An Industrial Strategy for Solar in Europe

An industrial strategy for solar in Europe SolarPower Europe would like to thank the members of its Industrial Competitiveness Task Force that contributed to this report including:

Chair Vice-chairs

Sponsor Members: FOREWORD: THE SOLAR VALUE CHAIN: A UNIQUE OPPORTUNITY FOR EUROPE

As policymakers, investors and consumers increasingly enjoy the benefits of clean, flexible and low-cost solar power, solar technology has become the world’s most popular power generation source. In 2018, more solar power capacity was installed than all fossil fuel and nuclear sources combined, and almost twice as much as wind. In the coming years, SolarPower Europe anticipates 2-digit annual market growth in Europe, with solar playing a major role in meeting Europe’s 32% renewables target by 2030, and beyond. The potential for growth is indeed significant, as the latest studies suggest solar could cover 69% of Europe’s electricity generation in a 100% renewable scenario, with over 2 TW installed in 2050.1 Beyond its significant contribution to Europe’s clean energy future, the solar industrial value chain holds promise for Europe. It is highly innovative and offers modular, easily deployable energy solutions, able to quickly benefit from the effects of scale. Today, solar already provides both low-cost and highly efficient large-scale centralised solutions and decentralised consumer-oriented business models, enabling the creation of local and highly qualified jobs in Europe. Solar energy is an agile technology, it offers a high degree of flexibility and provides valuable services to the electricity grid. Combined with its low-cost profile and scalability, solar is a fundamental driver for the full decarbonisation of the European economy, providing highly efficient and sustainable electrification and, in a near future, converting green electrons into renewable molecules. Building bridges with chemicals, agriculture, digitalisation and e-mobility sectors will increasingly diversify the solar industrial value chain in the years to come. EU policymakers now need an overarching strategy to promote the growth of the solar industry in Europe and make the most of its industrial value. The Clean Energy Industrial Competitiveness Forum, established in 2016, must help develop a meaningful supply side industrial policy for solar and support the market uptake of Europe’s cutting-edge solar technologies. It will generate countless new business opportunities and jobs for Europe – the solar sector alone could support at least 300,000 jobs by 2030, compared to 81,000 Full-Time Equivalents (FTEs) in 2016.2

TARGETS FOR A PRACTICAL SOLAR SUPPLY SIDE POLICY • Jobs and general value added (GVA) should be dramatically increased in the solar sector by 2030: Europe should target 300,000 solar jobs by 2030 compared to 81,000 Full-Time Equivalents (FTEs) in 2016 • The EU should boost EU domestic demand for solar so at least 20% of Europe’s electricity demand is powered by solar energy by 2030. It will drive the competitiveness of the EU PV supply chain, and therefore job creation and value creation in Europe: • Set ambitious targets for the deployment of rooftop installations in Europe, to reach at least30 million solar roofs by 2030. • Accelerate the deployment of utility-scale solar in Europe. • Boost the market uptake of innovative solar technologies developed in Europe such as Building Integrated PV and floating solar. • Explore the contribution of solar energy beyond the power sector, through solar-based sector coupling. • To secure a globally competitive PV supply chain in Europe, policymakers should provide an attractive business environment, and develop top runner investment programs for large-scale manufacturing facilities in cutting-edge solar technologies. • The European Union should re-open negotiations on the Environmental Goods Agreement and work with international partners to eliminate trade barriers on green goods, and support European solar companies POLICYin accessing new markets. 1 GLOBAL ENERGY SYSTEM BASED ON 100% RENEWABLE ENERGY Energy 2 SolarPower Europe – E&Y Solar PV Jobs and Value Added in Europe, Transition in Europe Across Power, Heat, Transport and Desalination November 2017. Sectors – LUT university, December 2018.

SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 3 TABLE OF CONTENTS

FOREWORD: THE SOLAR VALUE CHAIN, A UNIQUE OPPORTUNITY FOR EUROPE 3 1 BOOST EU DOMESTIC DEMAND FOR SOLAR: AT LEAST 20% OF EUROPE’S ELECTRICITY DEMAND SHOULD BE POWERED BY SOLAR BY 2030 5 2 IMPROVING THE BUSINESS ENVIRONMENT FOR A COMPETITIVE SOLAR INDUSTRY 10 3 A STRONG INNOVATION FRAMEWORK FOR CUTTING-EDGE SOLAR TECHNOLOGIES 15 4 REMOVE ALL TRADE BARRIERS IN EUROPE AND IN THIRD COUNTRIES 17

SolarPower Europe would like to extend a special thanks to all the Industrial Competitiveness Task Force members and companies who contributed with their knowledge and experience to this report. In particular we would like to thank:

Our Chair and Vice-chairs: Wacker Chemie AG, Enel Green Power Spa, Fronius.

Our Task Force members: ABB, Akuo Energy, ALECTRIS, Applied Materials GmbH & Co. KG, Autarco, AZUR SPACE Solar Power, BayWa RE, Becquerel Institute, Borealis, Coveme , DNV GL Energy, DSM Advanced Surfaces, Eni Spa, EUROBA, First Solar, glass2energy, GOLDBECK Solar GmbH, H.Glass, Heraeus Precious Metals GmbH, HUAWEI, Ideematec , IKEA Services, INES, Innogy SE, ISRA SOLAR VISION, Merck KGaA, Schenker AG, Meyer Burger, Schneider, Siemens, SMA Solar Technology AG, Solarcentury, Solarwatt Gmbh, Solibro Hi Tech, Solnet Green Energy Oy, Sonnen GmbH, Tecnalia, TENERGIE DEVELOPPEMENT, Total, Ubik Solutions, VON ARDENNE GmbH, Wartsila Corporation, Weidmueller, WIP, and SolarPower Europe staff.

Task Force coordinator and lead author of report: Aurélie Beauvais, Policy Director, SolarPower Europe. Email [email protected]

The SolarPower Europe Industrial Competitiveness Task Force started its work in April 2017 and has worked actively since to shape a business-friendly environment for the solar industry in Europe. This report was originally published on 18th of March 2019.

Please get in touch with SolarPower Europe if you have any comments or feedback on the report and its content in order to enrich our ongoing work in this field. If you would like more information on the contents of this report or on the work of SolarPower Europe please contact [email protected] or call +3227095520.

Design: Onehemisphere, Sweden.

Disclaimer: This report has been prepared by SolarPower Europe. It is being furnished to the recipients for general information purposes only. Nothing in it should be interpreted as an offer or recommendation of any products, services or financial products. This report does not constitute investment, legal, tax or any other advice. Recipients should consult with their own financial, legal, tax or other advisors as needed. This report is based on sources believed to be accurate. However, SolarPower Europe does not warrant the accuracy or completeness of any information contained in this report. SolarPower Europe assumes no obligation to update any information contained herein. SolarPower Europe will not be held liable for any direct or indirect damage incurred by the use of the information provided.

4 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE 1 BOOST EU DOMESTIC DEMAND FOR SOLAR

A. Delivering on the clean energy package for an ambitious solar Boost EU domestic demand in Europe demand for solar: A strong industrial value chain requires a predictable line of sight on the at least 20% of evolution and scale of the market. The products being manufactured and Europe’s electricity sold on the European market should be competitive globally and capable demand should be of anticipating their local market’s long-term demand, independently of powered by solar short-term trade & regulatory measures. by 2030 The European Union should therefore support its solar industry in expanding and generating economies of scale by increasing the European market’s domestic demand for solar energy and helping the solar industry to access and grow in foreign markets. Such an increase in demand should be predictable and stable year on year: one-off demand for multiple GW in certain markets is not enough to lay the foundations of an industrial policy. Working towards and delivering on a European binding target of at least 32% renewable energy by 2030, combined with the expiry of the Minimum Import Price (MIP) and trade duties on modules and cells from Asia, will help reinvigorate the European solar sector and boost demand. Increasing numbers of solar installations will support companies manufacturing in the EU along the solar value chain through increased demand for their products.3 To deliver on these opportunities, it will be critical to design a strong “Union renewable energy financing mechanism” (Art 33 Governance Regulation), which will ensure the 32% target at EU level is met. Other provisions put forward by the Clean Energy Package will be paramount to ensure the growth of the solar sector in Europe: • The ban of retroactive measures for renewable support schemes in Europe will be key to provide solar investors with the necessary predictability for ambitious investment plans in the long term, and to benefit from attractive capital costs. Evidence has shown that a stable regulatory environment leads to Weighted Average Cost of Capital (WACC) of around 3-4%, as is the case of the UK or Germany, whereas in countries which implement retroactive measures, such as Spain and the Czech Republic, can see WACCs of up to 12%.4

