Rooftop Solar EPC Market Trends

Growth Drivers

• Increasing government subsidies and investments: Globally, there is a sustained effort to reach net zero carbon emissions by 2050. The green energy sector is witnessing a profitable growth curve and solar energy is the most widely adopted renewable energy. Governments across the world have identified the potential of solar-powered energy solutions and have provided subsidies and incentives to help boost the rooftop solar EPC market’s growth. For instance, in November 2022, the government of Switzerland announced subsidies worth USD 636.3 million to support solar power extension across the country. Subsidies, tax breaks, and net metering policies boost the adoption of rooftop solar panels and provide opportunities for rooftop solar EPC end-to-end solutions.
  
  Additionally, government-sponsored incentives to help the private sector in large-scale solar power solutions assist the growth of the rooftop solar EPC market. For instance, the World Economic Forum (WEF) reported U.S. incentivized private sectors investments through nearly USD 400 billion in federal funding in the form of tax credits via the US Inflation Reduction ACT (IRA).
• Growth in manufacturing and declining costs of solar PV: The declining costs of solar PV have led to large-scale adoption as accessibility improves. The steep decline in costs is attributed to the rapid increase in manufacturing. Our World in Data estimated that global solar technology costs fell by almost 20% whenever the global cumulative capacity doubled. Currently, solar power is one of the cheapest energy solutions in many countries, and it is positioned to bolster the revenue growth of the rooftop solar EPC market.
  
  Additionally, solar equipment production has increased drastically with China dominating global production. For instance, the IEA reported that solar PV exports from China were over USD 30 billion in 2021, accounting for almost 7% of the country’s trade surplus. Increased production also ensures supply chain optimization, ensuring a global cost decrease. These trends are positioned to drive the sector by the end of the forecast period.
• Cost-effective solution to rising energy costs: Energy demands and costs have risen owing to heat waves suffered by numerous countries in the first half of 2024. For instance, in July 2024, the U.S. Energy Information Administration (EIA) released a report that the summer heat wave led to a 19% increase in electricity demand in the PJM region compared to the previous year. The rooftop solar EPC market is positioned to address the pain point of rising energy costs by providing cost-efficient solar-powered energy solutions that can reduce grid dependency. Solar energy is now the cheapest power source in many countries and offers a cost-effective alternative to traditional power grids. The price reduction trends in solar equipment correlate with the corporate push for sustainability measures, which is poised to increase the adoption of rooftop solar EPC services. For instance, in February 2021, the National Renewable Energy Laboratory estimated a steep decline in costs accounting for 64%, 69%, and 82% reduction in the cost of cost of residential, commercial-rooftop, and utility-scale PV systems, respectively between 2011 and 2021.

Challenges

• Geographical concentration of global supply chains: The geographical concentration of global supply chains can prove to be a challenge for governments. China accounts for the largest production and export of PV panels and any disruption of the supply chain can cause global disruptions. For instance, in September 2024, the U.S. imposed 50% tariffs on solar cells from China. This can lead to increased costs and delays in solar projects. To mitigate this issue stymying the rooftop solar EPC market’s growth, there is a need for diversification of manufacturing sources globally.
• Space constraints in urban areas: Lack of space in urban housing can cause issues in solar panel installation. High-rise buildings, congested layouts, and small roof surfaces challenge the scope of large-scale solar installations. This can pose challenges for the rooftop solar EPC sector. Additionally, older buildings in urban spaces may require structural reinforcements before the installation of solar panels installation which can drive costs of installation.
  
  Market players providing rooftop solar EPC services require share-free roof areas for efficient installations and lack of it can prove to be a deterrent. Advancements in community solar projects are poised to answer the challenge and maintain the growth of the rooftop solar EPC market.