Solar stocks face US solar policy uncertainty, but solar dominates new global electricity installs

The MAC Global Solar Energy Stock Index is down -3% year-to-date. The MAC Solar Index saw extraordinary gains of +67% in 2019 and +245% in 2020, falling back by -26% in 2021, -5% in 2022, -26% in 2023, and -37% in 2024.

Solar stocks have been under pressure over the past 1-1/2 years, mainly because of a sharp drop in polysilicon and solar module prices stemming from a surge in production capacity. That decline in solar product prices has been a negative factor for the profit margins of manufacturers of polysilicon, wafers, cells, and modules, which in turn has been a negative factor for stock prices.

However, those manufacturers constitute only about 21% of the total weight in the MAC Solar Index. The other 79% of the Index weight is in installers and operators of solar systems, or manufacturers of non-module solar components such as inverters, solar glass, and solar trackers, sectors that should benefit as lower solar module prices boost demand and unit sales.

Indeed, the sharp decline in solar module prices seen over the past two years has a silver lining since it is likely to boost unit sales over the longer term as solar energy becomes even cheaper than its competition and extends its lead as the most widely chosen source of new electricity capacity in most of the world.

The over-supply situation is slowly being resolved as Chinese solar companies are slashing production and delaying or canceling their capacity expansion plans. Companies are phasing out old production lines and are shutting down facilities for maintenance. In addition, non-competitive and low-quality solar manufacturers are being forced out of the business altogether.

The Chinese government is hastening the adjustment process by cracking down on government approvals for companies that want to build new solar factories or expand existing factories. The government is raising capital ratios, R&D requirements, and quality and efficiency standards for companies that want to expand capacity.

Solar product pricing has recently shown signs of stabilizing. Polysilicon prices have been moving sideways since summer 2024 and are currently about 10% above the record low of $4.36 seen in June 2024 (see p 14). The price of monocrystalline silicon modules has edged to a record low but has fallen by only -1% over the past three months, according to PV Infolink. Thin-film PV module prices have been unchanged since last summer, according to PV Insights.

In the US, the main development was Donald Trump’s victory in the November 5 election, along with Republicans winning control of both the House and Senate. The Republican sweep of Washington undercut solar stock prices due to concerns that Republicans will cut the IRA clean energy stimulus bill, which provided 10 years of tax credits for solar buyers and producers.

However, the reality is that solar electricity is now cheaper to install than natural gas, oil, or nuclear electricity, before any subsidies for clean energy are even considered. Thus, even if the US government cuts support for solar, many utilities will continue to choose solar due to its cheap cost, speed of installation, and 24-7 availability when paired with storage.

In regard to the Republican policy uncertainty, Wood Mackenzie said after the November US election, “There is always the potential for policy changes to impact deployment but solar is currently the dominant form of new energy generating capacity in the US. The benefits of solar — its cost competitiveness, benefits to the environment, low water use, and continuously improving technology, to name a few — have spurred demand from utilities, independent power producers (IPPs), and corporate off-takers who see solar as the path to US energy independence” (US Solar Market Insights – Q4-2024, Executive Summary, p 6).

If Republicans slash government stimulus measures for solar, the solar industry would likely see less growth over the next few years. Nevertheless, the solar industry will likely retain its current status as the winning source of new electricity generation due to its economic and environmental advantages for buyers.

The solar market is currently waiting to see exactly how Republicans will handle clean energy legislation and executive decisions. Legislative changes in solar policy will be shoe-horned into a massive 2025 reconciliation budget bill that will mainly be designed to extend the tax cuts contained in the Republican’s 2017 Tax Cuts and Jobs Act (TCJA) that would otherwise expire at the end of 2025.

Republicans will use the reconciliation process to pass the extension of tax cuts since the reconciliation process requires only 51 votes in the Senate versus the 60-vote filibuster threshold required for most other legislation (Republicans hold 53 seats in the Senate). Both parties have used the reconciliation process in recent years to pass major laws, including the Republican’s 2017 Tax Cut and Jobs Act (TCJA), and the Democrat’s 2021 American Rescue Plan Act (ARPA) and 2022 Inflation Reduction Act (IRA). However, the Tax Foundation points out that the “Byrd rule” limits what can be included in a reconciliation bill, disallowing policy changes that don’t affect spending or revenue, and disallowing changes that increase the deficit outside the budget window. Notably, reconciliation also specifically prohibits changes to Social Security.

The consensus among Wall Street clean-energy equity analysts is that Republicans will cut IRA benefits but are not likely to repeal the law entirely since most of the law’s benefits are in Republican states. Legislators are aware that the pain from any solar cuts would fall heavily on Republican states.

In fact, US clean-tech factory investment from the 2022 IRA law has accrued more than 3-to-1 to Republican-leaning states versus Democratic-leaning states, with the remainder going to swing states, according to analysis by Bloomberg New Energy Finance.

