New Delhi: Solar energy often paints a rosy picture: abundant sunshine, green jobs, cheaper power. But beneath this optimism, a complex reality is unfolding. Today’s solar sector is grappling with slowing growth, technical bottlenecks, geopolitical trade tensions, and infrastructure hurdles. Understanding these challenges is key to charting a path forward.
1. Oversupply meets falling panels
At the heart of the problem lies a paradox: while demand for solar remains high, especially in emerging economies, prices for solar modules have plummeted in recent years. That’s great for consumers—but unsustainable for manufacturers.
At Shanghai’s SNEC conference in June 2025, organisers noted a concerning trend: “oversupply had pushed panel prices below production costs,” resulting in production cuts and a 7% drop in global output in May, with another 4–5% expected in June. China, which accounts for over half of global panel manufacturing, now produces more than double the world’s demand, pressuring margins worldwide.
Investors are growing cautious. The SNEC meet drew over half a million attendees, but many skippers skipped sessions focused on new orders—signaling concern that the wave of cheap panels may be ebbing for manufacturers.
2. Trade wars cloud global supply chains
Trade politics have added new complexity to solar’s supply-side strains. In the U.S., tariffs and tax bill adjustments have transformed clean energy economics.
A recent Reuters analysis stated that U.S. solar developers now face rapidly expiring tax credits and new rules mandating that major components—down to screws—must be sourced outside China to qualify. These measures threaten to sharply raise installation costs and confuse timelines.
Further tariffs—up to 3,500%—are now being considered for panels sourced from Southeast Asia, as part of a broader anti-dumping drive. Domestic manufacturers are ramping up production—U.S. cell capacity rose 190% in 2024—but capacity still lags demand, and higher prices are already dampening consumer and commercial interest.
“Complying with these anti-China rules is nearly impossible,” warned one project developer. “We might see investment stall and prices rise”.
3. Chronic grid constraints and storage gaps
Even as installations grow, connecting solar power to the grid remains a major hurdle in many regions.
In India, solar accounted for record generation—10% of national electricity in early 2025, with close to 58 TWh generated from January to April. Yet persistent bottlenecks—from land acquisition to transmission delays—have slowed key projects. For example, the PM‑Kusum‑C substation solar rollout in Karnataka, though 90% underway, will only complete in early 2026 after multiple deadline extensions.
Globally, network planners warn of strain in areas like Germany, where solar curtailment occurs when local grids cannot absorb excess power . Without massive grid investment and better storage solutions, solar’s rapid growth could hit a natural ceiling.
4. Materials crunch: From lithium to graphite
Solar panels may be made from silicon, but building a fully renewable grid requires batteries—and batteries need critical minerals.
Rising demand for lithium, cobalt, and graphite is pushing metals supply chains to breaking point. According to the International Energy Agency, mineral demand for clean energy tech could double or quadruple by 2040. Yet mining projects face logistical roadblocks and environmental concerns; battery-grade graphite alone is over 90% produced in China.
Solar policymakers caution: without secure sourcing of these key inputs, even cheap panels won’t deliver reliable, round‑the‑clock power.
5. India’s domestic push meets real‑world snags
India’s solar ambitions are bold—ambitious targets, international investment, and rooftop schemes—but delivery lags.
Though India overtook its own records, solar still makes up less than 10% of total generation. Rooftop rollouts under PM‑Kusum are delayed by unclear tariff models, payment delays to private developers, and reluctance from distribution companies.
Policy frameworks—like domestic content requirements—have helped local manufacturing, but at the cost of about a 6% increase in tariffs . To stay on track for net-zero goals, India must overcome infrastructure gaps and financing uncertainties, while ensuring solar power remains affordable.
Charting a path forward
Despite these multiple headwinds, experts see reasons for cautious optimism:
1. Manufacturers: They must reposition for leaner, export‑focused models rather than overproducing.
2. Governments: Trade policies need to be matched with domestic supply build-up—but not at the cost of stalling adoption.
3. Grid operators: Must invest heavily in transmission and storage to absorb the solar surge.
4. Investors: Need to treat solar not as a standalone asset, but as part of integrated energy systems with battery and grid components.
As Deloitte predicted in early 2025, “It’s a race to overcome constraints and fill a growing gap between supply and demand for clean energy”. The world can choose easy power now—but the real prize lies in building sustainable systems that last.