3 Agora Energiewende and Sandbag (2019): The European Power Sector in 2018. Up-to-date analysis on the electricity transition. 4 PV Financing (2017) EU-wide solar PV businesses models.

SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 5 • Specific provisions promoting self-consumption, B. Developing the next generation of EU energy small-scale installations, and innovative regulation to support Europe’s industrial decentralised business models such as leasing or leadership peer to peer trading will generate significant business The Clean Energy Package was a necessary step to opportunities, driving industrial leadership in strengthen the solar industry in Europe. Now, the decentralised and highly innovative solar installations. European Union should maintain high-levels of • The removal of administrative barriers to the ambition and develop the next generation of European development of renewable corporate PPAs in regulation, to support Europe’s industrial leadership, Europe will unveil the deployment of large volumes not only in decentralised and innovative solar systems, of subsidy-free solar installations in Europe. Already but also to accelerate the deployment of utility-scale 6 GW of corporate renewable energy Power Purchase solar plants, which provide the cheapest source of clean Agreements (PPAs) have been signed in Europe, energy worldwide. With the right ambition, Europe can representing billions of euros of investment and ensure that at least 20% of Europe’s electricity thousands of jobs. demand is powered by solar by 2030.

ACCELERATE THE DEPLOYMENT OF UTILITY- The European Union should urgently address this SCALE SOLAR IN EUROPE gap and increase the deployment of utility-scale Utility-scale solar is becoming the most cost-efficient solar plants which are essential to Europe’s cost- path to Europe’s 32% renewable energy target. effective energy transition. Breakthrough innovations in system management, This means removing limitations on plant sizes where providing ancillary services using advanced power they currently exist, and allowing direct access to the electronics, and the increasing use of energy storage, transmission, not only the distribution grid. allow large-scale solar plants to be a significant provider Facilitating access to land for the development of of flexibility, reliability, and balancing services.5 The large-scale solar projects in Europe is also critical to technology is ready, but Europe is lagging behind many unlock the potential of utility-scale solar installations other regions in the world (Middle East, US, Asia, in Europe. Australia) in the deployment of utility-scale solar plants.

POLICY Solarpark in Spain. © MEP Werke GmbH 5 Grid Intelligent Solar report, SolarPower Europe 2018.

6 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE SET BINDING REQUIREMENTS FOR THE The European Union should propose ambitious DEVELOPMENT OF ROOFTOP SOLAR IN THE targets for the deployment of small-scale EU AND REACH AT LEAST 30 MILLION SOLAR installations in Europe. ROOFS BY 2030 California’s December 2018 housing rule, which Small-scale solar installations are the backbone of a requires that almost any new building should include smart, decarbonised and increasingly distributed solar as of 2020, is a very good example of how energy system, empowering energy consumers, regulation can actively support the growth of solar in communities and regions (e.g. households, hospitals, the residential sector. California considers this step to public buildings, hotels) with a clean and affordable be essential to reaching its objective of being powered electricity supply. Small-scale solar installations 100% by clean energy by 2045. support the competitiveness of European micro, small and medium-sized enterprises active in the The European Union should set a clear target for the manufacturing, installation, maintenance and development of solar in the residential and operation of these facilities. These sectors are commercial sector in Europe. Such policies would important creators of local, sustainable and skilled benefit the European economy as a whole, due to jobs that will make the green economy a local reality.6 rooftop PV’s highly job-intensive nature, adding 15 full-time equivalent jobs for every MW installed However, the economic potential of such installations (Centre for Economics and Business Research, 2015). is not yet fully met in Europe. Restrictive policies on the development of rooftop solar installations in some European countries limit the size of the market and hold back economies of scale needed to make small- scale solar installations more competitive and affordable for EU citizens.