Moreover, two Republican states rank among the top three states for installing solar in the US in 2024. Texas installed a massive 11.6 GW of solar in 2024, where it was the largest state installer in the US and would rank as the sixth largest installer in the world if Texas were counted as a country. Red-state Florida came in third, behind California, for the most US state solar installs with 4.7 GW.

There is some Republican support for clean-tech factory investment as a group of about 20 Republican House members are lobbying Republican House Speaker Mike Johnson and tax-writing committee members to keep intact some of the incentives in the IRA law so that factories in their districts do not start closing down and laying off workers.

Although the current US political uncertainty is a negative for solar firms that operate in the US, it should be noted that the US accounts for only 8% of world solar sales, meaning 92% of the world’s solar sales are not directly affected by US politics. While US politics plays a substantial role in US stock investor sentiment, the fact remains that solar is a global industry where US developments are usually overshadowed by the sector’s prospects in the rest of the world.

Turning to other factors affecting solar stock prices, the solar sector saw support in 2024 when the Federal Reserve cut interest rates by a full percentage point. The markets are currently expecting a further three-quarter percentage point interest rate cut by the Federal Reserve in 2025.

Regardless of the recent obstacles for solar stocks, the good news is that the demand for solar energy remains strong as a key economic and environmental solution. Solar stocks may be able to regain their footing once various temporary obstacles dissipate and US legislative uncertainty is resolved.

Bullish longer-term factors for solar stocks include (1) the global push to reduce carbon emissions as many countries have adopted net zero emissions goals to add to their Paris Climate Agreement goals, (2) strong demand for solar by many global corporations that have adopted net zero emissions goals, (3) strong economic demand for solar now that solar is cheaper to build than fossil fuel or nuclear power in most of the world, (4) the pairing of solar with ever-cheaper battery systems to provide a 24/7 electricity solution, and (5) the need for many nations to improve their energy security and independence by building domestic electricity infrastructure such as solar, thus insulating themselves from the risk of importing fossil fuels from hostile countries and regions.

Solar surges in 2024 and is set to remain the world’s primary source of new electricity capacity

Global solar installs in 2024 rose sharply by +35% to a new record of 599 GW(dc)*, adding to the surge of +76% seen in 2023 and posting the sixth consecutive year of double-digit growth, according to Bloomberg New Energy Finance (BNEF). Global investment in solar projects totaled $521 billion in 2024, according to BNEF.

During the 5-year period of 2019-2024, solar installs showed compounded annual growth of +38%, making it one of the world’s highest growth industries. BNEF forecasts that solar installs will show solid growth in 2025 of +14% yr/yr.

Even though the growth of annual solar installs is expected to come back to earth after the torrid pace seen in past several years, the world will still be installing a huge amount of new solar capacity each year, adding to the cumulative solar capacity that the world uses to produce electricity (i.e., the total amount of capacity of all existing solar plants).

Specifically, BNEF is forecasting that global cumulative solar capacity will show compounded annual growth of +20% over the next five years. Cumulative global solar capacity in 2024 rose by +36% to 2.3 terawatts (TW) and showed compounded annual growth of 29% over the 5-year period of 2019-24, according to BNEF.

Regarding the usage of total electricity, solar accounted for 7% of the world’s total electricity generation in 2024, up from 5% in 2023, according to the International Energy Agency (IEA),

The IEA expects total global electricity usage to show strong annual growth of +4% over the next four years due to increased air conditioning ownership, the need for more data centers to handle artificial intelligence, and the need to charge more electric vehicles. The IEA says that renewables will meet 95% of the world’s increased electricity demand through 2027.

The reason that renewables will be relied upon to meet electricity needs is their low cost and relative speed of construction. Renewables are now the most economical solution for building new electricity capacity, and they also have the key environmental benefit of trying to halt the climate change impacts that are quickly engulfing the world.

BNEF has determined that solar and wind are now the cheapest sources of new electricity generation in countries that account for 82% of the world’s power supply.

Even though the US has exited the Paris Climate Agreement for the second time, the rest of the world will continue to battle climate change. The world, at the COP28 conference in Dubai in December 2023, agreed to engage in an “orderly transition” away from fossil fuels and adopted the goals of tripling renewable energy by 2030 and reaching net zero emissions by 2050

China pushes ahead with market-based solar pricing

Solar energy is a key industry in China. China needs low-priced solar to expand its electricity capacity and support its economic growth targets. China also needs solar to build this new electricity generation in a way that reduces China’s reliance on coal, improves its air quality, and meets its carbon emission reduction targets.

China installed 338 GW of solar in 2024, up sharply by +30% from 2023, according to BNEF. That followed the massive growth rates of +55% in 2022 and +144% in 2023. China’s solar installs grew at a compounded annual growth rate of +59% in the 5-year period of 2019/24, according to BNEF. BNEF is forecasting slower solar growth in China over the next few years, with growth of +7% in 2025 and +5% in 2026.

