Energy and Power

Solar Encapsulation Market is Expected to Reach USD 9,020.6 Million by 2031

May 2024

Energy and Power

As per the report published by Kings Research, the global Solar Encapsulation Market was valued at USD 4,825.6 million in 2023 and is projected to reach USD 9,020.6 million by 2031, growing at a CAGR of 8.25% from 2024 to 2031.

The continued global shift toward renewable energy sources, driven by rising concerns over climate change and the pressing need for sustainable energy solutions, is contributing significantly to market growth. Governments worldwide are implementing supportive policies, incentives, and regulations to promote solar energy adoption, thereby bolstering demand for encapsulation materials. Additionally, advancements in solar technology, such as the development of higher efficiency panels and innovative encapsulation materials, are enhancing the performance and durability of solar installations, thus driving market expansion. Furthermore, the increasing competitiveness of solar energy, marked by declining installation costs and improving technology, is fueling widespread adoption across diverse sectors and geographies. Emerging markets, particularly in Asia Pacific, Latin America, and Africa, present significant growth opportunities, fueled by rapid urbanization, rising energy demand, and supportive government initiatives.

Moreover, the integration of solar energy with energy storage solutions, along with the emergence of smart grid technologies, is reshaping the solar landscape, leading to an increased demand for encapsulation materials capable of supporting these evolving applications. The growing emphasis on sustainability and environmental stewardship is further fostering innovation in eco-friendly encapsulation materials and recycling practices.

Key Insights

  • Based on material type, the ethylene vinyl acetate (EVA) segment held the largest market share of 41.05% in 2023
  • Based on application, the rooftop segment generated the highest revenue of USD 2,029.6 million in 2023
  • Based on technology, the crystalline silicon PV modules segment is anticipated to generate a value of USD 4,211.9 million by 2031
  • On the basis of region, Asia-Pacific accounted for the largest market share of 36.01% in 2023

First Solar Announces Expansion Plans to Increase Production Capacity with Another Setup in the U.S.

July 2023: First Solar, a major producer of thin-film solar panels, announced its plans to invest USD 1.1 billion in opening a fifth manufacturing facility in the United States. This facility is slated to possess an annual production capacity of 3.5 GW, thereby augmenting First Solar's total production capacity of 14 GW in the United States and 25 GW worldwide.

Favorable Government Incentives and Subsidies to Support Solar Encapsulation Market Growth

Numerous governments are actively promoting the adoption of solar energy through various policy measures. These include feed-in tariffs that guarantee a fixed price for electricity generated from solar panels, tax credits that reduce the upfront cost of installation, and subsidies for specific types of solar projects. These incentives make solar power more accessible and financially attractive for both individuals and businesses. This, in turn, is stimulating the demand for solar panel installations, which is contributing to the expansion of the solar encapsulation market. For instance, the US federal solar investment tax credit currently offers a 26% tax credit on the installation cost of residential and commercial solar photovoltaic systems. This policy directly incentivizes solar adoption, leading to a rise in the need for solar encapsulation materials.

Growing Utilization of Solar Energy in Emerging Markets to Present Potential Growth Opportunities

Countries in regions such as Asia-Pacific, Latin America, and Africa are experiencing rapid economic growth, urbanization, and increasing energy demand. Governments in these regions are recognizing the potential of solar energy to address energy security concerns, reduce reliance on fossil fuels, and mitigate environmental impacts. For instance, India's ambitious renewable energy targets aim to reach 280 GW of solar capacity by 2030, presenting a substantial opportunity for encapsulation material suppliers.

Investments in solar energy infrastructure and supportive policies, such as feed-in tariffs and tax incentives, are stimulating market growth in emerging economies. Moreover, innovative financing mechanisms, such as pay-as-you-go and leasing models, are making solar energy more accessible to consumers in rural and underserved areas. This expansion of solar energy deployment in emerging markets creates a significant demand for encapsulation materials to protect and enhance the performance of solar panels in diverse climatic conditions.

Furthermore, partnerships and collaborations between international and local stakeholders are facilitating technology transfer, knowledge sharing, and capacity building in emerging markets, which is fostering a conducive environment for solar encapsulation market growth. By capitalizing on these opportunities, encapsulation material suppliers are tapping into new markets, diversifying their customer base, and contributing to the global transition towards clean and sustainable energy.

Technological Innovation and Product Development to Aid Solar Encapsulation Market Growth

As the solar energy industry continues to evolve, there is a growing demand for encapsulation materials that offer improved performance, durability, and sustainability. Innovations such as bifacial solar panels, perovskite solar cells, and building-integrated photovoltaics (BIPV) are driving the need for specialized encapsulation solutions tailored to these emerging technologies.

For instance, the development of transparent conductive oxides (TCOs) as encapsulation materials for bifacial solar panels enables enhanced light transmission and energy conversion efficiency. Additionally, advancements in nanotechnology are facilitating the development of nanostructured encapsulation materials with superior barrier properties and resistance to degradation.

Furthermore, the integration of smart functionalities, such as self-cleaning coatings and embedded sensors, into encapsulation materials enhances the performance and maintenance of solar panels, thereby reducing operational costs and increasing reliability. Encapsulation material suppliers are seizing the opportunity to collaborate with research institutions, technology developers, and solar panel manufacturers to co-create innovative solutions that address the evolving needs of the solar energy industry.

Asia-Pacific Dominated the Market with a Share 36.01% in 2023

Based on region, the global solar encapsulation market is classified into North America, Europe, Asia Pacific, MEA, and Latin America. The Asia-Pacific region dominated the market in 2023, accounting for a valuation of USD 1,737.7 million due to the presence of manufacturing hubs for renewable energy components, coupled with the development of emerging economies. China and India, as prominent regional powerhouses, are also the world's leading producers of solar panels, requiring a vast supply chain for encapsulation materials. Government policies across the region actively promote solar energy with ambitious targets, such as China's goal of reaching 1,200 GW of solar and wind power capacity by 2030. This results in a significant demand for solar panels and, in turn, for encapsulation materials. The region's cost-effective manufacturing allows for competitive pricing, while research and development lead to innovative encapsulation solutions. Moreover, the burgeoning demand for rooftop solar installations in both residential and commercial sectors fuels regional market development. With continued government support, technological advancements, and a dominant solar panel production base, Asia-Pacific is likely to retain its leading position in the global solar encapsulation market in the foreseeable future.

Major Industry Players Ink Collaborative Deals to Strengthen Market Foothold

The global solar encapsulation market is fragmented with key players such as Mitsui Chemicals, Inc., First Solar, Elkem ASA, Dow, H.B. Fuller Company, 3M, DuPont, Saint-Gobain Group, RenewSys India Pvt. Ltd., Evonik Industries AG, and others. Companies employ a variety of strategic measures such as acquisitions, mergers, partnerships, product introductions, and collaborations to expand their business globally and enhance their competitive position.

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