European Commission reviews NECP! Annual new photovoltaic growth is expected to reach 75GW

After evaluating the revised National Energy and Climate Plans (NECP) of some European countries, the European Commission called on European governments to "increase their efforts" to accelerate energy transition.

NECP is a plan by EU governments to achieve decarbonization of their energy structure by 2030, which was first implemented in 2019. This year, the European Commission has provided governments with the opportunity to update their NECP to align their climate plans with the new clean energy goals, which will be written into law in June next year.

As part of the latest round of revisions, some countries have expanded their planned targets, with Europe's goal of adding 90GW of solar capacity.

The European Commission has currently evaluated the revised NECP. The evaluation found that even with these revised goals, it is unlikely to achieve the series of goals stipulated in European energy legislation, the most important of which is the "Fit for 55" plan. This plan aims to reduce greenhouse gas emissions in the European Union by 55% from 1990 levels by 2030.

The European Commission has found that if the revised NECP plan is implemented, Europe's greenhouse gas emissions will only be 51% of 1990 levels, which is far from expectations.

The European Commission also pointed out that according to the new NECP, the proportion of renewable energy in the European energy structure is expected to be as high as 39.3%. Although this is higher than the 32% target set in the EU's second-generation renewable energy directive, it is lower than the 42.5% target set in EU law, and also lower than the ideal 45% target introduced as part of the third-generation renewable energy directive.

The leadership of the European Commission is optimistic that the latest round of assessments will benefit Europe's renewable energy industry. However, senior officials point out that this only clarifies the limitations of Europe's decarbonization commitments.

EU Climate Action Commissioner Wopke Hoekstra said, "The evaluation of the updated NECP draft by member states proves that we have taken another step in the right direction towards achieving ambitious goals."

"However, it is very clear that we need to make stronger commitments in the final plan, which will firmly put us on the right track of climate neutrality, enhance our ability to resist climate impacts, and leverage the benefits of climate and energy transition."

Chart 1: Changes in solar energy targets in NECP in 2019 and 2023

Germany and France respectively lead with 215GW and 60GW

In recent weeks, the EU has taken a series of measures to promote energy transformation within the EU. The European Commission and the European Parliament have reached an agreement on a fixed price structure for new renewable energy projects to make clean energy investments more economically attractive.

However, research by Rystad Energy suggests that in order to establish their own and sufficient renewable energy supply chains, renewable energy developers outside of China need to invest $700 billion in mining and manufacturing. This indicates that with a consistent legislative framework, the responsibility for achieving clean energy goals now falls on private companies and individual developers.

The European Commission announced in its NECP assessment document: "Although most member states have now submitted updated draft plans, the Commission regrets that several countries' draft plans have not been submitted, seriously affecting this process. The Commission calls on all member states to comply with the deadline for submitting their final plans by June 2024," the Commission emphasized, The responsibility for adhering to deadlines and achieving new goals should be borne by governments of all countries.

In fact, the two major participants in the European energy market, France and Germany, were unable to submit the revised NECP before the deadline of June 30th. Both countries have ultimately submitted revised plans, with current targets of 60GW and 215GW respectively, ranking among the countries with the highest solar power capacity on the European continent. However, the reluctance or inability of both countries to take swift action to achieve EU goals has raised doubts about their commitment to achieving these goals.

Figure 1 shows the new solar capacity plans of some countries in the latest revised NECP, with Germany clearly leading the way.

Optimistic outlook for the solar energy industry

Despite these concerns, the European Commission has pointed out that some countries have made positive progress in NECP overall, especially in the solar energy industry.

The European Commission pointed out that Lithuania and Estonia are expected to rely on renewable energy to meet 100% of their energy needs by 2030, while Denmark's renewable energy capacity is expected to exceed the total energy demand.

The European Commission also draws attention from countries to the EU's solar energy strategy. This strategy is part of the REPowerEU program implemented in 2022, aimed at encouraging a large amount of new photovoltaic installed capacity in European countries. This plan aims to achieve 320GW of new solar photovoltaic power capacity by 2025 and nearly 600GW by the end of this decade by simplifying the licensing process for new solar projects.

EU Energy Commissioner Kadri Simson stated, "NECP is a key tool for setting clear paths towards achieving clean and resilient digital energy systems. Our economy is waiting for clear investment signals, and our citizens are also waiting for strategies to maintain energy prices at affordable levels in the long term."

Some of these "investment signals" have been translated into actual projects. According to a report by trading firm Solar Power Europe, European developers are expected to reach a record breaking 56GW of new installed capacity this year, a significant increase from 39.1GW in 2022.

The figure below shows the significant increase in annual installed capacity in Europe over time. Solar Power Europe predicts that in 2026 alone, Europe's new solar capacity will exceed 75GW.

Chart 2: Changes and predictions of annual solar installed capacity in Europe