The Chinese government is relying heavily on solar to meet its climate targets. In October 2021, the Chinese government adopted the goal for carbon emissions to peak before 2030 and for carbon neutrality by 2060 as part of its National Determination Contributions (NDC) under the Paris Climate Agreement.

To help meet its aggressive renewables goals, China has been building a massive set of solar and wind projects in its desert regions. The first phase of 97 GW of solar and wind started in 2021 and ran smoothly, thus leading the government to expand the project. The Chinese government announced another 455 GW of desert solar and wind projects, with 200 GW slated to be built by 2025 and another 255 GW to be built by 2030. The electricity from those plants will primarily be delivered to the nation’s more densely populated eastern regions.

In February 2025, Chinese government regulators announced that China will accelerate its move to market-based pricing for solar electricity. Solar electricity from projects implemented after June 1, 2025, will be sold through market transactions, thus replacing the current feed-in tariff system. This means that 100% of solar electricity will be traded in the power market after June 1, 2025, up from 50% in 2024.

Under the new policy, there will be a new “Contract for Difference” (CfD) program that will provide some revenue protection for solar developers of projects commissioned after June 2025. For solar projects commissioned before June 2025, the CfD program will guarantee the original pricing terms.

US solar industry awaits Republican policy changes

The US solar industry is waiting to see how Republicans will change solar policy. The policy uncertainty will likely result in the delay of some new solar projects until the new policy landscape becomes clear.

Regardless of near-term political uncertainty, solar energy has already solidified into a major US industry. The value of the US solar market was $70 billion in 2024, according to the Solar Energy Industry Association’s (SEIA) Solar Data Sheet. The SEIA reports that there are now more than 10,000 solar businesses in the US employing 279,447 persons. There are now 5.4 million solar systems installed in the US, and a new solar system is installed every 54 seconds. There is already enough solar in the US to power 40 million households.

US annual solar installations in 2024 rose sharply by +36% yr/yr to a record 51.0 GW, adding to the surge of +58% seen in 2023, according to BNEF.

Looking ahead, BNEF forecasts that new US solar installs in 2025 will fall slightly by -1% yr/yr to 50 GW due to policy uncertainty and consolidation after two years of sharp gains. BNEF is then forecasting +11% growth in 2026.

The fact that the US is expected to install at least 50 GW of solar per year over the next few years means that cumulative US solar capacity (i.e., the total capacity of all solar plants in existence) will continue to show strong growth over the near term. BNEF is forecasting that US cumulative solar capacity will grow by +22% in 2025 to 279 GW, and by +20% in 2026 to to 335 GW, building on the 2024 growth rate of +29% to 229 GW.

Solar energy is trouncing its competitors for newly-installed electricity capacity. Specifically, solar accounted for 66% of all new US electricity-generating capacity in 2024, marking the sixth consecutive year that solar energy took first place, according to Wood Mackenzie. Solar was far ahead of an 18% share for storage, 10% for wind, 4% for natural gas, and 2% for “other.” New installs of coal and nuclear electricity-generating capacity in 2024 were not large enough to get their own category.

Solar beat natural gas by a margin of 16-to-1 in 2024 for new electricity plant installs. With Republicans taking over Washington in January, there have been calls for increased use of natural gas for electricity production. However, NextEra Energy CEO John Ketchum told the “CERAWeek by S&P Global” conference in Houston in March that gas-fired electricity generation can only meet a sliver of the electricity demand increase required by the end of the decade, and that the cost of gas plants in any case has soared in the last 18 months. In addition, there is currently a shortage of new gas turbines available, with turbine manufacturers having delivery backlogs stretching into 2028.

The shortage of turbines and the high cost of gas-fired plants have already caused some utilities to cancel plans for new gas-fired electricity generation plants. By contrast, new solar plants can be built relatively quickly and at a low cost.

US solar growth in 2024 was led by the utility sector, with a +33% surge in installs to a record 41.4 GW, according to Wood Mackenzie. The utility solar sector, which accounted for about 82% of all new US solar installs in 2024, benefited from strong demand and the increased availability of modules as US domestic module production came online. Wood Mackenzie forecasts that a total of 356 GW of utility-scale solar will be installed during 2025-35.

Utility-scale solar accounted for 5.2% of total US electricity generation in 2024, according to the US Energy Information Administration (Short-Term Energy Outlook, Table 7d). The EIA is forecasting that utility-scale solar’s share of total US electricity generation will increase to 6.8% in 2025 and 8.0% in 2026. The relatively low penetration rate seen thus far for solar energy means there is plenty of headroom for solar to continue to grow rapidly in the coming years to meet new electricity demand and replace more expensive options like natural gas, coal, and nuclear.

US residential solar installs in 2024 fell by -32% to 4.2 GW, according to Wood Mackenzie. The residential sector was undercut by net metering changes in California and other states, sustained high interest rates, and consumer hesitation ahead of the November 2024 election.

