EU Solar Market Slows in 2025 as Corporate PPA Deals Drop 41%: SolarPower Europe

The European Union (EU) is projected to install less new solar capacity in 2025 than in 2024, marking the first annual decline in a decade. According to a mid-year market analysis by SolarPower Europe, the EU solar market is expected to contract by 1.4% under its most likely scenario. 

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According to the trend revealed by the SolarPower Europe report, "While solar auctions strengthen, Corporate Power Purchase Agreements (CPPAs) are wavering. CPPAs have been a key driver of utility-scale solar in recent years, giving developers and companies long-term price certainty. However, in 2025, falling electricity prices have reduced buyers’ incentive to sign long-term deals. New solar PPA signings have dropped by 41% between Q1 and Q2 this year, raising questions over the market’s near-term performance. Improving the framework that supports these contracts will be essential to unlock their full potential."

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The report shows an exceptional annual market expansion in 2022 (+ 47%) and 2023 (+51%), which flattened in 2024 (+3.3%). In 2025, based on current predictions by SolarPower Europe, the EU is set to install 64.2 GW, a decrease from 65.1 GW in 2024. 

However, the study remains optimistic, noting that new installations are helping to deliver the European Commission’s 2025 solar target of 400 GW, and estimating that the bloc should reach 402 GW by the end of the year. It added: “To meet the 2030 target and deliver the continent’s decarbonisation and competitiveness goals, Europe must install nearly 70 GW per year through the rest of the decade. But the current trend suggests that Europe will fall short, reaching 723 GW of solar PV by 2030, compared to the required 750 GW.”

Dries Acke, Deputy CEO of SolarPower Europe, said, “The number may seem small, but the symbolism is big. Market decline, right when solar is meant to be accelerating, deserves EU leaders’ attention. Europe needs competitive electricity, energy security, and climate solutions. Solar delivers on all of those needs. Now policymakers must deliver the electrification, flexibility, and energy storage frameworks that will drive solar success through the rest of the decade.”

Declining Rooftop Segment Leads to Solar Installation Downturn

The SolarPower Europe report showed a decline in rooftop solar installation. It mentioned, "Traditionally strong residential rooftop solar markets, like Italy, the Netherlands, Austria, Belgium, Czechia, and Hungary, households are now postponing installations as the impact of the 2022 energy crisis wanes. For most of these markets, the withdrawal of incentive schemes without adequate replacements is resulting in a residential rooftop market collapse of over 60% compared to 2023. Similarly, Poland, Spain, and Germany are experiencing a decline of over 40%." 

The new analysis for the utility-scale solar also expects a continued growth in the EU this year, which, in 2025, will likely contribute to around half of all new capacity additions.

It further explored, "Since 2022, improved auction design has helped restore confidence, with 2024 seeing a record 20 GW of utility-scale solar awarded across the EU. Hybrid and co-located storage projects, especially in Germany and Bulgaria, are playing a driving role in boosting auction-deployed solar. Germany leads in solar auctions, followed by the Netherlands, France, and Italy, with Poland and Ireland also scaling up."

Looking ahead, the 2025 SolarPower Europe auction schedule suggests that utility-scale solar capacity is set to grow. It added, "Germany’s latest innovation tender drew 158 bids totalling over 2 GW, mostly for hybrid solar-storage. Prices fell to €0.05/kWh, from €0.07/kWh in a similar auction in October, which awarded only 487 MW. Rolling out well-designed auctions that incentivise flexibility and hybridisation (with storage and/or wind) is key to the resilience of utility-scale solar."