Solar stocks consolidate below 2.5-year high as global solar industry solidifies its position as the dominant form of new electricity

The MAC Global Solar Energy Index is up +80% year-on-year and has more than doubled from last April’s 6-year low. The MAC Solar Index in 2025 rallied by +27%, overcoming some of the losses seen in the previous three years (-37% in 2024, -26% in 2023, and -5% in 2022). Before those losses, the Index experienced extraordinary gains of +245% in 2020 and +67% in 2019.

The MAC Solar Index rallied to a 2.5-year high in February and is currently consolidating mildly below that high. The Index has more than overcome the weakness seen after the November 2024 US election when Republicans took control of Washington. Solar stocks rallied sharply during 2025 after Republicans’ changes to US solar policy were less severe than expected.

Also, the markets expect profitability in the solar sector to improve as the Chinese government works on a plan to slash excess manufacturing capacity and improve profitability.

Solar stocks also received support after the US Federal Reserve cut its federal funds target range by a total of three-quarters of a percentage point in late 2025, adding to the one percentage point rate cut seen in late 2024.

Solar stocks have settled back in the past month, along with the global stock market as a whole, after the US and Israel launched a war against Iran, driving oil prices sharply higher as Iran effectively closed down the Strait of Hormuz.

The sharp rise in oil prices has undercut global stocks but has supported clean energy stocks as it becomes apparent once again that the world economy is vulnerable to oil supply shocks from hostile regions. That vulnerability is likely to accelerate the trend towards electrification and a greater reliance on domestic clean-electricity generation.

The US solar industry is moving forward after the Republicans in July 2025 passed their “One Big Beautiful Bill Act” (OBBBA). The bill phased out solar buyer incentives but fully retained the IRA’s 45X solar manufacturing credits through 2032, which have been the main driver of the US solar manufacturing boom over the past several years. In addition, the OBBBA left in place generous incentives for battery storage, which maintains the attractiveness of pairing solar and battery facilities to create a 24/7 electricity solution.

The OBBBA’s early phase-out of the tax credits for solar buyers will undercut solar installation growth over the next several years. However, the early elimination of buyer credits does not change the fact that solar electricity is still much cheaper to install than natural gas or nuclear electricity before any subsidies are taken into account. Even without subsidies, many utilities will continue to choose solar due to its low unsubsidized cost, speed of installation, and 24/7 availability when paired with storage.

As Bloomberg New Energy Finance (BNEF) puts it, “Even without tax credits, the case for renewables and batteries remains strong in the US with top-line electricity demand growing swiftly for the first time in a decade, thanks to data-center buildout and electric vehicle sales. US natural gas is cheap, but turbines to convert it to electricity are expensive and hard to procure.”

BNEF expects US electricity demand from data centers to more than triple by 2035 due to AI demand, forcing utilities and data center operators to install new electricity generation resources.

Wood Mackenzie also remains positive about solar in a post-subsidy America, saying, “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.”

It is also important to note that solar energy is growing rapidly worldwide, even in countries without government subsidies. This bolsters confidence that solar will thrive in the United States even without buyer subsidies.

Although the reduced US solar stimulus was a negative factor for US solar firms, it is important to recognize that the US accounts for only 8% of global solar sales. That means that 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 elsewhere.

Global solar stocks have been under pressure over the past two years, primarily due to a sharp decline in polysilicon and solar module prices resulting from a surge in production capacity. The decline in solar prices has occurred even though global demand for solar remains very strong. The decline in solar product prices has been a negative factor for the profit margins of polysilicon, wafer, cell, and module manufacturers, which in turn has been a negative factor for stock prices.

However, those manufacturers constitute only about 27% of the total weight in the MAC Solar Index. The other 73% of the Index weight is in installers and operators of solar facilities, as well as manufacturers of non-module solar components, including inverters, solar glass, and solar trackers. Those sectors would benefit from higher demand and unit sales driven by lower module prices.

Also, 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.

Meanwhile, the global oversupply situation is slowly being resolved as Chinese solar companies curb production and delay or cancel their capacity expansion plans. Companies are phasing out old production lines and shutting down facilities for maintenance. Additionally, non-competitive, low-quality solar manufacturers are being driven out of business altogether.

Also, the Chinese government has launched an initiative to manage disorderly competition by forcing Chinese solar companies to reduce their production. On July 3, 2025, China’s Minister of the Ministry of Industry and Information Technology, Li Lecheng, met with the leaders of 14 solar companies and solar industry associations to announce that the government will increase oversight of the solar industry and take “forceful measures.” A Chinese press report stated that the government may “severely” punish companies that sell at prices below their production cost. There is also speculation that the government will implement strict energy-use limits for polysilicon production, effectively outlawing obsolete and inefficient producers.

The Chinese government also canceled the 9% export VAT rebate effective April 1, 2026, which Chinese solar exporters received for shipping their products overseas. The removal of this de facto government subsidy is expected to put some low-end solar manufacturers out of business and reduce production overcapacity, boosting the profitability of large, well-capitalized Chinese solar manufacturers. The removal of the export rebate is also expected to benefit non-Chinese solar manufacturers by reducing Chinese exports and boosting global solar module and component prices.

