The solar energy systems market is estimated to be valued at USD 255.40 Bn in 2024 and is expected to reach USD 730.50 Bn by 2031. It is expected to growing at a compound annual growth rate (CAGR) of 16.2% from 2024 to 2031. The rising demand for cleaner energy resources along with supportive government policies and investments have been the key drivers for the growth of the solar energy systems market.

Market Driver - Government Policies and Incentives, such as Subsidies and Tax Benefits

With climate change becoming an increasingly pressing issue, many governments around the world have implemented policies to incentivize the adoption of solar energy systems. Providing subsidies and tax benefits has helped drive significant growth in the installation of photovoltaic panels on both residential and commercial buildings.

In the United States as well, federal and state-level incentives have encouraged more widespread use of rooftop solar. The investment tax credit from the federal government covers 30% of the installation expense. Countries across Asia as well have introduced supportive policies for solar power. In China and India, subsidies and preferential feed-in tariffs that guarantee above market rates for solar electricity have enabled large scale projects to emerge at a rapid pace. Both nations have seen massive growth in their solar industries to cater to rising domestic and global demand.

The push for clean energy has become a priority and governments are playing an active role in driving solar energy systems market transition through forward-looking policies.

Market Driver - Rising Demand for Renewable and Clean Energy Solutions Globally

As more countries commit to reducing dependence on fossil fuels and limiting environmental pollution, renewable sources of energy have emerged as an important long term solution. Solar power, being widely available across vast geographical areas, is seen as having huge untapped potential globally to provide clean electricity.

Corporations too are increasingly making sustainability a priority and have set renewable energy procurement targets to power their operations. Tech giants like Amazon, Google, and Facebook now meet over half their electricity needs through solar and wind projects. Green energy advocacy groups as well as young consumers are calling on companies and policymakers to go solar.

The current pandemic has also underlined the need for diversification of supply chains and building resilience at a regional level. Technological innovations are continuing to enhance efficiency and energy yields. So, the solar energy systems market is well positioned to lead the shift to cleaner sources of power on a global scale in the coming decades. The long term outlook for rising demand in the solar energy systems market therefore remains very positive.

Market Challenge - High costs associated with large-scale energy storage systems

One of the major challenges faced by the solar energy systems market is the high costs associated with developing and implementing large-scale energy storage systems. Solar energy is intermittent in nature as it is only produced when the sun is shining. However, electricity demand from customers is constant around the clock. This necessitates finding cost-effective ways to store the electricity generated from solar energy during the day for use after sunset.

Currently available utility-scale battery storage technologies like lithium-ion batteries are still quite expensive to deploy at the volumes required by solar farms. The high battery costs significantly increase the levelized cost of electricity from solar energy. Extensive research is ongoing to develop next-generation low-cost grid-scale battery chemistries, but those solutions are still some years away from commercialization.

Until energy storage costs come down substantially, solar power will remain economically unviable without government subsidies in many parts of the world.

Market Opportunity - Expansion of product services by key players, including innovative business models for market

One of the major opportunities in the solar energy systems market is the expansion of product services by key industry players. Leading solar panel manufacturers and project developers are increasingly offering innovative business models beyond the traditional energy supplier model.

Some others offer solar-plus-storage solutions bundled as a package. There is also a rise in firms offering operational services like monitoring and maintenance of solar assets over their lifetime under long-term contracts. Such expanded suite of products and services help lower installation barriers for customers and improve the overall value proposition of solar energy.

It also allows industry players to diversify their revenue streams. This kind of business model innovation is expected to be a key driver of future solar energy systems market growth.

Focus on technological innovation: Companies like Tesla, Panasonic, and JinkoSolar have invested heavily in R&D to develop more efficient and cost-effective solar panel technologies. For example, Tesla introduced its Solar Roof product in 2016 that integrates solar technology into roof tiles.

Leverage economies of scale: Large players like Trina Solar, JinkoSolar, and Canadian Solar have adopted an asset-light model and built extensive global supply chain networks and manufacturing facilities.

Focus on emerging markets: Players like First Solar, Canadian Solar and Trina Solar have positioned themselves strategically in fast growing solar markets like India, Southeast Asia, and Latin America in the last 5 years.

