Europe's solar PV pipeline holds immense promise, says IHS Markit


As many European solar markets take their foot off the gas in 2016, demand for ground-mounted solar PV capacity across the continent is expected to fall 40% this year compared to 2015 – but a recovery could be on the cards as early as 2018, believe analysts IHS Markit.

In a research note by senior analyst Josefin Berg, IHS Markit has observed a groundswell of solar pipelines in many European countries that could be politely described as having no current solar market.

These countries include Ireland – which has seen the fastest expansion in its solar PV pipeline of all European countries – Portugal and Spain, the latter of which has a sizable base of installed solar but has at best been a less-than-dynamic market for many years, and at worst, a regressive one.

According to IHS Markit, Spain has more than 8 GW of PV projects under development that have already secured grid-connection permits. The majority of this pipeline, however, has remained stuck on amber. However, recently announced plans in the country for a new renewable power tender could include 2 GW of solar PV, thus reviving the hopes of developers operating in the market.

IHS Markit tracking data shows that almost 2 GW of Spanish solar projects have inched in the past year towards final construction approval. The problem, as IHS Markit sees it, is many developers’ expectations of making revenue from these solar farms on the wholesale power market – a risky strategy, Berg says, with low chances for most projects to secure the necessary financing.

"However," she adds, "a potential PV tender increases the likelihood that some of the pipeline projects could be built over the next five years."

Portugal faces a similarly unstable reality, with as many as 2.3 GW of grid-connected solar applications already failed. But, Berg stresses, until the Portuguese government announces a solid support scheme for large-scale solar, most of these planned projects are simply economically unviable. “It will be very difficult to finance projects without fixed-rate PPAs,” she said. “Iberian power prices do not justify such an investment, and PV projects need guaranteed long-term revenues to be viable."

An interesting case is that of Ireland – a land not renowned for its solar irradiation nor, indeed, its PV market. Yet IHS Markit tracks a 3 GW solar pipeline in the country at various stages of permitting. These projects have all bet their future on the introduction of large-scale solar incentives, something which policymakers in the country are preparing for 2017. Exact details on the type of support forthcoming are scarce at the moment, but, Berg said, "if an attractive scheme comes into place, a wave of construction activity can be expected".

Ifs, buts and maybes, certainly, but the weight of solar projects currently straining at the leash to be developed is encouraging, and would mean a rapid ramp-up of capacity in these three markets alone in a short space of time should various green lights flash.

"These are three markets where developers have eagerly built up PV pipelines in anticipation of improved local conditions, and further decline in PV system prices," Berg concluded. "The exact contribution that these countries will provide to the overall ground-mount PV market in Europe still hinges on regulatory provisions that have yet to be rolled out."