With its ‘Fit for 55’ legislative package, the European Commission is mandating the comprehensive decarbonisation of the economy, delivering on the EU Green Deal. The package is a far-reaching set of new legislation and revamped existing legislation issued in two parts over the year 2021. Political negotiations on the proposed measures are expected to be concluded by the end of 2022.The Fit for 55 package is on the cusp of delivering the necessary level of ambition that will create the unprecedented opportunity to accelerate renewables-based electrification for all end use sectors.
The proposals should maximise the potential of a truly European solar value chain, redeveloping critical manufacturing capacity of solar PV components Europe, while creating over 1 million green EU jobs by 2030.Some of the drivers for this growth include the proposed 40% renewable energy use target for 2030, which is set to be translated into national measures. Binding targets for green hydrogen use in industry and transport will also kickstart the creation of a renewable hydrogen market in Europe.
Notably, the Fit for 55 package is set to be complemented by a European Solar Strategy in 2022. This reflects the wider move to incentivise European countries and companies to step up ambition on solar energy at national level and to tackle remaining barriers to solar deployment. Following the pattern, already we can see the new German government raising their solar targets.
Climate urgency needs bolder ambitions
A key pillar to sustain a 55% reduction of GHG emissions in 2030 is the Renewable Energy Directive, amendments have been proposed to increase the overall renewable energy target from the current 32% to 40% in gross final energy demand by 2030. According to SolarPower Europe and LUT modelling, this increased target is still insufficient to set the EU on the right track to deliver on the 1.5°C goal.
By 2030 we need to deploy 870 GW of solar across the EU to set the most cost-efficient trajectory towards climate neutrality in 2050. Considering the current market growth of solar, which is expected to reach 50 GW of annual capacity additions across the EU by 2025, a higher target is well within reach. SolarPower Europe together with leading scientists and eight other energy and city associations in the renewable sector, has published an open letter calling for the EU’s 2030 renewable energy target to be increased to at least 45% renewables in the EU’s final energy demand.
Faster permitting times and permitting best practices to support more solar projects
Increasing solar deployment ambitions requires granting more permits for solar projects, and doing so more efficiently. Solar projects currently face significant burdens through permitting and land-access for newprojects. Permitting procedures must be simplified, standardised, and digitalised, with authorities ensuring appropriate staffing levels to tackle bottlenecks. The already applicable Renewable Energy Directive has defined new rules, but in practice, it still takes between three to five years to develop a ground mounted solar project in Europe, depending on the country. While the sector welcomes the European Commission’s proposal to publish guidance on permitting by summer 2022, we must urgently pursue comprehensive implementation of permitting rules to facilitate the development of projects. In parallel, best practice forthe implementation of permitting rules, or for increasing public acceptance of projects should be identifiedand disseminated.
On-site solar coupled with storage to decarbonise the EU building stock
Buildings represent about 36% of the EU’s energy consumption and produce around 40% of the bloc’s greenhouse gas (GHG) emissions. Decarbonising existing buildings, which represent between 75% and 90% of the building stock, remains a significant challenge. On-site solar should be mobilised as a key solution.
The potential of on-site solar is yet to be fully maximised – with only 111 GW deployed today. The Recast Renewable Energy Directive (RED III) sets a useful indicative benchmark on EU buildings to use at least 49% of renewable energy by 2030. It must be complemented by the explicit exemption of construction permits for solar rooftop systems, a key barrier in several member states.
In addition to this, the implementation of the Renovation Wave must focus on the deployment of on-site solar and demand-side flexibility solutions.
The recast Energy Performance of Buildings Directive (EPBDII) is a further opportunity to mainstream solar and storage in all building renovations. It should, at a minimum, ensure that all buildings are ‘solar-ready’ by requiring a GHG emission reduction component in Energy Performance Certificates (EPCs) to promote integrated energy renovation, and include minimum requirements to deploy on-site solar and storage (Mandatory Performance Standards).
Boosting a Renewable Hydrogen economy for the climate transition of hard to abate sectors
Priority must be given to renewable hydrogen when and where direct electrification is not cost-efficient or not technically viable, for example for the maritime sector or aviation.
It will be essential to implement the recast Renewable Energy Directive (RED III) proposal for 50% of the hydrogen intended for end-use in industry to be from renewable electricity by 2030. Additionally, Renewable Fuels of Non-Biological Origin (RFNBOs) will need to account for 2.6% of the energy used in transport. Another very important step taken in this endeavour is the update of the definition of RFNBOs, as well as of the methodology to calculate its emission savings, which need to be robust enough to guarantee that the electricity used for its production comes from renewable sources.
