EU solar market struggles to turn record generation into new capacity
During the first week of September, all of Europe’s largest solar markets recorded a new daily high for photovoltaic generation compared with the month’s daily average. Portugal reached its peak on 2 September with 31 GWh, followed by Spain on 3 September with 267 GWh. France and Italy both stood out on 4 September, generating 155 GWh and 143 GWh respectively, while Germany reached 389 GWh on 6 September.
A record summer for European solar power
In fact, almost the entire summer of 2026 has been exceptional for European solar power. Solar supplied more than 20% of EU electricity in May, June and July, reaching 25% in June, when it became the European Union’s largest source of electricity generation.
Yet these figures tell only part of the story. While solar generation has surged, helping the power system meet growing cooling demand, new capacity additions have lost momentum.
For now, installation trends appear broadly stable, with only a marginal difference compared with 2025. Between January and June 2026, at least 33.8 GW of new solar capacity was added across the European Union, just 1.9% more than the 33.2 GW connected during the first half of 2025.
The energy crisis supported the EU solar market, but only marginally
There is, however, an important factor to consider. The first six months of 2026 were marked by a new energy shock caused by the conflict in the Middle East. According to SolarPower Europe, the resulting rise in energy costs and concerns over energy security were the main drivers of the solar market during the first half of the year, helping installations outperform the initially pessimistic forecasts.
High volatility in energy costs has pushed households and consumers, particularly in mature markets such as Germany, towards solar self-consumption and balcony solar systems. At the same time, it has encouraged new long-term corporate power purchase agreements (PPAs) as businesses seek to reduce electricity bills and protect themselves against future price increases.
If the current trend continues, the EU is expected to install 68.1 GW of new solar capacity by the end of December under the medium scenario.
Why the 2026 solar response is weaker than in the previous energy crisis
It is difficult to ignore how much weaker the market response has been compared with the first energy crisis of the decade. Between 2021 and 2022, annual new solar capacity grew by 47%. This time, the transition from 2025 to 2026 is likely to bring the first contraction, with installations expected to decline by 2.1%.
The explanation lies in a combination of factors, starting with national policies. Most Member States have not responded to the latest price shock with substantial new incentive programmes of the kind introduced in 2022. Instead, several governments have opted for short-term fiscal measures aimed at containing fuel prices.
SolarPower Europe warns that “the outlook for 2026 has improved significantly, but structural risks remain”. The association adds that “political support continues to weaken across several Member States and regulatory uncertainty is increasing”.
Rooftop solar support is being scaled back
As SolarPower Europe notes, most Member States are retreating from support measures, particularly in the residential segment.
France has further reduced incentives for rooftop solar. In the Czech Republic, changes to the New Green Savings Programme, including the restructuring of non-repayable household grants, have significantly weighed on residential demand. Germany, meanwhile, is discussing reforms that would reduce incentives for new rooftop photovoltaic systems from 2027.
This weakening policy environment is becoming an increasingly important constraint on the EU solar market, particularly at a time when volatile fossil fuel prices might otherwise strengthen the economic case for distributed solar generation.
Grid constraints are becoming a major obstacle
There is another increasingly significant problem: grid constraints are becoming more pronounced.
SolarPower Europe points to “rising curtailment, falling solar capture prices, periods of negative prices and evening price spikes” as evidence that grids, energy storage systems and other flexibility solutions are not developing quickly enough to keep pace with solar deployment.
The issue therefore extends beyond the amount of photovoltaic capacity Europe can install. Without sufficient storage, stronger grids and greater flexibility, additional solar generation increasingly risks being curtailed or exposed to unfavourable market conditions.
Can EU fiscal flexibility revive solar investment?
Some hopes are now being placed on the National Escape Clause granted by Brussels for energy-related expenditure. The mechanism could provide Member States that request it with limited budgetary flexibility for measures designed to accelerate the energy transition, potentially supporting further growth in European solar power.
It is difficult, however, to see fiscal flexibility alone as sufficient without structural intervention.
Walburga Hemetsberger, CEO of SolarPower Europe, commented: “The lesson from this summer could not be clearer: when fossil fuel prices rise, when heatwaves hit, when Europe needs affordable, homegrown energy, solar delivers. Yet instead of strengthening the conditions for further solar growth, many governments are reducing support and increasing uncertainty. Europe should not need an energy crisis to promote solar, and it certainly should not weaken the conditions for solar investment in the middle of one.”