Meanwhile, the Chinese government has put the kibosh on the plan by top Chinese polysilicon producers to create a polysilicon inventory platform company, whose job would be to manage global polysilicon inventory with a view to stabilizing polysilicon prices within a specified range. The Chinese government halted the $7 billion plan to consolidate the polysilicon industry by warning companies not to coordinate production capacity, sales volume, or prices.

In any case, solar product pricing has recently stabilized. Polysilicon prices are currently trading at $5.07 per kilogram, 20% above the record low of $4.22 set in June 2025. The prices of silicon and thin-film modules are moving sideways, above the recent record lows.

Despite recent obstacles for solar stocks, the good news is that demand for solar energy remains strong, serving as a key solution on both economic and environmental grounds. Solar stocks have regained their footing in recent months, now that US legislative uncertainty has been resolved and excess Chinese production capacity is being addressed.

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 is by far the world’s primary source of new electricity capacity

Global solar installations in 2025 rose by +11% to a new record of 655 GW(dc)*, adding to the sharp growth rates of +76% in 2023 and +33% in 2024, according to Bloomberg New Energy Finance (BNEF). Global investment in solar projects totaled $450 billion in 2025, according to the International Energy Agency (IEA).

Global solar installations grew at a compound annual rate of +34% during the five years from 2020 to 2025, making it one of the world’s fastest-growing industries. BNEF forecasts that global solar installations will fall slightly by -1% in 2026 but then rise by +6% in 2027 and +9% in 2028.

Even though the growth of annual solar installations is expected to come back to earth after the torrid pace seen in the 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 capacity of all existing solar plants).

Specifically, BNEF forecasts that global cumulative solar capacity will grow at a compound annual rate of +18% over the 2025-2030 period. Cumulative global solar capacity in 2025 rose by +29% to 2.9 terawatts (TW) and showed compound annual growth of +30% over the 5 years of 2020-2025, according to BNEF.

Solar accounted for about 70% of total new global electricity generation installations in 2025, far exceeding the next largest source of wind, at 20%, according to the International Renewable Energy Agency’s (IRENA) “Renewable Capacity Statistics 2025.” As a whole, renewables accounted for a record 92.5% of total electricity installations in 2025, leaving fossil fuel and nuclear power in the dust for new global electricity installations.

Utility-scale solar accounted for more than two-thirds of global solar installations in 2024, with most of the rest involving rooftop solar on homes and businesses, according to the IEA PVPS’s “Snapshot of Global PV Markets 2025” (pp. 10-11).

Regarding total electricity use, solar accounted for 7% of global electricity generation in 2024, up from 5% in 2023, according to the International Energy Agency (IEA).

The IEA expects total global electricity usage to grow by a hefty +4% annual over the next four years, driven by increased air conditioning ownership, the need for more data centers to support 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 renewables are being relied upon to meet new electricity needs is their low cost and rapid construction. Not only are renewables the most economical solution for building new electricity capacity, but they also help slow the effects of global warming.

BNEF has determined that solar and wind are now the cheapest sources of new electricity generation for at least two-thirds of the world’s population.

Even though the Trump administration has pulled the US out of the Paris Climate Agreement for the second time, the rest of the world will continue to battle climate change. At the COP28 conference in Dubai in December 2023, the world consensus was to pursue an “orderly transition” away from fossil fuels and to achieve a tripling of renewable energy by 2030 and net-zero emissions by 2050. Most of the world, excluding the US, is moving ahead with those goals.

Chinese solar consolidates with a focus on quality and profitability

The solar energy industry is a key sector in China. China needs low-priced solar to expand its electricity capacity and support its economic growth targets. China also needs solar energy to build new electricity generation facilities that reduce its reliance on coal, improve air quality, and meet its carbon-emission-reduction targets.

China installed 382 GW of solar in 2025, up +13% from 338 GW in 2024. That added to the sharp gains of +144% in 2023 and +30% in 2024. China’s solar installations grew at a compound annual growth rate of +49% in the five years from 2020 to 2025, according to BNEF. BNEF is forecasting a -16% drop in solar installs in China in 2026, followed by stable installs near 310 GW during 2027-2030.

The 382 GW of solar added in 2025 pushed China’s cumulative solar capacity up +37% to 1.4 terrawatts. BNEF is expecting cumulative solar capacity to rise by a compound annual rate of 16% over the next five years through 2030.

China, during 2020-2025, installed solar at a breakneck pace to meet strong electricity demand and its climate targets. However, solar installs are now expected to fall back as the grid and battery storage catch up and as Chinese solar companies cut production capacity to restore profitability.

Chinese solar production is expected to fall after April 1, 2026, when the government removes its 9% export tax rebate for solar exports. Chinese solar installs already fell in the second half of 2025 after the government phased out fixed-price tariffs and exposed solar electricity generators to market prices. Solar growth is settling back as the government focuses on quality rather than quantity and seeks to restore profitability to the sector.

Solar accounted for about 60% of all new electricity capacity additions in China in 2025, far higher than the 20% share for wind, the 14% share for coal, and the low single-digit shares for natural gas, hydro and nuclear, according to a compilation of data from various sources. China generated 11% of its total electricity from solar in 2025, up from less than 1% a decade earlier.

The Chinese government is heavily relying on solar energy to meet its climate targets. In September 2025, the Chinese government announced a new goal of reducing emissions by 7-10% from peak levels by 2035, compared to its previous goal of peaking carbon emissions by 2030. The government also announced a goal of increasing installed wind and solar capacity to 3,600 GW by 2035, which is more than six times the 2020 level. China also adopted a goal for the share of non-fossil energy (including renewables, hydro, and nuclear) to exceed 30% by 2035. The Chinese government aims to achieve carbon neutrality by 2060 as part of its Nationally Determined Contribution (NDC) under the Paris Climate Agreement.