As a second step in the Fit-for-55 package, in December 2021 the European Commission will publish the Hydrogen and Gas Decarbonisation package. Those texts must integrate the hydrogen sector into the natural gas legislative framework, and allow for the replacement of fossil gases with hydrogen in a cost-effective manner. Similarly, it will be paramount that this legislation focuses on the scale-up of renewable hydrogen in the hard-to-abate sectors by establishing a fair, open market with strong certification schemes.
Leverage corporate procurement of renewables to accelerate private sector investments towards European Green Deal objectives.
Private procurement of solar energy must be more actively promoted across all Member States. Recordbreaking low costs have meant that European market for solar and hybrid solar-and-wind PPAs have reached 1.9 GW in 2021 at the time of writing.1 However, administrative and market barriers still hinder the growth of private procurement of renewable energy in several member states.
The European Commission has correctly identified the issue and has made corporate sourcing a key priority for the revision of the renewable energy directive. Specifically, it has proposed requirements on member states to actively promote the uptake of renewable energy Power Purchase Agreements in their market, including through de-risking them via credit guarantees. PPA requirements must be complemented by guidance for member states on how to develop frameworks to promote PPAs, currently slated for 2024. In addition to this, the European Commission has also introduced proposals to ensure that all renewable energy producers are able to receive Guarantees of Origin (GOs).
To ensure the corporate sourcing framework is fully fit for purpose, SolarPower Europe is also proposing to improve the temporal granularity and transparency of GOs, calling for member states to time-stamp GOsat more regular intervals, rather than annually.
Provide the basis for solar manufacturing to flourish again in Europe
An industry can develop sustainably only with a comprehensive vision of its supply chain. The growth of the EU Solar market, coupled with the sustained EU leadership in future solar cells technologies, opens an opportunity to reinvest into a sizeable solar PV manufacturing capacity. This will be critical to ensure a diversification of supply for EU project developers, to increase the sustainability of supply chains, while creating added value and highly qualified jobs contributing to the European Green Deal.
We need to re-establish 20 GW of solar PV manufacturing in the EU by 2025, from polysilicon to module assembly. This is the vision set by the European Solar Initiative, the industrial alliance launched by SolarPower Europe and EIT InnoEnergy in 2021 with the support of the European Commission.
Reaching that objective will require adopting a coherent strategy, aiming at de-risking investments into new manufacturing capacities while ensuring a level-playing field with global producers. The upcoming EU Solar Strategy, to be proposed in summer 2021, and further planned EU actions to support the resilience of our continent’s economy next year, will be excellent opportunities to set the course towards that objective.
Factoring sustainability into business decisions
The solar PV industry is constantly looking at means to improve its sustainability performance under different perspectives beyond what is required by law. SolarPower Europe’s recent publications such as Solar Sustainability Best Practices Benchmark2 and Agrisolar Best Practice Guidelines3 show the effort from the sector to lead by example, taking into account social and environmental dimensions, including biodiversity preservation, local acceptance, circularity and supply chain transparency.
As part of the Green Deal sustainable product policy agenda, the EU Commission is currently preparing regulatory measures aimed at supporting the PV sector’s sustainability credentials, notably with the Ecodesign Directive and the Energy Labelling Regulation. The proposed regulatory measures will improve the environmental sustainability of PV products by increasing their environmental performance and energy yield and reducing the overall environmental footprint of the products placed on the EU market. The policy measures are planned to be adopted at the beginning of 2023.
Address grid bottlenecks & the flexibility potential of solar prosumers
The availability of sufficient grid capacity to connect new projects, in particular in the low voltage grid, can limit more solar deployment.
To mitigate this risk, important investments are needed in power networks, estimated at 59 billion euros annually by 2030 according to the European Commission Long-Term Decarbonisation Strategy, which is three times the amount invested during the previous decade.
SolarPower Europe is putting forward best practices in grid planning and grid connection practices as member states implement the Clean Energy Package rules. SolarPower Europe has worked to reflect this approach in the TEN-E Regulation, which regulates the use of the EU funding for energy infrastructure (CEF-E).
System operators must be incentivised to deploy smart technologies or use flexibility sources that can alleviate the need for grid reinforcements. Deploying the right framework to unlock flexibility resources, through standards for local flexibility markets and an updated approach to network tariffs are solutions to these challenges.
Solar prosumers also represent an untapped flexibility potential to compensate for supply and demand imbalances or congestions in the distribution grid. They can optimise local solar generation by synchronizing it with energy consumption patterns and avoiding transmission losses. Tailoring the energy system of the future to them is therefore key to support the integration of solar, while creating future-proof right investment conditions for rooftop solar.