Apart from Germany, Spain and Italy have the highest solar PV targets for the decade ahead. In their latest National Energy and Climate Plans (NECPs), the two countries aim to install 76GW and 80GW of solar PV respectively by 2030, up from 39.1GW and 52GW in their first plans submitted in 2019.
Portugal and Greece have also increased their solar PV targets: Portugal has more than doubled its previous target of 9GW and now expects to reach 20GW, while Greece has similarly almost doubled its target from 7.7GW to 13.4GW.
In all these markets, solar PV is expected to play a key role in the transition to renewable energy, but some shadows are beginning to loom.
Iberia is in red
Since early February, Spain and Portugal have often had the cheapest prices in the EU. In late February and early March, both countries saw their day-ahead spot prices average no more than 10€/MWh (US$10.82) over a 10-day period. It is no longer unusual to see consecutive days with average prices of nearly 0€/MWh in the two Iberian Peninsula countries.
Regarding price candidacy, and especially the negative prices in Spain and Portugal, Doris Aquet, deputy CEO of SolarPower Europe, says it is one of the most pressing issues for the European solar industry. “This is one of the priorities for the solar sector and the renewable energy sector in general for next year,” Aquet explains, adding that the current price problems in the Iberian Peninsula will occur in other parts of Europe sooner or later.
“This is a good wake-up call to get serious about flexibility solutions at both the transmission and distribution levels.”
Ake added that the problem for the Iberian Peninsula is that both countries currently function as energy islands with little interconnection with the rest of Europe.
France has been fixated on delaying a proper border transmission line between Spain and the rest of Europe, but that could be resolved by bypassing its neighbour and building a connection with Italy.
“It bypasses France and goes to Italy, which makes a lot of sense because if you look at electricity prices in recent months, Italy is one of the few countries where they remain quite expensive, while Spain and Portugal have become extremely cheap,” explains Gaétan Masson, founder and CEO of the Becquerel Institute.
This would pave the way for Spain and Portugal to export electricity to Italy, but also from Italy to Greece and from there to southern European countries such as the Balkans and Cyprus, Masson said, adding: “We have the potential to do some pretty impressive things with high-voltage transmission lines.”
Clearly this would be a longer-term solution, given how long it would take and how expensive it would be to build just one power line between Spain and Italy.
Unfortunately, the challenge facing Spain right now is twofold: the roughly 25GW of solar projects that have received environmental approval and been granted grid access in 2023 but have yet to be built, and this is just the tip of the iceberg, according to Masson, with more than 100GW of capacity planned for Spain.
With such a large pipeline of solar power plants being built over the next few years, Masson explains, we can also expect to see increased development of two adjacent technologies to solar: storage and green hydrogen.
“Spain's peak demand is around 40-45GW, so we can't install 100GW of solar power,” Masson adds.
Meanwhile, there's the problem of finding enough skilled workers to build all this capacity, even though not all projects will ultimately be built. With so many projects being approved at the same time, Spain is experiencing a bottleneck in engineering, procurement and construction (EPC) capacity. Masson adds: “In some southern European countries, salary levels for engineers specializing in EPC have doubled in recent years. This is starting to become unsustainable.”
The pace of growth in solar power in the country is stagnating, with installed capacity, including ground-mounted and self-consumption, growing by 7.5 GW in 2022 to just under 7.3 GW in 2023.
A recent report by energy think tank Ember on national grid developments by European transmission system operators (TSOs) found that Spain had the second-largest capacity gap between TSOs' grid plans and SolarPower Europe's national forecasts. Only Poland, with over 40 GW, is less prepared than Spain (about 40 GW) for its grid to allocate new solar PV capacity.
But the bright side for Spain is that it is the fastest-growing electricity grid country in Europe, with the country on track to add a fifth of the 25,000 kilometers of new transmission lines planned between now and 2026.
Greece: Low demand but high growth in renewable energy
In the first four months of 2024, Greece has already exceeded the amount of renewable energy suppressed in the whole of 2023. This can be explained by the fact that electricity demand remains lower than before the COVID-19 pandemic, explains Panos Kefalas, lead research expert for Southeast Europe at Aurora Energy Research. “Everyone thought that there would be a quick recovery, but even now in 2024, that is still not the case.”
“This surprised some people because renewables have been growing very fast. And they have not slowed down during this period. In fact, they have grown even faster,” Kefalas adds. With the pace of renewable installations growing much faster than demand, one of Greece's main concerns is how to solve this throttling problem. Greece will face similar price problems as Spain and Portugal this year, and negative or near-zero prices may become more frequent going forward.
“Hydrogen will be a key driver of demand growth, but it will take time. It's not going to happen in the next three or four years. It's going to take a little longer.”
Implementing injection restrictions to resolve grid congestion
Kefalas added that the discussion of injection limits emerged in addition to the increasing number of curtailment issues the country has been facing since the beginning of the year, measures that were implemented across technologies last year to cap the amount of electricity projects can supply to the grid.
