Global Solar Additions Set for First Decline in 2026, Hints S&P Global Report

Global renewable additions will hit a turning point in 2026, with solar installations set to decline for the first time in more than a decade and grid bottlenecks emerging as a central constraint on clean energy growth, S&P Global Energy said in its 2026 outlook.

The agency said that by the end of 2025, the world will surpass 500 GW AC of solar power. It said that the surge was spearheaded by China, which accounted for more than half of global additions. However, it said that China's solar additions are set for a setback, which will affect global solar additions too.

"Our analysts now forecast that China’s annual additions will fall from approximately 300 GW in 2025 to about 200 GW in 2026, a decline so steep that no other region will be able to compensate. A major policy shift in mid-2025 — from guaranteed pricing to competitive bidding — triggered a dramatic slowdown after an initial rush of installations. This led to a sharp drop in Chinese volumes in the second half of the year, creating intense price pressure and ultra-thin margins across the supply chain," the report said. 

Sharp Slowdown In Second Half 

The abrupt change triggered a rush of commissioning in early 2025 and a sharp slowdown in the second half, pushing prices down and compressing margins across the supply chain. No other region is expected to offset China’s decline, making 2026 the first year of lower global solar additions, though cumulative capacity will continue to rise.

S&P Global warned that grid infrastructure has now become a critical choke point for energy transition plans. Ageing networks in Europe — where 40% of grids are more than 40 years old — and slow permitting timelines are delaying renewable integration. The European Commission estimates €584 billion in grid investment is required by 2030, rising to €1.2 trillion in 2040.

In the United States, surging electricity demand from data centres and AI-driven loads is straining local grids, raising risks of capacity shortages without accelerated investment and modern planning. Utilities, policymakers and large energy buyers are increasingly calling for faster permitting and domestic manufacturing of grid components, S&P Global said.

Reshaping Clean Energy Contracting 

Volatile wholesale electricity prices are also reshaping clean energy contracting. Rising zero- and negative-price intervals driven by solar PV are pushing the market toward more flexible structures, including hybrid PPAs that combine multiple technologies and storage. Traditional long-term PPAs are giving way to shorter, risk-managed contracts as capture rates deteriorate.

Europe is seeing the sharpest pricing swings. Platts, part of S&P Global, reports that solar PPA price indexes in Spain and Germany remain well below cost-based benchmarks, while buyer–seller price gaps continue to widen.

Fate of BESS

Battery energy storage systems (BESS) are expanding rapidly as developers seek to stabilise revenues and support grid operations. The United States is expected to add nearly 15 GW of BESS capacity in 2026, followed by Germany and Australia at 5 GW each, and the UK at 3 GW.

Corporate clean energy procurement has slowed amid weaker sustainability commitments and uncertainty around Scope 2 emissions guidance. Global PPA announcements fell to 9.5 GW in Q3 2025, down from 13.9 GW a year earlier. However, data centres remain a bright spot, with 27 GW of PPAs announced through October and accounting for more than 43% of global deals in 2025.

S&P Global said the combined pressures of slowing solar growth, grid constraints and rising price volatility will define the next phase of the energy transition as markets adjust to a more complex operating environment.