Enhance customer experience: Companies are enhancing customer experince through innovative business models of solar energy systems. For example, Sunrun pioneered solar-as-a-service model in 2010 allowing customers to subscribe solar systems with no large upfront costs. This new ownership model boosted customer acquisition dramatically. By 2018 Sunrun had over 200,000 customers.

Insights, By Product: Increased Electricity Demand Drives Solar Panel Adoption

The solar panels segment contributes 43.3.% share in the solar energy systems market in 2024. This is owing to the growing demand for modular and flexible solar power generation options. As populations and economic activities rise globally, the demand for electricity continues to surge exponentially.

Solar energy systems provide a viable decentralized solution to supplement grid-level electricity or act as a backup during outages caused by natural disasters or maintenance work. Their plug-and-play functionality along with scalability as per capacity needs makes them an attractive proposition. Advances in panel design and materials of solar energy systems have also increased efficiency while driving down costs.

Monocrystalline and polycrystalline variants offer high performance in a compact format. The rising solar rooftop installation trend among commercial and industrial facilities as well as homes further stimulates demand. Government incentives and net-metering policies also encourage self-consumption of green power. All these factors contribute to solar panels dominating the product segment in the solar energy systems market.

Insights, By End Use: Utility-Scale Projects Fuel Commercial Segment Growth

Within the end-use segments, utility accounts for 67.1% share of the solar energy systems market. This is attributed to the increasing utility-scale solar projects being commissioned globally to cater to the bulk power needs of regions. As power distributors aim to diversify generation sources and reduce carbon footprint, huge solar farms are being set up through public-private partnerships or independent power producer models. Their large land requirements and megawatt-scale capacities make utilities the primary off-takers.

Additional drivers include regulatory mandates for renewable purchase obligations and carbon credit earning potential. Further, declining levelized costs of solar energy systems that now offer tariff parity drives growth of this segment in the solar energy systems market . Centralized monitoring and reduced distribution losses also give utilities an edge over smaller installations. The rising competitiveness of solar energy is convincingly evidenced by record-breaking lowest solar tariffs seen in recent global bids.

Insights, By Source: Maintenance Requirement Supports New Installation Dominance

Within the solar energy systems market by source, new installation commands the major share owing to factors like operational lifespan and performance guarantees offered by original equipment manufacturers (OEMs). Performance of solar energy systems lowers gradually due to degradation of panels and other outdoor equipment from factors like weathering effects of heat, moisture, and UV radiation.

While repairs and replacement of minor components occur under standard maintenance contracts, major overhauls involving panel swaps or inverter upgrades need to be carried out. This ensures steady demand for fresh installation of components of solar energy systems. Also, greenfield projects continue to come online as polar adoption goals are increasingly realized across nations.

Meanwhile, optimized preventive maintenance ensures ongoing operation reliability but entails relatively lower investment than new builds. Need for periodic replacements once performance hit degradation thresholds underpins the larger opportunities in the new installation segment in the solar energy systems market. Proactive upkeep is nevertheless crucial to extract the designed lifetime output from solar assets.

• Asia-Pacific dominated the solar energy systems market in 2023, contributing over 60% of revenue, driven by governmental renewable energy targets and investments in solar infrastructure.
• The utility segment captured over 67% of revenue share of solar energy systems market in 2023 due to its efficiency and carbon reduction capabilities.
• The U.S. added 14.1 GWh of energy storage in 2022, marking a 34% year-over-year increase, highlighting the rising importance of energy storage solutions.
• Lithium-ion batteries are gaining prominence for solar energy system storage in the solar energy systems market due to their high efficiency, energy density, and long lifespan.

The major players operating in the solar energy systems market include Canadian Solar Inc., Sunpower Corporation, Tata Power Solar, Wuxi Suntech Power Co. Ltd., Abengoa Solar S.A., Bright Source Energy Inc., Gintech Energy Corp., Kaneka Corp., Acciona Energia S.A., and Esolar Inc.

• In June 2023, Vaisala introduced the Automatic Weather Station AWS810 Solar Edition, a cutting-edge solution designed to enhance the performance and operational efficiency of solar energy systems. This IEC-compliant weather station integrates solar irradiance measurements with key weather parameters, offering advanced analytics and digital insights.

• By Product
  • Solar Panels
  • Charge Controllers
  • Batteries
  • Inverter
  • Others
• By End Use
  • Utility
  • Commercial
  • Industrial
  • Residential
• By Source
  • New Installation
  • Maintenance, Repair, and Operations (MRO)