Expect Record Solar Growth In 2025, But Near-Term Risks Loom

The year 2024 was an eventful one for the global solar PV market with record installations, a surge in manufacturing capacity, and a decline in PV component prices. The year 2025 has also started on a similar note with China alone installing a new record of close to 200 GW AC in the initial 5 months. 

On the other hand, under Trump 2.0, the US is strengthening the fossil-fuel lobby as it is quickly sliding back on its renewable energy commitments. And Europe is in a stagnant phase as infrastructure is dramatically lagging behind solar and wind deployment. Add to these geopolitical tensions, trade policy challenges, continued overcapacity concerns, and price pressures. Yet, demand continues to grow elsewhere in the world.  

To discuss solar market developments in H1 2025 and get an outlook for H2 2025 and beyond, TaiyangNews hosted a webinar on Global Solar Market Developments 2025—H1 Review & H2 Outlook on July 17, 2025.  

Providing a comprehensive global overview of solar market trends, Rystad Energy Vice President Marius Bakke projects global solar PV additions will reach 655 GW DC in 2025. While this represents a solid jump from Rystad-estimated 554 GW DC of installations in 2024, it is somewhat less ambitious when considering other analysts peg the number closer to 600 GW for 2024. But some, like IRENA, for instance, were still conservative at 453 GW of solar in 2024 (see IRENA: Global Renewable Energy Additions Hit 582 GW in 2024). However, led by China and supported by markets such as India and Pakistan, Asia Pacific will continue to be in the driver’s seat this year, probably more than ever before. In 2026, the installation spree could slow down to 579 GW DC before picking up pace from 2027 onward, according to Rystad. 

Bakke sees China as the most dynamic global PV market in 2025 despite the expected dip in demand following the implementation of market reforms on June 1, 2025. The government is countering this by creating policy-driven demand; for instance, renewable energy targets for heavy industries. 

Europe, on the other hand, is facing headwinds from negative electricity prices and low capture rates. Bakke pointed out that the situation gets compounded by a slow realization of domestic solar manufacturing ambitions. Domestic manufacturing in Europe faces gigantic challenges amid low-cost Chinese competition and delayed supply chain projects. At the same time, the demand side of the sector, merchant solar economics, is quickly deteriorating due to negative pricing and lack of battery storage and other flexibility tools. 

While countries in Southeast Asia and the Middle East — notably India, Pakistan, and Saudi Arabia — are showing steady solar growth, South America and parts of Africa are seeing stagnation due to grid constraints and uncertain investment climates. 

In the US, solar deployment continues as some of the major project developers have their pipelines set for the next 3 years. Despite growing constraints on technology sourcing, solar still remains the cheapest and fastest option to meet the country’s growing energy demand, especially from data centers, even without subsidies in high-capacity-factor regions. However, any change to safe harbor provisions can play spoilsport. Bakke cautioned that with stricter domestic content rules and foreign entity of concern (FEOC) definitions targeting Chinese ownership, many solar manufacturing ventures may lose eligibility for tax credits. 

In terms of technology, due to supply chain restrictions and their small manufacturing industry, Western markets like the European Union and North America will likely lag behind next-gen PV technologies such as back-contact and perovskites, which very likely will come from China, as do today’s module, inverter and battery products. 

Sungrow Europe’s Head of Market Research, Frank Du, outlined several challenges currently facing the solar PV market across the EMEA region. Project timelines are increasingly affected by grid connection delays, permitting issues, and tightening supplier requirements – especially for hybrid PV+energy storage systems (ESS), which are growing in popularity. Additionally, Du sees falling electricity prices as reducing project returns on investment, making developers more cautious. As the market pushes for more innovative solar-plus-storage projects, suppliers are under greater pressure to meet elevated standards. 

Country-specific hurdles are also impacting momentum. In Germany, although the solar project pipeline remains robust, weaker-than-expected official registrations in H1 2025 and declining electricity prices are dampening demand in the residential segment. Policy changes and extended commissioning deadlines in Spain, as well as the rollback of reduced VAT rates – raising them from 6% back to 23% – in Portugal, are contributing to further project delays. 

