SOLAR LEASE SERVICE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

Solar Lease Service Market Size and Trends

The global solar lease service market size is estimated to be valued at US$ 14.84 billion in 2023 and is expected to reach US$ 49.26 billion by 2030, grow at a compound annual growth rate (CAGR) of 18.7% from 2023 to 2030. Solar lease services allow consumers to lease solar panels from a solar company rather than purchasing them. This eliminates high upfront costs and enables consumers to benefit from lower electricity bills. Key drivers of the market include declining costs of solar panels, supportive government policies, and rising environmental awareness.

The solar lease service market is segmented by End User Industry, solar panel type, ownership model, mounting type, and connection type. By End User Industry, the residential sector accounted for the largest share in 2022. The growth in this segment is driven by increasing rooftop solar installations by households seeking affordable and clean energy.

Solar Lease Service Market Trends:

Rising Popularity of Solar Leasing among Residential Customers: Residential solar leasing has become very popular owing to its flexibility and zero upfront costs for homeowners. Under lease models, customers avoid system ownership complexities and can save significantly on monthly power bills. Solar leasing allows households to reduce electricity expenses and carbon footprint without high initial installation costs. SunPower, Tesla, and other leading players are offering innovative leased rooftop solar options tailored for homeowners. Rising environmental awareness and retail electricity prices will further boost residential solar leasing adoption.

For instance on September 2021, according to a recent Department of Energy report, it is projected that the percentage of U.S. households opting for solar leases will increase to 23% by 2023, a substantial rise from the 10% recorded in 2020. This surge in solar lease adoption is anticipated to have a substantial impact on the growth of residential solar installations in the years ahead.

Third-Party Solar PPA Model Growth: The third-party solar Power Purchase Agreement (PPA) has surged in popularity as an innovative procurement route for commercial and industrial entities. Under this model, an external solar developer installs and owns the Photovoltaic (PV) system on the customer’s site. The customer pays for solar power generated through a long-term contract at a fixed kWh rate lower than prevailing utility rates. PPAs provide access to solar power with minimal upfront investment, management hassles, and performance risks for corporate offtakers. Major solar lease providers like SunRun are offering flexible PPA solutions, accelerating model adoption.

For instance, according to the International Renewable Energy Agency (IRENA), there was a global increase of over 50% in renewable energy capacity additions during the 2016-2021 timeframe, even in the face of the COVID-19 pandemic. Solar PV was responsible for the largest capacity additions in both 2020 and 2021.

Solar Lease Service Market Drivers:

Increasing solar power generation: Solar power generation has been on a steady rise globally, driven by several factors, including greater awareness of climate change, improving economics, and supportive government policies around the world. More and more homes and businesses are installing rooftop solar panels to generate their own green electricity and reduce carbon emissions.

For instance, according to Energy Efficiency and Renewable Energy, in 2022, there was a resurgence in the off-grid solar market after years of stagnation caused by the COVID-19 pandemic. A remarkable 9.5 million off-grid solar products were purchased, boasting a total capacity of 94 megawatts (MW). Most of these sales were related to lighting solutions and an array of appliances, including fans, televisions, water pumps, and refrigerators.

Declining solar panel installation costs: Declining solar panel installation costs have been a significant factor driving the growth of the solar lease service market over the past few years. As technology has advanced, solar panels have become more efficient at converting sunlight into energy while also decreasing in price. This steep decline has made solar more accessible and affordable for both homeowners and businesses. With lower upfront costs, solar leasing has emerged as an attractive option that has allowed many more customers to adopt solar without large capital outlays.

For instance on Feb 2021, previously, the U.S. Department of Energy reported that the initial expenses for an average home solar system could reach as high as US$40,000. However, current figures show that these costs have decreased to below US$15,000, and it is anticipated that they will further decline to under US$10,000 by 2023, according to forecasts from International Renewable Energy Agency (IRENA).