Photovoltaic expansion in Germany: developments, targets and forecasts

The sustainable transformation of the German economy is essential to ensure the country's competitiveness. The focus of this transformation is decarbonisation, which is being driven forward by the German government with ambitious targets. The goal: increased resilience.

The accelerated expansion of photovoltaics (PV) plays a central role in this transformation. A complex task that opens up new design and growth options.

The most recent amendment to the Renewable Energy Sources Act (EEG) set four main objectives:

1. The share of renewable energies in electricity consumption is to be increased to at least 80 per cent by 2030.
2. The aim is to achieve almost greenhouse gas-neutral operations by 2035.
3. Global warming is to be limited to 1.5 degrees.
4. Dependence on fossil fuels is to be reduced.

Various measures have been implemented to achieve this, including

• More expansion opportunities for solar energy
• Higher subsidies for solar systems
• Abolition of the EEG levy and better utilisation of market opportunities
• Support programmes for battery storage systems
• Greater promotion of energy communities

In the Federal Solar PV Strategy (May 2023, Section 4 EEG), the national expansion target was set at 215 GWp of installed capacity in 2030 and a PV share of 30 per cent of total electricity production.

Annual targets can also be derived from the federal government's plans, which illustrate the growth pattern:

• The coming years will be characterised by strong, double-digit growth in photovoltaics. The annual increase in capacity is set to rise to over 22 GWp/a from 2026. By way of comparison, a record 14 GWp of new capacity was added in 2023.
• The period between 2026 and 2040 is planned as a phase of sustained growth with annual additions at a high level of approx. 18 to 22 GWp/a. The annual growth rate during this period is eight per cent.
• The expansion also includes the replacement of old PV systems ("repowering"), which is currently still marginal, but could amount to up to 15 GWp/a in the phase after 2040.

Looking at the historical market development, two growth phases of photovoltaics in Germany can be distinguished.

The first growth phase for photovoltaics was primarily based on subsidy mechanisms.

It began in the 2000s and lasted until 2012, when the EEG amendment provided for a reduction in the feed-in tariff from 18.8 to 11.8 ct/kWh, including further degression. With generation costs still high, this led to a standstill in the market and a sharp levelling off of annual expansion. With the now reduced subsidies, demand for modules also declined overall. It increasingly shifted in favour of cheaper modules from China, which led to numerous insolvencies of established equipment manufacturers in the industry.

The second growth phase, which began in 2017, was and continues to be driven by sustainable growth.

There are three main reasons for this:

It can be stated that the market for PV investments will continue to gain momentum in the coming years, driven by energy policy and supported by attractive subsidies and tenders from the Federal Network Agency.

At the same time, the increasing market attractiveness is leading to greater competition. More and more companies are tapping into the market and competing for the limited resources, ground-mounted PV installations and systems.

Domestic and foreign investors, energy producers and energy-intensive companies should therefore set the right course now, analyse their own portfolio and examine strategic investments. In order to survive the growing competition for attractive sites and personnel, developers and energy producers should also consider strategic co-operations such as joint ventures and co-development agreements.