In its latest report, "EU Market Outlook for Solar Power: 2025 Mid-Year Analysis," SolarPower Europe (SPE) points out that although solar power will become the largest source of electricity in the EU for the first time in June 2025, accounting for 22.1% of total power generation, the annual increase in solar power installations will see its first decline in 10 years. The neutral estimate for new installations in 2025 is 64.2 GW, a year-on-year decrease of 1.4%.

The 2025 interim photovoltaic installation target is nearing completion, but a shortfall remains in the long-term target.

The report argues that the record-breaking annual new photovoltaic (PV) installations of the past few years have enabled the EU to achieve its previously seemingly impossible PV installation target of 320GW AC (400GW DC) by the end of 2025. In particular, the Russia-Ukraine conflict in 2022 triggered a surge in European energy prices, generating substantial demand for residential PV systems. This led to explosive growth in EU PV installations in 2022 and 2023, with growth rates of 47% and 51% respectively, before falling to single digits (3.3%) in 2024. Under a neutral forecast, new installations in 2025 are projected to decline by 1.4% year-on-year, marking the first negative annual growth rate since 2015. By the end of 2025, the EU's cumulative PV installations will reach 402GW (DC).

If Germany, Spain, and Hungary experience a large-scale rush to install centralized projects by the end of the year, while residential rooftop PV projects in France, Germany, the Netherlands, and Belgium see a slight recovery driven by policy incentives, and industrial and commercial projects in Italy and Spain accelerate, then in an optimistic scenario, the EU's new PV installations are expected to see a slight increase of 1.1% in 2025.

Based on the EU's "REPowerEU" plan's goal of "reaching a cumulative 600GW AC-side (750GW DC-side) photovoltaic capacity by 2030," an annual increase of 69.6GW is needed over the next five years. However, based on the current growth rate, the cumulative installed capacity is expected to reach only 723GW (DC-side) by the end of 2030, leaving a gap of 27GW from achieving the target.

The phasing out of subsidies for residential power projects in many countries has led to a slowdown in growth, making ground-mounted power plants the mainstay.

The report points out that the decline in installed capacity in 2025 was mainly due to the slowdown in the residential rooftop photovoltaic market. This is also evident in the structure of the three types of new installations: the proportion of centralized installations has been increasing year by year for the past three years, while the proportion of residential installations dropped sharply from 30% in 2022 to 15% in 2025. Even in traditionally strong markets such as Italy, the Netherlands, Austria, Belgium, and the Czech Republic, residential photovoltaic projects generally experienced delays, with new installations decreasing by more than 60% compared to 2023. Poland, Spain, and Germany also saw declines of over 40%. The report believes that the main reasons for the market decline include: ① Following the energy crisis of 2022, electricity prices continued to decline, and the supply of energy sources such as natural gas stabilized; ② After some countries phased out or canceled incentive/subsidy policies for photovoltaic projects, they failed to introduce effective alternatives in a timely manner. However, in the residential market, plug-in solar PV, or balcony solar PV, is growing rapidly. Germany, as the birthplace and main market of balcony solar PV in the EU, saw more than 190,000 new systems registered and installed in the first half of 2025 alone, a year-on-year increase of 32%, bringing the cumulative number of registered and installed systems to nearly 1 million. If the number of unregistered installations is included, this figure will be even larger.

In stark contrast to the sluggish residential market, centralized projects in the EU are becoming the market's "ballast." The report predicts that centralized projects will account for 50% of the annual new installed capacity in 2025, continuing their strong growth momentum. This is mainly due to the recent oversubscription of PV + energy storage tenders in countries such as Italy and Germany. In 2024, the EU set a new record with nearly 20GW of bids (including tenders, auctions, and contracts for difference) for ground-mounted PV power plant projects, with Germany, the Netherlands, France, and Italy ranking in the top four. Germany received 158 bids in its most recent PV project tender this year, totaling a record 2GW.

The scale of newly signed corporate power purchase agreements (c) is showing a downward trend.

Over the five years since 2019, corporate power purchase agreements (cPPAs) have been a key driver of growth in the European centralized power market. By directly locking in electricity prices with power-consuming companies for extended periods, power plant developers no longer rely on fluctuating wholesale electricity prices, significantly increasing the certainty of project returns. As a result, the size of newly signed contracts has increased year by year, reaching a peak of 7GW in 2024, with a cumulative contract size exceeding 20GW.

In the first quarter of 2025, PPA (Power Purchase Agreement) contract signings reached 2.2GW, maintaining a growth trend. However, the market showed clear signs of slowing down in the second quarter, with contract signings plummeting by 41% to 1.3GW, the lowest in nearly three years. The report believes that persistently low, even declining, wholesale electricity prices have weakened the enthusiasm of electricity consumers to sign long-term agreements, while developers, constrained by fixed investment costs, are unwilling to sign contracts at low prices. It is expected that price competition will continue to affect the scale of new contracts until a new equilibrium is reached.

SPE calls for increased policy support to promote energy storage and power system flexibility.

SPE Deputy CEO Dries Acke warned, “While the 1.4% decline in new installations by 2025 may seem small, it marks a reversal of the accelerating trend in photovoltaic (PV) development and should be taken very seriously by EU leaders. Europe needs competitive electricity prices, energy security, and climate solutions, and PV can meet these needs simultaneously.” Acke believes, “Policymakers must drive the development of a policy framework for electrification, flexible dispatch, and flexible energy storage to support PV development over the next five years; otherwise, a policy vacuum will limit market potential.”

Michael Schmela, Head of Market Intelligence at SPE Executive Consulting, added, “To continue writing the story of European PV success and achieve the 2030 renewable energy targets, the most crucial solution is clear—rapidly expanding energy storage and improving the overall flexibility of the power system.”

The report also points out that as the energy crisis-driven “emergency installations” recede, the EU PV market is entering a critical period of transition from policy dependence to marketization. The ability to activate the residential market and commercial investment through institutional innovation will determine the next growth cycle.