Rooftop Solar Photovoltaic (PV) Installation Market

Market Overview

The global rooftop solar photovoltaic (PV) installation market size was valued at USD 98.70 billion in 2022. It is estimated to reach USD 326.07 billion by 2031, growing at a CAGR of 14.20% during the forecast period (2023–2031). 

The global rooftop solar photovoltaic (PV) installation market is primarily driven by the surging efficiency of solar PV with technological advancements. The decreasing cost of solar PV systems globally is also expected to boost the market expansion. A photovoltaic (PV) system consisting of solar panels that are put on the roof of a residential or commercial building is known as a rooftop solar power system. These systems comprise photovoltaic modules, mounting systems, cables, solar inverters, and various electrical accessories. Rooftop-mounted photovoltaic systems are miniature compared to utility-scale solar ground-mounted photovoltaic power stations with megawatt capacity and are a form of distributed generation.

The majority of rooftop PV systems are grid-connected photovoltaic energy systems. Residential rooftop PV systems typically have a capacity of 5–20 kilowatts (kW), whereas commercial rooftop PV systems typically have a capacity of 100 kW to 1 MW (MW). Solar photovoltaic systems of 1–10 Megawatts can be installed on extremely large roofs.

Market Dynamics

Global Rooftop Solar Photovoltaic (PV) Installation Market Drivers

Rising Efficiencies of Solar PV

The efficiency of solar PV panels has been increasing steadily over the past decade. With the development of new technologies and manufacturing capabilities, this trend will likely continue over the forecast period. The most efficient solar panels currently commercially available on the market have efficiency ratings as high as 22.8%, while most panels have efficiency ratings between 16% and 18%. As of September 2021, SunPower's monocrystalline solar PV panels have the greatest efficiency rating of any solar panel brand that is commercially available.

Additionally, in May 2022, researchers at the National Renewable Energy Laboratory (NREL) of the United States Department of Energy developed a solar cell with a record-breaking 39.5% efficiency under 1-sun global illumination. This is expected to be the highest efficiency solar cell, measured using standard 1-sun conditions. Such developments are expected to boost rooftop solar PV installations during the forecast period.

Declining Costs of Solar PV

Over the past decade, there has been a substantial decrease in the installation cost of solar photovoltaic (PV) systems. According to the International Renewable Energy Agency (IRENA), the total average installed costs in the residential rooftop PV sector decreased by 85% between 2010 and 2020. The solar photovoltaic (PV) installation cost is expected to decrease further throughout the projected time, influenced by a combination of technological, economic, and geopolitical variables.

As per the United States National Renewable Energy Laboratory (NREL), from 2010 to 2020, there has been a 64%, 69%, and 82% decline in the price of residential, commercial rooftop, and utility-scale PV systems in the country, respectively. The decline in prices of solar PV systems is primarily because of the drop in solar panel prices, increased competition as the sector continues to mature, and technological improvements. As a result of falling prices, an increasing number of residential and commercial consumers are opting for rooftop solar PV systems to lessen energy costs and recovery time. This scenario will expect considerable rooftop solar PV installation developments during the forecast period.

Global Rooftop Solar Photovoltaic (PV) Installation Market Restraints

Supply Chain Vulnerability Caused by Geopolitical Tensions

China leads the global supply chain for solar PV panels. Due to China's recent emergence as an economic and ideological counterweight to the Western democracies, there is considerable geopolitical tension between the two blocs. The United States and China have been involved in a trade war since 2018. In May 2021, the European Union suspended the China trade deal over allegations of unfair treatment of minorities and dissenters in Xinjiang and Hong Kong.

The solar photovoltaic (PV) industry in the United States and Europe heavily relies on China to procure essential raw materials necessary for producing solar panels. In the event of a significant geopolitical conflict resulting in a trade embargo between China and Western nations, a substantial disruption in the supply chain would be experienced by the solar PV industry in both regions. Such a situation is expected to negatively impact solar equipment and the market's growth.