The US commercial sector showed +8% yr/yr growth in solar installs in 2024 to 2.1 GW as more corporations sought to capture the solar benefits of lower cost and zero emissions. Meanwhile, community solar saw strong growth of +35% to a record 1.7 GW.

IRA stimulus law boosts solar, but policy changes are awaited — The US solar industry received a huge boost in August 2022 when Congress passed, and former President Biden signed, a $369 billion climate bill, representing the single biggest climate investment in US history. The bill was named the “Inflation Reduction Act” since it was partly designed to reduce consumer healthcare and energy costs.

The US solar industry no longer needs any subsidy help from the US government since solar is now the cheapest form of new utility-level electricity capacity on an unsubsidized basis and is self-sustaining without any subsidies (see LCOE analysis on page 13 of this report). Nevertheless, the policy support from the US government gave the solar industry an extra stimulus boost.

The energy provisions of the Inflation Reduction Act raised the solar investment tax credit (ITC) to 30% from 26% and implemented a 10-year extension of the 30% ITC tax credit through 2032, with step-downs to 26% in 2033 and 22% in 2034. The ITC also has “adders” that can boost the ITC to as much as 50%, including credits for paying “prevailing wages,” creating apprenticeship programs, using solar modules produced in the US, and building solar projects in brownfield sites traditionally linked to fossil fuels such as coal.

Also, the ITC has a “direct pay” provision. That provision allows developers without sufficient tax liabilities to claim a direct payment from the federal government through a tax rebate, which is much more valuable to the solar industry than the old system that required equity investors with sufficient tax liabilities to claim the ITC credit. Previously, a shortage of tax equity limited the solar industry’s ability to take full advantage of ITC credits.

The Inflation Reduction Act was intended to give the solar industry a decade-long period of stimulus and certainty for production and project development. Previously, the US solar market went through various booms and busts as developers tried to stay ahead of short-term ITC windows and step-downs.

Before the Inflation Reduction Act was passed, the solar industry was operating under the legislation in the pandemic aid bill passed in December 2020, whereby the ITC was set at 26% for 2020 and 2021, with a step-down to 22% in 2023. For 2024, the ITC under the previous law would have fallen to 10% indefinitely for large-scale solar projects and to zero for small-scale solar projects.

The Inflation Reduction Act also established an ITC for battery storage for the first time, giving solar-plus-storage a big boost.

The Inflation Reduction Act provided a big boost for residential solar with a 30% tax credit for residential solar systems installed from 2022 through 2032, with a step-down to 26% in 2033 and 22% in 2034. The new credit also applies to residential battery storage systems installed in tandem with a solar system. The previous residential tax credit was set at 26% for 2022 and 22% in 2023 before ending in 2024, and did not include battery storage systems.

To support US domestic solar production, the Inflation Reduction Act also provided $30 billion to implement a new production tax credit (PTC) for US solar manufacturers through 2035. The solar PTC seeks to help the US build a larger solar manufacturing base and reduce its reliance on imported solar modules.

Manufacturing tax credits are specified for solar products built in US-based facilities, such as modules, thin-film or crystalline PV cells, wafers, backsheets, and solar-grade polysilicon. There is also a manufacturing tax credit for DC-to-AC inverters, which has prompted some inverter companies, such as Enphase, to announce they will build new manufacturing plants in the United States.

The 2022 IRA law caused US solar module manufacturing capacity to soar by six-fold to 42.1 GW as of the end of 2024 from 7 GW in 2022 prior to the IRA law being passed, according to Wood Mackenzie. US solar module manufacturing capacity then increased further to 50 GW in early 2025, which is roughly enough to supply all US solar installs in 2025 without the need for any module imports.

However, the US still needs to import nearly all of the solar cells that are installed in the modules assembled in the US. As of the end of 2024, only 1 GW of solar cells were manufactured in the US, according to Wood Mackenzie. However, solar cell manufacturing in the US is expected to grow quickly to 15-20 GW by the end of 2025, according to Wood Mackenzie.

US government also uses solar import tariffs to help build a domestic solar manufacturing base — Over the past decade, the US government has used import tariffs to try to promote US solar manufacturing. However, the import tariffs mostly just restricted the supply of modules available to US solar developers and raised the price of US modules relative to world price levels. It wasn’t until the US government offered a hefty production subsidy that solar companies actually started building module assembly plants in the US of any scale.

US tariffs on imported solar products go back to 2012 when the Obama administration imposed Section 301 tariffs on solar modules and cells imported from China to address concerns that Chinese solar manufacturers were dumping subsidized products in the United States. In May 2024, the Biden administration then doubled the Section 301 tariffs on Chinese solar modules and cells to 50% from the original level of 25%. In December 2024, the Biden administration raised the duty to 50% from 25% on solar PV wafers and polysilicon, thus covering the entire Chinese solar supply chain with 50% tariffs.