China has been installing utility-scale and rooftop solar on a massive scale across the country. However, to help meet its ambitious renewable energy targets, China has also been building a vast array 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 completed by 2025 and an additional 255 GW by 2030. Those plants will mainly deliver the electricity to the nation’s more densely populated eastern regions.

In February 2025, Chinese government regulators announced a new policy, known as Regulation No. 136, that fully moved China to market-based pricing for solar electricity. Solar electricity from projects implemented after June 1, 2025, is sold at market prices, thus replacing the previous system of a fixed contract price based on the coal-fired power price. The new program means that 100% of solar electricity is now being traded in the power market, up from 50% in 2024.

Under the new policy, a “Contract for Difference” (CfD) program provides 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.

China’s new pricing policy is designed to transition its solar industry into a mature, market-driven power sector by balancing market exposure, revenue certainty, and investment quality. It marks the end of universal fixed pricing and marks the beginning of a new era in renewable energy commercialization.

US solar industry moves forward despite last year’s phase-out of buyer subsidies

Solar has become a major industry in the United States, with sales of about $68 billion in 2025, according to the Solar Energy Industries Association’s (SEIA) Solar Data Sheet. There are more than 10,000 solar businesses in the US, employing some 280,000 people. Nearly 9% of US electricity comes from solar, enough to power 47 million households. There are nearly 6 million solar energy systems installed in the US.

US annual solar installations in 2025 grew by +2.6% to 49.0 GW from 47.7 GW in 2024, slowing after the torrid growth of +58% in 2023 and +28% in 2024, according to BNEF. US solar installations are expected to remain little changed at around 40-45 GW over the next five years.

The fact that the US is expected to install an average of 43 GW of solar capacity per year over 2026-2030 means that cumulative US solar capacity (i.e., the total capacity of all existing US solar plants) will continue to show solid growth. BNEF forecasts that US cumulative solar capacity will grow by +17% to 320 GW in 2026, adding to the 2025 growth rate of +22% to 274 GW. Wood Mackenzie expects cumulative US solar capacity to nearly triple to 769 GW by 2036.

Solar energy is trouncing its competitors in newly installed electricity capacity. Specifically, solar energy accounted for 54% of all new US electricity-generating capacity in 2025, marking the seventh consecutive year it led, according to Wood Mackenzie. Solar’s 54% market share was far ahead of 25% for battery storage, 13% for wind, and 8% for natural gas. No new coal or nuclear electricity-generating plants of any size were installed in 2025.

Solar beat natural gas by a margin of 7-to-1 for new US electricity plant installations in 2025. With Republicans in control of Washington, there have been calls for a greater reliance on natural gas for electricity production. However, natural gas is limited in its ability to provide new electrical capacity by its high cost relative to solar. BNEF determined that the levelized cost of energy (LCOE) for a new combined cycle gas turbine (CCGT) plant on a global basis has risen by +15% since 2023 to $102/MWh, which is far higher than the global LCOE of $39/MWh for fixed-tilt solar PV and $57/MWh for a 24-hour combined solar-battery storage plant.

In addition, there are long lead times for building new natural gas plants due to severe backlogs for turbines that extend to 2029. The average lead time for getting a gas plant into service has stretched to 5 years from 3.5 years in 2023, according to BNEF. That is much longer than the average lead time of about 3 years for a utility solar project, which can be fast-tracked to 18-24 months for an ideal project. Solar is not only cheaper to build than natural gas plants, but is also much quicker.

Utility solar remained the dominant install sector in 2025, accounting for 343.7 GW, or 81% of US solar installations, according to Wood Mackenzie. Residential solar accounted for 11% of US solar installations in 2025, followed by 5% for commercial solar, and 3% for community solar.

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 expects utility-scale solar’s share of total US electricity generation to increase to 6.8% in 2025 and 8.0% in 2026. The relatively low penetration rate seen thus far for solar energy indicates ample room for solar to continue growing rapidly in the coming years, meeting new electricity demand and replacing more expensive options such as natural gas, coal, and nuclear.

US solar installations in 2025 were undercut by policy uncertainty after Republicans curbed incentives in July with their One Big Beautiful Bill Act (OBBBA). In addition, there was a continued shortage of solar panels available to developers due to tariff chaos and other US trade restrictions.

Yet, US solar installations remained generally strong in 2025 due to high demand for new electricity generation capacity, particularly solar. In addition, US solar manufacturing ramped up sharply in 2025, making panels more available and less expensive as developers could avoid paying tariffs on imported panels.

US solar industry absorbs OBBBA subsidy curbs — In July 2025, Republicans passed their OBBBA reconciliation bill, which included legislative amendments to the solar stimulus measures originally passed in the Biden administration’s “Inflation Reduction Act” (IRA) in 2022.

The original IRA law offered two major tax incentives for solar buyers, which substantially reduced the bottom-line cost for solar developers and operators. Buyers could choose either incentive, but not both.

The first buyer incentive was the Section 48E Clean Electricity Investment Tax Credit (ITC), which the IRA law set at up to 30% of the cost of purchased solar equipment (including inverters and batteries). The original IRA provided the credit through 2032, with step-downs to 26% in 2033, 22% in 2034, and 0% in 2035.

