/22nd March 2020, RENEWABLE MARKET WATCHTM/ The current levels of dependence on fossil fuels, the need of reducing the carbon emissions associated with energy use and the prospects of developing a new and highly innovative European technology sector make distributed solar photovoltaic energy generation increasingly attractive. To understand how we may unlock the self-generation potential, the analysis Europe Net Metering and Self-Consumption Solar Photovoltaic (PV) Market Outlook 2021 – 2030 has been conducted with primary research, interviews, first-class sources of information, case studies and desk research. Based on our findings, the study drew conclusions and recommendations on developing a more comprehensive policy and regulatory framework for residential and commercial prosumers. Today, renewable energy sources have become a significant contributor to the energy transition occurring in Europe.
Chart 1: Solar Resource Map of Europe and Central-Asia - Photovoltaic Power Potential 2019; Sources: World Bank Group, ESMAP, SolarGis
According to the EU Green Deal, substantial fossil fuel capacity needs faster decommissioning to ensure that the EU reduces carbon-intensive power plants by 2030. The rate of replacement of carbon-intensive energy sources by renewable energy to date has already resulted in GHG emissions reductions in the EU electricity sector. Residential and commercial prosumers installing rooftop and building-integrated (BIPV) solar photovoltaic systems and energy storage shall have a vital role in the European clean energy transition by 2030.
The current state of the net metering and self-consumption solar photovoltaic (PV) market in Europe
In general, incentives have played an essential role in the past decade in promoting net metering and self-consumption installations, especially in the more mature solar PV markets. The market for MW-scale solar power facilities in European countries will become increasingly complex with the phase-out of subsidies and new tender schemes requiring the lowest bid winners to connect to the grid. In the meantime, net metering and self-consumption business models for small scale residential and commercial solar PV installations more and more are paving the way in Europe towards independence from government subsidies.
Solar is already cheaper than retail electricity in most European markets today and will continue to decrease in cost, which will be a crucial driver for investing in on-site power generation. The falling cost of home battery energy storage combined with electrical vehicles (EVs) growth supports the sales of small scale residential and commercial solar PV systems. With the benefits of digital and smart energy, most consumers prefer to reach a higher energy independent status and fully control their energy bill.
Chart 2: Historical Cost of Small Scale Residential and Commercial Solar PV Systems with a Capacity Below 250 KWp in Europe (in €/KWp) 2010 - 2020; Sources: IRENA, JRC, SolarPower Europe, Renewable Market Watch™
The household and residential prosumers still decide to invest in a self-consumption solar PV installation based on financial viability and profitability. However, we observe since 2015 the growing number of customers driven by social incentives, environmental concerns, community group participation, public image issues and others.
Support schemes for small scale residential and commercial solar PV installations in Europe
Countries in Europe have different terms and conditions for support and financial incentives given to small scale residential and commercial solar PV installations. Besides net-metering, some countries have feed-in tariffs or premiums, but there is no unified and well-structured approach to support. Tax reductions, capital subsidies, loans, or other forms of investment support are also available, but they vary across Europe. Incentive schemes are beneficial in countries with less developed net metering and self-consumption solar PV market.
There is significant potential for renewable energy production in apartment buildings that can be realised if self-consumption is also allowed for solar cooperatives, tenant communities and supported by adequate permitting procedures. Furthermore, access to capital and/or financing is crucial for residential consumers to select and invest in self-consumption installations. Therefore, the development of business models and financial instruments is necessary to make self-consumption widely accessible to customers from all income levels, including special programs for vulnerable consumers. The complicated and time-consuming administrative and authorisation procedures still represent a bottleneck to small-scale self-consumption projects' competitiveness.
Small scale residential and commercial solar PV installations with capacity up to 250 KW represent more than 40 per cent of total solar power capacity in 14 countries in Europe at the end of 2020
Although utility-scale solar photovoltaic (PV) power plants with a capacity above 1 MW continue to dominate the market, distributed solar is rapidly growing. A clear trend that the solar photovoltaic (PV) sector in Europe is moving towards self-consumption and net metering reveals the recently published report Europe Net Metering and Self-Consumption Solar Photovoltaic (PV) Market Outlook 2021 – 2030. According to industry analysts of Renewable Market Watch™, this trend shall continue. The EU administration is working to establish a new, more effective business and regulatory framework to stimulate distributed solar photovoltaic (PV) and other decentralised renewable energy sources.
Electric vehicles are essential part of a clean energy future for Europe. As electric vehicles plug into the grid at night, they increase energy usage. This encourages homeowners and utilities to add more solar-powered charge-in capacity to the grid.
Besides the revenues generated by the electricity injected into the grid, people also want to reduce their bills via optimised levels of self-consumption. This represents a new revenue stream for both households and businesses. Net-metering programmes have been in place in Europe for quite some time. Recently, more elaborated business models appeared in an increasing number of European countries, which enlarge the concept of self-generation and consumption to wider groups of consumers.
European net metering and self-consumption solar photovoltaic (PV) capacity grew by 14.2 per cent in 2019 compared to 2018
Prosumers generating and consuming electricity under net metering and self-consumption schemes shall play an important role in future electricity networks. According to the European Commission’s forecasts, renewables will cover around 45% of our electricity demand by 2030. Their share is expected to grow to 60% ÷ 97% by 2050.
The strong run for small scale residential and commercial solar photovoltaic (PV) installations continued in 2020. The speed at which the capacity of self-consumption and net metering solar photovoltaic (PV) installations in Europe has grown since 2010 surprised many stakeholders and market players. Thus, European net metering and self-consumption solar photovoltaic (PV) capacity grew by 14.6 per cent in 2019 compared to 2018, Europe Net Metering and Self-Consumption Solar PV Market Outlook 2021 - 2030 revealed. This represents a significant opportunity to establish a clean, secure and resilient energy system for the European economy.
