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EU set to install less new solar in 2025 than it did last year – the first annual drop in a decade
6/8/2025
News
SolarPower Europe’s new mid-year market analysis for EU solar forecasts a 1.4% annual decline in installations for 2025. This would mark the first year of negative market growth since 2015, putting the continent’s 2030 targets at risk, it says. However, despite the forecast drop, years of solar boom mean that the EU will just meet its RePower EU 2025 solar target of 400 GW capacity.
The report says the downturn is particularly linked to a declining residential rooftop segment, as the energy crisis and related public-sector support schemes wane in key markets. The contraction follows ‘exceptional annual market expansions’ in 2022 (+47%) and 2023 (+51%), and flattened growth in 2024 (+3.3%). On current predictions, the report predicts that the EU is set to install 64.2 GW in 2025, a decrease from 65.1 GW in 2024.
In order to meet the 2030 target, and deliver the continent’s decarbonisation and competitiveness goals, Europe must install nearly 70 GW per year through the rest of the decade, says SolarPower Europe. However, it warns that the current trend suggests that Europe will fall short of its goals, producing 723 GW of solar PV capacity by 2030, compared to the required 750 GW.
The analysis comes as solar’s performance for Europe has hit the headlines. According to Ember, for the first time solar delivered most of the EU’s monthly electricity in June. The UN reports that renewable energy drives one-third of EU economic growth. While IRENA says that solar is 41% cheaper than the lowest-cost fossil fuel alternatives.
Dries Acke, Deputy CEO of SolarPower Europe, comments: ‘The number [–1.4%] may seem small, but the symbolism is big. Market decline, right when solar is meant to be accelerating, deserves EU leaders’ attention. Europe needs competitive electricity, energy security and climate solutions. Solar delivers on all of those needs. Now policymakers must deliver the electrification, flexibility and energy storage frameworks that will drive solar success through the rest of the decade.’
The projected downturn of solar installations is driven primarily by a declining rooftop segment, particularly home solar. In traditionally strong residential rooftop solar markets, like Italy, the Netherlands, Austria, Belgium, Czechia and Hungary, households are now postponing installations as the impact of the 2022 energy crisis wanes, reports SolarPower Europe. For most of these markets, the withdrawal of incentive schemes without adequate replacements is resulting in a residential rooftop market collapse of over 60% compared to 2023, it says. Similarly, Poland, Spain, and Germany are experiencing a decline of over 40%.
On a more positive note, the new analysis predicts that utility-scale solar is expected to continue growing in the EU this year, likely contributing to around half of all new capacity additions in 2025.
Since 2022, improved auction design has helped restore confidence, with 2024 seeing a record 20 GW of utility-scale solar awarded across the EU, notes the report. Hybrid and co-located storage projects, especially in Germany and Bulgaria, are boosting auction-deployed solar. Germany leads in solar auctions, followed by the Netherlands, France and Italy, with Poland and Ireland also scaling up, it says.
Looking ahead, 2025 auction schedules suggest that utility-scale solar capacity will continue to grow, according to the report. Germany’s latest innovation tender drew 158 bids totalling over 2 GW – mostly for hybrid solar-storage. Prices were €0.05/kWh, down from €0.07/kWh in a similar auction in October, which awarded only 487 MW. ‘Rolling out well-designed auctions which incentivise flexibility and hybridisation (with storage and/or wind), is key to the resilience of utility-scale solar,’ says SolarPower Europe.
However, while solar auctions strengthen, corporate power purchase agreements (PPAs) are wavering, it warns. These have been a key driver of utility-scale solar in recent years, giving developers and companies long-term price certainty. However, in 2025, falling electricity prices have reduced buyers’ incentive to sign long-term deals. New solar PPA signings have dropped by 41% between the first and second quarters this year, raising questions over the market’s near-term performance. Improving the framework that supports these contracts will be essential to unlock their full potential, concludes SolarPower Europe.
