Spotlight on GW EU solar markets: Germany comes out on top despite new EEG revision changing support policy framework

In 2020, based on the results from our latest EU Market Outlook for Solar Power, Germany regained the top spot on the EU solar chart with 4.8 GW of solar installations. So it comes as no surprise that most of the year’s solar news in Germany is positive, and the GW leader can flaunt some impressive statistics from 2020.  

Firstly, Germany’s total solar PV capacity amounts to 54.6 GW, the largest fleet across the EU, and despite Germany having the largest population, it still holds the highest solar installed capacity per capita ratio, at a rate of 0.65 kilowatt per citizen. Secondly, predictions for the future of solar are very promising, with 7 GW year-on-year growth expected as of 2022. Thirdly, in 2020 solar won all the auctioned capacity in technology-neutral tenders; in September, the first technology-neutral innovation tender took place, with solar winning nearly all of the 650 MW capacity.

As a final positive point, Germany’s PPA market is very healthy. The first stage of Germany’s largest solar project, EnBW’s 187 MW subsidy-free solar power plant and several other PPA projects were grid-connected by the end of 2020. The German PPA market is also expected to grow steadily in the coming years. All of this shows that despite rather mediocre irradiation levels compared to many other European countries, Germany’s solar sector is thriving and will continue leading the rest of the continent for the coming years if it proceeds on this path.  

The new EEG law, which sets the framework for renewable energy policy and was adopted by the German Parliament on 17 December 2020, has restructured the support framework for distributed solar. Looking at the first drafts of the proposed reform, solar support policies appeared severely weakened, although several of these concerns have been addressed in its final form. There is still one significant caveat for larger commercial systems. The revised law requires rooftop projects above 300 kW to participate in the national tendering scheme. This threshold is higher than the initially proposed 100 kW, but lower than the 500 kW level of a later draft, and will reduce the interest of large rooftop owners to develop new PV systems. With regard to small-scale rooftop solar, the new framework looks more promising. The threshold requiring PV systems to install smart meters has been raised to 7 kW, while all self-consumption below 30 kW is fully exempted from the EEG surcharge. 

In the medium term, residential rooftop solar is expected to continue its upward trajectory. Good conditions for this include: the high retail electricity prices, the availability of low-cost PV systems, and the imminent financial support from the EU Recovery and Resilience Plans. A further hopeful factor is residential Battery Energy Storage Systems (BESS) growth predicted in the next four years and an increase in the rate of residential battery attachment, as seen in our European Market Outlook for Residential Battery Storage 2020-2024. 

Considering the overall picture, and because recently increased tender capacities are soon coming online, we expect continued solar growth for German over the next three years. Solar in Germany is characterised by flexibility, scalability, and a low cost, which should keep the country in the top rankings across Europe for the years ahead.

Photo: © Shutterstock, Germany

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