The higher 50% Biden tariff had little impact since the US imports virtually no solar modules or cells directly from China due to the original Obama tariff. However, the Biden administration temporarily exempted solar cell and PV wafer manufacturing equipment from the tariff so that companies building manufacturing facilities in the United States could import the factory machinery they need to build their US factories. The temporary exemptions last from January 1, 2024 to May 31, 2025.

The new 20% tariff on all goods imported into the US from China announced by President Trump in February and March was on top of the original 50% Section 301 tariff on solar products imported from China. That means that the US tariff on solar products imported from China now totals 70%.

Some Chinese companies responded to the original 2012 Chinese tariffs by building new factories in Southeast Asia to import solar components from China and circumvent the US tariff. To address this concern, the US Department of Commerce (DOC) in August 2023 imposed anti-dumping and countervailing duty (AD/CVD) tariffs on four companies that the DOC concluded were circumventing the Chinese tariffs. Those factories were located in Malaysia, Thailand, Vietnam, and Cambodia.

That AD/CVD investigation, which began in March 2022, sparked a flurry of order cancellations and project delays by US developers in 2022 due to uncertainty about how extensive the tariffs would be. However, the Biden administration announced in June 2022 that any tariffs from the investigation would be suspended until June 2024, thus giving US solar developers time to migrate their solar module purchases to other sources. However, that tariff suspension ended in June 2024, and the US government started to collect AD/CVD tariffs on US solar imports from those four companies.

The US Department of Commerce (DOC) in June 2024 then began a new and more extensive AD/CVD investigation against solar factories in Malaysia, Thailand, Vietnam, and Cambodia. The DOC in late 2024 then announced anti-dumping and countervailing duties on solar cells and modules produced by a range of companies in Malaysia, Thailand, Vietnam, and Cambodia.

Separately on the tariff front, the Biden administration, in February 2022, extended the first Trump administration’s Section 201 tariffs on imported solar modules at 14.25% until February 2025 and 14.0% from February 2025 until February 2026. The Section 201 tariffs apply globally with limited exemptions for countries such as Canada, Mexico, Indonesia, Jordan, South Africa, and others.

However, in its 2022 extension of Section 201 tariffs, the Biden administration kept open two big loopholes. First, the Biden administration in 2022 exempted the first 5 GW of imported solar cells from the Section 201 tariff. Second, the Biden administration maintained the exemption for bifacial modules, which was first introduced by the Trump administration. The bifacial module exemption provided a big break for US solar developers and buyers since large utility-scale projects widely use those modules. Bifacial modules allow light to be absorbed by both the front and back of the module as light bounces off the ground.

In early 2024, the Biden administration tightened the Section 201 duties by removing the exemption for bifacial panels, meaning those panels became subject to a 14.25% duty. However, the Biden administration kept in place the 5 GW of exempted cell imports to give US module factories the ability to import the solar cells they need to assemble into their solar panels. As of August 1, 2024, the Biden administration then more than doubled the solar cell exemption to 12.5 GW to ensure that US factories have enough duty-free cells to assemble their modules.

Regarding the history of the US Section 201 tariffs, the first Trump administration, in January 2018, imposed a Section 201 tariff of 30% on imported solar cells and modules in an attempt to protect the few US solar manufacturers that existed at the time. The initial Section 201 import tariff of 30% for 2018 stepped down to 25% in February 2019, 20% in February 2020, and 15% in February 2021. The tariff was set to expire in February 2022, but as mentioned earlier, President Biden in 2022 then extended the tariff until 2026.

US solar importers deal with Xinjiang restrictions — US solar imports and installs have been disrupted over the past several years by the US government’s action to block some solar imports from the Xinjiang region of China due to allegations of forced labor at some companies located in Xinjiang. However, that situation has largely been resolved as solar companies meet US government documentation requirements or acquire the modules they need elsewhere.

The Xinjiang issue began for the solar industry when the US government in June 2021 imposed a “Withhold Release Order” that blocked the import of polysilicon products produced by five companies based in China’s Xinjiang province due to allegations that the companies were associated with government-run forced labor programs of the Uyghur Muslim minority. China’s government denied the forced-labor allegations and objected to what it said was US interference in its internal affairs.

The targeted companies were hamstrung in trying to defend themselves against the forced labor allegations by China’s Anti-Foreign Sanctions Law, which makes it illegal for Chinese companies to comply with US requirements to avoid sanctions. The Chinese law makes it difficult for Chinese companies to defend themselves against allegations of using forced labor without getting themselves into trouble with the Chinese government.

Going beyond the initial Withhold Release Order, the US Congress in December 2021 then passed the Uyghur Forced Labor Prevention Act (UFLPA), which was signed into law by former President Biden and took effect in June 2022. That law bans importing products made in Xinjiang unless the importer can provide convincing evidence that the products were not made with forced labor. The UFLPA does not impose a total ban on importing goods from Xinjiang but rather imposes a “rebuttable presumption” of a ban that can be overcome with proper documentation.

