Solar is projected to supplant coal as the leading electricity source by 2032, according to the latest energy transition outlook from BloombergNEF. Despite a slight drop in solar installations to 640 gigawatts in 2026, representing the first year-over-year decline, capacity additions are expected to rebound in 2027 as global renewable deployment accelerates.
Three key themes emerge from the outlook:
- Steady capacity growth
Solar has demonstrated persistent growth over the past two decades, with annual installations climbing from under 100 gigawatts in 2016 to more than 650 gigawatts in 2025. After the projected dip in 2026, growth resumes and continues through the end of the decade. - Competitive cost profile
Fixed-axis photovoltaic systems maintain the lowest levelized cost of electricity among new generation sources, with onshore wind close behind. In contrast, coal generation costs are nearly double those of solar and onshore wind, and even exceed the cost of battery storage, which has experienced significant cost reductions in recent years. Combined cycle gas turbines and offshore wind remain among the most expensive options. - Market leadership and diversification
China leads global solar installations by a wide margin, followed by India, the United States, Germany and Pakistan. The next tier includes Brazil, Japan and Saudi Arabia. In total, 46 markets are set to install over one gigawatt of solar capacity in 2026. To mitigate concerns over supply chain dominance, many countries have introduced incentives for local manufacturing of modules, cells, wafers and polysilicon.
According to BloombergNEF, the combination of solar and battery deployment will reshape power markets over the next decade, although trade barriers and revenue cannibalization during peak generation periods may present challenges. At higher battery penetration levels, utilization rates decline, which can affect their economic viability.
Source: BloombergNEF