Global Rooftop Solar Photovoltaic (PV) Installation Market Opportunities

Favorable Government Policies and Incentives

The rooftop solar PV installations are witnessing significant developments driven mainly by favorable government policies and incentives. In order to foster the change to the net zero-emission target, several governments are offering increased support to raise the penetration of clean energy technologies such as rooftop solar PV. For instance, in the United States, the federal government offers various incentives for purchasing and installing rooftop solar PV panels.

In contrast, individual state governments have feed-in-tariff (FiT) schemes for generating and distributing solar energy. The country offers federal tax incentives for renewable energy projects, such as the Residential Energy Credit system. The federal residential solar energy credit is a financial incentive program in the United States that allows homeowners to claim a part of the cost of a solar PV system on their federal income taxes. This will support rooftop solar PV installations in the coming years, creating market growth opportunities.

Regional Analysis

Based on region, the global rooftop solar photovoltaic (PV) installation market is bifurcated into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa. 

Asia Pacific Dominates the Global Market

Asia-Pacific is the most significant global rooftop solar photovoltaic (PV) installation market shareholder and is expected to expand substantially during the forecast period. In recent years, Asia-Pacific has been the leading market for solar energy installations. In the last decade, the Levelized Cost of Energy (LCOE) for solar photovoltaics (PV) decreased by more than 88%. As a result, developing countries in the region, such as Indonesia, Malaysia, and Vietnam, have increased their solar energy installation capacity. China holds over 70% of the global solar photovoltaic (PV) manufacturing capacity, making it home to the major companies and facilities in this domain. These businesses also dominate the polysilicon, ingot, and wafer manufacturing industries, integral to the solar panel supply chain. This extraordinary control over the global solar PV supply chain gives Chinese manufacturers a competitive advantage over solar equipment manufacturers from other nations. As a result of the factors above, Asia-Pacific is anticipated to lead the rooftop solar PV installation market over the forecast period.

The North American region consists of the US, Canada, and Mexico. The US dominated the global market in this region. Accessible and widespread solar energy has increased in the United States. In the past decade alone, the average annual growth rate for solar energy has been 42%. Solar installations in the United States have multiplied by 30 in the past decade. In 2021, the total installed capacity in the United States reached 121.4 GW, representing a 26% increase from the previous year's value. In addition, solar PV-based power generation is now cost-competitive with conventional energy sources in several states, including Hawaii, California, and Minnesota. The solar photovoltaic (PV) market is primarily driven by strong federal policies, like the solar Investment Tax Credit (ITC), rapidly falling costs, and the surging demand for clean electricity in the private and public sectors. Such factors boost the regional market growth.

In Europe, solar power increased by 21% in 2018, reaching 11.3 GW, compared to the 9.3 GW installed in 2017. In 2017, the EU's solar sector experienced a period of stagnation; however, it has since shown notable growth. Germany is Europe's largest solar photovoltaic market regarding installed capacity, which justifies it being one of the front runners in energy and climate security worldwide. The country has witnessed significant developments in the solar rooftop PV installation mark. It will likely continue to do so because of a combination of self-consumption with attractive feed-in premiums, especially for medium to large-scale commercial systems ranging between 40 and 750 kW. According to the EurObserv'ER Organization, Germany's solar PV installed capacity increased from 42.39 GW in 2017 to 58.73 GW in 2021.

In addition, beginning in January 2023, solar rooftop PVs will be required for roof renovations in the country for existing buildings in the NRW province to be certified as climate-neutral by 2040. Other German states are expected to adopt similar regulations shortly, which may benefit the rooftop solar PV installation market.

In South America, Brazil dominated the regional market. Brazil is a newly industrialized country with a large population and considerable economic growth. The country's primary energy consumption has significantly increased, mainly due to its growing industrial sector and population. The country meets most of its energy demand from hydroelectricity and conventional energy sources like coal, oil, and gas. As of 2021, the country produced over 22% of its primary energy requirements from renewable energy resources (excluding hydroelectric), increasing from approximately 19% share in 2020 and 16.2% share in 2019. The country has vast potential for energy generation from solar power due to its tropical location and high solar radiation, which may directly aid the rooftop solar PV installation market.

