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Solar Street Lighting Market Overview
The global solar street lighting market valued $2.8 billion in 2016 and is expected to grow at CAGR of 21.2% during the forecast period 2017–2023. The development of smart cities globally has been a key factor driving the growth of the market.
As per the United Nations estimates, over 60.0% of the worldwide population would be living in urban areas by 2030. With rapid urbanization, the requirement for utilities such as water, lighting, energy, and sanitation would also rise, further necessitating the development of associated infrastructure in cities to meet the needs of the residents. Responding to these needs, governments across the world, especially in developing countries, have already started numerous projects for the development of smart cities.
GLOBAL SOLAR STREET LIGHTING MARKET, BY PRODUCT TYPE, $M (2013 – 2023)
Based on product type, the solar street lighting market is divided into standalone and on-grid solutions. Of these, standalone solar street lights held the larger market share during the historical period, as these are independent sources that provide electricity to areas with no access to transmission lines and grids. These lights are extremely useful in remote locations, where people generally depend on conventional fuels, such as kerosene and firewood, for lighting purposes.
The market is also categorized into industrial, residential, and commercial applications. Of these, commercial application dominated the solar street lighting market with the largest revenue share in 2016. Based on lighting type, the market is divided into compact fluorescent lamp (CFL) and light-emitting diode (LED), of which LED lighting witnessed the higher CAGR during the historical period.
Solar Street Lighting Market Dynamics
Growing demand for cellular-connected lights is the key trend in the solar street lighting market, globally. Governments in several developing countries are adopting cellular-connected solar-powered street lights, as these are extremely cost-effective and easily monitorable. On being connected to a mobile network, solar street lights can be controlled remotely from an internet of things (IoT)-enabled device.
The declining price of solar lighting solutions is another trend being witnessed in the solar street lighting market. According to a report by the National Renewable Energy Laboratory (NREL), the cost of using solar photovoltaic (PV) cells for power generation dropped by 60.0% between 2009 and 2016. In 2009, the cost was around $7.06 per watt, which slumped to $2.93 per watt in 2016. Between 1998 and 2013, the cost of residential solar PV cells installation decreased from 6.0% to 7.0% per year, and by 12.0% during 2012–2013. As solar PV cells are an inextricable part of solar street lights, the decrease in their cost is expected to reduce the cost of these lights.
Although, tax credits and other incentives offered by the governments in various developed countries, such as the U.S. that supported the industry may expire in the next few years, the it will not have a negative effect. This is because investors in the market exist in a large number, and the World Bank continues to extend strong support to developing countries, especially developing countries such as Nigeria, which would help in taking the worldwide market forward.
Currently, numerous smart city projects are underway, which include San Francisco, Amsterdam, Caofeidian, Lavasa, Barcelona, Konza, Beijing, Kashiwanoha, Masdar, Shanghai, Santander, Sant Cugat del Vallès, Shenyang, Songdo, Singapore, Tianjin, and Wuxi apart from the 100 projects launched recently by the Government of India. Moreover, with the sharp decline in the price of solar panels, various government initiatives have been targeted at powering smart cities with solar energy in the future, which will result in the growth of the solar street lighting market.
Strict regulations regarding carbon emissions and favorable government support toward adoption of renewable energy sources are the major factors behind the growth of the solar street lighting market across the globe. Governments of many countries, including China, India, and the U.S., have stringent regulations and schemes, such as feed-in tariffs and quota-based renewable portfolio standards (RPSs). Further, several nations are taking initiatives to promote the use of renewable energy sources, such as wind and sunlight. A target to reduce carbon footprint in the environment, which is rising due to the use of non-renewable sources of energy, has been set, thereby making the adherence to the regulations more stringent.
In numerous countries, governments are offering financial support in the form of subsidies to encourage the use of renewable sources of energy. Numerous campaigns, schemes, and programs initiated by the World Bank and International Finance Corporation to promote the use of solar power are contributing to the growth of the solar street lighting market. The World Bank has been offering various countries support to increase the use of renewable energy in place of conventional energy, to ultimately reduce carbon emissions and curb the resulting pollution. For example, in March 2017, the World Bank approved a funding of $100 million for large-scale solar parks in India.
The reserves of fossil fuels, such as natural gas, crude oil, and coal, which are the key sources of conventional energy, are depleting fast. The dwindling levels of coal and gas reserves have led to an increase in their extraction cost, which has, in turn, resulted in a surge in power tariff. Further, the continuously increasing network charges, for instance, those levied for energy delivery via transmission lines, are raising the cost of electricity. Due to the rising power cost, governments in various countries are focusing on solutions such as solar LED lights, which are more efficient and reliable than conventional lighting systems.
As of 2014, over 1.2 billion people across the globe did not have any access to grid electricity. The situation does not seem to have changed much. The demand for off-grid electricity is the highest in Asia-Pacific (APAC) and Africa, where urbanization is increasing at a rapid pace. This huge requirement for electricity can be catered to by standalone systems, which do not require grid connectivity; rather, these generate power by taking the energy directly from the sun. This is the reason that the standalone solar street lighting market is growing across the globe, offering ample scope for growth to the players operating within.
The lack of LED standardization procedure across the world is one of the major factors hampering the growth of the solar street lighting market. Governments in several nations have passed stringent laws to promote the use of energy-efficient technologies, but without standardizing product specifications. Hence, the standards for LED solar street lights vary across countries.
This further creates a hurdle for suppliers, as they need to adhere to the standards in countries where they intend to sell the lights. Stiff competition owing to the penetration of counterfeit products is another factor hindering the growth of the solar street lighting market. In some parts of the world, although the demand for solar street lighting products is high, their low availability has led to the intrusion of inferior-quality products that cost lower. The penetration of counterfeit products has further led to increased competition in the market.
Solar Street Lighting Market Competitive Landscape
Leading players operating in the solar street lighting market are expanding their production units in developing countries, such as China and India. APAC is predicted to be the most lucrative market for solar street lights during the forecast period, owing to the ongoing construction of a large number of streets, highways, airports, and flyovers in the region.
Some of the major players in the global solar street lighting market are Koninklijke Philips N.V., Carmanah Technologies Corporation, Sunna Design, Omega Solar, Sokoyo Solar Group, Su-Kam Power Systems Ltd., Dragons Breath Solar, Urja Global Ltd., Solar Street Lights USA, and Solektra International.