44.6GW production capacity roadmap revealed! EU plans 30GW of local photovoltaic manufacturing

A study conducted by the Fraunhofer Institute for Solar Energy Systems (Fraunhofer ISE) and commissioned by the trade body SolarPower Europe (SPE) concludes that the EU's target of 30 GW of annual solar panel manufacturing is technically and economically feasible.

To achieve this goal, the EU and its member states need to "act quickly" and support it with a favorable policy and investment environment.

The study highlights two key points in this regard: first, the establishment of an EU-level, output-based support program specifically for the solar manufacturing industry; and second, the effective implementation of the Net-Zero Industry Act (NZIA) policy package across all 27 member states, including, where possible, a "Made in EU" credit.

The study notes that without these proposed interventions, the EU solar manufacturing industry will struggle to compete in the global market, "and the sector risks losing its remaining industrial and technological capabilities. Since scaling up production plants typically takes two to three years, the window for creating the necessary conditions for investors to establish plants in the EU by 2030 is limited." Walburga Hemetsberger, CEO of Solar Europe, said: "This new report highlights that with the right policies, Europe can achieve 30 GW of solar manufacturing capacity by 2030, creating thousands of local jobs and building a resilient, innovative solar supply chain that keeps economic value at home. To achieve the 2030 target, the EU and its member states must act quickly. Without intervention, Europe risks losing its remaining industrial and technological capabilities in the solar sector."

The study notes that Europe currently has less than 10 GW of annual manufacturing capacity for wafers, cells, and modules, while China supplies between 81% and 93% of all photovoltaic modules across the entire PV supply chain to Europe.

However, if announced or planned capacity by 2030 is included, this figure is much higher, as shown in the figure below. Even so, the EU still lags behind other regions in module production capacity, particularly the United States, India, and Southeast Asia.

The study's analysis is based on three scenarios that meet the resilience criteria of the EU's Net Zero Industry Directive (which came into effect last year and aims to boost domestic renewable energy manufacturing).

The first scenario involves establishing a fully vertically integrated supply chain in the EU (from polysilicon to modules, including solar glass and inverters); the second scenario involves sourcing more upstream raw materials—polysilicon, ingots, and wafers—from China, with the remainder produced in the EU; and the final scenario is similar, but with the production center located in Southeast Asia rather than the EU.

The European Solar Energy Association estimates that a system produced entirely in the EU would cost approximately €0.128 per watt-peak (Wp) more than a system with mixed production in China and Southeast Asia. For large-scale ground-mounted solar, the cost for a European system is approximately €0.608/Wp, while the cost for a Chinese system is €0.50/Wp. This means that the levelized cost of electricity (LCO) for European-made modules is 14.5% higher than for Chinese modules. This gap is driven by a variety of factors, with labor costs accounting for the largest difference (up 240%), by building and factory costs (up 110%), material costs (up 50%), and equipment costs (up 40%).

Solar Europe stated, "This provides a hopeful sign that the additional costs of manufacturing products in the EU are currently within the 15% limit imposed by the Net Zero Industry Act tendering rules."

Furthermore, the report emphasizes that the cost gap could be further narrowed to below 10% through a combination of policies, including capital expenditure (CAPEX) and operating expenditure (OPEX) programs. These policies would benefit both solar manufacturers and project developers, with output-based support. This result is based on an annual nameplate capacity of 5 GW.

The study's findings come just days after Solar Europe and the European Solar Manufacturing Council (ESMC) called on EU policymakers to adopt additional measures beyond the Net Zero Industry Act to support the growth of Europe's solar manufacturing industry. The two trade bodies proposed five key measures that the European Commission should consider, including developing a European action plan for the solar industry or setting up a new clean technology manufacturing fund covering capital expenditure and operating expenditure support.