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The global solar power market size was USD 163.70 billion in 2019 and is projected to reach USD 194.75 billion by 2027, exhibiting a CAGR of 5.9% during the forecast period.
Solar power is the cleanest and most abundant renewable energy source available, and the United States (U.S.), China, India, Germany, and Spain have some of the largest solar resources in the world. There are two key ways to harness solar energy: photovoltaics (PV) and concentrated solar power (CSP). Developed and developing countries across the globe are strongly promoting solar as an alternative to conventional energy sources and are hence positively influencing this market.
Disruption in Supply Chain Due to COVID-19 Affects Heavily On Solar Projects
The lockdowns & restrictions in the wake of the COVID-19 pandemic have made economies squelch across the globe, disrupting supply chains, delaying projects, and creating a shortage of labor. In most of the countries across the world, the renewable sector is largely dependent on imports from other regions, mainly China. India imports around 80% of its solar cells and modules from China along with other equipment such as inverters, prefabricated structures, and raw materials. Developers of solar projects in India are concerned about project delays due to the initial slowdown of manufacturing in China, followed by a lockdown in India. Furthermore, major solar equipment suppliers have observed production delays due to COVID-19, resulting in a huge backlog for fulfilling orders. For example, in July 2020, the Government of Seychelles has confirmed that the construction of a floating solar PV power plant will be delayed owing to concerns surrounding the COVID-19 pandemic.
India's electricity demand during the current financial year is seen to be falling. As per the credit rating agency ICRA, annual electricity demand in India is expected to fall by 1% by the end of March 2021 due to the impact of the nationwide lockdowns to prevent the spread of the coronavirus. This will also negatively impact the domestic solar industry owing to the withdrawal of investments. For example, recently, Arabian clean energy and renewable energy solutions provider, Fotowatio Renewable Ventures, announced that it will be withdrawing its only ownership in the Indian solar space.
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Increasing Demand for Electricity Worldwide to Boost the Market
Rapid growth in population across the globe, thriving industrial sector, and high growth in infrastructure development are all leading to a significant rise in the demand for electricity. Owing to the promising economic development of countries and the improvement in living standards, there is a huge demand for energy consumption. As the demand for electricity upsurges, regions around the world are increasing their power generation capacity by expanding the capacity of the existing plants or installing new plants. As a result of stringent government regulations regarding carbon emissions, companies are more inclined towards the use of renewable energy sources for power generation and particularly towards solar energy and wind power. This is expected to drive and to push the solar power market growth during the forecast period.
Increasing Investment in Solar Energy to Drive Market Growth
Stringent environmental protection regulations across the globe are forcing power generation companies to shift to cleaner and environment-friendly energy sources. Major economies around the world are hugely focused on increasing renewable energy power generation to reduce their dependence on conventional power generation through fossil fuels. Solar energy is one of the key renewable energy sources with the ability to meet many of the challenges facing the world. According to SolarPower Europe, the cumulative installation of solar rose to more than 630 GW (Gigawatt), as the world installed 116.9 GW of new solar PV projects in 2019. With 67.1 GW of installation, the Asia Pacific region accounted for 55% of all new installations. Hence, such a remarkable year-on-year increase in the installation of solar power capacity is favoring the global market growth.
Supportive Government Initiatives and Policies to Propel the Market
From the past few years, the investments in renewables show that the focus on decreasing global dependence on coal and other fossil fuels is well underway. As a measure, several new solar energy industry projects are being established across the globe and will start contributing to the global energy mix consistently in the next few years. One of the primary drivers for the growth of this market is the important part played by government initiatives and policies. In many countries such as the U.S., China, Japan, and EU countries, policies such as feed-in tariffs, investment tax credits, net metering, and capital subsidies are the major energy policies explicitly geared towards fueling the adoption of solar.
Recently, the Price Bureau of China’s National Development and Reform Commission (NDRC) announced the level of solar FiT payments for large-scale projects. Commercial and Industrial (C&I) distributed solar PV power projects designed for self-consumption & excess power feeding back into the grid are subject to a FiT of RMB 0.10/kWh.
Land Use Constraint to Hinder Market Growth
For the development of utility-scale solar power generation, huge areas of land are needed for efficient and large-scale power generation. The selection of land for solar power generation can be constrained by environmental or technical reasons in many areas, such as the availability of solar radiation. Deployment of a solar power system on a large land area can have an impact on the surrounding natural habitats and biodiversity. For example, it is difficult for solar PV or CSP operations to be deployed in built-up areas, agricultural lands, forests, wetlands, and water bodies due to low accessibility and instability of land. Furthermore, large-scale solar plants need to consider land factors such as transportation networks, distance to the electricity grid, and implications on the nearby residential areas. Additionally, in developing countries, lack of technology to store solar energy owing to the high upfront investment is also restricting the market growth.
