Global Market Analysis and Strategic Outlook
The global energy transition accelerated significantly in 2025, with renewable energy sources cementing their position as the dominant force in new power generation capacity. According to the International Renewable Energy Agency (IRENA), renewable generation capacity reached 4.4 terawatts (TW) by the end of 2024, representing 46.2% of total global installed capacity. This marks an unprecedented 15.1% year-over-year increase, significantly outpacing the 10.4% compound annual growth rate observed over the preceding five years.
The year 2024 witnessed the largest increase in renewable energy capacity to date, with 585 gigawatts of new capacity added globally. Solar and wind energy continued to dominate expansion, jointly accounting for 97.5% of all net renewable additions. Solar capacity alone increased by 453 GW, while wind contributed 114 GW.
For the first time across a sustained period, renewables including solar, wind, hydro and smaller sources such as geothermal generated more electricity than coal. Ember's analysis shows that solar and wind supplied 17.6% of global electricity in the first three quarters of 2025, up from 15.2% over the same period in 2024, pushing the total share of low-carbon sources to 43%.
| Technology | Capacity (GW) | Share of Renewables | YoY Growth |
|---|---|---|---|
| Solar PV | 1,866 | 42% | +32% |
| Hydropower | 1,277 | 29% | +1.1% |
| Wind | 1,133 | 26% | +11% |
| Bioenergy | 151 | 3% | +4% |
| Geothermal | 15 | <1% | +0.3% |
Renewable energy investments set another record in the first half of 2025, rising 10% from the same period of the previous year to reach $386 billion. However, the investment landscape shows signs of shifting dynamics. Asset finance for utility-scale solar and onshore wind was down 13%, reflecting an adverse policy environment in some key markets.
According to BloombergNEF, investors are rethinking capital allocation and putting their money where project returns are strongest. This rethink is particularly evident in the offshore wind sector, where major players including TotalEnergies and RWE announced reductions in US activity while expanding in the North Sea. The Canadian pension fund CDPQ also indicated it would rebalance investment toward Europe from the US.
Signs of capital movement from the US to Europe are emerging as investors seek markets with stronger project returns and more stable policy frameworks. This shift reflects growing uncertainty around US federal renewable energy policies.
Solar energy has emerged as the dominant force reshaping the global power system. At the heart of the renewable energy transition, solar's growth was more than three times larger than any other source of electricity in 2025, confirming its role as the primary driver of clean energy expansion.
The global solar PV market is expected to grow by 10% in 2025, reaching 655 GW under the medium scenario according to Solar Power Europe. This marks a continuation of the deceleration trend following the extraordinary 85% growth in 2023 and the more moderate 33% in 2024.
China continues to lead global solar deployment, with annual installations reaching 357.3 GW in 2024, representing nearly 60% of new global capacity. The country's cumulative solar capacity surpassed 1 terawatt by the end of 2024, hosting almost half of global PV capacity.
| Scenario | New Capacity (GW) | Growth Rate | Key Drivers |
|---|---|---|---|
| High | 774 | +30% | Low prices, policy stimulus |
| Medium | 655 | +10% | Continued cost competitiveness |
| Low | 548 | -8% | Policy headwinds, market contraction |
In 2025, solar strengthened in markets that had long trailed behind global leaders. Several countries outside traditional frontrunners like China and Europe are now recording sharper growth thanks to falling costs, easing supply bottlenecks, and clearer policy signals.
The United States built the most new power-generating capacity in more than two decades in 2025, with 54 GW of new utility-scale generation and storage capacity commissioned. Renewables accounted for 61% of new capacity, with utility-scale solar specifically leading with 27 GW commissioned. However, the US market faces uncertainty from federal policy changes, with 87 new trade and tariff policies announced in 2025 creating unpredictability for companies and investors.
Europe continues to advance solar deployment, though at a more measured pace. Germany awarded nearly 11 GW of new onshore wind capacity in tenders, an all-time high representing a 70% increase year-on-year. The UK's strike price ceiling for onshore wind increased from £89 to £92/MWh, with contract lengths extended from 15 to 20 years to support project development.
Technological advancement continues to drive solar competitiveness. JinkoSolar set a world record with its TOPCon modules, achieving 25.58% efficiency. Module prices continued to drop through 2024 in a massively oversupplied market, putting financial pressure on manufacturers while stimulating demand.
Emerging applications are expanding solar's reach beyond traditional installations. Agrivoltaic systems use solar panels to harvest energy for farms while providing cover for crops that thrive under partial shade. Floatovoltaics provide green energy while minimizing evaporation on reservoirs and canals. Solar carports generate electricity while reducing UV damage to vehicles.