Du believes that, collectively, these factors are slowing PV deployment in the region despite overall sectoral interest. 

AECEA Director Frank Haugwitz anticipates China’s solar oversupply to persist longer than expected. Although legacy production lines are being gradually retired, fresh capacity additions in HJT and perovskite technologies continue to accelerate. At the end of H1 2025, China’s domestic polysilicon inventory was estimated at 400,000 metric tons (MT), 4x the current monthly output, comprising 260,000 MT with polysilicon manufacturers and 140,000 MT with wafer producers. Solar module inventory stood in the 70 GW to 75 GW range. 

Prompted by local governments, manufacturers are completing planned expansions. He shared Zhejiang’s example that alone targets 55 GW in cell and 42 GW in module capacity additions by 2025. 

Industry consolidation remains pending, and sustained cash outflows appear essential for companies to stay competitive. He does not see solar companies along the value chain reporting profits till 2026/2027. 

China experienced a 150% year-on-year (YoY) surge in installations from January 2025 to May 2025, largely fueled by the June 1 transition to fully market-based electricity tariffs. While monthly installation volumes have since declined, Haugwitz remains optimistic, projecting up to 20% annual growth in PV installations for 2025. He anticipates the number to reach between 330 GW and 350 GW, while the State Grid Energy Research Institute expects 380 GW (see China Forecasts 380 GW New Solar PV Installations In 2025). 

In an update on his LinkedIn account following the TaiyangNews webinar, Haugwitz said that China’s State Grid has revised its annual solar capacity addition forecast downward to 260 GW AC – equivalent to less than 8 GW AC of monthly new installations for the remainder of the year. However, he remains confident that China could still achieve at least 300 GW AC, translating to around 10% annual growth. 

The mandated 80% green power requirement for data centers is expected to underpin strong solar demand. Heavy industries will also need to meet the updated renewable purchase obligation (RPO) standards, which were recently updated by the government.

During the 5M 2025 period, China tendered close to 100 GW of solar capacity, representing a 36% annual drop, but most of this capacity was tendered in January.  

As China has already met and exceeded its 1.2 TW solar and wind capacity target of 2030, Haugwitz expects the administration to release an updated Nationally Determined Contribution (NDC) in November 2026, which should have revised targets for renewable energy. Nevertheless, he sees the country experiencing lower growth in the 1st year of the 15th Five-Year Plan (2026-2030).

Panel Discussion 

During a panel discussion with TaiyangNews Managing Director Michael Schmela, the panelists were unanimous in their view that the global solar and storage markets face ongoing price pressure due to overcapacity, especially in China, where short-term price upticks are unsustainable. Manufacturers are shifting toward innovation, like back-contact and perovskite cells, to stay competitive. AECEA Director Frank Haugwitz emphasized that R&D and innovation will be the key to survival for manufacturers in the near term. 

Energy storage is becoming essential worldwide, driven by economics rather than mandates. However, regulatory clarity and market reforms are still needed, especially in Europe, stressed Sungrow Europe’s Head of Market Research, Frank Du, while pointing to persistent permitting issues. He said his company is aligned with the EU’s NZIA local manufacturing drive and wants to support customers in securing resilience auction points. 

Rystad Energy Vice President Marius Bakke stated that despite short-term headwinds, the industry remains focused on long-term competitiveness, sustainability, and smarter deployment strategies across global regions. He views regional diversification as the way forward for solar manufacturing as countries like the US, Europe, and India boost local production to reduce reliance on China and strengthen energy security. Other nations will follow suit sooner or later. 

TaiyangNews ran a live blog during the webinar, which can be accessed here. 

On July 29, 2025, TaiyangNews will be back with a Virtual Conference on Distributed & Smart Solar 2025 to discuss the latest innovations, business models, and policies shaping the solar future across residential, commercial & industrial segments. Register for the event free.