Solar power, once the fastest-growing segment of the renewable energy market, is entering a transitional phase. While global installations of new capacity rose by 16% in 2024, this marks a sharp deceleration from the sector’s peak — including a staggering 70% growth in 2023. Analysts at BloombergNEF now predict annual growth will average just 3% through 2035.
The deceleration is most notable in the sector’s two largest markets: China and the United States. Both countries are facing policy shifts that have introduced new uncertainties for developers and investors.
China’s Market-Based Turn
In China, authorities eliminated guaranteed long-term revenue schemes for renewable projects in mid-2024. Previously, solar operators enjoyed 20-year stable returns linked to benchmark coal prices. The introduction of market-based pricing created a rush to complete projects before the new policy took effect — leading to an unprecedented 90 GW of new capacity in May. However, installations dropped below 20 GW the following month, according to the International Energy Agency (IEA).
This policy change increases developers’ exposure to volatile electricity prices, raising the financial risk of future projects.
U.S. Uncertainty and Policy Reversals
In the U.S., a shift in federal policy has also altered the landscape. The “One Big Beautiful Bill Act” passed in July 2024 under President Donald Trump has restricted the use of Chinese solar and battery components by limiting tax incentives.
As a result, the IEA downgraded the U.S. solar growth forecast for 2025–2030 by nearly 40% compared to 2024 projections. Battery and solar companies are now scrambling to localize supply chains or shift sourcing to other parts of Asia — a logistical and economic challenge.
Growth in Emerging Markets
Despite these slowdowns, solar energy is expanding rapidly in emerging economies. Regions such as Asia, Sub-Saharan Africa, and the Middle East are stepping in, fueled by lower equipment costs and strong government support.
Saudi Arabia is a standout case, benefiting from cheap Chinese panels and long-term strategic efforts to reduce its dependence on oil.
Grid Bottlenecks and Battery Solutions
In more mature solar markets, especially in Europe, profitability now hinges on navigating grid access challenges and power price fluctuations. Developers report waiting up to 5–7 years for permitting and connection approvals in countries like Spain and Italy.
Grid capacity constraints are forcing companies to pair solar farms with battery storage solutions. Battery installations surged by 75% globally in 2024, reaching 77 GW — with nearly 80% designed for large-scale renewables.
One of the most ambitious projects is underway in Abu Dhabi, where Masdar plans a 24/7 solar power facility supported by a 19 GWh battery system. Scheduled to launch in 2027, the battery alone could power the entire United Arab Emirates for one hour.
Falling Battery Costs and Financial Innovation
A key driver behind battery adoption is the rapid decline in cost. In 2024, global battery prices dropped by 40%, with further reductions expected in 2025.
Utilities and solar producers are also using long-term contracts and contracts-for-difference schemes to reduce exposure to price swings. However, securing these deals is becoming more difficult. Developers now view battery integration as the most reliable tool to safeguard returns.
A Sector Maturing, Not Declining
Despite political hurdles and market recalibrations, the solar transition remains on course. As Dave Jones of Ember noted, the solar revolution is now driven more by technology and market forces than by government policy.
Solar’s next phase may involve slower percentage growth — but it will be more resilient, distributed, and technologically advanced. Emerging markets, coupled with innovative storage strategies, are ensuring that solar power remains central to the global clean energy mix.