The Xinjiang restrictions were significant for the global solar industry because factories in the Xinjiang region produced about 45% of the world’s solar-grade polysilicon as of 2020, according to Bernreuter Research. Factories in Xinjiang do not assemble any significant number of solar modules, but they do produce a significant amount of polysilicon.

However, the importance of Xinjiang polysilicon has been reduced by a sharp increase in the number of polysilicon factories built outside Xinjiang. As a result, Wood Mackenzie says that the share of the world’s polysilicon that came from Xinjiang factories dropped to less than one-quarter in 2023.

The global solar industry has also adjusted to Xinjiang labor issues by diverting supply chains away from Xinjiang and doing a better job documenting their supply chains to satisfy US import requirements.

Also, about 175 solar companies from around the world signed a pledge, sponsored by the Solar Energy Industries Association (SEIA), to ensure that their supply chains are free of any forced-labor products (see “Solar Companies Unite to Prevent Forced Labor in the Solar Supply Chain”). The SEIA also released a Supply Chain Traceability Protocol that helps companies prove that their supply chain is free of any products that are potentially connected with forced labor (see “New Traceability Protocol Allows Solar Companies to Ensure Ethical Supply Chain”).

The SEIA, in September 2024, then released a draft of “Standard 101” that establishes an industry standard for meeting the US Customs and Border Protection (CBP) traceability and duty requirements for solar imports. The SEIA’s Standard 101 is expected to be in use by early 2025. The SEIA will partner with third-party auditors so that companies can get their products certified as compliant with US trade laws. The Solar Stewardship Initiative has launched a similar standard for European countries called the “Supply Chain Traceability Standard,” in an effort sponsored by trade bodies SolarPower Europe and Solar Energy UK.

The US ban on importing undocumented solar products from Xinjiang caused supply-chain disruptions for some US solar developers who had shipments detained by US Customs until they provided the necessary documentation. However, the overall impact of the ban was reduced by the fact that the US purchased only a small portion of China’s solar module output in the first place due to the decade-long US tariffs on Chinese solar products.

Europe has also acted to block products tied to forced labor. The European regulatory authorities in December 2024 implemented the “EU Regulation on Prohibiting Products Made with Forced Labor on the Union Market” (FLR). The FLR prohibits companies from selling into the EU market or exporting from the EU market any products made in whole or part with forced labor, as defined by the International Labor Organization. The ban will go into effect in December 2027 without the need to implement legislation at the national level.

Other US solar policy issues — When Donald Trump took office as President for his second term in January 2025, he made a slew of announcements affecting clean electricity. He announced that the US will withdraw from the Paris Climate Agreement, beginning a year-long process to complete the exit. He revoked the US International Climate Finance Plan, which provides aid to developing nations for reducing emissions. Mr. Trump also said he would revoke all the US federal and national goals for reducing emissions. The Trump administration is also reviewing new clean energy loans, grants, leases, and permits.

The Trump administration is set to drop former President Biden’s previous US climate commitments. The Biden administration, in April 2021, announced a new “Nationally Determined Contributions” (NDC) under the Paris Climate Agreement of a reduction in US greenhouse gas emissions by 50-52% by 2030 from 2005 levels. That was nearly double the previous commitment made by the Obama administration of a 26-28% cut in greenhouse gas emissions by 2025 from 2005 levels. The Biden NDC also included the target of the US economy having net-zero carbon emissions by 2050. Former President Biden also pledged to reach a 100% carbon-free electricity sector by 2035 and reach net-zero greenhouse gas emissions by 2050.

Europe continues to strengthen policy support for solar

European solar installs in 2024 grew by +4% yr/yr to a record 65.5 GW, according to industry association SolarPower Europe in its report, “EU Market Outlook for Solar Power: 2024-2028.” That followed the banner year in 2023 when solar installs surged by +53%.

Solar energy’s share of total electricity generation in Europe rose to 11%, up from 9.1% in 2023 and 7.6% in 2022, according to energy thinktank Ember. Solar energy in 2024 beat coal for the first time, with solar energy’s 11% share of total EU electricity usage exceeding coal’s 10% share. European gas-generated electricity fell for the fifth consecutive year in 2024.

Slower European solar growth in 2024 was caused by weaker residential installs and the stabilization of electricity prices after the surge caused in 2022-23 by Russia’s invasion of Ukraine. Yet utility-scale solar continued to show strong growth in 2024 and accounted for 42% of European solar installs, up from 36% in 2023.

Looking ahead, EU solar installs in 2025 will grow by +7% to 70 GW, followed by +3% growth in 2026, according to forecasts from SolarPower Europe. European solar growth is expected to slow over the near term as fast-growth issues are addressed, such as grid congestion and permitting delays.

The EU has aggressive climate and renewable energy goals. In September 2022, the European Parliament approved an increase to a 45% target by 2030 of the share of renewables in the EU’s electricity mix, up from 40% in June 2022 and the previous target of 32%. The new 45% target was set by the European Commission as part of the REPowerEU plan to cut the EU’s dependence on imported Russian natural gas. The actual target is 42.5%, but a 2.5% “indicative top up” allows for a 45% target to be reached.

