It took the solar industry more than 40 years to install its first terawatt of capacity. It took less than three years to nearly triple that. Global cumulative installed PV capacity reached approximately 2,974 GW by the end of 2025, according to the IEA Photovoltaic Power Systems Programme's 13th annual Snapshot of Global PV Markets (find the accompanying fact sheet here).

Annual installations in 2025 reached an estimated 698 GWp — confirmed figures of at least 608 GWp plus a further 90 GWp identified through expert estimates — representing 16% growth over 2025. That sounds impressive until you compare it to the 28% growth recorded in 2024 and the staggering 93% surge in 2023. The market is still expanding, but the pace is moderating.

China accounted for approximately 60% of new global capacity in 2025, installing up to 415 GWp. China's annual additions alone exceeded the entire global market as recently as 2022.

The EU held second place with 66 GW,  similar to 2024’s 65 GW in 2024, while India leaped to third with 56 GW thanks to accelerating utility-scale deployment ahead of domestic content deadlines and expanding distributed solar support policies. The USA slipped to fourth at 43 GW, its first time outside the top three since 2019. The American slowdown is attributed to rising costs for structural and electrical components, grid interconnection bottlenecks, higher interest rates, and policy uncertainty accompanying the change of administration.

Beyond the top four, the rankings reveal a genuinely diversifying market. 39 countries installed at least 1 GW in 2025, up from 33 in 2024. Saudi Arabia entered the top ten for the first time, commissioning several very large utility-scale projects, while Pakistan, despite a measure of uncertainty in estimated volumes, remained among the largest annual markets, almost entirely in the distributed segment driven by low-cost imported modules.

One of the report's most striking observations is the deepening paradox at the heart of the global supply chain. Module prices in China fell by more than 60% from early 2023 levels, supporting deployment across virtually every market. Yet this same price collapse drove manufacturer margins to the floor, with cumulative losses among Chinese module producers approaching USD 5 billion from early 2024 onward.

The report is direct about the consequences: this divergence between strong market growth and constrained industrial profitability is a defining feature of the sector, with real implications for warranty exposure, bankability, and long-term operations and maintenance under sustained price compression. In plain terms, buying cheap modules today may come with hidden costs if the manufacturer cannot honour its 25-year warranty.

Under these conditions, deployment bottlenecks in a growing number of markets shifted away from module CAPEX and increasingly towards permitting, grid connection, grid congestion and the evaluation of curtailment and negative price risk. IEA PVPS also notes that curtailment, negative prices and grid access constraints are becoming more material as penetration rates rise.

Perhaps the most significant data in the report concerns PV penetration. Global theoretical PV penetration reached approximately 10.5% of electricity demand and 12.0% of electricity consumption in 2026, based on installed capacity at the end of 2025. Thirty-five countries now theoretically exceed 10% penetration, up from 27 in 2024 and just 18 in 2023.

At the top sit Greece and Spain, both at or above 31% of electricity demand, though the report notes that curtailment in Greece means actual delivered penetration is meaningfully lower. Pakistan could be approaching 28%, though between the uncertainty in estimated installation volumes and grid instability, a significant but unknown volume is also being curtailed. Cyprus, Lithuania, Chile, the Netherlands, Australia, and Germany all sit above 18%.

Even the two largest markets are crossing meaningful thresholds: the EU is approaching 15% penetration, while China has surpassed 13%. At these levels, system-level effects like curtailment, negative prices, and grid voltage issues are becoming routine operational realities rather than edge cases. The report's conclusion is pointed: the key question for PV markets is no longer simply the scale of deployment, but the conditions under which additional capacity can be integrated into reliable and economically sustainable electricity systems.

The structural shift the report describes has sweeping implications for policy, investment, and system design.

On the policy side, feed-in tariffs and simple volume-based tenders are giving way to more complex instruments. China has moved utility-scale solar to market-based pricing. Several countries are introducing storage mandates — India now requires storage to be paired with new utility-scale tenders, China's new distributed PV rules demand that projects be “monitorable, measurable, adjustable and controllable.” Spain's 11 regional governments launched fiscal subsidy programmes for self-consumption in 2025 even as national policy cooled on export remuneration. Austria is exempting storage from grid fees where it demonstrably serves system stability.

On the commercial side, PPA structures are evolving from simple long-term electricity price hedging tools towards arrangements that must increasingly reflect counterparty risk, flexibility needs and system value. In North America, large technology companies signed major utility-scale solar PPAs in 2025, while in Australia volumes secured for greenfield solar remained significant as mining and other large industrial consumers pursued long-term decarbonisation and cost-stability objectives. In Saudi Arabia, five solar PPAs totalling 12GW were signed over the same period. Data centres and industrial consumers are emerging as a significant driver of contracted solar demand globally.

The rise of co-located solar-plus-storage is also beginning to complicate the industry's own reporting conventions. The report highlights the AC/DC accounting problem: as DC-to-AC ratios on utility-scale projects push above 1.5 — and in solar-plus-storage projects beyond 1.7 — the gap between AC reported and real DC installed capacity grows. This is not a trivial issue; at current market scale, methodological differences between IEA, IRENA, PVPS, and BNEF datasets can represent several tens of gigawatts.

In 2025, PV represented more than three-quarters of new renewable generation capacity added worldwide, and around 60% of new renewable electricity generation. Its share of installed capacity continues to outpace its share of generation, reflecting its lower average capacity factor compared to wind or hydro — but the trajectory is clear.

The report illustrates an increasingly tight three-way convergence between annual PV additions, stationary battery storage deployment, and light EV sales, all of which accelerated sharply after 2021. These are no longer separate markets, but reinforcing components of the same energy transition, each making the others more valuable — PV charging EVs and batteries, batteries shifting PV output to higher-value hours, EVs providing flexible demand that smooths grid balancing. The report also points out that over 300 GW of PV is now more than a decade old, making inverter replacement, repowering, and end-of-life recycling immediate operational concerns rather than future abstractions.

The near-term outlook is shaped by challenges  on several fronts. The USA entered 2026 in a volatile trade and policy environment, with tariff pressures increasing procurement costs across the solar supply chain even as domestic manufacturing capacity continues to expand under the Inflation Reduction Act. France faces potential slowdown as shifting political priorities reshape national energy policy. India is expected to remain one of the largest growth markets, though grid absorption and the pace of storage development will determine how much new capacity can actually be integrated.

China, meanwhile, is not retreating from scale but rather reorienting, shifting toward stronger integration with storage, grid capacity, and smart-system infrastructure. Whether the rest of the world's grids, policy frameworks, and financing structures can keep pace with a market that is closer and closer to 1 TW per year is the defining question of the solar decade now underway.

Author: Bettina Sauer

This article is part of a monthly column by the IEA PVPS programme.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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