Solar’s dizzying investments return to normal level

, Washington D.C. Correspondent
Source: BloombergNEF, Energy Transition Investment Trends in 2025 • Investments include manufacturing of solar polysilicon, wafer, cell and module factories. Data for 2025 and 2026 are estimates.

An overheated global solar sector is cooling off after reaching dizzying heights two years ago, BloombergNEF’s latest projections show.

While cheap solar power continues to outpace all other forms of renewable energy, the exuberance of 2023, when Chinese factory spending reached an “unsustainable” level of $85 billion, is now being corrected.

As the chart shows, China — depicted in bright red — remains the world’s leader in solar manufacturing. The United States, shown in vivid green, spent the second most on solar factories in 2024 after China.

While the chart seems to show the U.S. narrowing the estimated investment gap with China between 2024 and 2026, BNEF senior associate Pol Lezcano said China will continue to maintain its sizeable lead in solar manufacturing.

“Some of the U.S. investments will still move ahead and start production for the most part of solar modules, but many will also get canceled or not produce as much as expected” because of the long lead times involved in securing permits and grid connections, Lezcano told Cipher.

In other words, increased estimated investments in solar factories will not necessarily translate into increased solar panel production.

Solar factory investments in the U.S. have mainly climbed due to subsidies in laws like the 2022 Inflation Reduction Act and partly from some existing tariffs.

President Trump’s latest tariffs on China and planned ones on steel and aluminum imports could hurt domestic solar manufacturing going forward by increasing costs, said Lezcano.

Last year, global investments in solar manufacturing plunged to $25 billion, just over one-third the level in the prior year. This year, the sector is expected to pull in $24 billion overall, a figure more in line with global demand, according to BNEF analysts.

China is a victim of its own success, with Chinese factories closing and companies looking for new markets overseas.

“The over investment in manufacturing capacity and the fact that companies made their expansions at the same time has led to the severe oversupply in the market that we’re seeing today,” BNEF’s head of solar research Lara Hayim told Cipher. “Consequently, most of these firms are currently incurring losses that cumulatively add up to billions of dollars.”