What's Happening?
S&P Global has projected that global solar installations will exceed 500 gigawatts (GW) AC by the end of 2025, marking a significant milestone for the solar market. This growth is primarily driven by China,
which is responsible for more than half of the global additions. However, a policy shift in mid-2025 from guaranteed pricing to competitive bidding is expected to cause a slowdown in China's annual additions, dropping from approximately 300 GW in 2025 to about 200 GW in 2026. This decline is anticipated to create intense price pressure and thin margins across the supply chain. Despite this, cumulative photovoltaic capacity is expected to double over the next five years, supported by emerging markets and innovations in storage and operations.
Why It's Important?
The anticipated slowdown in solar installations, particularly in China, could have significant implications for the global solar market. The shift in policy and subsequent reduction in installations may lead to increased competition and price pressures, affecting manufacturers and suppliers worldwide. However, the continued growth in cumulative capacity suggests that the solar industry remains a vital component of the global energy transition. The expansion into emerging markets and advancements in technology could open new opportunities for growth and investment, potentially reshaping the global energy landscape.
What's Next?
As the market adjusts to the new policy environment, stakeholders will likely focus on diversifying their markets and investing in technological innovations to maintain competitiveness. The shift towards competitive bidding may encourage more efficient and cost-effective solar solutions, driving further advancements in the industry. Additionally, the role of emerging markets in sustaining growth will be crucial, as these regions may offer new opportunities for expansion and investment.