POLICY

POLICY Rooftop Solar in Germany. © SMA

6 SolarPower Europe – E&Y Solar PV Jobs and Value Added in Europe, November 2017.

SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 7 C. Explore the contribution of solar energy study that by 2050, electricity could constitute more beyond the power sector, through solar-based than 85% of the primary energy demand in a global sector coupling energy system based on 100% renewable energy,7 with solar electricity covering 69% of Europe’s electricity The European economy is electrifying, opening supply. EU policymakers should seize this potential significant opportunities for the growth of solar. The beyond the power sector and foster the penetration of renowned Lappeenranta University of Technology (LUT) solar energy across all key sectors of the economy. and the Energy Watch Group (EWG) showed in a recent

BOOST THE MARKET UPTAKE OF BUILDING facades, windows, roads. BIPV proves to be an asset for INTEGRATED PHOTOVOLTAICS (BIPV) cities and rural areas, allowing them to preserve their The full decarbonisation of Europe’s building stock, which architectural identity and comply with heritage preservation. BIPV is a local industry, which can transform accounts for 36% of EU CO2 emissions, is a huge challenge on the way to a carbon neutral economy by 2050. To cope Europe’s urban energy landscape while improving the with the size of the challenge, European governments and living conditions of urban dwellers, creating jobs and cities must accelerate the deployment of renewable significantly reducing the carbon footprint of cities. energies in their building stock and incentivise significant The European Union should massively help deploy investments in energy efficiency. The contribution of BIPV BIPV technologies for the deep and cost-efficient technologies to the full decarbonisation of Europe’s decarbonisation of Europe’s building stock. An EU building stock is unique in this regard. strategy to help jump start this deployment on a BIPV is a “made in Europe” highly innovative technology large scale is urgently needed. with unique properties which places it in a position to be BIPV should be recognised as an innovative the construction product of the future. It consists of solar construction product under the Construction Product cells or modules that are integrated into building elements regulation. This would standardise BIPV products and or material as part of the building structure. BIPV modules leverage an increasing penetration of BIPV products in not only generate electricity; they can also provide the future building stock. Existing levers for the additional functionality to the building, such as insulation, penetration of green technologies in the building sector thermic regulation, and energy efficiency services. Its agile (green certificates, green public procurements, tax nature adapts to almost any urban environment: roofs, incentives) should also be adapted to promote BIPV.

POLICY BIPV roof – Astana expo, Austria. © Ertex solar 7 Energy Transition in Europe Across Power, Heat, Transport and Desalination Sectors.

8 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE FOSTER THE UPTAKE OF SOLAR-POWERED MOBILITY Electromobility is the key to Europe’s transition to low-carbon transport. Thanks to the falling costs of batteries and increasing e-mobility infrastructure, 11 million electric vehicles are expected on the world’s roads by 2025. The latest studies suggest that with a well-designed policy framework and smart charging infrastructure, the additional electricity demand resulting from the deployment of electric vehicles will be mainly met by variable renewable power capacity, especially solar.8 This will drive innovation in new solutions and business models bringing together the solar and mobility sector, allowing solar and EVs to be © We Drive Solar - Utrecht POLICYcombined in mutually beneficial business models.

SUPPORT THE UPTAKE OF INDUSTRIAL SELF-CONSUMPTION Renewable self-consumption is an important tool which allows European industry to achieve their carbon reduction commitments while at the same time supporting member states in the achievement of their climate and renewable energy targets. The potential for renewable growth is huge, as no less than 67 TWh of green electricity supply will have to be developed by 2030 just to satisfy the commitments of the RE100 companies which are committed to 100% renewable electricity supply9 headquartered in Europe. POLICY Industrial area in Czech Republic. © Petr Sorejs Electrification policies also come with their own decarbonise through direct electrification. In markets challenges, including the need to address seasonal with high shares of solar penetration, it will constitute a peaks and develop adequate solutions for the cost-efficient long-term storage technology, absorbing decarbonisation of energy-intensive sectors. excess solar generation on the system and providing valuable flexibility services to the electricity grid. With extremely competitive prices and a high scalability potential, solar electricity is the ideal solution for With an additional focus on sector coupling, the EU goes renewable-based sector coupling (converting electrons beyond the power sector and outlines what should be in molecules). Boosting the generation of solar-based a comprehensive industrial strategy with positive hydrogen, will support a sustainable long-term demand repercussions across the whole economy. Solar-to-X for solar in Europe and accelerate the decarbonisation based sector coupling is essential to the future of a of energy-intensive sectors such as mobility, heavy- competitive and sustainable energy-intensive industry, industry and heating which are more complex to fully in Europe and globally.

