The European solar energy market comprises businesses that engage in the manufacturing of photovoltaic equipment and components, project developers as well as providers of installation services for utility-scale and rooftop projects. While assets primarily focus on solar energy, a significant portion of identified assets also target other renewable energy generation methods (e.g. wind, biomass, thermal). We segmented the market into: (i) manufacturing, (ii) solar on land and (iii) solar on roof.

The broader global solar energy market is relatively fragmented. However, when focusing on the manufacturing segment, we see that Europe does not play a significant role in the global landscape, accounting for only ~1% of module output in 2021. Herein, China dominates the manufacturing segment, with 9 companies in the global top-10. Jinko Solar (CN), Trina Solar (CN) and LONGi (CN) are the global market leaders. This is primarily because of their cost leadership from scale advantages and low raw material prices, with low-cost Chinese solar module prices falling to ~€0.14/Wp in August 2023, compared to ~€0.22/Wp for mainstream and ~€0.31/Wp for high efficiency modules. The solar on land segment is less consolidated, primarily comprising private and public utility players and infrastructure investors. The solar installation services market has the most fragmented nature, primarily comprising local champions and SMEs.

Investor-led interest has been notable, with >50% of identified assets being sponsor-backed (as of November 2023). The solar on roof segment has seen the highest interest, with ~70% of identified players receiving financial backing (as of November 2023). We believe that the segment’s abundant buy-and-build potential and tailwinds from subsidies are the driving factor for interest in the segment. Overall interest in the solar energy market stems from underlying growth drivers, such as favourable regulation and a decreasing levelised cost of energy. However, the current high-interest environment making capital more expensive for project developers and the decrease in new build construction serve as detractors for investors.

ESG topics primarily relate to environmental and social topics. Players in the solar energy market positively contribute toward lowering CO2 emissions. Rooftop solar generates ~12x less CO2 than electricity from gas-powered plants and ~20x less than energy generated from coal. However, the adoption of solar power has far outpaced its recycling capacity. The primary social topic revolves around the impact of solar energy on energy prices. As solar power is generally cheaper than electricity generated from fossil fuels, this will increase purchasing power and overall quality of life for citizens. To ensure adherence to an ethical and sustainable supply chain, European incumbents follow the Solar Stewardship Initiative (SSI).