Distributed Solar Power Generation Market

Market Overview

The global distributed solar power generation market size was valued at USD 109.92 billion in 2023 and is projected to reach a value of USD 182.73 billion by 2032, registering a CAGR of 5.81% during the forecast period (2024-2032). The increase in distributed solar power generation market share during the forecast period is related to the cost-effectiveness of amorphous silicon and government initiatives to promote roof-top solar panels.

Distributed solar power is generated through a decentralized solar photovoltaic module and is extensively used in the residential and commercial sectors. Continuously rising temperatures, growing need for energy conservation and reducing CO2 emission, declining dependency on fossil fuel, decreasing prices of solar PV modules, and increasing demand for clean energy sources drive the market growth. Thus, the megatrends above for energy transformation will drive market growth in the upcoming years.

Solar power is the second-largest contributor to renewable energy production. The installation of distributed solar panels reduces the load on grid generation and transmission, and it facilitates cheaper energy generation. As per the International Renewable Energy Agency (IREA), the cumulative installed capacity of solar PV modules across the globe is projected to reach 8,519 GW by 2050. Consumers generally favor grid power over off-grid power due to its inexpensive initial investment and lack of space requirement for electricity generation. This is anticipated to impede the expansion of the distributed power generation market throughout the projected timeframe. However, the increasing environmental worries, global requirements to reduce carbon emissions, and favorable policies implemented by various governments to promote renewable energy sources create a favorable situation for the distribution power generating business.

Highlights

• Monocrystalline (Mono-SI) dominates the market by Product Type.
• The rooftop segment is a significant shareholder by installation.
• Off-grid systems hold the majority of the market share by application.
• The commercial sector leads the market by end-users.

Market Dynamics

Global Distributed Solar Power Generation Market Drivers:

Cost-Effectiveness of Amorphous Silicon

The cost-effectiveness of amorphous silicon (A-Si PV) is expected to significantly enhance its adoption in the distributed solar power generation market. Amorphous silicon holds the largest market share due to its ease of production and attractiveness to customers reluctant to invest in solar panels. It is more cost-effective than other solar cell varieties, such as mono-crystalline silicon, with higher production costs. The affordability of amorphous silicon makes it an appealing choice for businesses and consumers aiming to reduce their carbon footprint and energy expenses. Additionally, its excellent resistance to shading and versatile applications further increase its appeal.

Additionally, the demand for amorphous silicon is anticipated to grow in line with the rising demand for renewable energy. Its cost-effectiveness, adaptability, and lightweight construction position it as a market leader in solar energy. Market expansion is expected to be driven by ongoing research and development, technological advancements, favorable government policies, and increasing environmental concerns. For instance, according to ResearchGate, amorphous silicon films produced through the Inductively Coupled Plasma (ICP) deposition technique achieve a conversion efficiency of 9.6%.

Government Initiatives to Promote Roof-Top Solar Panels

The rooftop segment is projected to witness the fastest growth due to increasing demand for power generation in the residential sector. Government initiatives worldwide are promoting rooftop solar power generation. For example, India's Ministry of New & Renewable Energy has planned to scale up grid-connected solar power projects from 20,000 MW to 100,000 MW by 2022.

In addition, the power industry has experienced a significant shift in power generation methods in recent years. Rising global temperatures and depleting fossil fuels have compelled customers to adopt alternative energy sources, further driving market growth. The ground-mounted segment dominates the distributed solar power generation market due to its rising demand in the commercial and utility sectors.

Global Distributed Solar Power Generation Market Restraints:

High Initial Setup Cost

The distributed solar power generation market faces challenges due to high initial setup costs. Off-grid systems requiring storage systems are costly to construct, hindering market expansion. Although solar photovoltaic module prices are decreasing and government programs encourage domestic solar power consumption, high initial costs remain a significant barrier. Amorphous silicon photovoltaics (A-Si PV) have the largest market share due to their ease of manufacture and increased customer adoption, avoiding significant financial investments. However, their low efficiency, short warranties, and limited lifespans may hinder their utilization. The mono-Si category is expected to increase due to its efficiency and durability.

Meanwhile, though highly profitable, the Concentrated Photovoltaics (CVP) segment faces higher installation costs due to the required cooling systems, slowing its expansion. The rooftop category is anticipated to experience rapid growth due to demand from residential and business customers. For example, installing a solar power plant in Karnataka costs between USD 480 to USD 720 per kW.

Global Distributed Solar Power Generation Market Opportunity:

Expanding into Remote Areas

Geographical expansion into remote regions presents a substantial opportunity for the distributed solar power generation market. With the rise of remote work, more individuals are relocating to rural areas for recreational opportunities, familial connections, and family-friendly communities. This trend offers rural community leaders new opportunities to attract and retain remote workers by promoting the benefits of living and working in their localities.
Rural communities can capitalize on this opportunity by developing co-working spaces, promoting alternative workstations, and improving transportation infrastructure, including airports and public transportation.

