Solar is delivering today.

In June 2025, solar became the EU’s largest electricity source for the first time, delivering 22.1% of the total power mix. As it stands now, the EU will also meet the RePower EU solar target of installing a total of 320 GWAC (equal to 400 GWDC) by the end of 2025. What seemed hard to imagine in the past has become reality at a record pace, proving solar is the key player to decarbonise EU’s electricity generation. This monumental achievement, however, comes at a moment of solar market slowdown.

Europe is not on track to meet its 2030 solar target as the market faces its first downturn in many years.

The EU aims to install 600 GWAC (equal to 750 GWDC) of solar by the end of the decade, yet under current deployment rates, only 723 GWDC would be reached. This warning – first raised by SolarPower Europe with a yellow card to policymakers in 2024 - is now turning into a tangible gap. After exceptional expansion in 2022 (+ 47%) and 2023 (+51%), growth flattened at 3.3% in 2024. For 2025, the market is expected to contract for the first time in nearly a decade, with a projected -1.4% growth under the Medium Scenario.

The current downturn is driven primarily by the rooftop segment, particularly residential solar systems. In many major Member States, primarily households and SMEs are postponing investment in solar installations following lowering electricity price trends and weakened support frameworks. In many cases, rooftop solar incentives have been withdrawn or scaled back without effective alternatives, resulting in a short rush and sudden market decline. Out of all rooftop segments, the residential solar market contracts the most. It accounted for around 30% of installations between 2020 and 2023 and is now forecast to contribute just 15% of new capacities in 2025.

Utility-scale solar, by contrast, is expected to continue growing this year. In 2025, the segment will likely contribute to around half of all new capacity additions. Part of its resilience is based on de-risking instruments that enable affordable financing and faster deployment. Corporate Power Purchase Agreements (cPPAs) have offered long-term certainty at competitive cost for developers and off-takers, which is the reason for the boom of PPAs in the recent years. But this promising and important solar segment also faces challenges to adjust to today’s market. In recent months, buyers for PPA contracts are more hesitant to commit in the downward electricity price environment. Newly signed solar PPA contracts dopped by 60% in Q2 from Q1. Improving the framework that supports these contracts will be essential to unlock their full potential. Auctions and tenders are now even more important for ensuring utility-scale solar deployment continues to play a key role. Today, more competition is driving the price of auctioned solar capacity to new lows.

Looking ahead, for solar to continue meeting EU targets and providing low-cost energy to European citizens and companies, the EU and its Member States must improve the value of solar electricity within the system. Energy system flexibility and storage are key tools to achieve this. They enable solar to be used when demand is highest, ensure smooth variable generation, and improve project economics across the board. While we need massive investment in the grid in the long run, more flexibility, and in particular a stark increase in battery storage, is the key in the short term for the EU to meet its solar and renewables ambitions for 2030.

EU Market Outlook for Solar Power: 2025 Mid-Year Analysis

24 July 2025