Solar PV Market Set to Surge: Capacity Expected to Reach 7.23 TW by 2031 with 19.92% CAGR

Market Size and Growth Forecasts

The solar photovoltaic (PV) market is positioned for significant expansion, with installed capacity projected to climb from 2.91 terawatts (TW) in 2026 to 7.23 TW by 2031. This represents a compound annual growth rate (CAGR) of 19.92% over the forecast period. In the United States, solar capacity is expected to increase by 65% by 2030, adding roughly 232 gigawatt-hours (GWh) of generation.

The Asia-Pacific region is anticipated to lead new installations, with solar energy projected to account for one-third of its power mix by 2030, up from less than 10% in 2020.

Emerging Trends

Electrification of the Economy: Rapid electrification across sectors such as data centers and electric vehicles is driving up solar energy demand, necessitating increased solar capacity.
Balcony Solar PV Systems: The rise of portable "plug-in" balcony PV systems in the U.S. and Europe offers a cost-effective alternative to traditional rooftop solar installations, enhancing accessibility for residential users.
Utility-Scale Innovations: Large-scale projects like the 5.2 GW solar-plus-storage facility in Abu Dhabi are revolutionizing utility-scale solar by providing continuous baseload power, crucial for AI hubs and data centers.

Policy Impacts

The solar industry is influenced by complex policy shifts globally. In the U.S., changes in federal policies have affected incentives and permitting processes, though demand for renewable energy remains strong. Conversely, India faces challenges in 2026 due to stricter domestic content requirements, which may slow its solar market growth.

Regional Market Dynamics

Asia-Pacific: Leading new power installations with a shift away from coal and gas, the region is increasing reliance on solar and other renewables to meet growing energy needs.
United States: Despite federal preferences leaning towards fossil fuels, the solar sector demonstrates resilience, supported by planned capacity additions.
Middle East: Innovative projects like Abu Dhabi’s solar-plus-storage facility are setting new benchmarks for renewable energy integration in the region.

Conclusion

Entering 2026, the solar PV market exhibits resilience and innovation. Global demand for solar energy is accelerating, driven by technological advancements and evolving policy landscapes. This trajectory points toward a sustainable energy future with solar power playing a central role.