The residential solar energy market is expected to grow at a CAGR of more than 10% from 2021 to 2026. The COVID-19 pandemic has slowed down the growth of solar energy including residential installations due to supply chain disruption amid lockdowns in various nations during Q1 and Q2 2020. With the ongoing pandemic, multiple countries also witnessed delays in solar modules and associated equipment trading, which restrained the market growth. However, factors such as the declining cost of solar photovoltaic (PV) systems owing to technological upgradations and competition in the market, globally, coupled with supportive government policies and incentives are expected to drive the market studied during the forecast period. However, the lack of financing options coupled with the difficulties in integrating residential solar PV systems in the regions like Africa is expected to restrain the growth of the market.
Key Market Trends
Increasing Rooftop Solar Installations to Drive the Market
- The technological advancements and upgrades in the residential solar energy market, which reduces the cost of modules are expected to drive the market during the forecast period.
- Several nations like the United States, the United Kingdom, Germany, India, and others have set up ambitious targets to increase the renewable share in their energy mix. Governments across these nations have also planned to increase the renewable enrgy share through the deployment of residential solar PV systems in the coming years. This, in turn, is expected to act as an opportunity to the residential solar PV manufacturers and suppliers during the forecast period.
- Asia-Pacific is expected to dominate the market primarily due to the increasing demand for clean electricity from major developing countries such as China, India, and ASEAN countries, over the forecast period.
Asia-Pacific to Dominate the Market
- The increasing adoption of solar PV systems in the residential sector is primarily driven by expected savings in electricity costs, the need for an alternative source of electricity, and the desire to mitigate climate change risk.
- During the forecast period, the demand for rooftop solar PV is expected to increase, on account of decreasing solar PV costs, supportive government policies for residential solar PV, FIT programs and incentives, and targets set by various governments for solar energy.
- The cost of electricity for residential rooftop solar PV applications has witnessed a rapid decline in recent years. The declining cost has resulted in a massive increase in the residential PV capacity globally, reaching 580 GW in 2019, with a significant contribution from residential solar energy.
- In the United States alone, the annual residential PV capacity has increased signifficantly from 2.2 GW in 2017 to 2.8 GW. The capacity is further expected to increase in the coming years.
- The cost reductions are driven by continuous technological improvements, including higher solar PV module efficiencies. The industrialization of these highly modular technologies has yielded impressive benefits, from economies of scale and greater competition to improved manufacturing processes and competitive supply chains.
- All the above-mentioned factors have been driving the demand for residential solar energy over the study period.
- Asia-Pacific has accounted for more than 30% of the global residential solar PV market and is expected to continue its dominance during the forecast period as well.
- In India, the residential PV installation cost is at USD 1000 per KW, which is higher, when compared to its commercial counterpart (USD 692 per KW). However, the Indian costs of installations are cheaper, when compared to the global average for both residential (USD 1638 per KW) and commercial (USD 1379 per KW).
- China is the largest producer and consumer of solar PV and also accounts for around half of the production of solar PV globally. Apart from this, the country is also leading in solar energy with a 205 GW installed capacity of solar energy in 2019.
- In 2017, the South Korean government decided that in Seoul, the countryâ€™s capital, it will implement solar panels in one-third of all the households by 2022. This, in turn, is expected to increase the country's existing residential solar capacity in the coming years. According to the plan, all new buildings would be required to install solar PV. Meanwhile, the existing buildings would be offered incentives to opt for solar PV. Furthermore, it is estimated that about 1 million solar power systems would be deployed in Seoul by 2022, among the 630,000 apartment verandas, 150,000 houses, and 220,000 buildings.
- Owing to the above-mentioned factors, the demand for residential solar energy is expected to increase over the forecast period in the Asia Pacific region.
The global residential solar energy market is fragmented. Some of the major players operating in this market include Trina Solar Limited, Canadian Solar Inc., JinkoSolar Holding Co., Ltd, Hanwha Q Cells Co. Ltd, and Tesla Inc.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support