8 2018 IRENA Global Energy Transformation, 2017 IRENA electric vehicles. 9 Bloomberg New Energy Finance.

SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 9 2 IMPROVING THE BUSINESS ENVIRONMENT

Solar factory. © SMA

Europe initiated a profound energy transition and announced from the start Improving the that this transformation would be a strategic long-term objective, which business would deeply transform the European society, industry and economy. In environment for a line with this long-term objective, the European Union should ensure that competitive solar the skills and equipment needed to bring forward this transition are also produced in Europe, providing security for Europe’s solar industrial supply industry and retaining a competitive advantage at global level.

A. Create a business-friendly environment for companies active in Europe Although a market with a significant local demand is essential, a manufacturing site must, first and foremost, produce a product which will be sustainable and competitive, on its own merits, in neighbouring markets and globally. This is essential given the commoditised markets of solar PV components such as wafers, cells, modules and inverters. A successful industrial strategy should therefore create a business-friendly environment for European manufacturers to grow faster, add new production lines, or diversify their activities in a sustainable way. • Easing access to cheap finance, addressing risk constraints The InvestEU Programme provides EUR11.5 billion of EU budget guarantee for “sustainable infrastructure”, which aims at leveraging private investment in order to address ‘investment gaps’ and meet EU strategic policy objectives. Over the 2019-2024 budgetary period, the Commission has proposed that 50% of this funding be dedicated to meeting climate and energy goals. This share may not be enough to support the significant investments needed to deliver a cost-efficient energy transition and the overarching objective of building Europe’s global industrial leadership in clean energy technologies. A larger share of the InvestEU Programme should therefore be mobilised to guarantee long-term financing contracts for new and existing manufacturing projects in Europe and attract solid financial partners.

10 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE PROVIDING A COMPETITIVE FRAMEWORK FOR EU SOLAR BUSINESSES TO GROW • Easing access to cheap finance, addressing risk constraints • Providing land and appropriate infrastructure at a low cost • Streamlined and simplified administrative procedures (less bureaucracy, easier approval and permitting processes, shorter delays) • Providing globally competitive electricity prices particularly for the energy intensive steps in the PV supply chain

z POLICY• Developing tax incentives to attract new manufacturing and investment in existing operations in Europe European Investment Bank lending should support Environmental Footprint Category Rules (PEFCR) for the development and expansion of manufacturing PV panels, and the ongoing MEERP study being facilities for PV components and equipment in Europe conducted by the JRC in the context of the current as well as finance PV deployment. Solar PV has for Ecodesign Action Plan. The taxonomy work should in many decades been considered a higher-risk no case create a new set of standards; that would investment, especially in certain member states, such only duplicate work and create uncertainty. as in southeastern Europe. It is essential that the EU • Providing land and appropriate infrastructure at a uses all the mechanisms available to it to bring down low cost this negative risk premium and provide sustainable capital costs for solar across all EU countries. Sustainable access to, and availability of, land plays an important part in a company’s ability to expand Finally, the “investment taxonomy” developed in the its production and build new manufacturing European Commission’s Sustainable Finance Action facilities. Land is increasingly scarce in Europe and Plan provides an interesting opportunity to mobilise different economic sectors (food production, private finance towards sustainable and strategic preservation areas, etc.) must often compete with activities such as PV manufacturing and the one another for affordable and suitable land on deployment of solar installations. SolarPower Europe which to build. Beyond access to land, competitive stresses that to assess the green credentials of both PV manufacturing companies will require sustainable PV manufacturing and PV installations, the taxonomy access to water, raw materials and chemical supplies, should build upon existing EU environmental as well as transport infrastructures (road, railways). footprinting work, such as the Product

SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 11 In line with the ambition to become global leader in competitiveness of electro-intensive industries in the renewables, the European Union should facilitate European PV supply chain (production of polysilicon, affordable access to land and appropriate wafers, glass, etc.). infrastructure for building competitive PV component Displacing “green levies” from the electricity bill manufacturing facilities. towards general taxation would allow for ambitious • Streamlined and simplified administrative financing for the energy transition to continue procedures (less bureaucracy, easier approval and without putting the competitiveness of European permitting processes, shorter delays) electro-intensive industries at risk. The review of the European Energy Taxation Directive could present an When an investment decision is made to scale-up or opportunity in this regard. diversify a production line, speed is critical. The European Union could also divert existing The European Commission should look at existing best subsidies to fossil fuels to finance dedicated support practices to promote simpler and faster administrative for manufacturing facilities in strategic clean energy processes for the development of manufacturing goods (such as PV components and equipment). facilities in Europe (ex: digitisation of approval and permitting processes) and strive to promote their • Developing tax incentives to attract new dissemination across member states. The European manufacturing and investment in existing Commission should come forward with binding operations in Europe requirements on the removal of administrative barriers At global level, countries and regions increasingly and on the simplification of administrative procedures compete with one another to attract manufacturing for Europe’s strategic manufacturing facilities, such as and sustain employment levels and growth. The those which make PV components. European Union must acknowledge this trend and • Providing globally competitive electricity prices make competitive offers in this space. particularly for the energy intensive steps in the PV As an example, recent reductions in corporate tax supply chain rates in the US have helped create new green field Today, levies aimed at financing the energy transition factories in the renewable sector, as in others. In in EU member states are essentially borne by other countries, VAT exemptions, or time limited tax electricity consumers, which puts renewable holidays, are used to attract investment in electricity at a competitive disadvantage compared manufacturing and to speed up the market uptake of to other sources of energy and impacts the manufactured products.

12 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE B. Investment support for a competitive and ensure that the EU market values innovative and innovative solar supply chain quality solar components and systems, leveraging Europe’s unique R&D ecosystem and building on the The Clean Energy Industrial Forum should identify the findings of EU regulatory work such as the Product solar sector as a value chain of strategic importance for Environmental Footprint (PEF) of PV panels, or the Europe. Existing initiatives for a competitive EU storage current ecodesign preparatory study. industry should therefore be complemented by an overarching strategy to promote the growth of the solar The InvestEU program (Juncker plan II), has been industry in Europe and make the most of its industrial value. conceived and developed to serve this exact purpose and should be mobilised to its full potential to support In this regard, and in line with the approach developed the uptake of a high-tech European solar industry. EU by the Strategic Forum for Important Projects of competition authorities could also adapt state aid and Common European Interest,10 the European investment rules for the deployment of large-scale Commission must develop an ambitious investment manufacturing facilities for highly innovative PV strategy, joining forces between the solar industry and technologies such as building integrated PV, power EU public authorities to strengthen the European electronics, floating solar plants or agro-photovoltaics. solar value chain and build upon Europe’s global leadership in cutting-edge solar technologies. Finally, the development of large-scale solar manufacturing facilities will also provide additional The InvestEU and EIB lending programs, relevant EU jobs and added value in Europe. In this regard, it can funds – e.g. Regional and structural funds – and European contribute to the conversion of declining European State Aid frameworks (restructuring aid, regional industrial regions, another core priority of the investment aid, risk finance aid, etc.) should be mobilised European Union. to ensure the solar industry can thrive in Europe. On top of the InvestEU program, the European State • Develop an ambitious European investment top Aid framework (restructuring, risk finance, regional runner program so cutting-edge EU solar development) as well as regional and structural technologies gain a competitive advantage funds could be mobilised to support the deployment To remain competitive in a highly commoditised market, of GW-scale solar manufacturing facilities in the European solar industry should strive to differentiate economically depressed regions. Recent decisions its products and retain a competitive edge at global level based on the European State Aid framework also by developing large-scale manufacturing facilities for seem promising in this regard (Slovakia - Jaguar Land cutting-edge solar technologies. Technological and Rover / Hungary – BorsodChems). industrial leadership can be built on several aspects, either cost-differentiation (LCOE, performance increase), the development of new functionalities (power electronics, Solar-to-X) or new applications (agro- photovoltaics, floating solar, BIPV etc.). To meet this goal, and keep in line with WTO rules, the European Union should develop an ambitious top runner investment program, supporting upgrades of existing business models, and the deployment of multiple GW-scale manufacturing factories for cutting- edge solar technologies, across the whole value chain. A successful solar top runner program should enhance the collaboration between European-based solar companies and research institutes (consortiums, industrial hubs), and leverage significant volumes of private and public investments with the support of public authorities (EU level or national). It should also

