A tough letter from five European energy ministers was sent to the European Commission this week, calling for a renaissance in solar manufacturing in Europe, and a flat out rush to build 1.1 TW of photovoltaics in Europe, mostly on 70 million rooftops, by 2030. The ministers call for this to be part of the REPowerEU plan designed to unhook the bloc from Russian oil and gas.
It looks as if the text of the Solar Energy Manufacturing for America (SEMA) plan which has been pushed at adoption by President Biden, has been reworked into European-ese to achieve the same ends.
Suddenly both the US and Europe have a heightened awareness of how far behind they are in solar compared to China. The letter draws the comparison of swapping reliance on Russian oil and gas, to replacing this with a reliance on Chinese solar manufacturing.
This is perhaps the first time that the fairly obvious logic of speeding up the energy transition in Europe in favor of solar, has been pushed in a concrete document by EU politicians in response to the Ukraine war.
The idea is to literally triple the likely install rates for solar in Europe. At the current rate of uptake solar is likely to reach around 20% of this level by 2025, and under 40% by 2030. And if this is carried out, the move would have obvious implications for a major overhaul of European strategy around Battery Energy Storage as well – as far more of it would need to be installed, far earlier to balance solar.
The energy ministers of Austria, Belgium, Lithuania, Luxembourg and Spain don’t really count for much in the way of solar installed, except in Spain for the past couple of years, but in terms of electricity and gas used, they carry considerable weight, and more may flock in behind their message.
The danger of worrying about Russian gas, is that the answers so far have all been couched in more freedom to local oil and gas firms to open up more territory for exploration – which could deprive the long term answer – solar electricity from our own rooftops – of funding, just when it needs it.
While solar is obviously growing in Europe, at quite a clip, the correct policy approach – eliminating bureaucracy, stimulating local manufacture, and legislating that all new homes MUST have a certain amount of solar – could see solar generation rising from tripling in 10 years to rising by a factor of 6 in the same time – more than twice the total generation that we all expect.
The ministers point out the EU still has some of the best R&D in PV production in the world and that if the right conditions prevailed, it could resurrect the PV industry that died out so rapidly in the prior two decades. The problem of course is doing this without getting the World Trade Organization involved in blocking policy moves.
The idea is a fresh European Commission Act which makes solar rooftops the norm for all new build housing and all newly roofed homes; a campaign for all public buildings, supermarkets, industrial plant and offices to have solar on rooftops. But beyond this, calls for state credit guarantees to be used to back solar funding, and for the European Renewable Energy Financing Mechanism to be strengthened.
The group also says that regulations on self-generation needs to be rushed through so that consumers can take responsibility for their own electricity. Not many utilities will lake that message.
But on the manufacturing side it calls for “a dedicated support mechanism” aimed at scaling up existing solar manufacturing capacities and promoting innovation, calling for EIB funding or the Innovation Fund to be aimed at the problem and for the Climate, Energy and Environmental Aid Guidelines (CEEAG) which were brought in this January to be amended yet again to ease the notification period. The idea is to head towards 75% of solar panels being installed in Europe to be made in Europe, a tall order from where we are today.
Our own view at Rethink Energy, is that the global energy landscape has changed with both Covid and the Ukraine war and supporting local manufacture is now back in vogue, but it cannot work on is own. Tariffs charged against the installation of Chinese panels are specifically omitted from this letter, and it is after all, only the first step in a policy transformation that many will find unpalatable – but we expect some concrete change to happen here. India and the US has embarked on the same route, but also shot themselves in the foot on the one hand by imposing high tariffs before sufficient manufacturing was in place (India) and on the other, by extending a tariff investigation to the only remaining solar suppliers (US) – let’s hope in Europe this policy idea does not end up with a return to tariffs in Europe, which were only killed off in 2018 – and remember that it was their removal that has re-ignited the European solar industry in the south (Spain, Portugal and Italy).
The other issue here politically will be that if rooftop solar is made this easy, and this acceleration works, then the tail (rooftop) will certainly be wagging the dog (utilities) and that could make for a backlash from utilities – they are fighting against high gas and coal prices and trying to move to solar, but may feel usurped by a rooftop only EU policy, so should try to be creative here – embracing the financing of rooftop solar and home batteries, rather than setting their lobbyists against it.