How Europe is funding its solar boom

In Marbella on Spain’s Costa del Sol, the roof of Jesus Miguel Vera Lopez’ home is covered in solar panels. “I put them up like everyone else: to save on electricity,” he said.

And they are not only a common sight in Spain. Corinna Gutmann, who rents an apartment in the western German city of Bonn has installed solar panels on her balcony. Hers is one of the million-plus solar systems registered across Germany in 2024.

“I’ve wanted this on my balcony since around 2013. But back then, the process was much more difficult,” she told DW. “A lot has changed for the better since then.”

Both are part of a surge in solar adoption that stretches across the world and is particularly visible in Asia and Europe.

Europe’s solar boom is driven by the European Union, which has vowed to become climate-neutral by 2050. Renewable energy was already a cornerstone of this plan, but the energy crisis sparked by Russia’s invasion of Ukraine led the bloc to push for massive, ” rapid deployment of renewable energy” in a bid to break free from Russian fossil fuels.

“Solar energy will be the kingpin of this effort,” according to the EU commission in its 2022 Solar Energy Strategy. “Panel by panel, the infinite energy of the sun will help reduce our dependence on fossil fuels.”

Together with the European Data Journalism Network, DW has analyzed how Europe’s governments support the continent’s solar power expansion.

How did solar become so popular so fast?

Today, several EU countries host a capacity of around a kilowatt — roughly two solar panels — per person. The Netherlands leads with 1.4 kilowatts per capita, followed closely by Germany at 1.2 kilowatts.

“The first wave of solar power took place in the mid-2000s,” explained Raffaele Rossi, head of market intelligence at industry group Solar Power Europe. “Countries started introducing feed-in tariffs, where you get paid for the electricity that you inject into the grid.” This sparked noticeable growth in pioneering countries like Germany, Greece, Belgium, Spain, Italy, and France.

Still, the high cost of solar technology kept most homeowners away, Rossi says. But in the intervening years, technological breakthroughs have slashed global installation costs by nearly 90%.

With the additional push caused by the global energy crisis, EU solar capacity has doubled between 2021 and 2024 alone.

The solar market is now set to exceed EU countries’ 2030 solar targets. Recent analysis by Solar Power Europe shows all but three EU members will likely reach their goals on time, with twenty set to meet or exceed their targets before 2030.

Small-scale residential installations on balconies and rooftops are contributing to this change, accounting for a quarter of all EU solar capacity.

While prices have dropped, going solar still requires considerable upfront investment. Corinna Gutmann’s balcony setup cost €650 (around $680), while Jesus Vera Lopez’ rooftop system had a price tag of €6,000.

“It is a profitable investment,” said Vera Lopez, whose electricity bill has gone from more than €100 to €15 per month. This is in line with a 2023 study, by Solar Power Europe which found that family homes in Germany, Italy, and Spain could save over €1,000 per year on energy bills by installing solar panels.

Making solar power achievable for all

Not everyone can afford the initial cost. “We need to focus especially on vulnerable, low-income households,” said Seda Orhan, Renewable Energy Manager at Climate Action Network Europe, a collection of NGOs advocating for sustainable climate and energy policies. “These are the parts of society that have not been engaged in the energy transition.”

The EU is urging member states to help citizens make the switch by easing regulations and providing financial support, especially for lower incomes. Member states approach the issue in various ways.

Where citizens pay less for solar

At least nine European countries, including Germany, have reduced VAT rates on solar panel sales and installation. This should result in a direct price reduction for consumers instead of reimbursements which can lead to complex application processes.

Across Europe, governments also offer direct financing to citizens investing in solar power, though the amounts and conditions vary dramatically.

Hungary leads with generous subsidies, covering up to two-thirds of solar panel costs for homeowners, provided they meet specific requirements and invest in energy storage as well. Sweden takes a different approach with its “Grön Teknik” program, which offers a simpler 20% rebate with minimal paperwork.

For Gutmann, installing solar panels on her Bonn balcony proved surprisingly affordable. The city covered almost half her costs, 300 euros, through a straightforward process. “I had to fill out a short form, upload my invoice and a picture of my balcony, and received the money within two weeks,” she told DW. “My solar panels will pay for themselves within two years.”

Local subsidies often more generous

While German renters can access these programs, most European countries limit their support to homeowners like Vera Lopez.

He applied for the Andalusian regional program Plan Eco Vivenda, which ended in December 2024. He is hoping to get 40% of his costs reimbursed but his application has yet to be approved. He also found the process difficult to navigate: “I do not have very high education, and they asked me for things I didn’t understand,” he said.

Spain’s subsidy system has particularly complex requirements and is known for long delays: “Even though the money is allocated, less than half of the requested solar subsidies have been paid out after two years”, said CAN’s Seda Orhan. However, Spain also offers some of Europe’s most generous maximum payouts for the more expensive roof installations.

Favorable loans and tax incentives

Many governments and banks also offer low-interest loans for solar installations, with Belgium’s Wallonia region even providing zero-interest options for low-income households.

Additionally, homeowners can claim significant income tax deductions on their solar investments in Spain and Italy, while Germany and Sweden reduce taxes on electricity sold to the grid.

A complete overview of solar subsidies identified in this analysis can be found in this database.

Uncertainty over future support programs

DW’s analysis also showed several solar subsidies approaching their expiration dates, while many have already ended. Seda Orhan points to uncertainty surrounding future EU funding. The EU’s Multiannual Financial Framework ends in 2027 and negotiations for a new budget are just beginning. “We’ll need to secure an ambitious EU budget,” Orhan said. “Then we can see how it can be allocated.”

Some governments are starting to push for phasing out subsidies altogether, market expert Raffaelle Rossi told DW. “If the right conditions are in place, direct subsidies can somewhat be reduced. But this should be done carefully. We can already see the market reacting negatively to the reduction of subsidies.” For low-income households especially, he said, subsidies remain particularly helpful.

“It will be really important to continue supporting solar power,” Seda Orhan added. Beyond climate action, she also emphasizes the economic potential of the solar sector. It already employs more than 800,000 people in the EU, mostly in local installation work — delivering direct economic returns to governments that maintain financial support programs.

Solar growth depends on reliable infrastructure

Despite these uncertainties, Solar Power Europe is forecasting another doubling of capacity in the EU before 2030. Rooftop solar remains the largest segment, with larger-scale installations catching up.

Success will hinge on a robust solar infrastructure. According to the EU’s Solar Energy Strategy, this includes training enough workers to manufacture, install, and maintain solar power systems, as well as modernizing the European electricity grid to handle the surge in decentralized energy sources from solar installations.

Energy storage solutions are key as well, notes Rossi. They allow power to be used where it is generated, reducing pressure on the grid at large.

For Corinna Gutmann, meanwhile, her balcony solar plant has already been worth it. “When people see more solar panels on their streets, that makes them curious”, she said. “I do think it’s a little infectious. And it’s so much easier now to get started.“

Zsolt Bogar, Sofia Kleftaki, Michal Gostkiewicz and Emmy Sasipornkarn contributed research to this investigation.

Edited by: Gianna Grün, Tamsin Walker

This project is a collaboration among several media outlets in the European Data Journalism Network. While DW was project lead, the Center for Investigative Journalism of Serbia and El Orden Mundial were contributing partners.

Original source: https://www.dw.com/en/how-europe-is-paying-for-its-solar-boom/a-71640144