Additionally, providing high-speed internet access is crucial for remote workers to conduct business efficiently. By offering the necessary support and infrastructure, rural communities can become desirable locations for remote workers, contributing to expanding the distributed solar power generation industry.

Regional Analysis

Asia-Pacific Dominates the Global Market

The global distributed solar power generation market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

Asia-Pacific is the most significant market shareholder and is estimated to grow at a CAGR of 5.5% over the forecast period. Most of the demand for the region's products comes from nations like China and India, which are becoming increasingly concerned about the environment. This is the primary factor driving the region's growth. The Asia-Pacific (APAC) distributed solar power generating market is projected to dominate due to limited grid connectivity and power shortages in developing countries within the region, such as China, India, Indonesia, and Thailand. A significant increase predominantly influences the market in the installation of solar panels, particularly in emerging countries, and growing environmental concerns, which are expected to drive a transition towards off-grid power generation.

Nevertheless, the substantial upfront expenses associated with establishing solar power generation provide a notable obstacle for the market, specifically for individuals in the middle-class income bracket. Climatic circumstances, such as excessive rainfall and snowfall also influence the low adoption of this technology in particular nations. Notable global distributed solar power generation players include JinkoSolar Holding Co. Ltd., SunPower Corp., KACO New Energy GmbH, Canadian Solar Inc., Shenzhen Yingli New Energy Resources Co. Ltd., and First Solar Inc.

North America is estimated to grow at a CAGR of 5.9% over the forecast period. North America would experience considerable growth due to the growing demand for renewable energy sources and the favorable policies implemented by the government. As a result of increased environmental concerns and regulations enforced by the government to provide financial incentives and tax benefits for the installation of solar panels, it is anticipated that the region will experience tremendous growth.

Europe is anticipated to expand significantly, and by the year 2024, the continental region will account for a substantial portion of the market. First, the expansion is being pushed by the growing demand for sustainable energy sources and beneficial legislation implemented by the government. High adoption in countries like Germany, Spain, and Italy due to strong government support and ambitious renewable energy targets. The increasing emphasis on reducing carbon footprints and enhancing energy security is a significant market driver.

Segmental Analysis

The global distributed solar power generation market is segmented based on product type, Installation, application, and end-use industry.

The market is further segmented by product type into Monocrystalline (Mono-SI), Polycrystalline (p-Si), Amorphous Silicon (A-Si), and Concentrated PV cells (CVP).

Monocrystalline cells hold a substantial market share. This can be attributed to their superior efficiency compared to alternative materials, which typically range from 15% to 20% higher than other solar modules. The increased efficacy of monocrystalline cells is the primary driver of market demand.

Polycrystalline cells are frequently encountered, whereas Amorphous Silicon cells are favored by customers who prefer to invest minimally in solar panels due to their low production cost. In contrast to other varieties, amorphous silicon modules exhibit diminished efficiency rates and lesser warranties and lifespans. Concentrated PV Cells (CVP) are experiencing exponential expansion owing to their exceptional performance. However, their implementation necessitates a cooling system, escalating installation expenditures, and may impede market growth.

The market is further segmented by Installation into ground-mounted and roof-top.

The rooftop segment is projected to rapidly expand due to the rising demand for these modules in the residential sector for power generation. Furthermore, governmental institutions worldwide actively encourage the implementation of rooftop solar power generation by initiating various programs and campaigns. The Ministry of New & Renewable Energy of India intends to increase the capacity of grid-connected solar power projects from 20,000MW to 1,00,000MW by 2022.

The power industry has recently experienced a significant and transformative change in how power is generated. The increasing global temperature and diminishing fossil fuel reserves have prompted customers to adopt alternate energy production sources, further pushing market expansion. The ground-mounted segment currently holds a dominant position in the distributed solar power generation industry because of its increasing popularity in the commercial and utility sectors.

The market is further segmented by application into On-Grid and Off-Grid.

Off-grid systems now hold the majority market share, primarily because they offer dependable and cost-effective electricity to communities not linked to the primary grid.

On-grid systems are interconnected with the primary power grid and enable the sale of surplus electricity to the grid. In contrast, off-grid systems are not linked to the primary grid and require battery storage devices to store excess power. Off-grid systems are widely utilized in residential and business sectors, and they are especially advantageous in isolated places with little or no access to the power grid.

The market is further segmented by end-use industry into Residential, Commercial, and Utility-Scale.

Businesses are anticipated to drive growth in the commercial sector as they aim to lower their electricity expenses and support environmental sustainability. The residential sector is projected to experience substantial growth due to government initiatives, like Eco-Bonus regulations and Cooling system incentives, which promote the use of solar PV modules in both residential and commercial settings.

Recent Developments

• February 2024- Distribution generation (DG) solar expansion by Nextracker with two new strategic value-added reseller partners and over 600 DG projects. Customers employing Nextracker's NX Horizon solar tracker system have achieved considerable energy gains, delivering over 600 DG projects.