HOME SOLAR SYSTEM MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The home solar system market size is expected to reach US$ 212.81 Bn by 2030, from US$ 67.20 Bn in 2023, exhibiting  a compound annual growth rate (CAGR) of 17.9% during the forecast period.

A home solar system consists of solar panels, batteries, inverters, and other electrical components that allow homeowners to generate, store, and consume solar power in their houses. Growing adoption of rooftop solar Photovoltaic System in residential buildings is driving the market growth globally. The key factors propelling the uptake of home solar systems include declining costs of solar components, favorable government policies, rising electricity prices, and increased environmental awareness.

Home Solar System Market Regional Insights

• Asia Pacific: This region is the largest market for home solar systems, accounting for over 40% of the global market in 2023. The growth of the market in this region is driven by factors such as rising government incentives, increasing awareness of solar energy, and declining costs of solar panels. China is the largest market for home solar systems in Asia Pacific, followed by India, Japan, and South Korea.
• North America: The North American market for home solar systems is the second largest in the world, accounting for about 30% of the global market in 2023. The growth of the market in this region is driven by factors such as increasing government incentives, favorable policies, and rising demand for renewable energy. The U.S. is the largest market for home solar systems in North America, followed by Canada and Mexico.
• Europe: The European market for home solar systems is the third largest in the world, accounting for about 20% of the global market in 2023. The growth of the market in this region is driven by factors such as increasing government incentives, rising awareness of solar energy, and declining costs of solar panels. Germany is the largest market for home solar systems in Europe, followed by Italy, France, and the U.K. 

Figure 1. Home Solar System Market Share (%), By Region, 2023

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Home Solar System Market Drivers

• Declining costs of solar photovoltaic systems: The costs associated with solar photovoltaic (PV) systems including panels, inverters, and other components have declined significantly over the past decade. This has been driven by improvements in solar cell technologies, manufacturing scale, and supply chain efficiencies. The levelized cost of electricity from residential solar PV systems has reduced by over 70% since 2010. As solar power achieves grid parity in more regions, homeowners are finding solar to be an economically viable option to meet their electricity needs and reduce dependence on utilities. The declining costs are a major driver fostering the adoption of rooftop solar and growth of the home solar system market globally. For instances, according to the International Renewable Energy Agency (IRENA), the global weighted average price of utility-scale solar PV fell 82% between 2010 and 2019.
• Supportive government policies and incentives: Governments across the world have implemented various policy measures and financial incentives to accelerate the deployment of solar energy systems at the residential level. These include capital subsidies, feed-in tariffs, renewable portfolio standards, net metering, and solar renewable energy credits. For instance, the federal solar tax credit in the U.S.,, allows homeowners to deduct 26% of the cost of installing a solar system from their taxes. Such incentives along with renewable purchase obligations make home solar power attractive, thus overcoming the cost barriers and driving market growth.
• Innovations in solar technologies: Advancements in solar cell, module and system technologies are contributing to higher efficiencies, improved reliability and lower costs, thus making home solar solutions more viable. For instance, Programmable Electrical Rules Checking (PERC) , heterojunction, bifacial, and other high-efficiency solar cells have increased module efficiency to over 20%. Smart modules with integrated microchips aid better energy yield monitoring and outage mitigation. Expanding battery storage capacities, smart inverters and EV integration are also driving technological improvements in the home solar ecosystem. For instances, the U.S. Energy Information Administration predicts that annual solar PV installations in the U.S. are expected to rise to 19 gigawatts by 2023, up from 14 gigawatts. These trends point towards home solar continuing its strong growth trajectory in response to technology-driven reductions in costs and increases in system performance.
• Growing electricity prices and demand: Rising retail electricity prices coupled with increasing power consumption in residential buildings due to economic growth, rising incomes, and improving access to electricity is escalating the demand for solar energy systems from homeowners. With savings on monthly energy bills over long-term, solar power helps consumers hedge against energy inflation and recurring fuel costs. This consumer pull is likely to persist, with the outlook for continued electricity price rise, thus driving uptake of rooftop solar.

