2025 Global Solar Outlook: Growth, Challenges, and the Road Ahead

The latest Snapshot of Global PV Markets 2025 by IEA-PVPS marks a historic milestone in the solar energy sector: global photovoltaic (PV) capacity has crossed 2.2 terawatts (TW), with over 600 gigawatts (GW) deployed in 2024 alone. This surge came amid falling module prices driven by oversupply, showcasing both the resilience and volatility of the solar industry.

Two Sides of 2024: Booming Installations Amid Market Strain

In 2024, the global PV market witnessed record-breaking installation volumes, led by China (357.3 GW), followed by the EU (62.6 GW), the U.S. (47.1 GW), and India (31.9 GW). Over 30 countries joined the “1 GW Club.” However, this success came with mounting challenges, particularly intense oversupply, declining margins, and mounting pressure on manufacturers.

The rapid acceleration of solar deployment has outpaced grid readiness, policy frameworks, and supply chain capacity in several regions. This mismatch signals an urgent need to revisit infrastructure planning, financing models, and regulatory strategies to ensure stable, long-term growth.

Policy, Climate Goals, and Investor Pressure: A Delicate Balance

The momentum behind solar deployment is no longer driven by cost alone. Climate commitments, geopolitical energy security, and growing investor expectations are accelerating adoption. Yet, these same forces are straining outdated infrastructure, revealing the fragility of today’s systems. Coordinated planning and sustainable integration will be essential moving forward.

Global Market Dynamics: Emerging Players and Shifting Patterns

China has solidified its global leadership, edging closer to 1 TW in cumulative PV capacity and accounting for over half of global additions in 2024. Its dominance is fueled by robust policy support, cost-efficient manufacturing, and aggressive deployment.

Other emerging markets showed impressive growth. Pakistan scaled up from just over 1 GW to 17 GW in one year, while Brazil and India expanded steadily. Across Africa, Southeast Asia, and Latin America, momentum is building—though political uncertainty and limited grid infrastructure remain hurdles.

Regional collaboration is gaining ground through joint research initiatives, shared infrastructure, and harmonized regulation—early signals of a more integrated global solar ecosystem.

Utility-scale PV was the dominant segment in 2024, especially in China, India, and the U.S., driven by surplus module availability and large-scale project economics. Still, rooftop solar continues to empower homes, small businesses, and energy communities, particularly in areas with high electricity prices.

The rise of hybrid systems—combining rooftop solar, energy storage, and smart grid controls—illustrates the growing emphasis on flexibility, energy self-sufficiency, and grid resilience.

Market Volatility: Oversupply and Structural Risks

Despite robust demand, the solar industry faces a structural imbalance. Oversupply—particularly in China—has depressed global module prices, causing financial strain along the value chain. Inventories in China and Europe surged past 150 GW in 2023, with continued accumulation through 2024.

This imbalance is prompting calls for new policy tools: capacity ceilings, coordinated planning between supply and demand, and broader geographic diversification of production.

Smaller players are especially vulnerable. Larger manufacturers, through aggressive pricing, are consolidating market share, forcing many SMEs to downsize or exit. Policymakers may need to support smaller innovators to ensure supply chain diversity and resilience.

Many countries adjusted their solar targets and support schemes in 2024. Competitive auctions and corporate power purchase agreements (PPAs) gained popularity, while remuneration models evolved from fixed feed-in tariffs to market-based incentives incorporating environmental and social factors.

Digital transformation is accelerating change. Technologies like smart meters, dynamic pricing, and peer-to-peer trading platforms are reshaping the role of consumers. These developments, however, depend on updated regulatory frameworks and multi-sectoral coordination.

Long-term consistency in solar policies remains elusive. While some regions offer predictable multi-year programs, others shift direction frequently—undermining investor confidence. Greater policy stability will be vital to mobilize private capital at scale.

Grid Integration: The Next Frontier

High PV penetration has brought new challenges. Grid congestion, curtailments, and negative pricing are becoming more common in saturated markets like Australia, Spain, and parts of the U.S.

Solving this will require both technological and regulatory innovation—flexible demand response, vehicle-to-grid integration, enhanced forecasting, and investment in digital grid infrastructure. Cross-border grid interconnections also offer relief from localized oversupply.

The push for local manufacturing intensified amid trade disruptions. U.S. solar production grew under the Inflation Reduction Act, exceeding 40 GW/year by 2024. India expanded its module manufacturing capacity by 60 GW/year through its ALMM program.

Still, subsidies alone won’t build resilient supply chains. The report emphasizes the need for integrated ecosystems—including materials sourcing, skilled labor development, and innovation hubs—to achieve energy independence and economic value.

Sustainability is also gaining traction. Governments and investors are increasingly factoring circularity and ESG compliance into procurement decisions. PV systems are now expected to meet lifecycle standards including recyclability and low-impact manufacturing.

Solar’s Role in the Clean Energy Transition

In 2024, solar accounted for 75% of newly added renewable capacity and 60% of global clean energy generation. With prices at record lows and global policy support expanding, solar is cementing its place as a foundational element of the energy transition.

Its applications now extend far beyond electricity—supporting green hydrogen production, industrial decarbonization, and climate adaptation strategies. Transmission planning, multi-use energy hubs, and hybrid solutions are shaping the future of integrated energy systems.

Conclusion: Scaling with Purpose

The 2025 IEA-PVPS report captures both the promise and the growing pains of the solar sector. To realize its full potential, the industry must move beyond sheer capacity expansion toward smarter, more inclusive growth—built on stable policies, resilient supply chains, and flexible infrastructure.

The path ahead demands alignment—of finance, regulation, and technology. Solar energy is now a critical pillar of global climate and economic agendas. Growing sustainably isn’t just beneficial—it’s essential.