By Tim Longstaff, Urs Neumair, Geoff Versteeg and Frank Qiang Fu

As Europe races towards Net Zero and energy security, solar power has emerged as a cornerstone of the region’s energy transition. With a record-breaking 65.5 GW of new capacity added in 2024 and a target of 600 GW by 2030, solar energy is now the dominant force in Europe’s renewable expansion. While we celebrate the prominent rise of solar in meeting Europe’s climate goals, it also reveals significant challenges that lie ahead. How should Europe respond to its over-reliance on Chinese solar imports? How can Europe effectively harness emerging growth opportunities in its local solar market?

Evolving European solar market

The European solar market has witnessed exceptional growth over the past five years. This stellar growth of solar can be attributed to Europe’s continuous efforts to decarbonize as a result of the climate crisis, the changing energy landscape triggered by Russia’s invasion of Ukraine, and rapidly decreasing solar panel prices.

The energy crisis – a shock to the system

The energy crisis, triggered by Russia’s invasion of Ukraine, served as a rude awakening to Europe, exposing the continent’s dependence on Russian natural gas and highlighting the pressing need to reduce reliance on fossil fuels. Sanctions imposed on Russia caused energy prices to skyrocket, prompting European nations to act swiftly to counter the energy shortage by diversifying energy supplies and doubling down on the self-production of clean energy. Many countries issued immediate responses to support solar deployment, including accelerated planning and permitting procedures for PV parks, increased feed-in tariffs, and the removal of renewable energy surcharges.

To facilitate structural change, the EU launched the REPowerEU plan, setting forth several EU-wide initiatives, including the European Solar Rooftops Initiative and EU large-scale skills partnership – providing legal obligations, guidance, and industry support to accelerate solar adoption across the continent. REPowerEU also raised the binding target for the share of renewables in the EU’s overall energy consumption to 45% in 2030, having a cascading effect on 2030 decarbonization targets of member nations. Many nations, including Spain and Italy, have increased their solar targets to deliver on the accelerated decarbonization goal.

The energy crisis arguably had a bigger impact on the UK than on many EU countries, due to its reliance on gas for electricity production and heating homes. The UK Conservative government gave positive signals to both rooftop and ground-mounted solar , pledging to reach 70 GW solar capacity by 2035. The new Labour government has set even more ambitious targets, aiming to triple solar power capacity by 2030, reaching 50 GW. Although a concrete solar roadmap has yet to be released, the government has already indicated its commitment by greenlighting previously blocked solar farms and promising a “rooftop revolution.”

Solar manufacturing in Europe is falling short

Europe faces a stark reality: 90% of solar panels deployed in the EU are imported from China. EU manufacturing growth has been limited due to its lower cost competitiveness. Hopes were raised by the potential EU tariff investigations, supply chain constraints such as the Red Sea shipping crisis, and the Carbon Border Adjustment Mechanism (CBAM). However, none of these factors have materially impacted the competition landscape dominated by companies such as Jinko, LONGi, and Suntech.

The CBAM, introduced by the European Commission to address carbon leakage, holds the potential to reduce Europe’s reliance on cheaper solar imports by leveling the playing field for domestic manufacturers. However, with its initial focus on sectors such as cement, steel, and aluminum, solar PV imports remain unaffected. Furthermore, industry leaders have cautioned against imposing tariffs on imported solar PV, emphasizing the risk of disrupting solar deployment momentum. Lessons from 2013–2018, when EU restrictions on Chinese solar imports coincided with a significant slowdown in installations, serve as a glaring reminder.

Emerging solar related opportunities in Europe

While head-on competition against Chinese solar panel manufacturers appears increasingly challenging and arguably unrealistic given their substantial cost advantages and economies of scale, Europe could consider charting a more holistic course to bolster its solar industry. Rather than attempting to replicate China's dominance in large-scale manufacturing, Europe has the opportunity to deploy a "loose-brick" strategy, focusing on complementary areas like services, innovation, and high-value niches that are less accessible to foreign solar competitors.

1. Service-oriented segments: As the demand for solar energy increases, there is a growing need for service-oriented segments such as installation services, rental and financing solutions, home energy management systems, risk mitigation and performance optimization solutions, and recycling and end-of-life management solutions. These segments offer scalable business models with recurring revenue potential and address critical bottlenecks or inefficiencies in the solar value chain.

2. Novel technologies: The European solar market is also experiencing a surge in new technologies that address the known limitations of traditional mainstream solar panels. These technologies include vehicle-integrated photovoltaics (VIPV), building-integrated photovoltaics (BIPV), product-integrated photovoltaics (PIPV), and floating photovoltaics (FPV). These technologies offer high efficiency, lightweight and flexible materials, and low-temperature printing capabilities.

To unlock these opportunities, strategic investments, policy support, and regional collaboration will be essential. Investors should prioritize scalable business models that offer recurring revenue streams, such as AI-driven energy management platforms and subscription-based solar services. Infrastructure innovation—such as advanced inverters, storage solutions, and grid enhancements—will also be critical in ensuring seamless solar integration into the energy system. Meanwhile, policymakers must provide long-term regulatory certainty, boost funding for R&D, and offer targeted incentives to support domestic production, ensuring Europe can sustain its leadership in solar technology and services.

Conclusion

Solar energy is central to Europe’s transition. Despite challenges in manufacturing and reliance on China, opportunities exist in innovation, localization, and service-driven solutions. By advancing technology, diversifying supply chains, and fostering R&D, Europe can carve out an alternative path in advancing its solar market. Strategic investments, policies, and collaboration will be key to meeting solar targets while strengthening economic resilience and sustainability.

We at Roland Berger understand the unique challenges ahead for investors and market players along the complex solar energy value chain. We combine specialized industry insights with deep strategy expertise and tailored solutions to guide organizations through challenges and capitalize on emerging opportunities.

For more in-depth insights, download the full study on Europe’s evolving solar market. The report explores the market's rapid growth, dependence on Chinese imports, and opportunities for innovation and investment, as well as key implications for investors, solar industry, and policy makers.

We would like to thank Shelly Feng for co-authoring this study.

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