The latest mid-year market analysis from SolarPower Europe highlights a shift in the EU’s solar PV growth trend. For the first time since 2015, the European solar market is expected to shrink in 2025, with projected annual growth at -1.4% under the most likely scenario. This comes after strong expansion in 2022 and 2023, which saw growth of 47% and 51% respectively, and a more moderate 3.3% growth in 2024.
According to current estimates, the EU will install 64.2 GW of new solar capacity in 2025, down slightly from 65.1 GW in 2024. Despite this dip, these additions are enough to help the EU meet its 2025 target of 400 GW of installed solar capacity. By the end of next year, the total is expected to reach 402 GW. However, to stay on track for its 2030 targets and broader decarbonisation goals, Europe needs to install close to 70 GW of solar capacity annually through the rest of the decade. At the current pace, the continent will reach 723 GW by 2030—falling short of the 750 GW target.
The new report arrives as solar energy is gaining more visibility in the region’s energy landscape. In June, solar became the EU’s top source of electricity generation for the first time, according to Ember. Other global reports also underline solar’s value: the UN notes that renewable energy is responsible for a third of the EU’s economic growth, and IRENA reports that solar is now 41% cheaper than the least expensive fossil fuel options.
Despite these milestones, several challenges remain. In countries where residential rooftop solar has traditionally been strong—such as Italy, the Netherlands, Austria, Belgium, Czechia, and Hungary—households are delaying new installations. The sharp drop in urgency since the 2022 energy crisis, along with the removal of government incentives without proper alternatives, has led to a collapse of over 60% in the residential rooftop market compared to 2023. Poland, Spain, and Germany are also seeing declines of over 40%.
On a more positive note, utility-scale solar is expected to remain a strong performer. In 2025, this segment is projected to contribute around half of all new capacity additions in the EU. Since 2022, improvements in auction design have boosted investor confidence. In 2024, a record 20 GW of utility-scale solar was awarded through auctions across Europe, with hybrid projects that combine solar and storage seeing particular success in countries like Germany and Bulgaria.
Dries Acke, Deputy CEO of SolarPower Europe, said in a statement, “The number may seem small, but the symbolism is big. Market decline, right when solar is meant to be accelerating, deserves EU leaders’ attention. Europe needs competitive electricity, energy security, and climate solutions. Solar delivers on all of those needs. Now policymakers must deliver the electrification, flexibility and energy storage frameworks that will drive solar success through the rest of the decade.”
Germany continues to lead in solar auctions, followed by the Netherlands, France, and Italy, with Poland and Ireland also expanding their auction-based capacity. The outlook for 2025 remains strong, as seen in Germany’s latest innovation tender, which attracted 158 bids totaling more than 2 GW—mostly for hybrid solar-storage projects. Prices have dropped to €0.05/kWh, down from €0.07/kWh in a similar auction last October, where only 487 MW were awarded. Designing auctions that promote flexibility, hybridisation, and storage integration will be essential for continued growth in this segment.
At the same time, the Corporate Power Purchase Agreement (cPPA) market is showing signs of weakness. Once a major driver for utility-scale solar, cPPAs have been affected by declining electricity prices, which reduce the motivation for companies to enter long-term contracts. In 2025, this has led to a 41% drop in new PPA signings between the first and second quarters of the year. Strengthening the policy and financial framework for cPPAs will be necessary to support their continued role in the market.
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