The second buyer incentive was the Section 45Y Clean Electricity Production Tax Credit (PTC), which offered a credit of up to 1.5 cents/kWh for solar-electricity generators. The original IRA law provided the credit through 2032, with step-downs to 75% of the credit in 2033, 25% of the credit in 2034, and zero in 2035.

However, Republicans’ OBBBA law ended the buyer 48E ITC and 45Y PTC credits for solar buyers much earlier than the IRA, providing the credit only for (i) projects that began construction between July 2025 and July 2026 (with no completion date requirement), or (ii) facilities that began construction after July 2026 but place the facility in service by December 31, 2027.

The Treasury released guidance in August 2025 defining how to meet the “beginning of construction” rules to qualify for the credits. The new rules state that projects can comply only if they show “physical work of a significant nature,” which was more restrictive than the former requirement of spending at least 5% of the project cost. However, small projects under 1.5 MW can still qualify under the old rule requiring 5% of the project cost.

While the OBBBA law sharply curbed solar and wind credits, it was very generous with the 48E and 45Y credits for battery storage, not only leaving the IRA credits in place but also extending them by a year. Specifically, the OBBBA law maintained the battery credits through 2033, with step-downs to 75% of the credit in 2034, 50% of the credit in 2035, and a zero credit in 2036.

The OBBBA law was very generous with nuclear, geothermal, and hydropower credits, leaving the IRA’s existing 48E and 45Y credits in place through 2033. However, geothermal and hydro power do not pose much competition to solar due to their geographic and scalability limitations.

Meanwhile, nuclear power continues to be held back by very high costs, both for legacy and newer nuclear technologies, even after receiving subsidies. Also, nuclear remains highly risky, as no electric utility could operate a nuclear power plant without a taxpayer liability backstop from the US federal government’s Price-Anderson Act. The Price-Anderson Act caps the liability of a nuclear operator and ensures compensation by US taxpayers in the event of a nuclear accident or sabotage.

There is also the substantial risk posed by nuclear waste, which utilities currently store mostly on-site, as the US government has yet to build a permanent national nuclear waste repository due to a decades-long stalemate within the federal government. That means there is currently radioactive waste at various nuclear power plants across the US that is subject to leaks or terrorist attacks. It is worth noting that advanced nuclear reactor developers have yet to address the nuclear waste issue, even assuming their monumental cost problem can be overcome.

Another tax credit in the original IRA law was the Section 25D Residential Clean Energy Credit, which offered a 30% tax credit for residential solar and storage systems installed from 2022 through 2032, with step-downs to 26% in 2033 and 22% in 2034.

The OBBBA law eliminated the residential solar tax credit as of December 31, 2025. However, the bill was more lenient, allowing third-party ownership (TPO) companies to receive the 48E ITC credit for home-based solar systems leased or provided to homeowners under power purchase agreements, thereby allowing those TPO companies to charge homeowners less for the solar electricity. The OBBBA law allows the 48E ITC credit for TPO systems through 2030 if safe-harbored by starting construction before July 4, 2026.

To support US domestic solar manufacturing, the original IRA law provided $30 billion to implement a Section 45X Advanced Production Credit for US solar manufacturers through 2032. The credit covered the entire solar supply chain, from polysilicon to modules, as well as inverters and batteries.

The purpose of the 45X production credit was to encourage companies to build factories in the United States to manufacture solar modules, inverters, and batteries, thereby stimulating employment in the country and reducing the need for the United States to import this equipment.

In a big win for the US solar industry, the OBBBA law retained the 45X production credit, with the intent of keeping newly built US solar factories open and encouraging the construction of additional factories.

The OBBBA law retained the IRA’s same expiration schedule for the 45X production, providing the credit through 2029, with step-downs to 75% of the credit in 2030, 50% in 2031, 25% in 2032, and 0% in 2033.

In a new measure not in the original IRA law, the OBBBA law includes a “Prohibited Foreign Entity” (PFE) screen that disallows the 45X production credits for factories owned or operated by a prohibited foreign entity or that receive material assistance from one. OBBBA’s PFE rules expanded the Foreign Entity of Concern (FEOC) rules contained in the IRA bill.

There are also PFE restrictions on the 48E ITC and 45Y PTC credits, which prohibit foreign entities from receiving these credits. In addition, facilities that began construction after December 31, 2025, cannot receive material assistance from a prohibited foreign entity. The new PFE rules also apply to battery credits.

The countries prohibited by the foreign entity of concern rules are China, Russia, Iran, North Korea, and Cuba. China is obviously the primary concern for the solar industry, as a significant portion of the world’s polysilicon, solar wafers, and solar cells originates in China or is produced by Chinese-owned companies operating outside the country.

In February, the Treasury released FEOC guidance on “material assistance” that was better than expected for the industry. The new rules said that companies claiming the subsidies do not need to prove the origin of every single raw material or component in a solar module or cell, only those already listed in the existing domestic content safe-harbor tables.

However, the Treasury has yet to release rules on prohibited foreign ownership, leaving uncertainty over the credits.

US solar manufacturing sector has grown rapidly and can now meet US domestic module demand — The IRA’s 45X production credit, implemented in 2022 and extended by OBBBA, has been highly successful in driving the construction of many solar factories in the United States.

