Solar Energy Systems Market Trends

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.