Utility-scale energy storage emerged as a central component of new capacity, with a record 15 GW added in 2025, up 35% year-on-year. Battery storage installations were 41% higher than in 2024, reflecting the critical role of storage in managing variable renewable generation.
While wind energy continues to play a vital role in the global energy transition, the sector experienced a more challenging year in 2025 compared to solar. Wind developers faced political barriers, failed auctions, and rising costs that tempered growth expectations.
The global wind industry added approximately 160 GW of capacity in 2025, with onshore wind accounting for roughly 93% (149 GW) of total additions. According to the Global Wind Energy Council (GWEC), new installations are expected to surpass previous records and reach 139 GW for the full year.
China dominated onshore wind additions in the first half of 2025, installing 51.4 GW, more than double the previous year's pace. This reflects the country's new Nationally Determined Contributions (NDC) commitments to lift the share of non-fossil energy to over 30% of consumption and expand combined wind and solar capacity to around 3,600 GW by 2035.
India also saw notable growth, with a reinforced project pipeline driven by government auctions. The country's wind and solar capacity exceeded 163 GW, ranking third globally behind China and the United States.
| Segment | 2025 Additions (GW) | Avg Annual 2025-2030 (GW) | CAGR |
|---|---|---|---|
| Onshore Wind | ~149 | 151 | 4.4% |
| Offshore Wind | ~11 | 25 | 6.5% |
| Total Wind | ~160 | 176 | 4.8% |
The offshore wind sector experienced a significant slowdown in 2025, with only 6 GW of new capacity added globally, down from 11.1 GW in 2024. This decline reflects a challenging year marked by rising costs, geopolitical turbulence, and policy recalibrations across several major markets.
Despite the slower pace of new installations, the industry's underlying momentum remains robust. By the end of 2025, 33.3 GW of offshore wind capacity was under construction globally, highlighting the scale of projects progressing through development. Global offshore wind capacity in operation reached 84.5 GW, with more than 50% installed in China (42.31 GW).
Looking ahead, cumulative offshore wind capacity is forecast to grow significantly, reaching 396 GW by 2034, with Europe accounting for 45% of this capacity. The annual offshore wind market is expected to expand from 9.2 GW in 2024 to over 37 GW by 2030, with China accounting for almost 50% of this increase.
The wind industry faces several headwinds that have tempered growth expectations. According to the International Energy Agency, the global offshore wind capacity forecast has been revised downward by 27% from the previous year due to policy changes in the United States, macroeconomic pressures, and supply chain challenges that have raised costs and undermined project bankability.
Several developers reduced their 2030 deployment targets, and post-2027 developments face potential delays amid constrained wind turbine installation vessel capacity. The offshore sector is also experiencing significant financial pressure, with auction volumes plummeting to 2.5 GW in the first half of 2025.
Onshore wind auction volumes showed a more positive trend, accounting for around 33% of global auction volumes in the first half of 2025, the highest awarded capacity in any six-month period before 2024. This surge results mainly from permitting condition improvements that addressed years of undersubscribed auctions, especially in Germany.
The renewable energy sector stands at a critical juncture in 2025. While the industry has achieved remarkable milestones, including record capacity additions and investment levels, significant challenges remain to meet global climate targets.
The International Energy Agency projects that renewable power capacity will increase by almost 4,600 GW between 2025 and 2030, double the deployment of the previous five years. However, this forecast represents a 5% downward revision from 2024, reflecting policy, regulatory, and market changes that have emerged over the past year.
To achieve the global target of tripling renewable capacity to 11 TW by 2030, the world must accelerate deployment significantly. At current growth rates, global renewable capacity is expected to reach approximately 10.3 TW by 2030, falling short of the target by 0.9 TW. Achieving the tripling goal would require renewable capacity to expand at 16.6% annually in the remaining years.
Three critical actions are needed to accelerate renewable deployment: (1) Streamline permitting processes to reduce project development timelines; (2) Enhance grid infrastructure to accommodate variable renewable generation; and (3) Provide policy certainty to attract sustained investment across all market segments.
Solar energy will continue to lead capacity additions, with utility-scale and distributed solar PV representing nearly 80% of worldwide renewable electricity capacity expansion through 2030. Wind energy, while facing near-term headwinds, remains essential for achieving deep decarbonization, particularly offshore wind which offers higher capacity factors and complements solar generation patterns.
The investment landscape is evolving, with capital increasingly flowing toward markets offering stable policy frameworks and attractive returns. Europe appears well-positioned to benefit from this reallocation, while the US market faces uncertainty from federal policy changes.
Looking ahead, the renewable energy transition is irreversible, but the pace of change remains contingent on policy decisions, technological advancement, and investment flows. The industry has demonstrated its ability to scale rapidly when conditions are favorable. Creating those conditions consistently across all markets will be the defining challenge for the remainder of this decade.