industry – from P-type to N-type cells – and incentives for purchasing European-manufactured panels, stockpiled products could face declining interest from European buyers if left in storage too long. However, that is not likely in the short term until the continent can advance its manufacturing capabilities, the research concludes.