BNEF Forecasts Historic First Slowdown in Global Solar Growth

The central force behind this global trend is the anticipated slowdown in China, the world's largest solar market. For years, breakneck deployment in China has fueled global growth. However, the country's most recent five-year economic plan suggests a strategic deceleration from that rapid pace following a projected 372 GW of installations in 2025.

Analysts point to a major policy shift in mid-2025, moving from guaranteed pricing for renewable energy to a competitive bidding system. This change triggered a rush to complete projects before the policy expired, leading to a massive 92 GW of installations in May 2025 alone. The aftermath of this surge, coupled with questions about the economic viability of new projects under market-based pricing, is expected to result in a 14% contraction in the Chinese market in 2026. BNEF projects China's installations to fall to 341 GW next year, though it will remain the global leader, accounting for about 52% of worldwide installations.

BNEF analyst Jenny Chase emphasized the decisive role of the Chinese market: "I think a really key thing to note is that growth in China cannot continue at its historical breakneck pace, and that means the world market is likely to flatten or even shrink. Unfortunately, the trajectory chosen for China pretty much determines the world's build trajectory".

Even though worldwide photovoltaic growth has slowed, not all regions of the world are expected to experience a decline in PV growth rates. BNEF projects that total global annual solar capacity installed outside of China will increase by almost 300 GW by 2026. The rapid growth of emerging markets like India and Africa will not completely compensate for the large number of installations that will not be built as demand for electricity decreases in China and the U.S.

The U.S. is also expected to see a continued decline in solar growth rates due to changes in energy policy imposed under President Trump's administration providing incentives to use fossil fuels rather than installing new solar facilities. Typical mature solar markets, like Spain and Brazil, are experiencing some level of saturation as rapid installations in these markets have resulted in a much higher level of curtailment of Solar PV electricity generation in recent years and significant declines in electricity prices, thereby introducing additional uncertainty for investors.

This shift in demand dynamics will prolong intense pressure across the solar manufacturing value chain. The report warns that prices will "remain stuck at historically low levels through 2026," pressured by the weaker demand outlook and what it describes as "an unprecedented amount of manufacturing capacity and inventory".

The polysilicon sector exemplifies this challenge. Despite consolidation efforts that pushed prices up by 50% since June 2025, overall values remain depressed, and the saturated sector is seen as having limited room for significant recovery as demand cools. This environment poses severe challenges for manufacturers, particularly in China, who are already grappling with overcapacity and financial losses.

Despite the near-term headwinds, BNEF and other industry observers maintain a long-term optimistic view for solar energy. The current phase is seen as a necessary transition from unbridled growth to a more mature, sustainable market.

BNEF expects a return to global growth as early as 2027, with installations forecast to reach 688 GW, followed by a further increase to 743 GW in 2028. This "modest" recovery is predicated on major markets adapting to new supply-demand conditions and the continued expansion of new markets.

Industry leaders characterize this not as a decline but as a strategic pause. "The industry from past dozen years' rapid growth is now transitioning towards a phase of deep adjustment and transformation," noted Wang Bohua, honorary chairman of the China Photovoltaic Industry Association. He emphasized that the market is moving from a growth period to a mature period, where "demand-side still holds great potential".