Home Solar System Market Opportunities

• Emerging battery storage systems: The coupling of solar power systems with battery-based energy storage opens new opportunities for home solar growth. It allows residential consumers to store excess solar power during daylight hours for later use when sunlight is unavailable. This improves solar energy self-consumption and provides backup power during grid outages. Cost declines, improving performance of lithium-ion, and other emerging battery chemistries, and evolving business models like solar+storage as a service will drive the adoption of integrated solar and storage solutions. For instances, according to the International Renewable Energy Agency (IRENA), the global average price of lithium-ion battery packs dropped by 97% between 2010 to 2021 to about US$230 per kWh International Renewable Energy Agency. 2022. Several manufacturers are claiming battery price levels below US$150 per kWh which will make battery storage very attractive add-on for solar homes.
• Off-grid applications: Home solar systems present a promising decentralized energy access solution for millions living in remote areas without reliable grid connectivity. The advances in standalone solar systems, DC appliances and productive use applications enable affordable off-grid electrification. Government programs supporting solar deployments to unelectrified homes and communities in developing countries would create substantial opportunities for the off-grid home solar market segment. For instances, according to the International Energy Agency, around 770 million people worldwide lacked access to electricity in 2020, most of who live in rural areas of Asia and sub-Saharan Africa. For these populations, stand-alone solar home systems can provide a reliable and sustainable source of energy for lighting, fans, mobile charging, and powering of basic appliances.
• Integration with smart technologies: The convergence of solar systems with artificial intelligence, big data analytics, IoT and smart home technologies will create new capabilities for homeowners. Smart solar monitoring, predictive maintenance, voice assistants, automated control of appliances will drive smarter, efficient utilization of solar energy. Solar + storage integrated with home energy management systems and EV charging enables customized solutions, thereby expanding home solar use cases.
• Peer-to-peer solar energy trading: Peer-to-peer solar trading allows consumers with rooftop solar panels to sell excess generation to their neighbors. Blockchain-enabled distributed ledger technologies facilitate such decentralized energy transactions between prosumers and consumers directly. This creates opportunities for home solar owners to become part of a local shared solar community and monetize excess solar power, thereby boosting returns on investment. Startups piloting peer-to-peer energy trading networks could accelerate its adoption.

Home Solar System Market Trends

• Solar leasing and shared solar ownership models: Emergence of third-party solar leasing and solar PPA models have mitigated ownership-related barriers limiting on-site solar installations for homeowners. Under a solar lease, homeowners can install solar panels on their rooftop with low upfront costs and pay for the systems through monthly lease payments to a solar leasing company. Shared or community solar allows households to subscribe to offsite solar arrays and obtain credits on their electricity bills. These innovative models reduce financial burdens, thus making solar access easier for homeowners. For instances, according to Department of Energy's report in 2021, 30 states in the U.S. has shared solar programs with over 3,000 MW of shared solar capacity installed, which increased 500 MW in 2015.
• Solar shingles and building integrated products: An emerging alternative to rack-mounted modules are integrated solar shingles, tiles, and roofs which replace conventional building materials that are used in residential roofing. BIPV products such as solar shingles made of flexible thin-film PV laminates provide an aesthetically pleasing and unobtrusive rooftop solar installation. While costs are high, increased adoption of BIPV technologies would improve economies of scale. For instances, according to the United States Department of Energy's 2021 Solar Futures Study, building integrated photovoltaics are expected to grow significantly and account for approximately 40% of new U.S.
• Residential community solar and solar districts: Developers are increasingly integrating solar energy solutions across residential communities, neighborhoods and large-scale housing projects during construction itself. Pre-installed rooftop solar systems or shared ground-mounted solar farms built to serve energy needs of the entire residential community generate clean power for all homes. Planned solar districts represent a promising trend benefitting both builders and homeowners.
• Solar storage retrofits for existing home solar systems: Retrofitting battery storage systems to existing residential solar PV systems is rising as a key trend. Homeowners with already installed solar panels are adding batteries to maximize solar energy utilization. Companies are offering retrofit options and new capabilities like smart energy management for previously installed solar+storage systems. Retrofits help in harvesting greater value from solar infrastructure.

Home Solar System Market Restraints

• High upfront costs and long payback periods: Despite declining solar PV costs, the high upfront investment that is required for installing complete solar systems remains a key adoption barrier. Additional expenses related to roof upgrades, electrical works, permits, and labor costs add to the overall price for homeowners. The long payback period of over 4-8 years on initial investment lowers consumer motivation for installing on-site solar systems. For example, according to the U.S. Energy Information Administration's 2020 data, during the economic slowdown caused by COVID-19, the residential installed solar capacity in the U.S decreased by 13% as compared to the previous year 2019.

Counterbalance- Make systems are more affordable through innovative financing options like leases, power purchase agreements (PPAs), and loans. The key market player should seek government incentives and rebates that can lower the cost for consumers. Investing in more efficient production technology can help in  reducing the manufacturing costs.

• Intermittency of solar power generation: The intermittent nature of solar energy generation arising from diurnal cycles and unpredictable weather conditions like cloud cover limits the use cases for homeowners. Reliable power supply cannot be ensured solely that is based on rooftop solar systems, unlike continuous electricity from the grid. This poses an adoption restraint especially where net metering policies are unavailable. For instances, according to the International Renewable Energy Agency (IRENA), only about 8% of the population in rural areas of sub-Saharan Africa had access to electricity in 2020, thereby indicating the need for decentralized off-grid solutions. However, the intermittency concern of solar remains a significant barrier in these resource-constrained regions.
• Lack of supportive infrastructure and limited roof space: Inadequate transmission and distribution infrastructure for decentralized renewable power integration along with lack of net metering facilities in parts of developing countries slow down home solar market growth. Suitable roof space constraints, structural issues, and ownership barriers in high-rise apartments also limit installations. Limited product standardization and underwriting challenges impact solar financing options.

