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The global solar power market size was valued at USD 167.83 billion in 2021 and is projected to grow from USD 234.86 billion in 2022 to USD 373.84 billion by 2029, exhibiting a CAGR of 6.9% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with solar power experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global solar power market exhibited a growth of 17.1% in 2020 as compared to 2019.
The rising population in developing countries has directly impacted the power generation for the past years. With the increase in carbon reduction, power generation through renewable sources is considered the best feasible substitution for conventional power sources such as oil and coal products and is increasing at a healthy rate.
Solar power utilizes the sun's energy as either thermal energy (heat) or photovoltaic cells in solar boards and clear photovoltaic glass to create power. The aggregate sum of solar energy incidents on Earth is vastly abundant at present and can foresee energy requirements. If appropriately exploited, this highly distributed source has the prospective to meet all demands of future energy. Over the past years, solar energy has been proved to be an important renewable energy source due to its limitless availability and environment-friendly nature, contradicting the finite fossil fuels of coal, oil, and natural gas.
The increasing concern to reduce the dependency on fossil fuels and minimize the carbon emission from burning them has propelled the demand for renewable energy and its sources. This factor is expected to drive the development of the markets during the forecast period.
Halting of Activities in New Industrial and Commercial Establishments During Pandemic to Hamper Market Growth
The global health emergency caused by the sudden outbreak of COVID-19 viral infection has significantly affected numerous verticals. The energy required repeated lockdowns severely overblew sector in 2020, slowing down economic activity, transport, and trade across the globe, bringing energy usage down by 4%. Ultimately, the clean energy transition must be the priority of economic recovery and stimulus programs that have brought the spotlight to renewable energy, leading to continued expansion and installation. However, the disruptions in transportation & logistics were due to strict government regulations. Global lockdowns caused a delay in the delivery of the product, resulting in increased shipping costs, increases in fuel, tax and labor prices, and disruption in shipping facilities.
According to the Solar Energy Industries Association, the number of solar permits issued in the week beginning March 30th, 2020 in the U.S. was 32% lower than the first week of February, indicating the precise impact on solar activity due to the shelter-in-place restrictions and decreased business & consumer confidence. About 70% of the world’s solar panels are manufactured in China, and around 10-15% of the reserve is accommodated by Chinese companies working in Southeast Asia. In February, solar PV manufacturing facilities in China paused or decreased production due to lockdowns in several key provinces.
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Integration of New Technologies to Hold Immense Growth Opportunity
Better prediction capabilities provided by artificial intelligence are facilitating better forecasting and asset management, while its automation capability is driving operational excellence, leading to competitive advantage and cost savings for stakeholders. Artificial intelligence can unlock the vast potential of solar energy, supported by other emerging technologies, such as big data, the Internet of Things (IoT), sensors, and distributed ledger technology.
For instance, in February 2021, the U.S. DOE announced a project involving utilizing Artificial Intelligence (AI) diagnostic ability to increase performance in solar power systems. The work, financed by a U.S. 750,000 USD 3-year grant, will consist of a sizable solar-technology program proposed by the DOE in 2020, including USD 7.3 million primarily for engine learning and other solar-powered AI solutions. The above factor, along with the technological innovations aimed at the development of new methods in PV and Concentrated Solar Power (CSP) methods by prominent players, is expected to spur market opportunities during the forecast period.
Countries Aiming to Achieve Green Energy Targets to Increase Investments in Solar Industry
An energy transition is needed urgently, globally, to limit the increase in average global surface temperature to below 2° Celsius. As a result, the installation of renewable energy sources will increase enormously in the next few years, which will lead to the expansion of the market. The transition from fossil fuels to low-carbon solutions will play a significant role, as energy-related carbon dioxide emissions account for two-thirds of all greenhouse gases. New energy targets introduced by various governments to encourage a shift toward sustainable energy have had a positive impact on the market size. For example, Brazil aims to get 42.5% of its primary energy supply from renewable sources by the end of 2023.
Similarly, the U.K. government is aiming for around half of its electricity to come from renewable sources by 2025, according to the Carbon Brief analysis. Germany is on track to get 65% of its total energy from renewable sources by 2030. China plans to achieve 16% of its renewable energy by 2030. Following the investments and growth in the country, renewable energy is expected to hold a 26% share and surpass the set targets.
Growing Adoption of Renewable Sources for Power Generation to Boost Market
Renewable energy sources that help reduce carbon emissions and act as an economical source of everyday power are being looked upon as the best possible replacement for conventional power sources such as coal and oil products. At present, renewable sources account for around 29% of the total electricity generation across the globe. It is projected to rise considerably in the upcoming years and boost the market. The total installed capacity of solar PV will reach 842.14 GW globally by the end of 2021, representing the second-largest renewable electricity source after wind.
The growing population in developing countries directly impacts energy consumption and generation. Power generation through renewable sources is the best possible replacement for conventional power sources with the increase in carbon reduction. For instance, oil products and coal are increasing at a constant rate. Further, the construction of new grids and mass storage systems by utilities to utilize the captured energy from renewables also poses an opportunity for the solar power market growth.
