Solar remains robust despite policy changes in US and China

Renewable energyAdd to myFTGet instant alerts for this topicManage your delivery channels hereRemove from myFTSolar remains robust despite policy changes in US and China Emerging economies across Asia, Sub-Saharan Africa and the Middle East would likely see growth in renewablesKayenta solar plant, Arizona. The appetite for solar has cooled in the US and China © Brandon Bell/2024 Getty ImagesSolar remains robust despite policy changes in US and China on x (opens in a new window)Solar remains robust despite policy changes in US and China on facebook (opens in a new window)Solar remains robust despite policy changes in US and China on linkedin (opens in a new window)Solar remains robust despite policy changes in US and China on whatsapp (opens in a new window) Save Solar remains robust despite policy changes in US and China on x (opens in a new window)Solar remains robust despite policy changes in US and China on facebook (opens in a new window)Solar remains robust despite policy changes in US and China on linkedin (opens in a new window)Solar remains robust despite policy changes in US and China on whatsapp (opens in a new window) Save Ryohtaroh Satoh in LondonPublishedDecember 12 2025Jump to comments sectionPrint this pageStay informed with free updatesSimply sign up to the Renewable energy myFT Digest -- delivered directly to your inbox.Solar has been one of the success stories of the renewable energy market, enjoying rapid growth as developers have rushed in to satisfy rising demand for power. But the sector is facing a moment of change, as the industry matures and governments in the US and China, the two largest markets, shift their policies. Faced with the fresh uncertainty, developers are reining in their growth plans and instead relying more heavily on battery storage and long-term contracts to manage price volatility and secure predictable returns.New solar capacity additions rose 16 per cent this year, according to BloombergNEF — a significant increase, but the slowest in several years.The rise is a clear step down from the 30 per cent average of the past decade, with 2023 exceeding 70 per cent. Bloomberg now expects annual growth to average about 3 per cent by 2035.The sharpest slowdown was seen in China, after authorities introduced market-based pricing for renewables in June. Until then, solar and wind projects were guaranteed about 20 years of stable revenue linked to the benchmark electricity price from burning coal.“The solar plants will be exposed to power prices and, obviously, that brings in a lot of risk for these plants,” says Lara Hayim, solar analyst at BloombergNEF.The shift triggered a rush of developers accelerating projects before the policy took effect, doubling additions in May to 90GW before activity plunged below 20GW in June, according to the International Energy Agency.The US is also expected to slow down, because of President Donald Trump’s less favourable policies towards renewables. In its October report, the IEA downgraded the US solar growth forecast for 2025-2030 compared with 2024 by almost 40 per cent. Despite the cooling in China and the US, emerging economies across Asia, Sub-Saharan Africa and the Middle East are likely to see bigger gains, with Saudi Arabia among the most significant because of cheaper solar panels imported from China and the government’s effort to diversify away from oil.The rapid rise of renewables, particularly wind and solar, has increased volatility in wholesale electricity markets. Daytime oversupply depresses prices — often into negative territory — while evening demand spikes have become sharper.A relatively mature market, especially in Europe, has become more competitive, said one European asset owner, raising pressure on solar owners and operators to deliver more predictable returns.For Dario Bertagna, senior managing director at fund manager Capital Dynamics, the biggest risk on its projects remains securing permits, which in southern European countries such as Spain or Italy can take five to seven years.Like any other energy project, solar projects require building permits, environmental studies, and grid connection agreements. “There are a bunch of bottlenecks from a regulatory perspective,” Bertagna says.Hayim of BloombergNEF points out that getting a grid connection is probably the most challenging part, which can delay a project, or worse, make it economically unfeasible. “Your project might not make sense if you need to pay a lot for the grid upgrades that are required,” she adds.To navigate price swings and grid constraints, developers are increasingly pairing projects with battery storage. Batteries allow operators to shift power from the low-price daytime hours to higher-value evening periods, or simply smooth output to reduce imbalance.In 2024, the world added 77GW of battery storage, a 75 per cent jump from the previous year, with nearly 80 per cent of it built for large-scale renewables, according to the IEA.Renewable energy company Masdar plans to build a solar plant in Abu Dhabi that will rely on a 19 gigawatt hours battery system to stabilise its solar power © MasdarIn a symbolic project, Masdar, the Middle East’s largest renewable developer, early this year announced plans for a 24/7 solar plant in Abu Dhabi that will rely on a 19 gigawatt hours battery system to stabilise its abundant solar power. The enormous battery capacity is enough to supply the United Arab Emirate’s power needs for an hour. The project is planned to start operations in 2027.Dave Jones, co-founder of energy research group Ember, says the surge reflects both technological advances and a steep drop in costs. Battery prices fell 40 per cent in 2024 and are expected to decline again in 2025. “Battery is still in its relative infancy . . . [improvement in] the capital cost really has an impact,” he says.Utilities and power producers are also pursuing long-term contracts or fixed-profit schemes to stabilise returns as spot prices become more volatile. Several European countries have introduced contracts-for-difference schemes to guarantee prices for low-carbon power.However, offtakers — companies that buy electricity from renewable energy operators — have become more cautious, says Bertagna. “The market and the offtakers have evolved over the past few years, and now it’s much, much harder to get the counterpart to take that risk.” He adds, “So realistically, the only way to shield your investment is [batteries].”The environment could become even more complex under the One Big Beautiful Bill Act signed by US President Donald Trump in July, which restricts the use of Chinese solar and battery technologies by limiting eligibility for tax incentives for companies dependent on Chinese components.One European battery maker said it would have to switch some of the components that it was sourcing from China to other parts of Asia, adding that sourcing purely from the US would be difficult.Jones of Ember argues that the fundamental solar trend remains strong, despite political interventions. “Solar revolution is happening, and people say it’s happening despite government policy rather than because of [it],” he says. The only real question is, “Is the government turning the taps off by preventing the import of solar panels?”Reuse this content (opens in new window) CommentsJump to comments sectionPromoted ContentExplore the seriesREAD MOREThe electrification of everythingSolar remains robust despite policy changes in US and China 1 hour agoCurrently reading:Solar remains robust despite policy changes in US and China How to turn rough conditions into smooth power suppliesUS electric vehicle sales slow as Trump champions petrolGas deflates momentum of European heat pump rolloutHigh energy prices weigh on UK’s shift to low-emission steelmakingThe ‘profound’ global impact of China’s rise as an electrostateAre data centres a setback for the green energy transition?See all 12 stories Follow the topics in this article Renewable energy Add to myFT Utilities Add to myFT US Add to myFT China Add to myFT Ryohtaroh Satoh Add to myFT Comments