Wood Mackenzie says 133 new solar and storage facilities have come online due to the manufacturing incentives. New US solar manufacturing investments now total $37 billion since 2022, with $14.5 billion of those facilities operational, $13.5 billion under active construction, and $5.7 billion under development, according to Wood Mackenzie.

In fact, US solar module factories were capable of producing 65.5 GW of solar modules as of the end of 2025, up 50% yr/yr and a 9-fold increase from the pre-IRA level of 7 GW, according to Wood Mackenzie. That is more than enough capacity to fulfill all of 2026’s expected US solar installs of 45 GW, meaning there is no longer any need for US developers to import solar modules.

However, the US still needs to import most of the solar cells used in the modules assembled in the country. As of the end of 2025, only about 3 GW of solar cells were manufactured in the US, according to Wood Mackenzie. Yet, solar cell manufacturing in the US should soon reach 29 GW if all currently under-construction plants are completed.

Farther upstream in the supply chain, the US will soon have 33 GW of polysilicon production and 8 GW of ingot and wafer production, including existing and under-construction plants (see SEIA’s Solar and Supply Chain Dashboard). The US also has 25 GW of solar inverter manufacturing capacity in existence or under construction.

US solar industry navigates Trump tariffs — The global solar industry has been a victim of aggressive tariffs from governments worldwide for more than a decade. The tariffs have increased the bottom-line costs for solar homeowners and utility developers and have caused significant problems for solar manufacturers.

The goal of most tariffs is to protect domestic manufacturers from overseas competition. More often than not, however, tariffs restrict the supply of imported goods and increase prices for the country’s consumers.

For more than a decade, the US government used import tariffs in a failed attempt to promote US solar manufacturing. The import tariffs primarily restricted the supply of modules available to US solar developers and increased the price of US modules relative to global prices. It wasn’t until the US government, with the Biden administration’s Inflation Reduction Act, offered a substantial manufacturing subsidy that solar companies began building solar module assembly plants in the US on a significant scale. As mentioned earlier, Republicans in the OBBBA law preserved the solar manufacturing subsidies.

Over the past decade, the US government has employed three distinct solar-specific tariffs: Section 301 tariffs, anti-dumping and countervailing duty (AD/CVD) tariffs, and Section 201 tariffs (which expired in early 2026).

The Trump administration continues to use solar-specific tariffs, but radically expanded the use of tariffs by imposing so-called “reciprocal tariffs” on imports of nearly all goods worldwide. These tariffs were in addition to the solar-specific tariffs.

President Trump imposed reciprocal tariffs in April 2025, claiming a national emergency under the International Emergency Economic Powers Act of 1977. However, the US Supreme Court ruled in February 2026 that those tariffs were invalid because a president lacks the authority under the IEEPA to impose tariffs or any other types of taxes.

After the Supreme Court struck down the reciprocal tariffs, President Trump announced similarly sized tariffs based on other trade law authority, leaving the overall tariff picture little changed. In addition, US tariff deals already announced with China, Europe, India, and many other countries are likely to remain in place even though the US Supreme Court struck down the original authority for the tariffs.

These new blanket Trump tariffs are making it even more expensive for US solar companies to import products from overseas, including batteries, solar modules, and upstream solar components such as polysilicon, solar wafers, and solar cells. The high tariffs on imports from China are particularly damaging for US companies seeking to import batteries from China, the world’s largest battery producer.

In addition to the reciprocal tariffs, President Trump in March 2025 levied a national security tariff on imports of steel, aluminum, and their derivative products under Section 232 of the Trade Expansion Act of 1962. That import tariff is currently set at 50% for both steel and aluminum imports, except for the UK, which is at 25% due to a US-UK trade deal. The steel and aluminum tariffs have increased the cost of inputs for producers of solar trackers and solar module frames.

The Trump administration in July 2025 launched a separate probe into polysilicon imports based on national security concerns and Section 232 of the Trade Expansion Act of 1962. A decision on Section 232 polysilicon tariffs is expected at any time.

Regarding other types of solar tariffs, the Obama administration in 2012 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 doubled the Section 301 tariffs on Chinese solar modules and cells to 50% from 25%. In December 2024, the Biden administration raised the duty on solar wafers and polysilicon to 50% from 25%, thereby covering the entire Chinese solar supply chain with 50% tariffs.

The higher 50% Biden tariff had little impact since the US imported 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 as of January 1, 2024, allowing companies building manufacturing facilities in the United States to import the factory machinery they need to build their US factories.

In early December 2025, President Trump’s US Trade Representative (USTR) extended the Section 301 exemption for solar manufacturing equipment to November 10, 2026, a positive factor for companies looking to set up solar manufacturing plants in the US.

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) imposed anti-dumping and countervailing duty (AD/CVD) tariffs on four companies in August 2023, concluding that they had circumvented the Chinese tariffs. Those factories were located in Malaysia, Thailand, Vietnam, and Cambodia.

The AD/CVD investigation, which began in March 2022, sparked a flurry of order cancellations and project delays among US developers in 2022 due to uncertainty about the extent of the tariffs. However, the Biden administration announced in June 2022 that any tariffs resulting from the investigation would be suspended until June 2024, thereby giving US solar developers time to shift their solar module purchases to alternative sources. However, that tariff suspension ended in June 2024, and the US government began collecting AD/CVD tariffs on US solar imports from those four companies.

