After an 18-month downturn, the European photovoltaic market is set to recover during the fourth quarter of 2013, according to the latest NPD Solarbuzz European PV Markets Quarterly report.
While the research firm said the long PV slump "redefined the role of Europe within the global solar PV industry," it predicts quarterly PV demand "is now set to stabilize at the 2.5 GW level during the first half of 2014, with moderate growth forecast in the second half."
Germany, the U.K., Italy, and France are forecast to drive the European solar PV recovery next year. The four countries will account for almost 8 GW in 2014, equivalent to more than 75% of the PV capacity that will be installed in Europe next year.
"Following consecutive quarterly market declines going back to the start of 2012, solar PV demand from Europe is forecast to stabilize over the next three quarters," said NPD Solarbuzz analyst Susanne von Aichberger. "The downturn in the European solar PV industry has now bottomed out, with the quarterly demand volatility of the past soon to be replaced by more stable end-market dynamics."
PV demand in Europe declined significantly during the third quarter of 2013, dropping 11% compared to the previous quarter and 43% compared to the third quarter of last year. Confirming its position as the leading European solar PV country, Germany accounted for 40% of European demand in the third quarter of this year.
European PV demand in 2013 is forecast to decline by 37% year-over-year to 10.5 GW, a four-year low and almost half of the peak demand achieved by Europe in 2011.
"The European downturn this year was primarily caused by dramatic declines in solar PV demand in Germany and Italy, which was compounded by uncertainty introduced by the solar trade dispute between Europe and China," the report said. It also forecasts year-over-year declines in 2013 for Belgium, Bulgaria, Denmark, France, Greece, the Netherlands, Slovenia and Spain.
The severity of the downturn has been softened by strong year-over-year growth from the U.K., Romania and Austria, however, NPD Solarbuzz found.
Germany and the U.K. will again lead PV demand in 2014 and are forecast to account for half of total demand in Europe next year. The report predicts that the U.K. will emerge as the leading European market in the first quarter of 2014 for the first time as developers rush to complete large-scale projects ahead of Renewable Obligation Certificate (ROC) reductions in the second quarter.
"The residential segment in the U.K. is also rebounding, with installers now adjusting to predicable feed-in-tariff (FIT) rates," the report said.
Germany will regain its lead ranking between the second and fourth quarters of next year after four consecutive quarterly declines to the end of 2014s first quarter. While the ground-mount segment continues to be affected by low FIT levels and the 10 MW limit imposed on funded projects, most new residential installations are now self-consuming part of the onsite PV produced. The residential segment is also benefiting from recently introduced incentives for PV batteries.
PV demand in Italy, the report added, is set to recover slightly in 2014, having declined to a quarterly low of 229 MW during the third quarter of this year as the Conto Energia V funding scheme was phased out. Net-metering, tax breaks, projects completed under power purchase agreements (PPAs) and self-consumption by commercial users are expected to drive the rebound in Italy.
NPD Solarbuzz predicts that France will benefit from emergency measures implemented by the government, which are intended to target annual PV demand of at least 1 GW. The measures include new project tendering rounds that are expected to have a positive impact on demand during the second half of 2014.
Growth from the U.K. and France, assisted by the recovery of Denmark and other smaller markets, and by contributions from Turkey and other emerging markets will compensate year-over-year declines in Germany, Greece, Romania, Belgium and Switzerland next year. In addition, Ukraine and other smaller but more stable markets will continue to support European solar PV demand in 2014, the report said.
While Europe may have dominated global solar PV demand between 2006 and 2011 at levels between 70% and 80%, its redefined role in the global industry will decline to between 25% and 30% from 2014 onwards, according to NPD Solarbuzz.
"This reset now requires industry participants to implement new strategies to compete effectively within the European solar PV market in the future," added von Aichberger.