The idea behind Greece's interim solution was to impose a limit, effectively to conserve grid space, while the network was built out to accommodate more capacity, Kefalas explained.
Currently, the limit is set at a maximum of 72% of the installed capacity of solar power projects. “On an annual level, this can reduce total electricity generation by 2% to 4%,” Kefalas said, adding that the reduction is not significant as solar plants never reach a 100% load factor, but it is still an undeniable constraint.
But Kefalas says talk of lowering this even further to a 55% limit could further erode the investment return of solar power plants.One solution to this problem is energy storage, specifically co-locating solar PV with battery energy storage systems (BESS).
Kefalas expects solar plus storage to become increasingly important in Greece, where stand-alone solar projects will struggle to connect to the grid: “We are hearing more and more from stakeholders that they are actually considering co-location as the standard practice. Stand-alone projects will be much less considered in the future.”
Kefalas added that upcoming colocation and contract-for-difference auctions could help the market ramp up a bit faster.
Regarding the role of interconnection in solving the low electricity demand and curtailment issues facing Greece, Kefalas said it could be a “game changer” in the longer term, allowing southern European countries to export surplus electricity to the north of the continent.
“Interconnectors will undoubtedly play a big role in fighting this problem, but it is very complex in the sense that it cannot be solved by the Greek market alone. If you have an interconnector that goes through four or five countries, these countries need to cooperate and agree that the TSOs will include part of it in their investment plans,” Kefalas explains.
Kefalas added that this also applies to green hydrogen, with Spain and Greece expected to have the lowest production costs for green hydrogen, although this depends on how easily it can be transported across the continent.
“The growth of solar power in Greece depends heavily on the enthusiasm and realization of hydrogen plants. Without these, local demand will not be sufficient to absorb more (solar power capacity),” Kefalas concludes.
Italy bans solar power generation on farmland
Perhaps the most impactful recent move is the Italian government's decision to ban the development of solar power on agricultural land. While ongoing projects awaiting approval will not be affected by the newly implemented ban, the decision could ultimately cost the solar industry €60 billion, according to figures from industry association Italia Solare.
The government's rules mean a total ban on ground-mounted solar projects on land classified as agricultural. Agriculture Minister Francesco Lollobrigida said the policy is aimed at protecting Italy's productive farmland and “putting an end to ground-mounted solar proliferation.”
In a letter to Italian President Giorgia Meloni, Italia Solare argued that just 1% of the country's unused agricultural land could provide half of the 50GW still needed to meet the 80GW solar power target set for 2030. The other half would be added through rooftop solar.
As Masson noted earlier, Italy is one of the few European countries where electricity prices remain high, and the ban could hinder the construction of large-scale solar power plants that could lead to lower prices, Italia Solare explained in the letter.
Italy is one of the European countries with a high interest in agrivoltaics (agriPV), as indicated by an Italian government decree in February this year to commit €1.7 billion to the development of 1 GW of agriPV.
The integration of agriculture and solar power is a key topic for the solar industry, not just in Italy but across Europe, and Ache argues that the Green Deal must also be delivered for farmers. “Politically, it is very important that we, as the solar power sector, have solutions that are part of the Green Deal puzzle,” Ache explains.
The country is on track to install more than 5GW of solar PV in 2023, its best year in nearly a decade, a figure not seen since 2011 when it added a record 9.5GW of capacity.
Solar power has yet to boom in other markets
Unfortunately, apart from Portugal, Spain, Italy and Greece, there are no major markets for solar power in Southern Europe, and even countries outside the EU look unlikely.
Within the EU, Malta, Cyprus and Croatia have very low renewable energy targets and are among the few countries with less than 1GW of total solar PV installed capacity. Their revised National Energy and Climate Plans (NECPs) do not include any targets to raise their solar PV target above 1GW by 2030. Only Croatia has a significant gap between its NECP target and SolarPower Europe's estimates for the country. The industry group expects the Adriatic country to reach 5.7GW of installed solar PV capacity by the end of the decade. This will make Croatia a much more attractive country for solar development in the coming years.
Kefalas said that for now, wind power remains the preferred option in Croatia because its tariffs are higher than solar power.
The Balkan countries don't seem to fare any better than these three, and Masson is quite skeptical about the role of solar power in these countries: “I'm not sure yet that politicians in any of these countries are mature enough to put in place proper regulations.”
“The challenges in the Western Balkans are not yet as clear and visible because the market is not yet developed,” Kefalas said, adding that the solar PV market in the Western Balkans is still in its infancy, so the key is how to address it without facing the same challenges as other southern European markets.
Of particular note is the recent MoU signed between the Serbian government and Chinese company Hunan R&D Photonics Technology Co., Ltd., which aims to build a 1 GW solar module assembly plant and a 200 MW solar power project in Serbia. Both the module assembly plant and the 200 MW solar power project could be a major boost to interest in solar power development in Serbia.