© Wacker Chemie AG 10 https://www.clustercollaboration.eu/news/call-applications-strategic- forum-important-projects-common-european SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 13 • Develop an integrated vision for industrial The load curve of solar energy is particularly adapted leadership, beyond the manufacturing of solar to the production of renewable-based energy components and equipment carriers. Contrary to its wind counterpart, solar generation peaks in the middle of the day, at a period Solar-to X driving Europe’s heavy industry 4.0 where the overall consumption is generally lower. Boosting the generation of cost-efficient renewable According to recent scenarios presented by fuels will be essential to support the decarbonation Bloomberg NEF, this solar peak which will become of Europe’s heavy industry and to strengthen its recurrent in a “typical 2050 day” will be the main competitiveness at global level. Integrating a focus opportunity to produce cost-efficient solar gas and on sector coupling in Europe’s solar industrial products deriving therefrom. strategy can start to outline a comprehensive In line with the solar top runner program developed industrial strategy which can contribute to the above, the European Union should also look at growth and renewal of Europe’s industrial base, innovative applications and support the large-scale especially its energy-intensive industries (chemicals, deployment of hybrid pilot projects combining Solar- steel, cement, etc.). to-X plants and heavy industry facilities. Solar-to-X The combination of solar energy and hydrogen is hybrid plants could improve the sustainability and promising in many ways. It provides the two essential competitiveness of existing heavy industry facilities components of a successful renewable-based power- or facilitate the establishment of new industrial to-x strategy: huge deployment potential and ever- facilities in low-income European regions. increasing cost-competitiveness. The growth Developing cost-efficient solar-based electrolysis potential is indeed gigantic for solar in Europe: technology in Europe will boost the sustainability of according to the renowned Finnish Lappeenranta Europe’s heavy industry and deliver, at the same University, solar energy could cover more than 69% time, a European-owned pioneering renewable of Europe’s electricity production by 2050, compared technology with strong export potential in other to 4% in 2018. regions of the world.

14 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE 3 A STRONG INNOVATION FRAMEWORK

The European Union should create a robust innovation framework, A strong supporting solar industries in leveraging private finance, and guaranteeing innovation an attractive environment for innovation where new concepts can flourish framework for and access the European market fast. This is critical to make the most of cutting-edge Europe’s innovation power. solar technologies A. Leverage private finance for investments in incremental innovation & technological breakthrough The EU should help create conditions in which European companies are attractive to third party investors. A competitive solar industry can only exist if it attracts private capital as well as public financing. This investment is essential both to technological breakthroughs and incremental innovation. The recent Commission proposals on sustainable finance are an interesting development in the field of innovation. The three legislative proposals, and associated action plan, aim to define the conditions whereby green investments will be more attractive, and therefore capital will be redirected to green assets. Much more work remains to be done to ensure that these proposals deliver on their stated objectives. Where they could deliver added value for the solar sector would be in the space of green bonds, in identifying and valorising solar as a green asset (the expert group work on the taxonomy), and eventually, in helping the ‘green premium’ associated with green assets to help mitigate risk investment in the solar industry (manufacturing sites or solar project development.) Finally, the protection of IP is critical to preserve a dynamic environment for private investments in innovation and R&D. The lack of IP protection in Europe was identified by SolarPower Europe’s Industrial Competitiveness Task Force as one of the reasons EU businesses are reluctant to engage in significant investments in R&D&I or to engage in large-scale market deployment. An EU initiative ensuring the protection of IP in Europe and globally would ensure heavy investments in R&D remain attractive for EU businesses.

SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 15 B. Accelerating the market uptake of solar development of promising European technologies. technologies developed and patented in the EU In this context, green public procurement criteria, as developed by the European Commission, should be The European Union is leading innovations in clean used and adapted to innovative solar technologies energy technologies and solar energy. In 2018, 40% of all in the power sector and beyond (BIPV, Solar-to-X). renewable energy patents were from the EU. However, most of these innovations do not reach • Facilitate public/private partnership to support commercialisation, nor the market deployment needed investments in large manufacturing facilities for to achieve the necessary economies of scale and become cutting-edge PV technologies and the deployment a competitive product. The consequence is that other of innovative solar installations: investment grants regions of the world are increasingly taking leadership for and loans from the EIB, as well as the European the deployment of innovative technologies, even those Union Investment funds (InvestEU) can help increase based on European innovation. the competitiveness of innovative PV technologies and accelerate their market uptake. The European Union should improve the tools it uses to facilitate the market uptake of cutting edge • Allow member states to aid the deployment of technologies (Building Integrated PV, floating solar) by innovative solar installations and products (BIPV, developing adequate market-pull instruments. floating solar, agri-photovoltaic): as an example, in November 2018, the European Commission • Streamline existing funding programs dedicated to approved a EUR600 million state aid issued by the innovation and ensure that innovative technologies French government for the deployment of a floating benefit from comprehensive support from concept solar plant. development phase to market deployment. • Develop best practices regarding tax incentives • Shape better conditions for public procurement: (VAT depreciation, time limited tax holiday) that the public sector can go beyond price-driven-only could be used to support the early stages of investments, leading by example and supporting the deployment for innovative technologies.

16 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE 4 REMOVE ALL TRADE BARRIERS

The market for solar is global and its potential is enormous. This provides Remove opportunities for increased economies of scale and efficiencies. It also opens all trade the door to further technology developments which will reduce the levelised barriers in cost of electricity. The European solar industry has its role to play in these Europe and in developments. Leveraging them and rising to the challenge will mean more European manufacturing and downstream jobs along the full value chain. third countries Returning to free and fair trade and opening new markets for solar companies active in Europe should therefore be a priority for Europe’s industrial strategy. Removing trade barriers in Europe and in third countries is essential to further expansion. To achieve international climate goals, it is paramount that the European Union works with all international partners to eliminate all trade barriers on green goods. • Future trade negotiations on the model of the “Environmental Goods Agreement” need to be reinitiated: All trade barriers on green goods should be eliminated. This opens new opportunities for solar companies to sell to new markets. The European Union and its member states should also seize the opportunities provided by international cooperation to generate concrete industrial opportunities for solar companies active in Europe. EU and member state representations in third countries should serve as a support network to accelerate the opening of global energy markets and help de-risk renewable projects abroad (export guarantees, export finance, currency risk mitigation products, etc.).

SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE / 17 COOPERATION AND MOUS WITH THIRD COUNTRIES SHOULD PROVIDE CONCRETE INDUSTRIAL OPPORTUNITIES FOR EUROPEAN COMPANIES IN DEVELOPING REGIONS: • Develop trade agreements with all partnering countries to provide a level playing field for European companies and build access to new markets • Remove Local Content Requirements and ensure reciprocity between European-based solar companies and companies located in all MoU countries

• Remove administrative and financial barriers to project development where cooperation agreements are in place • Prevent retroactive measures relating to solar projects developed in a country covered by a bilateral MoU POLICYor any trade agreement

18 / SolarPower Europe / AN INDUSTRIAL STRATEGY FOR SOLAR IN EUROPE

SolarPower Europe - Leading the Energy Transition Rue d’Arlon 69-71, 1040 Brussels, Belgium T +32 2 709 55 20 / F +32 2 725 32 50 [email protected] / www.solarpowereurope.org