South America Solar Encapsulation Market Outlook, 2030

The South America solar encapsulation market is experiencing robust growth in line with the region’s broader solar power expansion, particularly driven by Brazil’s large-scale utility projects and rooftop solar adoption, as well as Chile’s steady development of auction-backed renewable capacity. Demand is primarily centered on utility-scale installations that require highly durable encapsulants capable of preserving optical clarity, resisting UV exposure, and preventing potential-induced degradation (PID) over 25–30 years of operation, while the residential and commercial rooftop segments increasingly seek cost-effective solutions with faster supply chains and easier certification processes. Ethylene-vinyl acetate (EVA) remains the most widely used encapsulant due to its low cost and established track record; however, polyolefin elastomers (POE), thermoplastic polyurethane (TPU), and advanced dual-layer encapsulants are gaining popularity because they provide superior PID resistance, UV stability, and enhanced mechanical strength for bifacial and heterojunction (HJT) solar modules, which are expanding in South America thanks to the region’s high solar irradiation levels. Innovation is visible as manufacturers launch dual-layer POE grades, UV-resistant films, and improved formulations tailored to the region’s demanding climatic conditions. Regulatory frameworks are playing a critical role, with Brazil enforcing stricter INMETRO certification requirements and implementing tariffs and quotas to encourage local manufacturing, while Chile’s transparent auction system ensures predictable demand for developers, even though shifting rules and permitting processes can affect timelines and procurement. These policy measures, combined with supply chain challenges such as currency volatility, import costs, and long shipping lead times, are pushing developers to prioritize encapsulants that guarantee long-term reliability, bankability, and lower balance-of-system (BOS) risks.

According to the research report ""South America Solar Encapsulation Market Outlook, 2030,"" published by Bonafide Research, the South America Solar Encapsulation market was valued at more than USD 410 Million in 2024. The most significant growth drivers is the region’s abundant solar resources, particularly in Brazil, Chile, Argentina, and Peru, where high irradiation levels make solar one of the most competitive renewable energy sources. This has fueled large-scale utility projects, such as Brazil’s rapidly expanding photovoltaic parks and Chile’s Atacama Desert solar hubs, which require encapsulants that can withstand intense UV radiation, high temperatures, and harsh climatic conditions, thereby pushing demand for advanced formulations like polyolefin elastomers (POE) and thermoplastic polyurethanes (TPU) alongside traditional EVA. Another factor is the surge in rooftop solar installations, particularly in Brazil, which leads South America in distributed generation; here, encapsulants that offer a balance of affordability and durability are in demand, enabling residential and commercial consumers to adopt solar technology with lower upfront risks. Policy and regulatory support also play a vital role: Brazil has tightened INMETRO certification requirements for photovoltaic modules and components, ensuring that only high-quality encapsulants enter the market, while tariff adjustments and incentives encourage local production and reduce dependency on imports. Similarly, Chile’s consistent use of renewable energy auctions, alongside efforts to integrate storage and hybrid systems, creates a predictable pipeline for developers, encouraging the use of bankable, certified encapsulation materials that guarantee long-term performance. A further growth factor is the technological shift toward bifacial and heterojunction (HJT) modules, which are increasingly deployed in South America to maximize energy yield; these modules require encapsulants with superior PID resistance, optical transparency, and mechanical strength, thereby expanding the market for innovative dual-layer encapsulants and UV-stable products.

Market Drivers

• Growing Solar Energy Adoption in Emerging Economies: South America is witnessing a steady rise in solar PV installations, led by countries such as Brazil, Chile, Argentina, and Colombia. Brazil, in particular, has become a regional leader, supported by net metering policies, government incentives, and private investments in renewable energy. Chile’s Atacama Desert, one of the sunniest places on earth, is also a hotspot for utility-scale solar farms. This growing demand for solar power directly fuels the need for encapsulants, which are essential for protecting solar modules from high UV exposure, dust, and varying weather conditions while ensuring long-term energy generation.
• Supportive Government Policies and Energy Diversification: South American governments are increasingly focused on diversifying their energy mix to reduce dependence on hydropower and fossil fuels. Renewable energy targets, tax incentives, and favorable regulatory frameworks are encouraging the development of large-scale solar projects across the region. As solar installations increase, encapsulant manufacturers have opportunities to supply materials that enhance the durability and efficiency of PV modules, especially in regions with strong sunlight and challenging climates.

