A joint report by SolarPower Europe and Fraunhofer ISE shows that European-made PV modules cost €0.103 (US$0.12) more per watt than Chinese-made ones. However, targeted policy support could narrow the gap and help the EU achieve its 30 GW annual production capacity target by 2030.
A recent report indicates that PV modules produced using EU-produced cells cost approximately €0.103 (US$0.12) per watt more than similar modules produced in China.
The report, "Reshoring PV Module Manufacturing to Europe," jointly released by SolarPower Europe and the Fraunhofer Institute for Solar Energy Systems (ISE), notes that the cost gap primarily stems from higher costs for equipment, materials, labor, plant, and facilities.
As a result, the system cost of a large-scale PV power plant using EU-produced cells is approximately €0.608 per watt, compared to €0.50 per watt for Chinese-made products, resulting in a 14.5% higher levelized cost of electricity (LCOE) for European modules. This percentage falls within the 15% cost premium cap for non-price factors in renewable energy auctions stipulated by the Net Zero Industry Act (NZIA).
The report states that through a sensible policy mix, including incorporating capital and operating expenses into output-based support mechanisms, the cost gap between European and Chinese modules could be narrowed to less than 10%.
The report recommends establishing an EU-level output-based support mechanism for PV manufacturing, encompassing grants, loans, and risk mitigation tools, to promote the scale-up of European PV manufacturing and cover capital and operating costs based on production volume. The report also notes that the US Inflation Reduction Act (IRA) and India's Production-Linked Incentive (PLI) policies have proven successful in other markets.
The report also notes that there is still a cost difference of €0.022 to €0.058 per watt between European and non-EU modules that meet NZIA standards. Therefore, governments could consider incorporating a "Made in EU" credit mechanism or EU priority scheme into their support policies, particularly for rooftop PV or public procurement projects.
Under the NZIA framework, the EU has set a target of at least 30 GW of annual production capacity by 2030. The report argues that, from a technical perspective, it is feasible to establish this capacity along the PV value chain by the end of the decade.
This target equates to a 30% to 50% share of the EU PV market and approximately 2% to 3% of the global market. The report estimates that Europe will need to build six to ten factories with an annual capacity of 3 to 5 GW to support this capacity.
To achieve the 30 GW target, the European PV industry will require annual support of €1.4 billion to €5.2 billion. The report also estimates that up to 39% of these costs could be recovered through macroeconomic benefits, including up to 2,700 jobs and €66.5 million in annual tax and social revenue.
SolarPower Europe CEO Walburga Hemetzberg stated that with appropriate policy support, Europe could competitively achieve 30 GW of PV manufacturing capacity by 2030. "To achieve this goal, the EU and its member states must act quickly," she added. "Without action, Europe risks losing its remaining photovoltaic industry and technological capabilities."
The report also warned that without intervention, European manufacturing will struggle to compete with major global competitors and could lose its remaining industrial and technological capabilities. "Because manufacturing capacity expansion typically takes two to three years, investors have a limited window to invest in European manufacturing before 2030," the report stated.
A joint report by SolarPower Europe and Fraunhofer ISE shows that European-made PV modules cost €0.103 (US$0.12) more per watt than Chinese-made ones. However, targeted policy support could narrow the gap and help the EU achieve its 30 GW annual production capacity target by 2030.
A recent report indicates that PV modules produced using EU-produced cells cost approximately €0.103 (US$0.12) per watt more than similar modules produced in China.
The report, "Reshoring PV Module Manufacturing to Europe," jointly released by SolarPower Europe and the Fraunhofer Institute for Solar Energy Systems (ISE), notes that the cost gap primarily stems from higher costs for equipment, materials, labor, plant, and facilities.
As a result, the system cost of a large-scale PV power plant using EU-produced cells is approximately €0.608 per watt, compared to €0.50 per watt for Chinese-made products, resulting in a 14.5% higher levelized cost of electricity (LCOE) for European modules. This percentage falls within the 15% cost premium cap for non-price factors in renewable energy auctions stipulated by the Net Zero Industry Act (NZIA).
The report states that through a sensible policy mix, including incorporating capital and operating expenses into output-based support mechanisms, the cost gap between European and Chinese modules could be narrowed to less than 10%.
The report recommends establishing an EU-level output-based support mechanism for PV manufacturing, encompassing grants, loans, and risk mitigation tools, to promote the scale-up of European PV manufacturing and cover capital and operating costs based on production volume. The report also notes that the US Inflation Reduction Act (IRA) and India's Production-Linked Incentive (PLI) policies have proven successful in other markets.
The report also notes that there is still a cost difference of €0.022 to €0.058 per watt between European and non-EU modules that meet NZIA standards. Therefore, governments could consider incorporating a "Made in EU" credit mechanism or EU priority scheme into their support policies, particularly for rooftop PV or public procurement projects.
Under the NZIA framework, the EU has set a target of at least 30 GW of annual production capacity by 2030. The report argues that, from a technical perspective, it is feasible to establish this capacity along the PV value chain by the end of the decade.
This target equates to a 30% to 50% share of the EU PV market and approximately 2% to 3% of the global market. The report estimates that Europe will need to build six to ten factories with an annual capacity of 3 to 5 GW to support this capacity.
To achieve the 30 GW target, the European PV industry will require annual support of €1.4 billion to €5.2 billion. The report also estimates that up to 39% of these costs could be recovered through macroeconomic benefits, including up to 2,700 jobs and €66.5 million in annual tax and social revenue.
SolarPower Europe CEO Walburga Hemetzberg stated that with appropriate policy support, Europe could competitively achieve 30 GW of PV manufacturing capacity by 2030. "To achieve this goal, the EU and its member states must act quickly," she added. "Without action, Europe risks losing its remaining photovoltaic industry and technological capabilities."
The report also warned that without intervention, European manufacturing will struggle to compete with major global competitors and could lose its remaining industrial and technological capabilities. "Because manufacturing capacity expansion typically takes two to three years, investors have a limited window to invest in European manufacturing before 2030," the report stated.
