Global solar installations are expected to surpass 500 gigawatts of alternating current capacity by the end of 2025, with China accounting for more than half of total additions, according to a new analysis from S&P Global.
Rapid Expansion Reaches Historic Scale
S&P Global said the solar market has reached a level that would have been difficult to anticipate just over a decade ago, when annual installations were still measured in single-digit gigawatts. The firm described the projected 500 GW milestone as an extraordinary development in the pace and scale of global deployment.
China has been the dominant driver of this growth. S&P Global estimates that the country will add around 300 GW of solar capacity in 2025 alone, representing more than half of global installations for the year.
Policy Shift Triggers Sharp Slowdown In China
Despite the record-setting total, S&P Global warned that China’s growth trajectory is set to change abruptly. The firm now forecasts that annual Chinese solar additions will fall from approximately 300 GW in 2025 to about 200 GW in 2026. According to S&P Global, the scale of this decline is such that no other region is expected to offset it.
The slowdown follows a major policy shift implemented in mid-2025, when China moved away from guaranteed pricing toward competitive bidding for new solar projects. The policy change triggered a surge of installations earlier in the year, followed by a sharp drop in volumes during the second half.
S&P Global said this sudden contraction created intense price pressure across the solar supply chain, resulting in ultra-thin margins for manufacturers, developers, and related service providers.
Global Additions Expected To Decline Year Over Year
The firm said the anticipated reduction in Chinese volumes marks a turning point for the global solar market. Worldwide solar additions are now expected to decline on a year-over-year basis, although S&P Global estimates the reduction will be less than 10 percent.
Even with this contraction, S&P Global said longer-term growth remains intact. Over the next five years, cumulative photovoltaic capacity is still expected to double, supported by emerging markets, expansion into energy storage, and continued innovation in operations and maintenance.
Low module prices and the scalability of solar power are also expected to open up new markets, according to the analysis.
Market Outlook Sensitive To Policy Changes
S&P Global cautioned that policy decisions remain a critical variable for the sector. Changes in government support mechanisms can significantly alter deployment forecasts and investment conditions.
The firm said that while future growth may continue, the market has reached a stage where discussions around a peak in global demand growth are now becoming relevant, regardless of whether annual installations decline immediately.
Featured image credits: Pexels
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