Market Challenges

• High Import Dependency and Cost Barriers: One of the major challenges in South America is the reliance on imported encapsulants and solar materials, primarily from Asia. This dependency raises costs due to tariffs, transportation, and currency fluctuations, making solar projects more expensive. Limited local manufacturing capacity of encapsulants further intensifies the challenge, restricting access to advanced encapsulant technologies like POE and ionomers for high-efficiency solar modules.
• Harsh Climatic Conditions and Reliability Concerns: South America’s diverse climates from the arid deserts of Chile to humid tropical regions in Brazil and Colombia create significant reliability challenges for encapsulant materials. High humidity, strong UV radiation, and temperature fluctuations can lead to encapsulant degradation issues such as yellowing, delamination, and water ingress. Ensuring encapsulants maintain long-term stability in these environments is critical but often adds to costs and requires advanced R&D.

Market Trends

• Rising Demand for Utility-Scale Projects and Bifacial Modules: A key trend in South America is the growing number of large-scale solar farms, especially in Brazil and Chile, which are increasingly deploying bifacial modules to maximize energy yield. These advanced modules require high-performance encapsulants with excellent transparency and resistance to degradation. The shift toward bifacial and high-efficiency modules is creating opportunities for encapsulant manufacturers to introduce advanced materials beyond conventional EVA.
• Interest in Sustainable and Locally Produced Encapsulants: There is a rising trend toward promoting local manufacturing of solar components, including encapsulants, to reduce import dependency and project costs. At the same time, sustainability is becoming more prominent, with growing discussions around recyclable and eco-friendly encapsulant materials to align with global environmental standards. Localizing production and adopting greener encapsulation solutions are expected to play a larger role in shaping the South American solar encapsulation market over the coming years.

Polydimethylsiloxane (PDMS) is moderately growing in South America’s solar encapsulation industry due to its superior flexibility, weather resistance, and compatibility with emerging flexible and building-integrated photovoltaic (BIPV) applications.

The moderate growth of Polydimethylsiloxane (PDMS) in the South American solar encapsulation industry is largely driven by its unique material properties and the evolving regional demand for versatile solar solutions. PDMS, a type of silicone polymer, offers excellent elasticity, thermal stability, and long-term weather resistance, making it highly suitable for solar modules that need to endure diverse climatic conditions, such as the intense sunlight in Brazil’s northern regions or the variable temperatures in Chilean solar farms. Its high optical transparency and UV stability allow for minimal energy loss, which is critical for maintaining the efficiency of solar panels over time. In addition, PDMS is increasingly adopted in flexible and thin-film photovoltaic applications, which are gaining traction in South America due to the growing interest in lightweight, portable, and building-integrated photovoltaic (BIPV) solutions. These applications are particularly relevant for urban areas and off-grid regions, where conventional crystalline silicon panels may not be practical due to weight or installation constraints. Another factor contributing to PDMS adoption is its chemical inertness and resistance to moisture ingress, which enhances the durability and lifespan of solar modules—a key consideration for investors and manufacturers in regions prone to high humidity or heavy rainfall. While PDMS is more expensive than conventional ethylene-vinyl acetate (EVA) encapsulants, its performance benefits in specialized applications justify the moderate growth observed. Additionally, local initiatives and government incentives promoting renewable energy, combined with increased awareness among manufacturers of the long-term cost benefits associated with higher durability materials, are further supporting PDMS integration into the South American market.

Thin-Film Solar technology is the fastest-growing in South America’s solar encapsulation industry due to its lightweight design, flexibility, and high efficiency in low-light conditions, making it ideal for diverse and off-grid installations.

The rapid growth of Thin-Film Solar technology in South America’s solar encapsulation industry is primarily driven by its unique combination of lightweight construction, flexibility, and adaptability to a wide range of applications. Unlike traditional crystalline silicon panels, thin-film modules can be produced in large, lightweight sheets that are easier and more cost-effective to transport and install, which is particularly advantageous in remote or off-grid regions of South America, such as rural areas in Brazil, Argentina, and Chile. These regions often have challenging terrains, where conventional solar panels are difficult to deploy, making thin-film an attractive alternative. Another key factor fueling growth is the technology’s performance under low-light conditions and partial shading, which enhances energy yield in areas with variable sunlight, seasonal cloud cover, or urban environments with shading from buildings or vegetation. Additionally, thin-film solar cells are highly compatible with building-integrated photovoltaic (BIPV) solutions, enabling installation directly onto rooftops, facades, and other unconventional surfaces without the need for heavy structural support, thereby expanding the scope of solar energy adoption across commercial and residential sectors. Technological advancements in encapsulation materials, such as improved polymers and weather-resistant films, have further increased the durability and lifespan of thin-film modules, addressing historical concerns about degradation and efficiency loss. Government policies and regional incentives promoting renewable energy deployment, coupled with declining manufacturing costs and growing environmental awareness, have accelerated the adoption of thin-film technology, particularly for small- to medium-scale projects.