Then, in September 2025, the US Court of International Trade ruled that the Biden administration’s 2-year tariff moratorium in 2022-24 was invalid and ordered the retroactive collection of those duties, which could total as much as $54 billion. However, that ruling was appealed, and the appeals court blocked the US government from collecting retroactive tariffs pending a final ruling.

In June 2024, the US Department of Commerce (DOC) initiated a new, more extensive AD/CVD investigation into solar factories in Malaysia, Thailand, Vietnam, and Cambodia. In April 2025, the DOC announced final AD/CVD duties, with exact levels varying by company and country. The average duty was 34% in Malaysia, 375% in Thailand, and 396% in Vietnam, according to Bloomberg News. The rates for some companies in Cambodia reached 3,521% for companies that refused to cooperate with the DOC’s inquiry.

In July 2025, the US Department of Commerce (DOC) initiated a new AD/CVD investigation into solar cell producers in India, Indonesia, and Laos. In February 2026, the DOC announced preliminary countervailing duties (CVD) of 126% on imports from India, a range of 86% to 143% on imports from Indonesia, and 81% for imports from Laos. A preliminary AD determination is expected in April 2026, and a final determination of the CVD duties is expected in July 2026.

US solar importers deal with Xinjiang restrictions — US solar imports and installations have been disrupted over the past several years by the US government’s actions to block some solar imports from the Xinjiang region of China, following allegations of forced labor at some companies located in Xinjiang. However, that situation has now largely been resolved as solar companies either met the US government’s documentation requirements or acquired the necessary modules elsewhere.

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

The targeted companies were hamstrung in defending themselves against the forced labor allegations under China’s Anti-Foreign Sanctions Law, which makes it illegal for Chinese companies to comply with US requirements aimed at avoiding sanctions. The Chinese law makes it nearly impossible 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 passed the Uyghur Forced Labor Prevention Act (UFLPA) in December 2021, which was signed into law by former President Biden and took effect in June 2022. That law bans the importation of products made in Xinjiang unless the importer can provide convincing evidence that the products were not produced 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 diminished by a sharp increase in polysilicon factories built outside Xinjiang. As a result, Wood Mackenzie reports that Xinjiang factories’ share of the world’s polysilicon supply decreased to less than one-quarter by 2023.

The global solar industry has addressed labor issues in Xinjiang by diverting supply chains away from the region and by enhancing documentation to prove there are no forced-labor products in their supply chains.

The US-based Solar Energy Industries Association (SEIA) developed the ANSI/SEIA 101 Solar and Energy Storage Supply Chain Traceability Standard to address the issue of forced labor. US solar and energy storage companies can use that standard to comply with US Customs and Border Protection’s (CBP) traceability requirements and the UFLPA requirements (link). The American National Standards Institute (ANSI) approved the standard in October 2025.

Companies that comply with the ANSI/SEIA traceability standard can demonstrate that imported products do not contain any raw materials, components, or finished products that are banned under the UFLPA. The standard was created with real-world situations in mind, along with some input from the CBP. The new standard should help reduce seizures of imported products caused by insufficient documentation.

The ANSI/SEIA 101 traceability standard for supply chains should also help companies qualify for subsidies by meeting the OBBBA’s Foreign Entity of Concern (FEOC) rules.

The Solar Stewardship Initiative has launched a similar standard for European countries, known as the “Supply Chain Traceability Standard,” in an effort sponsored by trade bodies SolarPower Europe and Solar Energy UK.

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

Other US solar policy developments — When Donald Trump took office for his second term as President in January 2025, he made a series of announcements affecting clean energy. He announced the US’s withdrawal from the Paris Climate Agreement for the second time, 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 revoked all US federal and national goals for reducing emissions. The Trump administration has also canceled many clean energy loans, grants, and leases.

Although President Trump dropped the Biden administration’s previous US climate commitments, those commitments could be reinstated by a future president. The Biden administration, in April 2021, announced a new Nationally Determined Contribution (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, which was a 26-28% cut in greenhouse gas emissions by 2025 from 2005 levels.

The Biden NDC also included the target of achieving net-zero carbon emissions in the US economy by 2050. The Biden administration 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 installations in 2025 fell slightly by -1% to 65.1 GW yr/yr after the +4% increase in 2024, according to industry association SolarPower Europe in its report, “EU Market Outlook for Solar Power: 2025-2030.” Europe’s flat solar growth in 2024-2025 followed a banner year in 2023, when solar installations surged by +53%.

Solar energy’s share of total electricity generation in Europe rose by 2.1 percentage points to 13.2% in 2025 from 11.1% in 2024, according to energy think tank Ember (European Electricity Review 2026). In 2025, solar electricity usage surpassed coal for the second year, with solar’s 13.2% share of total EU electricity usage easily exceeding coal’s 9.2%. For the first time, solar and wind together accounted for 30.1% of total EU electricity use, exceeding electricity from fossil fuels at 29.0% (coal 9.2%, natural gas 16.7%, and other fossil 3.1%).

Weaker residential installations led to slower European solar growth in 2024 and 2025, as electricity prices stabilized after the surge in 2022-23 tied to Russia’s invasion of Ukraine and higher natural gas prices. Yet utility-scale solar continued to grow in 2025, accounting for 53% of European solar installations, up from 44% in 2024, according to SolarPower Europe.

