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Sagar Chopra Research Analyst at Wood Mackenzie

The global floating solar market continues to remain a niche segment, but it is showing signs of strong growth prospects as the technology evolves and more stakeholders enter the market segment. In 2022, the total market is expected to be just shy of 4 GW direct current (GWdc), a 150% y/y growth.

Though it only accounts for 2% of the overall global solar demand, the compounded annual growth for the floating solar market is expected at 15% in the next 10 years, and the cumulative global installations are expected to surpass 58 GWdc.

The confluence of land scarcity, increased land costs, new market entrants, and growing market maturity will all contribute to the growth of the floating solar market. Offshore and near-shore floating photovoltaic (PV) developments are also gaining traction where in-land water bodies or their use for solar is limited.

Many new project announcements and capacity auctions are happening around the hybridisation of floating PV with hydropower. The two technologies can complement each other; during the dry season, floating solar can maximise production, and, during the wet season, hydro can be the majority power producer. Together, they can also help manage peak demand and smooth out the total power production. Co-location of floating solar with existing offshore wind projects can also help with cost amortisation as floating solar can take advantage of the existing transmission infrastructure.

The segment continues to evolve with disruptive solutions on all fronts of the component stack to make floating solar more adaptable and robust for water-based applications, where we’re seeing new market entrants and stakeholders develop innovative technologies to design such floating systems. Examples include dual glass modules, wave-dampening floats, and flexible mooring solutions.

The Asia-Pacific region continues as the largest market for floating solar. With 3 GWdc, the region captures over 93% of the total floating solar installations in 2022.

High population density leads to land scarcity, which in turn makes land acquisition costs high – one of the major demand drivers for floating solar in the region. CAPEX for floating solar is also one of the lowest in the region compared to others due to the availability of components that are made locally, as well as labour rates that are cheaper than most other regions.

China bolstered its lead with the commissioning of the 320 MW floating project by Huaneng Power International in the Dezhou region of the Shandong province at the start of 2022, which, at the time of writing, is currently the largest floating solar project in the world.

India, Indonesia, South Korea, Vietnam, and Thailand have all either executed large scale floating solar projects or have announced pipelines for the development of floating solar projects in the next 2 – 3 years.

With solar competing with agriculture for land use in Europe, developers have looked at floating solar as an alternate method to develop solar capacity in the region. France and the Netherlands continue to be leaders in the floating solar segment, sharing over 85% of the total floating solar capacity for Europe in 2022. This is expected to change as new markets, such as Spain and Portugal, also adopt and develop new floating solar projects.

Despite abundant land availability, the US is also exploring floating solar projects and is expected to have approximately 10% y/y growth in floating solar installations in 2022. Even though the cost of floating PV development is approximately 20 – 40% higher compared to ground-mounted solar, the elimination of land lease costs in urban areas that have a demand for solar can be a big driver for the adoption of floating PV.

With demand for solar increasing across the globe and developers looking for innovative ways to increase solar capacity, floating solar has the potential to emerge as the leader in the alternative segment due to all the benefits it can offer.