Floating photovoltaic (FPV) applications are the fastest-growing in South America’s solar encapsulation industry due to their ability to utilize water surfaces efficiently, reduce land constraints, and improve energy generation in high-sunlight regions.

The rapid growth of floating photovoltaic (FPV) applications in South America’s solar encapsulation industry is primarily driven by the region’s increasing demand for innovative, land-efficient renewable energy solutions. FPV systems, which are installed on reservoirs, lakes, and other water bodies, offer a strategic advantage in countries like Brazil, Chile, and Argentina, where suitable land for large-scale solar farms is limited or expensive. By deploying solar panels on water surfaces, FPV not only avoids competition with agricultural and urban land use but also helps preserve ecosystems and minimize environmental disruption, which is increasingly important amid South America’s growing sustainability initiatives. Another key factor is the technology’s efficiency benefits: the cooling effect of water on the panels helps reduce operating temperatures, which can enhance energy output and improve the lifespan of solar modules. In addition, FPV installations can reduce water evaporation from reservoirs, providing a dual environmental benefit that aligns with regional water management priorities, particularly in arid and semi-arid regions like northern Chile. South America’s abundant sunlight and availability of hydropower reservoirs create an ideal setting for integrating FPV with existing energy infrastructure, allowing for hybrid systems that optimize energy generation and grid stability. Technological advancements in encapsulation materials and mounting systems, including durable, corrosion-resistant polymers, have further increased the reliability and cost-effectiveness of FPV systems, encouraging more manufacturers and investors to adopt this approach.

The Construction end-user segment is the largest in South America’s solar encapsulation industry due to the region’s rising urbanization, infrastructure development, and the increasing integration of solar energy in residential and commercial buildings.

The dominance of the Construction end-user segment in South America’s solar encapsulation industry is closely linked to the region’s ongoing urbanization, infrastructure expansion, and the growing emphasis on sustainable building practices. Countries like Brazil, Chile, and Argentina are experiencing rapid population growth in urban areas, which drives demand for new residential, commercial, and industrial construction projects. These developments provide ample opportunities for integrating solar energy systems directly into buildings, such as rooftop installations, facades, and building-integrated photovoltaic (BIPV) solutions, which rely heavily on high-quality encapsulation materials to ensure long-term performance and durability. Solar encapsulants protect photovoltaic cells from moisture, mechanical stress, UV exposure, and temperature fluctuations, making them essential for construction-based applications where environmental exposure can vary widely. Moreover, governments in several South American countries are promoting renewable energy adoption in buildings through incentives, subsidies, and regulations that encourage developers to include solar solutions in new projects, further boosting demand from the construction sector. The trend is not limited to large commercial projects; small- and medium-sized residential buildings are also increasingly adopting solar panels to reduce electricity costs and support energy self-sufficiency, contributing to the sector’s dominance. In addition, construction companies are recognizing the long-term economic benefits of incorporating solar energy into building designs, including enhanced property value, energy savings, and compliance with emerging green building standards. Technological advancements in flexible and durable encapsulation materials, such as ethylene-vinyl acetate (EVA), polyolefins, and PDMS, have also facilitated the integration of solar modules into diverse construction formats, including curved surfaces and lightweight structures.

Brazil is leading in the South America Solar Encapsulation industry due to its rapidly growing solar power capacity, favorable government policies, and rising demand for durable encapsulation materials in large-scale solar projects.

Brazil has emerged as the leader in the South America Solar Encapsulation industry largely because of its fast-growing solar energy market, strong policy support, and the increasing need for reliable encapsulation materials in both utility-scale and distributed solar projects. Over the past decade, Brazil has made remarkable progress in renewable energy adoption, with solar power becoming one of the fastest-growing sources of electricity in the country. This growth has been fueled by government initiatives such as the National Energy Plan (PDE), auctions for renewable energy contracts, and incentives for distributed generation that encourage residential, commercial, and industrial solar adoption. These measures have created a robust demand for photovoltaic modules, which directly translates into a growing market for encapsulation materials essential for protecting solar cells against moisture, UV exposure, and mechanical stress. Brazil’s vast geographical expanse, high levels of solar irradiance, and availability of land make it particularly suitable for large-scale solar farms, many of which require high-quality encapsulants like EVA and polyolefin elastomers to ensure long-term performance under harsh climatic conditions. Moreover, Brazil’s energy diversification efforts, aimed at reducing dependence on hydropower and fossil fuels, have further boosted solar adoption, reinforcing the demand for advanced encapsulation technologies. Local and international manufacturers are increasingly investing in the country, attracted by its rising solar capacity and supportive regulatory environment. At the same time, Brazil’s manufacturing sector is gradually strengthening its solar supply chain, which supports the localized production and distribution of encapsulation materials, reducing reliance on imports.

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