Net metering and self-consumption solar photovoltaic (PV) is already part of the utility business model
During 2020, the research team of Renewable Market Watch™ registered more companies (solar PV equipment manufacturers and EPC contractors) in Europe shifted their focus on distributed generation due to increased price pressure in the utility-scale segment. Europe's net metering and self-consumption solar photovoltaic (PV) market need further development of innovative system-integration and power-management solutions for households and buildings. These solutions shall include energy storage, particularly addressing the impact of self-consumption on the grid's operation and the value of solar photovoltaic (PV) electricity when aggregated and offered to the wholesale power market.
Net metering and self-consumption solar photovoltaic (PV) is already part of the utility business model. Distribution system operators (DSOs) in more than 11 European countries are involved in offering, designing, installing, and maintaining solar photovoltaic (PV) systems for residential and commercial projects. The growth of the net metering and self-consumption solar photovoltaic (PV) market in Europe will increase the demand for relevant solutions and services (e.g. smart power meters, solar simulators, software, etc.).
In 2020 more companies in Europe shifted their focus on distributed generation due to increased price pressure in the utility-scale solar segment
Industry analysts of Renewable Market Watch™ used a complex array of research sources to better understand net metering and self-consumption solar photovoltaic (PV) systems and their application in European countries under different local regulations and support schemes. For this reason, a unique approach was applied in the segmentation process to explain better fundamental drivers and future dynamics behind the net metering and self-consumption solar PV market growth in Europe. The market was analyzed in very details from eight main perspectives:
1) Policy and Regulation. Support Schemes at Europe-wide and Country Level;
2) Turn-key Solar Photovoltaic (PV) System Cost;
3) Levelized Cost of Energy (LCOE) for Small Scale Residential and Commercial Solar Photovoltaic (PV) Systems;
4) Energy Storage Technologies and Solutions Development;
5) Market Trends and Investment Volume in Net Metering and Self-consumption Solar Photovoltaic (PV);
6) Energy Market and Electricity Grid Network. Transmission System Operators and Utilities;
7) Smart Grid Technologies Development;
8) Electric Vehicles and Charging Infrastructure Development
The rise in the number of prosumers has been facilitated by the fall in the cost of solar PV modules and home energy storage, and the growth of electric vehicles
The rise in the number of prosumers according to Europe Net Metering and Self-Consumption Solar Photovoltaic (PV) Market Outlook 2021 – 2030 has been facilitated by the fall in the cost of solar PV modules. In some Member States, it is possible to produce solar electricity at a cost that is the same or lower than retail prices.
Various options are possible (e.g. residential prosumers, energy cooperatives, commercial prosumers, public institutions, etc.). An increase of 10 per cent in the number of households with electric vehicles will lead to an increase between 5 per cent and 17 per cent in installed residential net metering and self-consumption solar PV capacity by 2030.
Future market development trends. Over 18 per cent of European households will able to produce their own electricity by 2030
European net metering and self-consumption solar PV market has many development opportunities. A large amount of the available rooftop space in Europe for solar PV Installations is still unused. The Renewable Market Watch™ estimates that over 18 per cent of European households will able to produce their own electricity by 2030. Net metering allows customers in Europe to generate their own electricity cleanly and efficiently. During the day, most solar customers produce more electricity than they consume; net metering allows them to export that power to the grid and reduce their future electric bills.
Chart 3 - Rooftop Area Available in Selected European Countries (in km2); Sources: European Commission, Renewable Market Watch™
In its independent, 230+ page report, Europe Net Metering and Self-Consumption Solar Photovoltaic (PV) Market Outlook 2021 – 2030, the Renewable Market Watch™, analyses the net metering and self-consumption supporting schemes for solar photovoltaic (PV) in all European countries. Series of market trends that will impact investment volume and solar photovoltaic (PV) capacity additions under net metering and self-consumption support schemes over the coming decade in Europe have been identified.
The research team of the Renewable Market Watch™ elaborated projections of the future (2020 - 2030) levels of net metering and self-consumption solar photovoltaic power capacity uptake and investments, under several baseline regulatory frameworks and scenarios in 44 countries, to determine the main groups of countries according to their support systems for household and commercial prosumers and also to better understand the costs and benefits involved in each baseline framework. The Renewable Market Watch™ assumed and assessed the impact of:
1) A gradual phase-out of policy support over the period to 2030;
2) Reduction of the EU anti-dumping policies regarding import of solar PV equipment (modules, inverters, mounting structures, etc.) manufactured in countries outside the EU;
3) Growth electric vehicles (EVs);
4) Growth of installed batteries for energy storage by households and commercial prosumers;
5) Development and penetration of smart grid technologies.
For the distributed solar generation industry, these issues have been critical in defining both the market opportunity and its rules for participation. Economically viable supporting mechanisms, efficient and flexible permitting, combined with available grid capacity, are the key elements necessary to build a stable net metering and self-consumption solar photovoltaic (PV) market in Europe.
The more information about the net metering and self-consumption solar power market in Europe, including country profiles, you may read here: Europe Net Metering and Self-Consumption Solar Photovoltaic (PV) Market Outlook 2021 – 2030
To download the executive summary brochure with sample pages, please access from here: Europe Net Metering and Self-Consumption Solar Photovoltaic (PV) Market Outlook 2021 – 2030 - Sample
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