The solar power industry is expected to experience a decline in annual capacity installations for the first time ever in 2026, according to a report by BloombergNEF (BNEF). The report predicts that 649 gigawatts (GW) of solar power capacity will be added globally in 2026, a slight drop from the 655 GW expected to be added in 2025. This decline is attributed to policy shifts in major solar markets such as China and the United States.
In China, a new renewable pricing mechanism introduced earlier this year has alarmed investors and led to a slump in solar installations. The mechanism removed a guaranteed rate of return, making it less attractive for investors. Additionally, China has implemented stricter controls on solar manufacturing capacity, which has created price wars and significant losses for companies. As a result, China’s solar installations are expected to slow down, focusing on quality over quantity.
In the United States, the Trump Administration’s hostile policy towards clean energy has created uncertainty for the solar industry. An analysis by the Solar Energy Industries Association (SEIA) found that political attacks on the solar and storage industry are threatening 519 projects, totaling 117 GW of capacity. These projects represent half of all new planned power capacity in the United States, and 17 states could lose over half of their planned capacity.
Despite the decline in 2026, BNEF expects global solar power additions to rebound in 2027, with 688 GW of new solar capacity expected to be added. However, 2026 will be a year of adjustment to new policy and market realities in the US and China. The solar industry is entering a low-growth phase after years of rapid expansion, and growth in other markets will not be enough to offset the slowdown in the largest solar markets.
The decline in solar installations is a significant shift for an industry that has experienced rapid growth in recent years. The report highlights the importance of policy stability and support for the solar industry, particularly in major markets like China and the US. As the industry adjusts to new policy and market realities, it is likely to focus on quality over quantity, with a greater emphasis on sustainable growth and profitability.