High Investment and Lack of Infrastructure Remain a Threat to Market Growth
The total cost of solar PV is higher than installing regular solar panels, likely reducing its acceptance in residential buildings where energy demands are comparatively low. For comparison, 15 ground-mounted solar panels rated at 300 watts would cost USD 14,625. The solar structure would cost an additional USD 500 per solar panel - this increase in initial cost results in lesser utilization of the solar power generation system. Furthermore, the lack of infrastructure is another factor holding back investments in this market. In regions such as Asia Pacific and Europe, the lack of awareness of the benefits and increasing preference for solar PV over primary grid power may hinder the market growth.
Global Solar PV Segment to Dominate Market Due to High efficiency
By technology, the market is segmented into solar photovoltaic (PV) and Concentrated Solar Power (CSP).
Solar technology is further categorized into mono-Si, thin film, multi-Si, and others. The CSP segment is divided into the parabolic trough, power tower, and linear fresnel. The global solar PV segment dominated in 2021 owing to rising investments in solar photovoltaic projects due to rising electricity consumption across the globe. The mini solar panels (small PV) where low power is required can be used for power calculators, wristwatches, and other small electronic devices. Solar PV systems have a long lifecycle with low maintenance and no fuel cost. As per IRENA, accelerated solar PV deployment and deep electrification could deliver 21% of the CO₂ emission reductions by 2050. Also, it is expected by IRENA that global capacity must reach 18 times the current levels or more than 8,000 gigawatts by 2050.
CSP systems store energy through Thermal Energy Storage (TES) technologies, so that power can be used when there aren’t enough renewable sources. PV systems, however, can’t store thermal energy as they use direct sunlight rather than heat. For this reason, CSP systems are better for energy storage. Thus, this factor is set to drive the CSP segment’s growth.
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Utility Segment to Grow with Increasing Demand for Energy
Based on application, the market is divided into residential, non-residential, and utility. The utility segment dominates the market owing to increasing installation targets and the high operating efficiency of PV panels compared to other counterparts. Large-scale photovoltaic power plants, consisting of many PV arrays installed together, prove helpful utilities. Utilities can build PV plants much more quickly than conventional power plants as the arrays are easy to install and can connect electrically. Solar energy adoption across residential segments is increasing due to increasing energy demand. The number of residential construction projects is increasing along with the growing public awareness regarding using renewable and efficient energy sources for residential purposes. Therefore, such factors are expected to drive the residential segment’s growth.
Asia Pacific Solar Power Market Size, 2021 (USD Billion)
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The market has been geographically analyzed across five central regions, Europe, North America, Asia Pacific, Latin America, and the Middle East & Africa.
Asia Pacific is expected to dominate the solar power market share during the forecast period, with most of the demand arriving from China. The country is one of the major producers and consumers of solar energy globally. The country is highly dependent on conventional resources and installing more renewable sources. For instance, in March 2022, China announced its plans to build 450 gigawatts (GW) of wind, solar, and power generation capacity in the Gobi desert and other desert regions. India is another primary potential market for solar energy in Asia Pacific. Solar energy installation is increasing owing to rapidly growing energy demand from various sectors. A positive outlook for clean energy deployment and an encouraging regulatory framework are some key factors propelling regional expansion.
Furthermore, North America will likely hold a substantial portion of the industry in 2021. Rapidly increasing energy demand from various sectors, a positive outlook for clean energy deployment, and an encouraging regulatory framework are critical factors propelling regional expansion.
Besides, the Middle East & Africa solar power market is also set to witness the highest growth rate between 2021 and 2029 owing to effective plans of various countries across the region to reduce the dependency on natural gas and crude oil for energy generation. The region is also in need to adopt a reliable power source to support remote areas with high solar exposure and low grid connectivity.
Key Players have been Acquiring New Contracts to Maintain their Position in the Market
Companies dealing in the renewable energy service business are expected to generate a significant market share in the coming years, owing to the rising adoption of renewable sources. The industry has also witnessed the continued involvement of critical global and regional players and several small & medium-scale system integrators.
Another key player is Trina Solar. The company is a crucial market shareholder and a reliable brand in the solar industry. As of April 2022, the company has achieved the milestone of having shipped 100 GW of modules in 25 years. Trina Solar has been a pioneer in solar systems and integrated technology for many years, during which module power generation capacity has increased from less than 100W to 690W and the diameter of its silicon wafers has grown from 125mm to 210mm.
Other players account for the rest of the market share in the solar energy market as majority of the share is represented by the top 10 players. However, the industry has seen several other local players in the market.
An Infographic Representation of Solar Power Market
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The research report offers a qualitative and quantitative in-depth industry analysis of the global market. It further details the adoption of solar power systems across several regions. The report provides a detailed competitive landscape by presenting information on key players and their strategies in the market. Information on trends, drivers, opportunities, threats, and restraints can further help stakeholders gain valuable insights into the market.
Value (USD Billion) and Volume (GW)
By Technology, Application, and Region
Fortune Business Insights says that the global market size was USD 167.83 billion in 2021 and is projected to reach USD 373.84 billion by 2029.
In 2021, the region stood at USD 69.94 billion.
Registering a CAGR of 6.9%, the market is projected to exhibit staggering growth during the forecast period (2022-2029).
The solar PV segment is anticipated to hold the leading share in this market during the forecast period.
Countries to achieve green energy targets and the growing adoption of renewable sources for power generation are the major factors driving the market growth.
Asia Pacific dominated the market in terms of share in 2021.
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