Solar PV Industry, Global, 2023–2035

Solar PV accounted for 45% of all power generation investment in 2024, and is forecast to maintain this throughout the next decade. Inflation drove up project costs in 2023, but lower module and PV inverter costs meant costs started to decline in 2023 and continued to decline in 2024–a rarity for the power industry.

Residential, commercial, and industrial customers are increasingly investing in solar PV as a way to reduce electricity bills as the payback becomes more attractive. When combined with battery energy storage systems (BESS), solar PV can provide system owners with additional revenue opportunities.

The revenue forecast reflects annual CAPEX and is accrued to the year the solar PV asset becomes operational. The CAPEX includes PV modules, inverters, balance-of-system costs, installation, and commissioning costs (these apply to larger commercial and industrial and grid-scale projects).

Short, medium, and long terms refer to 1 to 2 years (2025?2026), 3 to 4 years (2027?2028), and 5 to 11 years (2029?2035), respectively.

Scope of Analysis
Solar PV accounted for 45% of all power generation investment in 2024, and is forecast to maintain this throughout the next decade. Inflation drove up project costs in 2023, but lower module and PV inverter costs meant costs started to decline in 2023 and continued to decline in 2024 – a rarity for the power industry.
Residential, commercial, and industrial customers are increasingly investing in solar PV as a way to reduce electricity bills, as the payback becomes more attractive. When combined with battery energy storage systems (BESS), solar PV can provide system owners with additional revenue opportunities.
The revenue forecast reflects annual capex, and is accrued to the year the solar PV asset becomes operational. The capex includes PV modules, inverters, balance-of-system costs, installation and commissioning costs (these apply to larger commercial & industrial and utility-scale projects).
Short, medium, and long terms refer to 1 to 2 years (2025–2026), 3 to 4 years (2027–2028), and 5 to 11 years (2029–2035), respectively.


The Impact of the Top 3 Strategic Imperatives on the Solar PV Industry
Competitive Intensity
Why: The level of competition in the solar PV industry is high. Chinese module producers have invested huge sums in new production facilities, meaning there is now major overcapacity, even with the high levels of demand. This has driven prices to record lows.

Frost Perspective: For project developers, the declining module process are enabling them to bring down projects costs, thus making solar PV more competitive. Tax credits in the United States are partially countering this, because top qualify developers need to prove they are using locally sourced materials which have a higher cost.

Geopolitical Chaos
Why: Major conflicts have made energy security a major concern. Increasing economic competition is resulting in a higher use of tariffs, principally by the United States. Tariffs act to distort industries by making imported goods more expensive and domestically produced goods more competitive.

Frost Perspective: Tariffs (and incentives) are increasing investment in markets outside of China, particularly in the United States. Despite this, China’s dominance will be largely unchallenged because it is so far ahead already and has driven costs so low.

Innovative Business Models
Why: As the intelligence of the grid increases, those assets on the grid gain more importance. There has been strong growth in residential solar PV in the past two years, and more commercial & industrial businesses will install PV as the costs continue to decline.

Frost Perspective: The electricity produced from Solar PV projects is an asset. When combined with other DER such as BESS and EV Chargers it can generate additional revenues for the asset owners – or it can mitigate potential demand charges or high electricity bills.


Growth Drivers
Many countries have national energy and climate plans that set specific targets for RE, with solar PV usually accounting for a significant percentage of projects, with support programs such as FITs, incentives, tax credits, quotas, obligations, green certificates, and auctions.
Cost reductions and advancements in storage technologies make solar+ storage an increasingly attractive proposition as customers look to boost self-consumption and solar farm operators seek to maximize revenues.
After a blip because of pressures in the global supply chain, solar PV technology costs are falling again, particularly for modules, meaning that total project costs declined and are forecast to continue a slow decline.
Higher electricity costs incentivize residential and C&I customers to invest in onsite generation while helping the latter comply with corporate environmental, social, and corporate governance (ESG) targets.
Geopolitical concerns and the recent volatility in energy commodity prices have made energy security a major issue in many countries. Installing solar PV is a hedge against this, as it ensures a supply of electricity, reducing consumption of fossil fuels.
Technological advancements, such as trackers, bifacial panels, and higher-efficiency cells, boost the project economics of solar PV, making it a more attractive investment option.

Growth Restraints
Securing grid connections results in permitting delays, a major concern for the industry. The existing T&D infrastructure in many countries requires significant investment to ensure the effective integration of renewables. Strong demand growth has led to long delays for T&D hardware. Adding a BESS to a solar PV installation can reduce the amount of additional T&D investment that is required.
Permitting remains a challenge in several countries, taking up to 4 years to win approval for a grid-scale solar PV project in Europe and North America. The situation is improving but will remain a factor in delaying projects.
While most countries still provide strong incentives for solar, some have reduced them, deterring potential investors.