Installed solar capacity reached new heights in 2024, but the industry will see growth halt in 2025 amidst several uncertainties, according to a new report.
Wood Mackenzie recently released the “Global solar: four things to look for in 2025” report, which shows several limitations such as policy uncertainty, protectionist measures and interconnection and transmission bottlenecks will bring the annual growth trend of solar buildout to a halt.
Key themes to watch for include: Adapting to a new, more uncertain policy paradigm, capitalizing on data centre growth, rationalisation in manufacturing, and a new era of asset efficiency.
The solar industry adapts to a more uncertain policy paradigm | The global solar market reached 495 GWdc of installed capacity in 2024, a 14% increase compared to 2023. However, the growth trend will likely reverse course in 2025, according to the report.
“Solar deployment will decelerate in many countries as policy changes come to fruition,” said Sylvia Leyva Martinez, principal analyst, Utility-scale solar PV, North America for Wood Mackenzie. “Post-election uncertainty, waning incentives, power sector reforms and a shift towards less ambitious climate agendas, will drive solar installations to stagnate at 493 GWdc after years of exponential growth.”
Solar capitalizes on data center growth | Data center demand will rise due to the adoption of artificial intelligence. While future demand growth from data centers is uncertain, Wood Mackenzie is tracking more than 100 GW of proposed data centers. Even if only 50 GW of this capacity is added over the next five years, demand growth over the next five years could be as high as 10-20% in many regions of the United States.
“Data center demand for firm, zero-emissions capacity will reshape solar project origination and development,” added Leyva Martinez. “A higher share of solar projects will be paired with wind, storage and/or natural gas to meet higher energy needs, and we will see innovation in contractual terms, business models, and system architectures. Data centre-driven competition for energy will increase solar Power Purchase Agreements (PPAs) prices.”
2025 will be the year of rationalization in manufacturing. | According to the report, after two years of low solar panel prices due to global overcapacity, module prices will increase to compensate for the significant losses in profits that manufacturers experienced.
“China will remain the dominant manufacturing hub, and emerging hubs in India, the U.S. and the Middle East are expected to add at least 100 GW to the global solar manufacturing capacity,” said Yana Hryshko, managing consultant and head of global solar supply chain research for Wood Mackenzie. “Coordination by Chinese manufacturers, supported by the Chinese government, will be the key to bringing about rationalisation of the industry.”
Read the entire report here.
Tags: Wood Mackenzie
