Market Scenario
Asia Pacific solar power market was valued at US$ 349.6 billion in 2023 and is projected to attain a market valuation of US$ 2,738.9 billion by 2032 at a CAGR of 25.7% during the forecast period 2024–2032.
The Asia Pacific region has firmly staked its claim as a powerhouse in the global solar power landscape. In 2023, the region accounted for over 65% of the global solar PV installed capacity. China, leading the charge, reached an astounding 390 GW of installed solar capacity by the end of 2022. This meteoric rise is attributed not only to the nation's vast geographical expanse but also its world-renowned expertise in photovoltaic (PV) panel manufacturing. In fact, as of that year, six of the top ten PV manufacturers globally were Chinese companies. Following China, India has made significant strides in the Asia Pacific solar power market, with the country's solar capacity surpassing the 56 GW mark in 2022, out of which 13 GW was newly installed in the year 2022. The Jawaharlal Nehru National Solar Mission's ambitious goal of reaching 100 GW by 2022 provided a significant push, backed by both domestic and international investors. This drive was underscored by an investment flow of over $10 billion into India's solar sector in just the year 2020.
Japan, navigating the aftermath of the Fukushima disaster, channeled its energies into renewables, especially solar. By the end of 2021, Japan had an installed solar capacity of approximately 78.4 GW, which is projected to surpass 90 GW by the end of 2023. The government's generous feed-in tariffs were pivotal, offering rates as high as ¥40 per kWh in the initial phases to bolster adoption. On the other hand, Australia's solar power market growth is equally compelling. With more than 3.5 million rooftop solar installations by the end of 2022. It has also been found that over 310,000 new rooftops solar were installed in the country, reaching the solar capacity to 2.7 GW, nearly 21% of households in the country were harnessing solar energy. This adoption rate was primarily driven by a 60% reduction in installation costs over the preceding decade and the soaring electricity prices.
However, these monumental achievements come juxtaposed with challenges. For instance, India grappled with land acquisition issues in densely populated regions, while Australia faced grid stability issues due to the rapid uptick in decentralized solar installations. Moreover, the manufacturing prowess of the region is worth noting. By 2022, China was responsible for 70% of the global PV panel production. This dominance led many Chinese firms to branch out, establishing manufacturing bases in neighboring countries, such as Vietnam, to leverage local benefits and circumvent trade barriers.
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Market Dynamics
Driver: Declining Prices of Solar Panel and Related Equipment
At the heart of Asia Pacific's solar boom is a simple yet profound fact: solar power has become much cheaper in the global solar power market. In fact, the solar panel prices has been dropped by 82% during 2010 and 2022. China, as the region's manufacturing anchor, ramped up its production capabilities significantly. By 2023, the country accounted for 70% of global solar panel production. Its extensive manufacturing infrastructure and consistent R&D investments, which touched $1.4 billion in 2019, have been instrumental in pushing down solar panel prices globally. This 90% price reduction over a decade effectively cascaded to benefit other Asia Pacific nations.
On the other hand, India's solar power market responded emphatically to these price shifts. In 2020, solar tariffs in the country reached a groundbreaking low of ₹2.36 ($0.031) per kWh. This competitive pricing is reshaping India's energy procurement strategies, especially when juxtaposed against its dependence on coal imports, which stood at over 80%. Moreover, the Philippines, while a smaller market, reflected the broader regional trend. A 60% cost reduction in solar projects over a span of five years (up to 2021) was matched with a consistent 20% annual growth in its solar capacity.
Trend: Growing Focus on Decentralized Solar Installations
Decentralized or distributed solar installations have emerged as a definitive trend in the Asia Pacific region. This approach entails the distribution of smaller solar systems across a wider geographic area rather than concentrating capacity in large-scale farms. Australia stands as a testament to this trend's popularity. By the end of 2022, the country witnessed over 3.5 million rooftop solar installations. In percentage terms, that means nearly 21% of Australian households had adopted solar energy, a significant upswing from just 0.2% a decade earlier. Furthermore, Indonesia, with its archipelagic topography, saw over 15,000 villages leveraging decentralized solar systems by 2021, given the logistical challenges of a centralized grid. The trend is not just a reflection of logistical convenience but also an outcome of dropping solar panel prices, which plummeted by 89% between 2010 and 2020, making smaller installations economically viable for individual households and communities.
Challenge: Grid Integration and Stability
With the exponential growth of solar power in the Asia Pacific, a significant challenge has materialized: grid integration and stability. The sudden influx of power from solar sources, especially during peak sunlight hours, can create voltage fluctuations and destabilize the grid. In Australia, where rapid adoption of decentralized solar installations took place, grid stability became a pressing concern. By 2021, South Australia experienced periods where solar output exceeded demand, leading to potential grid instability. In Vietnam, where solar capacity jumped from 134 MW in 2018 to over 17.6 GW by the end of 2021, the grid infrastructure struggled to keep up. During sunny days, curtailments – where solar farms were asked to reduce their output or shut down – became commonplace due to the grid's inability to handle the surplus power. This challenge is further exacerbated by the intermittent nature of solar power, requiring robust grid management systems and significant investments in energy storage solutions, which, as of 2021, were still catching up to the rapid solar deployment rates.