Looking ahead, EU solar installations are expected to ease by -6% in 2026 and by -4% in 2027 as rooftop installations continue to decline, according to forecasts from SolarPower Europe. Also, utility solar is expected to be undercut as standalone solar projects transition to solar-plus-storage to boost revenues and eliminate curtailments.

SolarPower Europe expects solar installation growth to resume in 2028 and beyond as electrification accelerates and new rooftop requirements begin to take effect. The group expects rising electricity demand to drive more solar in the coming years from electric vehicles, heat pumps, industry, and data centers.

The EU has aggressive climate and renewable energy goals. In September 2022, the European Parliament approved raising the target for the share of renewables in the EU’s electricity mix to 45% by 2030, up from 40% in June 2022 and the previous target of 32%. The European Commission set the new 45% target 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 renewable energy target to meet its pledge under the UN Paris Climate Agreement to reduce its greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, and to achieve 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 1970s when OPEC’s oil embargo caused long gasoline lines and a global recession. Fossil fuels often originate in hostile, inhospitable locations, making them an expensive and unreliable source of energy for importers.

As a result of Russia’s attack on Ukraine, the EU formulated a plan called REPowerEU to slash its dependence on Russian fossil fuels. A key strategy of REPowerEU was to rapidly expand renewable electricity production to replace fossil fuels, such as natural gas and coal. REPowerEU aims to ensure that 750 GW of cumulative solar capacity is in place by 2030, requiring approximately 340 GW of new solar capacity to be installed between 2026 and 2030.

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

The US passage of the IRA in 2022 galvanized European policymakers to take more aggressive action to build a domestic solar manufacturing base. The European Commission formulated the “Green Deal Industrial Plan,” which focused on four key pillars: 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 aims to utilize European-manufactured products for at least 40% of its clean energy deployment. The NZIA imposes domestic content requirements on European public auctions and tenders for renewable energy capacity, thereby supporting 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 unveiled the Clean Industrial Deal, which aims to provide €105 billion in funding to support European clean industrial manufacturing.

The EU currently has manufacturing capacity of 12 GW of PV modules, 2 GW of PV cells, and 25 GW of PV-grade polysilicon,, according to the EU publication “Clean Energy Technology Observatory, Photovoltaics in the EU”. The EU does not manufacture PV-grade silicon ingots or PV wafers. The EU is a much bigger player in inverters and trackers, with manufacturing capacity of 142 GW of PV inverters and 121 GW of mounting structures, representing global market shares of 23% and 34%, respectively.

India becomes a major module exporter as production capacity soars

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

India is pursuing national goals of 500 GW of renewable energy capacity by 2030 and net-zero emissions by 2070. India’s government has also set ambitious goals to increase its cumulative solar capacity by +49% to 186 GW by 2027 and nearly triple it to 365 GW by 2032, from its current level of 125 GW, according to its 14th National Electricity Plan (NEP14).

Solar is already the largest source of new electricity in India, accounting for 68% of annual new electricity capacity additions in 2025, according to Mercom Capital Group. That means solar energy in India trounced other sources of new electricity generation in 2025, including wind, natural gas, coal, and nuclear.

In 2025, India installed the second-most solar capacity, surpassing the US. India installed 51.0 GW of solar in 2025, up +55% year-on-year from 33 GW in 2024, and adding to the +143% surge in 2024, according to BNEF. Over the 5 years through 2025, India’s annual solar installations grew at a compound annual rate of +64%.

BNEF forecasts that India’s solar compound annual growth rate over the 5 years through 2030 will be +6%, reaching 68 GW of annual installs by 2030.

Utility-scale solar accounted for 76% of India’s total installs in 2025, followed by 21% for rooftop and 3% for off-grid and distributed systems, according to data from India’s Ministry of New and Renewable Energy (MNRE).

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

As a result, India’s domestic solar manufacturing capacity has exploded in recent years. India’s solar panel manufacturing capacity reached 210 GW as of December 2025, while cell manufacturing reached 27 GW, according to Mercom India. India is currently in a manufacturing glut, with factory module production capacity utilization running below 50% according to some accounts.

Now that India’s module producers can easily meet domestic demand, they are focused on exporting their production. However, that has become more difficult since their previous main buyer, the US, now has prohibitive tariffs on Indian solar products.

To build a domestic solar manufacturing industry, India’s government provided a substantial $3 billion in funding for its solar PV manufacturing “Production Linked Incentive” (PLI) scheme, which offers subsidies to companies that establish large solar 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 approved for installation in India for government projects and programs. That list was originally designed as a minimum quality requirement. However, it is actually a domestic content requirement, as no non-Indian solar manufacturers are listed.

The ALMM currently applies to both solar modules and cells. However, the ALMM restriction will also apply to solar ignots and wafers as of June 1, 2028.

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

Solar installations in Japan in 2025 decreased by -6% year-over-year to 3.7 GW, marking the fifth consecutive annual decline, according to BNEF. BNEF expects a small decline of -1% in 2026, but increases of about +6% per year during 2027-2030.

Japan’s annual solar installation growth slowed through 2025 due to reduced subsidies as the Japanese government seeks to move solar to a fully unsubsidized market. The Japanese government is planning to phase out fixed feed-in tariffs (FIT) and feed-in premiums (FIP) for large solar systems with a capacity of over 10 kW beginning in fiscal year 2027, while keeping incentives in place for both residential and commercial-industrial projects.

