Policy and supply chain factors slow global PV demand

As the global energy transition accelerates, solar power applications have drawn significant attention and widespread adoption. InfoLink estimates that global PV market demand in 2024 is projected to reach 469-533 GW. The top four markets worldwide—China, the U.S., Europe, and India—each region faces multiple challenges, including economic changes, policy uncertainties, and supply-demand mismatches. With the growing number of PV installations, improving grid conditions will become vital. Meanwhile, fluctuations in supply chain prices and interest rates also put pressure on investment returns, adding uncertainties to demand. Market demand growth after 2025 is expected to slow down compared to 2024.

Even as demand growth turns slow in traditional major markets, emerging markets inject new momentum into the global PV market. In recent years, demand in the Middle East has sharply risen, particularly in Saudi Arabia, the UAE, and Oman, where government support and multiple utility-scale public projects will help sustain global demand. Countries such as Thailand, Malaysia, and Vietnam have introduced favorable green energy policies this year, indicating promising growth in PV demand in Southeast Asia and marking it as a key emerging market. Global PV demand is estimated to reach 492-568 GW in 2025, representing a 5-7% growth compared to 2024.


 

China, Europe, the U.S., and India dominate 80% of the global PV demand

China: Demand in 2025 to stay flat from 2024 amid waning market momentum

China's PV demand mainly relies on ground-mounted projects. However, several factors are impacting project timelines and grid connection rates, especially in Inner Mongolia, where delays have resulted from slowed-down external grid construction, power rationing, and mandatory energy storage ratio. As a result, significant grid connections won’t ramp up until late 2024 and 2025.

A new electricity market trading system was introduced in April for distributed generation projects, which could lead to competitive price drops due to free-market mechanism. Rising land and rooftop leasing costs also lower the overall investment return, leading a few state-owned enterprises to withdraw from the distributed market and some financing firms to reduce acquisitions. These factors have contributed to a pessimistic outlook on distributed demand growth for 2025.

In summary, China's PV market has experienced stagnant demand. InfoLink estimates demand will stabilize at 240-260 GW in 2024. Given the waning market momentum and installation slowdowns, conservative forecasts place China's demand at 245-265 GW in 2025.
 

Europe: Policies and sluggish economy limit PV demand growth

The EU is advancing the Net Zero Industry Act and the Critical Raw Materials Act, which came into effect in May and June 2024, respectively, aiming to increase domestic production of net-zero technologies and critical raw materials, reducing reliance on imports. However, with relatively high domestic supply costs, these regulations may lead to higher investment expenses. The EU Forced Labour Regulation (EUFLR), set to take effect in the latter half of 2027, may lead the EU to investigate Chinese solar firms for labor practices, hinging on future regulatory lists.

Despite the EU's promotion of localized development, the European PV market still faces multiple challenges. Many European countries experience oversupply due to economic downturns and insufficient grid capacities, with negative electricity prices becoming general in 2024. Germany and Spain, major drivers of European PV demand, have been grappling with economic stagnation and project delays, dampening overall regional demand. Moreover, diminishing government subsidies reduce the appeal of distributed PV installations, while ground-mounted projects face high financing costs and grid congestion. Ample natural gas reserves in Europe may further dampen installation demand.

Europe's PV demand is projected to reach 77-85 GW in 2024 and may rebound to 85-93 GW in 2025, reflecting a 9-10% growth. However, long-term growth remains contingent on economic performance and further policies.
 

The U.S.: Trade barriers increase supply chain challenges, demand growth remains uncertain

In the second half of 2024, the US trade barriers underwent significant adjustments. The Section 201 tariff on imported cells and modules removed the exemption for bifacial modules, and then raised the tariff rate quota (TRQ) for cells. Meanwhile, the Section 301 tariff on imported cells and modules from China was raised to 50%, and a 50% tariff will be imposed on polysilicon and wafers from China starting in 2025. The Department of Commerce's AD/CVD investigations into four Southeast Asian countries (Cambodia, Malaysia, Thailand, and Vietnam) will announce preliminary results between September and November.

Due to the insufficient production capacity of wafers and cells in the U.S., demand for polysilicon and wafers has not surged. Given that local cell production capacity has not yet been scaled up, even the increase in TRQ for cells may still be insufficient to satisfy local module manufacturers. With domestic cell capacity gradually coming online in 2024, future tariffs imposed by the U.S. on Chinese wafers may prompt manufacturers to purchase higher-priced wafers from Southeast Asia, thereby increasing the costs of projects. In addition, combined with the current AD/CVD issues, the preliminary rulings of the tax rate will further increase project costs in the U.S.

Influenced by the presidential election, high interest rates, and uncertain PV subsidy policies last year, developers' wait-and-see sentiment has increased, and utility-scale project reviews and grid connection delays still exist. In addition, California's NEM 3.0 reduced the selling income of distributed PV owners. Demand for distributed projects will stay weak in 2024, with overall market demand projected to fall between 38-42 GW. In the long term, the development of PV still needs to wait for policies to take effect, with a conservative estimate of US demand reaching 38-44 GW in 2025.
 

India: Localization policies continue, government projects benefit demand growth

As one of the top five markets, India's demand growth mainly relies on government projects, most of which aim for the 2026 installation goal. With ongoing public tenders, 2025 may see an installation surge, with demand reaching 25-35 GW, a 25-40% increase over this year’s 20-25 GW.

A key requirement for government-led projects is the ALMM-approval list of modules. Moreover, the ALMM for cells will be implemented in April 2026. Government projects will be restricted to local modules assembled with India-made cells. Although local module production meets demand, Chinese cells remain widely used despite the 25% Basic Customs Duty (BCD) on Chinese imports. However, the implementation of ALMM for cells in 2026 will drive up local cell capacity.
 

Demand shifts and emerging markets drive global solar growth

The global solar market faces a complex supply-demand landscape. With module prices nearing a low point and limited room for further drops, future growth will rely more on installation capacity and policy push. Some markets are seeing weaker demand, such as Brazil, where tax-free quota for imported modules are reducing, likely leading to higher project costs. South Africa’s market outlook is pessimistic, with projects delaying due to infrastructure and grid challenges. While emerging markets hold growth potential, global demand will slow from high growth to a more gradual increase after 2025.