ANALYST VIEW:

The home solar system market is expected to witness steady growth over the next decade 2023 to 2032 driven by supportive government policies and innovations to make solar panels more efficient and affordable for homeowners. The major drivers for the industry include rising electricity costs from conventional sources, climate change awareness, and rebates or tax credits for installing solar panels. However, limited technological improvements in battery storage remain a restraint as it affects round-the-clock reliance on solar power. North America dominates the home solar system market led by the U.S. due to its proactive net metering policies and carbon emission reduction goals. The U.S. is actively working to make the country energy independent by embracing renewable sources. Meanwhile, Asia Pacific is expected to emerge as the fastest growing regional market with countries like China, Japan, and India introducing schemes to boost rooftop solar installations. With continuous focus on research, the performance of solar modules is likely to improve while costs will decline further. This makes solar power an attractive option for households looking to reduce their monthly energy bills. Wider adoption of an integrated solar-plus-storage model can help accelerate consumer uptake. The concept of community solar where neighbors share capacity is gaining popularity in regions with space constraints.

Recent Developments

New product launches

• In January 2022, Tesla,, a U.S. based multinational automotive and clean energy company, launched its Solar Roof V3, an integrated solar panel shingle roof with higher efficiency and easier installation. The product aims to make solar an attractive and integrated roofing option for homeowners. Tesla, Inc. is an American multinational automotive and clean energy company headquartered in Austin, Texas. The company was founded in July 2003 by Martin Eberhard and Marc Tarpenning as Tesla Motors, and the name was changed to Tesla, Inc. in February 2017
• In June 2021, SunPower, a U.S. based provider of photovoltaic solar energy generation systems and battery energy storage products, primarily for residential customers launched its Equinox home solar system, integrating intelligent technology to maximize energy production. The system comes with SunVault storage and mySunPower app for homeowners. SunPower Corporation is an American provider of photovoltaic solar energy generation systems and battery energy storage products, primarily for residential customers. The company was founded in 1985 by Richard Swanson, an electrical engineering professor from Stanford University. It is headquartered in San Jose, California.
• In May 2020, LG Electronic, a South Korea based multinational electronics company unveiled its NeON R solar panel for residential market. The panel delivers improved temperature performance and power output. LG Electronics, Inc. is a South Korean multinational electronics company headquartered in Yeouido-dong, Seoul, South Korea. It is a part of LG Corporation, the fourth largest chaebol in South Korea, and often considered as the pinnacle of LG Corp with the group's chemical and battery division LG.

Acquisition and partnerships

• In August 2022, Sunrun acquired Sunfolio, a residential solar and home energy management company. This allowed Sunrun to expand its operations in key western states in the U.S. Sunrun Inc. is an American provider of photovoltaic systems and battery energy storage products, primarily for residential customers. The company was established in 2007 and is headquartered in San Francisco, California.
• In July 2021, SunPower partnered with Woodside Homes, one of the top U.S. homebuilders to provide its Equinox Solar Systems in new home communities. SunPower Corporation is an American provider of photovoltaic solar energy generation systems and battery energy storage products, primarily for residential customers.
• In June 2020, Sunrun acquired Vivint Solar, a major residential solar and smart home company. The acquisition created one of the leading home solar and energy services company.

Figure 2. Home Solar System Market Share (%), By Solar Module Type, 2023

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Top Companies in Home Solar System Market

• SunPower Corporation
• Vivint Solar
• Sunrun
• Tesla
• LG Electronics
• Panasonic Corporation
• JinkoSolar
• Canadian Solar
• ReneSola
• Trina Solar
• Yingli Green Energy
• SMA Solar Technology
• Enphase Energy
• SolarEdge Technologies
• Daqo New Energy Corp
• JA Solar
• LONGi Green Energy Technology
• Array Technologies
• First Solar
• REC Group

Definition: The home solar system market refers to the market for solar photovoltaic systems that are designed to generate electricity for residential buildings. It comprises rooftop solar PV systems, solar shingles, solar tiles, and other integrated building-applied photovoltaics installed in individual homes, apartments, and residential communities. With homeowners seeking energy self-sufficiency and environmental sustainability, the global adoption of solar power systems for decentralized power generation in the residential sector has increased over the past decade 2013-2023 This transition has been aided by the declining costs of solar modules, advancements in energy storage technologies, and favorable government regulations. The key components of home solar systems include solar panels, inverters, racking systems, and batteries for energy storage. The growth of this market is expected to accelerate as more homeowners switch to solar for reliable and clean power supply.