Solar PV Technology Segment Held the Major Share of the Market in 2019
Based on technology, the market is segmented into solar photovoltaic (PV) and concentrated solar power (CSP). Solar PV is further segmented into mono-si, thin-film, multi-si, and others; and concentrated solar power is further segmented into the parabolic trough, power tower, linear fresnel.
The solar PV segment held a dominant share of the market in 2019. In 2019, a total of 116.9 GW of new solar PV projects were installed globally, representing a 13% growth rate over the 103.7 GW additions the year before and marking a new solar record. In solar PV, mono-si technology is expected to grow at the highest pace during the forecast period. Monocrystalline solar panels are more popular compared to other solar rooftop systems and are generally used for large-scale installations that include industrial, commercial, and residential projects. Most of the manufacturers are shifting from multi-crystalline to monocrystalline solar cells owing to their high efficiency, compact design, and durability.
In 2019, the cumulative installed capacity of concentrated solar thermal power was 6.2 GW, with more than 600 MW of capacity coming online. Within this segment, the parabolic trough sub-segment is expected to grow at the highest pace during the forecast period. It is one of the most commercialized CSP technologies. This is because the segment has applications in all the end-use industries.
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Utility Segment to Grow at Highest Growth Rate
Based on application, the market is segmented into residential, non-residential, and utility. The utility segment held a dominant share of the market in 2019. A large number of utility-scale solar projects are in the pipeline across the globe. In May 2020, for instance, Amazon announced five new utility-scale solar projects to power global operations in China, Australia, and the U.S.
The increasing number of residential construction projects and growing public awareness regarding the usage of renewable and efficient energy sources are estimated to drive the residential segment during the forecast period.
Asia Pacific Solar Power Market Size, 2016-2027 (USD Billion)
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Asia Pacific is anticipated to lead the solar power market share over the forecast period. In 2019, the region installed more than 67 GW of solar projects. High solar irradiance levels and low manufacturing cost of components are the major factors fuelling the growth of the regional market. Ambitious carbon emission reduction targets by several countries, including China and India, coupled with the growing electricity generation demand, will further fuel market growth. In 2019, China installed a large number of solar projects with a total capacity of 30.1 GW. China remains the world’s largest solar market by far, adding over twice as much solar power capacity as the second-largest market.
Europe was the second-largest market in 2019. The European Union (EU) installed 16.7 GW of solar PV, reflecting a 104% increase over the 8.2 GW added the year before. The rapid increase in the installation of solar farms and favorable regulations are the key factors driving the growth of the market in Europe. The EU Renewable Energy Directive states the plan for the promotion & production of sustainable energy sources across the region. This directive has set targets to attain 20% renewable adoption in the overall energy mix. Such factors are providing an additional boost to the regional market.
The Middle East and African region installed 6.8 GW of new solar PV capacity in 2019, which is over twice as much as the 3.1 GW the year before.
Key Participants to Concentrate on Increasing Production Capacity
The global market is fragmented owing to the strong product portfolio and a remarkable distribution network of major companies in developed and developing countries. Currently, Canadian Solar Inc., First Solar, and Trina Solar lead the market, accounting for a dominant share in 2019.
The companies are expanding their production capacities by constructing new plants or expanding and enhancing the existing ones. For example, in July 2020, Sonnedix, the global independent solar power producer (IPP), has enhanced its operating capacity in Italy by 8.2 MW through the acquisition of two portfolios: a portfolio of 6 operating plants with a combined capacity of 5.2 MW was acquired from Silver Ridge Italia, and a portfolio of 3 operating plants with a combined capacity of 3 MW was acquired from Melfin (Melchioni Group).
An Infographic Representation of Solar Power Market
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The solar power market research report includes a detailed solar power industry analysis and focuses on key aspects such as leading companies, technology, and leading applications of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the advanced market over recent years.
Value (USD Billion) & Volume (GW)
Fortune Business Insights says that the global market size was USD 163.70 billion in 2019.
In 2019, the Asia Pacific market value stood at USD 74.81 billion.
The global market is projected to grow at a CAGR of 5.9% in the forecasted period.
The solar PV segment is expected to be the leading segment in this market during the forecast period.
The global market size is anticipated to reach USD 194.75 billion by 2027, growing at a substantial CAGR of 5.9% during the forecast period (2020 -2027).
Supportive government policies and regulations and race to attain renewable energy targets are the major factors driving the growth of the market.
Asia Pacific region dominated the market share in 2019.
Canadian Solar Inc., First Solar, Yingli Solar, and Trina Solar are major players in the global market.
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