The EU is relying on its renewables target to meet its pledge under the UN Paris Climate Agreement to cut its greenhouse gas emissions by at least 55% by 2030 from 1990 levels, and for net zero emissions by 2050.

Europe was thrown into an energy emergency after Russia invaded Ukraine in February 2022, which forced Europe to slash its dependence on Russian oil and gas. Russia’s invasion of Ukraine brought the importance of domestic energy security to the forefront once again, much as it was in the 1970’s when OPEC’s oil embargo caused long gasoline lines and a global recession. Fossil fuels often come from hostile and inhospitable places, making them an expensive and unreliable source of energy for importers.

As a result of Russia’s attack on Ukraine, the EU formulated a new plan called REPowerEU to slash its dependence on Russian fossil fuels. A key strategy of REPowerEU is to rapidly build more renewable electricity to replace natural gas and coal. The REPowerEU proposal seeks to ensure that 740 GW of cumulative solar capacity is in place by 2030, which would require about 440 GW of new solar to be installed during 2025-2030.

The REPowerEU strategy includes several key measures for accelerating the installation of solar, including larger government solar auctions, government help in identifying land sites, streamlined permitting, and streamlined solar Power Purchase Agreements (PPAs) to make them more attractive for small and medium-sized companies.

US passage of the IRA law galvanized European policymakers into taking more aggressive actions to build a domestic solar manufacturing base. The European Commission formulated the “Green Deal Industrial Plan,” which focuses on the four pillars of regulation, financing, skills, and trade.

As part of the Green Deal Industrial Plan, the EU’s “Net-Zero Industry Act (NZIA)” took effect in June 2024. The NZIA has a goal of using European-manufactured products for at least 40% of its clean energy deployment. The NZIA imposes domestic content requirements for European public auctions and tenders for renewable energy capacity, thus seeking to support European manufacturers. The NZIA also seeks to promote the training of workers for solar manufacturing plants and ease regulatory burdens on European solar manufacturers.

In February 2025, the European Commission released the Clean Industrial Deal, which anticipates providing $105 billion of funds to promote European clean industrial manufacturing.

India becomes major module exporter as production capacity soars

India’s government is pushing very hard for solar to help modernize its infrastructure, boost its global business competitiveness, expand electricity access in rural areas, and meet its climate goals.

India is pursuing national goals of 500 GW of renewable capacity by 2030 and net zero emissions by 2070. India’s government has also set an aggressive goal of increasing its cumulative solar capacity by +49% to 186 GW by 2027 and nearly tripling its cumulative solar capacity to 365 GW by 2032 from 125 GW in 2024, according to India’s 14th National Electricity Plan (NEP14).

Solar is already the biggest source of new electricity in India, accounting for 73% of new annual electricity capacity additions in 2024, according to Mercom Capital Group. That means that solar energy in India trounced other sources of new electricity generation in 2024, such as wind, natural gas, coal, and nuclear.

In 2024, India installed the third most solar of any country in the world, behind China and the US, with installs of a record 32.9 GW, up +143% yr/yr, according to BNEF. India’s solar installs have shown a compounded annual growth rate of +24% in the 5-year period through 2024.

BNEF is forecasting that India’s solar compounded annual growth rate over the 5-period period through 2029 will be +10% and will nearly double to 60 GW by 2030.

India’s government in recent years has pushed hard for a homegrown solar industry with a combination of tariffs on imported solar products and a large subsidy program for building solar factories in India.

India’s domestic solar manufacturing capacity has grown very quickly. Mercom reports that India added 11.3 GW of solar module production and 2.0 GW of solar cell production in the first half of 2024. That brought India’s cumulative solar module manufacturing capacity to 77.2 GW and solar cell capacity to 7.6 GW as of June 2024. Mercom forecasts that India will more than double its solar module manufacturing capacity to at least 150 GW by 2026.

Increased production allows Indian solar manufacturers to not only meet domestic demand but also export a significant number of modules to other countries, such as the US, where buyers are looking to avoid tariffs on Chinese-related modules. India exported $2 billion of solar modules in fiscal-2024, with nearly all of those exports going to the US, according to JMK Research & Analytics.

To build a domestic solar manufacturing industry, India’s government provided a hefty $3 billion of funding for its solar PV manufacturing “Production Linked Incentive” (PLI) scheme, which offers subsidies to companies that build large PV manufacturing plants in India.

India’s government has also used tariffs to block imports of Chinese solar modules and encourage Indian solar installers to buy Indian modules. Effective April 1, 2022, India’s government imposed a basic customs duty of 40% on certain imported solar modules and a 25% duty on imported solar cells.

As another trade protection mechanism, India maintains an “Approved List of Models and Manufacturers” (ALMM) of solar modules that are approved for installation in India in government projects and projects under government programs. That list was originally designed as a minimum quality requirement, but it is actually a domestic content requirement since no non-India solar manufacturers are on the list. The ALMM currently applies only to solar modules. There are no ALMM restrictions on importing solar wafers and cells.

