India Set to Overtake U.S. as World’s Second-Largest Solar Market in 2026

India is set to overtake the United States as the world’s second-largest solar market in 2026, supported by steady installation growth even as U.S. additions decline sharply, according to forecasts by BloombergNEF (BNEF).

India’s solar capacity additions are expected to rise 6% in 2026 to just over 50 gigawatts, driven primarily by utility-scale projects, while government subsidies continue to support residential rooftop installations, BNEF said.

US Installations To Fall

By contrast, U.S. solar installations are forecast to fall 14% to about 44 gigawatts. The decline is largely attributed to tighter eligibility rules under the One Big Beautiful Bill Act, which requires projects beginning construction after the end of 2025 to comply with foreign entity of concern regulations in order to qualify for tax credits.

As a result, the United States is expected to relinquish its position as the world’s second-largest solar market, a ranking it has held since 2019.

China is set to remain the world’s largest solar market by a wide margin, despite a projected slowdown. BNEF estimates China will add 321 gigawatts of solar capacity in 2026, a 14% decline from the previous year.

Slowdown in China

The slowdown in China is expected to push global solar installations lower for the first time, as growth in other markets will not be sufficient to offset the drop, the research firm said.

India added a record 35 gigawatts of solar capacity in the first 11 months of last year, putting it on track to meet its target of 500 gigawatts of non-fossil fuel capacity by 2030.

The sector’s expansion has been underpinned by renewable energy auctions, with India tendering a record 60 gigawatts of renewable capacity in 2024. However, around 42 gigawatts of auctioned capacity is still awaiting firm offtake agreements, raising the risk of project cancellations if contracts are not secured, BNEF said.

India's Solar Supply Chain

India has also tightened localisation requirements in the solar supply chain, mandating the use of domestically approved modules under its Approved List of Models and Manufacturers policy. While this has spurred investment in local manufacturing, total module capacity of around 125 gigawatts a year has raised concerns about potential overcapacity and consolidation.

Upstream component manufacturing remains below domestic demand, leaving the sector reliant on imports, the report added.