EU Solar Decline: Navigating the European Solar Market Slowdown
The European solar market is experiencing a slowdown, marked by a decline in new installations. While early 2025 saw a surge in solar power generation, with a 30% increase reported in the first two months [https://www.pvknowhow.com/news/europe-solar-power-surge-30-percent-2025/], projections suggest the industry might fall short of its 2024 targets, leading to a potential decrease in installed capacity by 2025 [https://www.pvknowhow.com/news/eu-solar-decline-shocking-2025-drop-predicted-for-solar-power/]. This slowdown raises concerns about achieving the EU’s ambitious 2030 solar capacity goals.
Solar Industry and the EU Solar Decline: Economic and Policy Headwinds
After years of robust growth, the solar industry faces significant headwinds. Rising costs of solar technology, increased interest rates, and evolving regulatory landscapes contribute to the decline in new solar projects. The projected addition of 48.9 GW of new solar capacity in 2024 represents a 15% decrease from the previous year. Furthermore, estimates suggest a further drop to 44.3 GW in 2025, signaling the first contraction in the sector for over a decade. This downturn contrasts sharply with the positive growth witnessed earlier in 2025, as evidenced by the increased solar electricity generation [https://www.pvknowhow.com/news/europe-solar-energy-growth-electricity-2025/].
Several factors contribute to this decline. A 34.4% increase in solar technology costs since 2020 stems from supply chain disruptions, inflationary pressures, and rising interest rates. The EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes tariffs on imported solar components, further exacerbates the cost challenges. Additionally, the removal of the EU’s target to double solar capacity by 2030 introduces market uncertainty.
IRENA’s Warning: CBAM’s Potential Impact on the EU Solar Decline
The International Renewable Energy Agency (IRENA) has voiced concerns regarding the EU’s Carbon Border Adjustment Mechanism (CBAM). While designed to promote cleaner technologies by taxing carbon-intensive imports, including solar panels, IRENA cautions that the CBAM could inadvertently increase solar energy prices and hinder installation growth.
IRENA’s report highlights the potential for a significant reduction in EU solar installations due to the CBAM. The agency estimates that the EU could miss its 2030 solar installation target by up to 25% if the CBAM is implemented without adjustments, potentially jeopardizing the bloc’s climate objectives.
EU Solar Decline: Balancing Market Challenges with Opportunities
Despite the challenges, opportunities for growth exist within the EU solar market. Policy adjustments and supportive measures are crucial for navigating the current downturn. IRENA recommends considering measures such as tariff reductions on solar panels and financial incentives to stimulate the industry. These actions could help the EU achieve its climate goals while fostering a robust solar sector.
The current slowdown raises concerns about the feasibility of the EU’s target of 600 GW of solar capacity by 2030. While the decline in new installations poses a significant obstacle, the solar industry remains vital for the EU’s energy transition. Policymakers must address the existing challenges to ensure continued growth and contribution to climate objectives. Germany, a key player in the EU solar market, is also experiencing fluctuations, with significant installations in Q1 2025 but also facing potential declines [https://www.pvknowhow.com/news/germany-solar-capacity-2025-stunning-4-65-gw-installed-in-q1/]. The overall European solar landscape remains complex and requires careful monitoring and strategic interventions.