The Indian government, from March 2023 through March 2024, temporarily suspended the ALMM list to allow the use of foreign modules since there weren’t enough modules produced in India to meet demand. However, the government reimposed the ALMM list restrictions as of April 2024 to clamp down again on foreign imports.

Japan’s solar slows while much of the rest of Asia/Pacific shows growth

Solar installs in Japan in 2024 fell by -16% yr/yr to 4.2 GW, for the fourth consecutive annual decline, according to BNEF. However, BNEF is expecting +5% solar growth in 2025 and then annual growth averaging about +10% through 2030.

Japan’s annual solar installation growth slowed through 2024 due to reduced subsidies. Yet, the Japanese government’s subsidy support for solar will continue in the coming years with a FIT (feed-in tariff) program for residential and commercial-industrial projects.

For large-scale solar projects, the Japanese government, in April 2022, launched a feed-in-premium (FIP) support program. The FIP program gave solar electricity producers a premium over wholesale electricity prices as an incentive, unlike the old FIT system that specified a fixed electricity price. The new system aims to transition the Japanese solar market to unsubsidized parity.

The Japanese government is pursuing aggressive solar targets to help meet its emissions goals. In July 2021, the Japanese government almost doubled its solar target to a cumulative capacity of 108 GW by 2030. The Japanese government has a Nationally Determined Contributions (NDC) of a 60% cut in emissions by 2035 and a 73% cut by 2040 from 2013 levels. Japan is seeking to achieve net zero carbon emissions by 2050.

Solar in Japan should also see support in the coming years from Japanese corporations that want to sign solar power purchase agreements to meet their corporate renewable energy goals. Corporate demand is expected to be a key factor driving the development of subsidy-free solar in Japan in the coming years.

Elsewhere in Asia/Pacific, Taiwan is expected to see strong solar installs in the coming years as the government promotes solar to meet its climate goals. Solar installs in Taiwan in 2024 fell by -26% to 2.0 GW, but BNEF is expecting strong growth of +25% in 2025 and +40% in 2026.

There is strong solar demand in Taiwan as well from corporations looking to meet their renewable energy goals. Also, there is rising demand for solar power in Taiwan to replace the coming closure of coal plants to meet the government’s goal of net zero emissions by 2050.

Taiwan’s government aims to obtain 25% of its total electricity from renewable sources by 2025. The government has announced an aggressive cumulative solar capacity target of 20 GW by 2025, which would be about 60% higher than current capacity.

Solar installs in South Korea in 2020 grew sharply by +51% to a record 5.6 GW, but have since fallen, with a -2% decline in 2024 to 2.9 GW, according to BNEF.

Corporate demand for solar power is expected to grow sharply after South Korea’s government in January 2021 revised its electricity laws to allow clean energy developers to sell electricity directly to corporations with power purchase agreements.

The South Korean government is considering a proposal to require that 21.5% of electricity generation capacity be derived from renewable sources by 2030. The South Korean government, in 2021, raised its Nationally Determined Contributions (NDC) under the Paris Climate Agreement to a 40% cut in emissions by 2030 from 2018 levels.

In Australia, solar installs in 2024 fell by -20% to 4.5 GW, following the +19% increase in 2023, according to BNEF. Australian solar installs have shown a strong +18% compounded annual growth rate over the last 10 years.

Australia’s government has pledged to reduce emissions by 43% by 2030 from the 2005 level and reach net zero emissions by 2050. The government is also targeting 82% renewable generation by 2030, up from the current level of 27%.

Latin America becomes major solar player, with Brazilian dominance

Latin America has become a major player in the solar industry due to rapid growth in Brazil, Mexico, and Chile.

Annual solar installs in the fifteen largest Latin American countries in 2024 rose by +9% to 23.2 GW, adding to the growth rates of +68% in 2022 and +14% in 2023, according to BNEF. Solar growth in Latin America has shown compounded annual growth of +25% over the last five years.

Solar growth in Latin America is heavily concentrated in Brazil, which accounted for 73% of Latin American solar installs in 2024. Brazil in 2024 was in fourth place in the world for annual solar installs, behind just China, the US, and India.

Brazil’s solar installs in 2024 rose +6% to 17.0 GW and showed compounded annual growth of +42% over the last five years .

Chile was the second largest Latin American solar player in 2024, with 2.1 GW of solar installs (-15% yr/yr), accounting for 9% of total Latin American installs. Chile’s solar installs showed compounded annual growth of +32% over the last five years.

Colombia was the third largest solar player in Latin America in 2024, with 1.5 GW of installs (+411% yr/yr), accounting for 6.6% of Latin American installs. Mexico was the fourth largest solar player in 2024, with 1.5 GW of installs (-15% yr/yr), accounting for 6.3% of total Latin American installs.