Solar Energy Rollout Across EU Slows as Subsidies Are Cut

The European Union’s solar energy program is bound for its first annual slowdown in more than a decade, according to industry data released on Thursday.

The trend mirrors shifting political priorities across the 27-nation bloc as some countries scale back green measures or find their ability to sustain clean energy projects is stretched due to spending on defense and local industries.

The EU is on track to install 64.2 gigawatts (GW) of new solar energy capacity in 2025, a 1.4 percent decline from the 65.1 GW installed last year, industry association SolarPower Europe reported.

“While the EU remains on track to meet its 2025 solar target of 320 GWAC (400 GWDC), this achievement contrasts with mounting concerns about reaching the 2030 goal of 600 GWAC (750 GWDC), as the market shows signs of slowing down,” the report said.

GWAC stands for gigawatt alternating current, while GWDC stands for gigawatt direct current, the ratio of which is about 1.25:1, according to SolarPower Europe, hence the discrepancy.

The reason for both being included in the report is that solar panels create direct current electricity, which then has to be converted to alternating current for use in the electrical grid.

“The market will most likely contract slightly in 2025, primarily due to a sharp decline in residential rooftop installations—driven by lower electricity prices and weakening support schemes,” the report said.

However, current deployment rates now indicate the EU will fall short, by some 27 GW, of the 750 GW of solar capacity which SolarPower Europe said is needed by 2030 for the bloc’s climate targets and its wish to phase out energy coming from Russia.

The main cause of the slowdown is fewer residential rooftop solar panel installations—a sector that is set to make up 15 percent of total new capacity this year, halving the circa 30 percent share it held from 2020 to 2023.

Germany, France, and the Netherlands have cut support for such installations.

Berlin passed a law in February that canceled compensation for solar power fed into the grid during peak supply times, while Paris also scaled back some financial incentives in March, which affected the pace of new installations.

The Dutch government also cut support for households exporting excess solar power to the grid, with the current scheme set to fully end in 2027. New installations, not already receiving the previous support, are contributing to a decline in rooftop solar installations.

The year-on-year drop would mark the first time since 2015 that the growth of Europe’s solar market has slowed. Solar capacity soared by 51 percent in 2023, although last year’s growth had already dipped to 3 percent.

Last month, solar generated 22 percent of the EU’s electricity, making it the EU’s largest single source of power generation that month, amid a heatwave that hit the continent.

The decline of solar energy subsidies in Europe comes alongside a drop-off across the Atlantic, after U.S. President Donald Trump signed an executive order on July 7 directing his administration to end federal subsidies for solar and wind energy facilities, citing their unreliability and dependence on foreign-controlled supply chains.

In his order, Trump stated that these types of renewable energy sources are expensive, compromise the nation’s electric grid, and threaten national security.

The order will enforce the One Big Beautiful Bill Act, signed into law on July 4, which effectively ends renewable energy tax credits after 2026 for projects that have not begun construction. Wind and solar projects that start construction after that must be placed in service by the end of 2027 to qualify. Under the previous law, developers could have claimed a 30 percent tax credit through 2032.

Solar panels, or photovoltaic (PV) systems, convert sunlight into electricity.

They are typically installed on rooftops or across fields in large-scale solar farms. While they produce no emissions during use, manufacturing them is energy-intensive and heavily reliant on fossil fuels.

According to the International Energy Agency (IEA), 80 percent of the energy used in solar PV manufacturing is consumed during the production of silicon-based components, such as polysilicon, ingots, and wafers, a process that requires extremely high heat.

A 2022 IEA report found that more than 60 percent of the electricity powering global solar panel production came from coal, significantly above coal’s share in general power generation.

This is mainly because most manufacturing takes place in China, particularly in the provinces of Xinjiang and Jiangsu, where coal dominates local energy supply.

Aldgra Fredly Rahman and Evgenia Filimianova contributed to this report.