South Africa is one of the leading countries in the Middle East and Africa region in terms of renewable energy projects. According to South Africa's Mineral Resources and Energy Department, the country had a renewable energy production capacity of around 11,757 MW in 2021. and solar PV installed capacity was approximately 4,822 MW. The country receives sunlight for more than 2,500 hrs. per year, with average solar radiation levels ranging between 4.5 and 6.5kWh/m2 in one day. Due to these natural advantages, South Africa is one of the ideal places for solar energy projects.

Additionally, the UAE launched Energy Strategy 2050 in 2017, aiming to increase the renewable energy contribution from 25% to 50% by 2050 in the total country's energy mix. This strategy would reduce the carbon footprint of power generation by 70 percent, which is expected to save more than AED 700 billion by 2050. Similarly, the country aims to achieve Net Zero emissions by 2050 and invest more than USD 158 billion in clean and renewable energy sources in the next three decades. All these aspects are anticipated to propel market expansion.

Segmental Analysis

The global rooftop solar photovoltaic (PV) installation market is segmented by location of deployment.

Based on the location of deployment, the global rooftop solar photovoltaic (PV) installation market is bifurcated into residential, commercial, and industrial. 

The residential segment owns the highest market share and is expected to grow substantially over the forecast period. Individual homes and residential building complexes make up the residential segment. Residential rooftop-mounted systems are diminutive in comparison to commercial and industrial rooftop-mounted systems. Solar PV installations on residential rooftops can be configured in smaller configurations for mini-grids or individual use. There is an increase in demand for residential rooftop systems in countries where residents require accessible, affordable, and dependable electricity sources.

In recent years, the demand for residential rooftops has increased in China, India, and Australia due to government initiatives to support solar energy projects in the residential sector and decreased installation costs. For instance, the Indian government has launched the second phase of its grid-connected rooftop solar initiative, administered by the Ministry of New and Renewable Energy (MNRE). Under this program, the Tamil Nadu Energy Development Agency requested proposals to install 12 MW of grid-connected residential solar rooftop systems in Tamil Nadu in April 2022. Similarly, the state of Telangana's Renewable Energy Department Corporation solicited bids to appoint contractors to construct 50 MW of residential rooftop solar projects that are grid-connected.

The commercial and industrial buildings have larger rooftop areas than residential buildings and can accommodate rooftop solar capacity of up to 1–2 MW. The segment includes various commercial and industrial complexes, such as malls, hospitals, restaurants, retail centers, schools and universities, sports facilities, manufacturing facilities, warehouses, data centers, and large office buildings. The adoption of rooftop solar has increased in the past couple of years in commercial and industrial applications worldwide for various reasons, including the government's favorable policies, financial benefits, subsidies, tax benefits, and incentives.

Furthermore, solar energy's total installation and electricity generation costs were already lower than wholesale electricity prices. Solar-based power generation and heat are vital for decreasing the world's dependence on fossil fuels. Solar heat and power combined with heat pumps can replace natural gas boilers for heating in commercial spaces. Similarly, electricity, heat, and hydrogen generated from solar energy can replace natural gas consumption in industrial processes. Therefore, rooftop solar can play a vital role in replacing fossil fuels and lowering carbon and greenhouse gas emissions, resulting in a significant rise in demand for rooftop solar from commercial and industrial end-users in the past few years.

Recent Developments

• July 2023- BayWa r.e. and Mercedes-Benz AG established a fruitful partnership, with BayWa r.e. developing six new photovoltaic (PV) rooftop installations. These installations are at five distinct German production locations, including Sindelfingen (two sites), Rastatt, Bremen, Hamburg, and Kolleda.
• August 2023- Solarvest Holdings Berhad secured a new agreement with Toyo Tyre Malaysia Sdn Bhd (TTM) for the installation of a 14-megawatt-peak (MWp) rooftop solar photovoltaic (PV) system. Solarvest is well-known in the clean energy sector.