Opportunity: Growing Demand for Energy Storage to Unlock Potential of Solar Power Market in Asia Pacific
As the Asia Pacific continues to ride the crest of its solar wave, a glaring opportunity emerges on the horizon: energy storage. Solar energy, for all its potential, is intermittent – the sun doesn’t shine all the time. Hence, storing solar energy efficiently becomes the linchpin for continuous power supply, especially during night-time or cloudy days. By 2022, the global energy storage market was valued at approximately $36 billion, and it's projected to skyrocket to over $87 billion by 2030. The Asia Pacific's share in this growth trajectory is substantial. Leading the charge is China, which, in line with its solar dominance, is aggressively pushing its energy storage initiatives. By the end of 2022, China had successfully installed over 59.8 GW of energy storage, a commendable 78% growth compared to the previous year.
India, not far behind and ever eager to optimize its expanding solar infrastructure, witnessed a surge in its energy storage market, growing at a compound annual rate of 6.4% from 2018 to 2022. This growth was complemented by policy measures like the National Energy Storage Mission, aiming to make India a global hub for research and manufacturing in batteries and energy storage. With over 4.3 billion people in the Asia Pacific solar power market, of which nearly 450 million still lack access to reliable electricity, the potential scale of the energy storage market is staggering. Energy storage, particularly battery storage solutions, can play a pivotal role in bridging this gap.
Segmental Analysis
By Technology
Photovoltaic systems are, without a doubt, the crown jewel of the Asia Pacific solar power market, demonstrating unparalleled growth and acceptance across the region. Their dominance isn't accidental. A robust combination of supportive governmental policies and active industry engagement has created an environment where PV technology not only thrives but also leads. With an 89% market share and an impressive CAGR of 26% projected over the subsequent period, the PV system has cemented its position in the Asia Pacific solar power market as the preferred choice for solar power generation in the region. The International Energy Agency's data from 2022 reveals an uptick in solar PV generation by 270 TWh, marking a 26% increase from the previous year, and reaching a cumulative total close to 1,300 TWh. Notably, for the first time ever, this growth rate eclipsed that of all other renewable energy sources, including wind. Such robust growth placed solar PV as one of the fastest-growing renewable technologies, only slightly behind wind power.
The impressive addition of 100 GW of new PV capacity in 2022, around 60% higher than the year 2021, which can be attributed to a mix of factors. Predominantly, looming policy deadlines in nations like China, the US, and Vietnam played a crucial role in the solar power market, pushing stakeholders to amp up their installations. Furthermore, as solar PV has emerged as the most economical choice for electricity generation, its allure for both commercial and residential applications is undeniable. As residential demand rises, the PV system's market share is only poised to grow. The Asia Pacific region is experiencing a collaborative rush to reduce PV-related costs, tackle challenges, and enhance the understanding of PV's potential, further solidifying its future prospects.
By Solar Module:
When it comes to solar modules, monocrystalline solar panels leads the Asia Pacific solar power market by holding a 44% market share. These panels are the preferred choice in the Asia Pacific region thanks to their high efficiency, coupled with an increasing production scale. Monocrystalline panels, characterized by their uniform, dark appearance and rounded edges, are made from a single crystal structure, allowing electrons more room to move and generating a higher efficiency rate. This efficiency, often clocking in between 15% to 20%, is higher than most other solar panel types, making them particularly attractive for regions with space constraints.
The preference for monocrystalline panels in the Asia Pacific solar power market also stems from their longevity and performance consistency. They tend to have a longer lifespan and exhibit less performance degradation over time compared to their polycrystalline or thin-film counterparts. Furthermore, as technological advancements progress, the cost of producing these high-efficiency panels continues to decline, making them even more accessible to the Asia Pacific market.
By End Users:
By end users, the Asia Pacific solar power market is dominated by electricity generation segment. As of recent data, this segment alone accounted for an impressive 65% of the total market revenue. Its dominance doesn't stop there: projections for the 2024-2032 period indicate that this segment is set to soar with an anticipated CAGR of 26%, showcasing its pivotal role in the region's renewable energy landscape. As Asia Pacific countries grapple with the twin challenges of escalating environmental degradation and rising energy demand, solar energy emerges as a sustainable solution. Governments are recognizing the imperative of this transition.
Numerous countries in the region are rolling out incentives and tax breaks to encourage solar panel installations, acting as a significant catalyst. For instance, by 2022, India's government had already facilitated the installation of over 56 GW of solar capacity, aiming for 100 GW by 2022's end. This proactive governmental stance, coupled with the ever-increasing awareness of environmental sustainability, ensures that the electricity generation segment's trajectory remains sharply upward in the Asia Pacific solar power market.
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Top Players in Asia Pacific Solar Power Market
Market Segmentation Overview:
By Technology
By Solar Module
By End Use
By Country
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