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 Contribution (NDC) of a 60% cut in emissions by 2035 and a 73% cut by 2040 from 2013 levels. Japan aims to achieve net-zero carbon emissions by 2050.

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

Elsewhere in the Asia-Pacific region, Taiwan is expected to see strong solar installations in the coming years as the government promotes solar energy to meet its climate goals. Solar installations in Taiwan in 2025 decreased by -36% to 1.2 GW but BNEF expects growth of +9% in 2026 and +15% in 2027.

There is strong solar demand in Taiwan from corporations seeking to meet their renewable energy goals. Additionally, there is a growing demand for solar power in Taiwan to replace the impending closure of coal plants, in line with the government’s goal of achieving net-zero emissions by 2050.

Taiwan’s government aims to obtain 50% of its total electricity from renewable sources by 2035. The government has announced an aggressive cumulative solar capacity target of 31 GW by 2030, be more than double its current capacity of 15 GW.

Meanwhile, solar installations in South Korea rose by +7% to 3.4 GW in 2025. Corporate demand for solar power is expected to remain solid after South Korea’s government revised its electricity laws in 2021, allowing clean energy developers to sell electricity directly to corporations through power purchase agreements.

South Korea’s 11th Basic Plan for Electricity Supply and Demand, approved in February 2025, set cumulative solar capacity targets of 55.7 GW by 2030 and 77.2 GW by 2038, which would require aggressive annual installations to achieve, given its 2025 capacity of only 34 GW.

The South Korean government’s current goal is to derive 20% of total electricity generation capacity from renewable sources by 2030. In 2025, the South Korean government raised its Nationally Determined Contribution (NDC) under the Paris Climate Agreement to a 53-61% reduction in emissions by 2030 from 2018 levels.

In Australia, solar installations in 2025 fell by -5.0% to 4.6 GW, adding to a -19% decline in 2024, according to BNEF. Australia’s government has pledged to reduce emissions by 43% from 2005 levels by 2030 and to reach net-zero emissions by 2050. The government is also targeting 82% renewable generation by 2030, up from the current level of 27%.

In the Southeast Asian bloc, BNEF is expecting 9 GW of solar to be installed in 2026 and a cumulative 133 GW from 2026 to 2030, making that region a big source of new solar demand. BNEF says that solar demand will stem mainly from forecasts that electricity demand in that region will soar by +42% from 2026-2035, making it the second-fastest-growing region after India at +49%. The Southeast Asian region includes Vietnam, Malaysia, the Philippines, Thailand, Indonesia, and Singapore.

Latin America becomes major solar player, with Brazilian dominance

Latin America has emerged as a significant player in the solar industry, driven mainly by rapid growth in Brazil.

Annual solar installations in the 15 largest Latin American countries in 2025 fell by -19% to 21.8 GW, breaking the string of nine consecutive yearly rises, according to BNEF. Latin American solar installations rose by +30% on a compound annual basis over the five years through 2025.

Solar installs in Latin America are heavily concentrated in Brazil, which accounted for 70% of the region’s solar installations in 2025. Brazil ranked fifth globally in annual solar installations in 2025, behind only China, India, US, and Germany.

Brazil’s solar installations in 2025 fell by -22% to 15.2 GW, but showed a compound annual growth rate of +29% over the five years through 2025.

Colombia was the second-largest solar player in Latin America in 2025, with a 6.9% market share, followed by Chile (5.8%), Argentina (5.5%), and Mexico (5.0%).

Solar in Africa is set to rapidly expand, led by South Africa

While solar energy is currently small in Africa, solar installations are set to expand rapidly in the coming years. There are approximately 600 million people in rural Africa who lack access to electricity, and the electricity systems in more developed areas require significant expansion and improvement.

There is a significant deficit in energy investment in Africa, given that it accounts for approximately 20% of the world’s population yet receives only 3% of global energy investment, according to the Global Solar Council (GSC).

Africa installed 4.5 GW of solar in 2025, according to the “Africa Market Outlook for Solar PV, 2026-2029,” published by the Global Solar Council (GSC). South Africa accounted for the lion’s share (32%) of Africa’s installations, with 1.6 GW of installations,

The other largest solar players in Africa are Nigeria with a 17% share (803 MW), Egypt with a 10% share (500 MW), and Algeria with an 8% share (400 MW).

It should be noted that the solar installation figures for Africa are likely understated, as many rooftop and smaller projects slip under the radar of research firms attempting to count installations.

Africa faces multiple obstacles to installing solar energy, including inadequate grid infrastructure, limited scalability, loan shedding issues, a three times higher cost of capital than in developed countries, currency risks, and weak purchasing power for small-scale solutions, among others, according to GSC.

Despite these obstacles, GSC forecasts that African solar installations will grow at a compound annual rate of +21% over the four years from 2026 to 2029. Specifically, GSC expects annual installations to more than double to 9.6 GW in 2029 from 4.5 GW in 2025. Most of that growth is expected to come from utility-scale solar.

There is a strong political will in Africa to rely on solar energy to enhance the electrical systems and infrastructure necessary for economic development and improved quality of life. GSC notes that African leaders set a target of 300 GW of renewable generation capacity by 2030 as part of the Nairobi Declaration issued in 2023. African leaders expect solar energy to account for a large proportion of the new electricity installations in the near future.