The global solar industry witnessed strong growth in 2024, reaching a record 495 GWdc of installed capacity. It reflected a 14% year-on-year increase. The main reasons behind the solar boom were the rising demand for renewable energy from data centers and electrification trends.
But anticipation is looming large over the solar industry this year, despite significant demand. Wood Mackenzie recently revealed a global solar report predicting a slight contraction, forecasting new installations to reach 493 GWdc in 2025. So, is the solar industry embracing a storm? Let’s weigh in on the potential opportunities and challenges ahead.
Data Center to Drive Solar Industry Boom
This year, the solar industry will mainly be driven by rising electricity demand from data centers and AI language models. The study reveals that more than 100 GW of new data center capacity has been proposed in the U.S., and even if half of this is built over the next five years, electricity demand in some regions could rise by 10-20%.
- According to EIA, The electric power sector will add 26 gigawatts (GW) of new solar capacity in 2025 and 22 GW in 2026. These additions will boost U.S. solar generation by 34% in 2025 and 17% in 2026.
But the question is how will solar meet the demand surge. The Wood Mackenzie report highlighted some ways the industry will adapt. They are:
- Solar energy has to replace fossil fuels and scale up to meet new demand from data centers.
- Solar developers will have to innovate by pairing solar with storage, wind, and natural gas to provide reliable, zero-emission power.
In another scenario, data center developers will compete with traditional buyers for solar assets. This competition will push solar PPA prices higher and force solar developers to change their strategies. This will drive market shifts and possible price increases.
Solar companies able to manage large-scale, multi-GW projects will thrive in this environment. This trend may lead to market consolidation and more transactions, as firms strive to secure their place in the changing energy landscape.
In today’s evolving solar landscape SolarBank, a leading North American solar company holds immense promise. It is playing a pivotal role in developing commercial, industrial, and community solar projects in the U.S.
Solar Panel Prices Set to Rise
For the past two years, solar panel prices have reached record lows due to global overcapacity and intense competition among manufacturers. While this was a win for buyers, it raised concerns about the long-term impact on the solar manufacturing industry.
However, a shift is expected in 2025, with prices projected to rise to around $0.15/W FOB China—a level unseen since 2021. Despite the persistent overcapacity in module component manufacturing, key players in the industry are taking steps to address the issue. Simply put, oversupply won’t be a permanent thing.
For instance, polysilicon giants GCL and Tongwei have pledged to scale back production. Similarly, major module manufacturers are working together to stabilize the market by limiting output and setting minimum prices.
China Will Dominate Despite Challenges
China, the world’s largest solar market, is grappling with its own challenges. Unclear policies under its 14th Five-Year Plan have created uncertainties. Rising curtailment of solar power and revenue risks are likely to slow the industry’s expansion, bringing a period of stabilization instead.
Despite these hurdles, China will remain a global leader in solar manufacturing, holding 75% (1.2 TW) of the world’s operational capacity for key module components.
Apart from the top economies, other regions are also ramping up solar manufacturing with government support. India is expanding cell production with its Approved List of Cell Manufacturers to cut reliance on Chinese imports.
The Middle East is becoming a solar hub, with Saudi Arabia, Oman, the UAE, and Egypt attracting major investments in polysilicon, wafer, and module production. Chinese manufacturers are setting up facilities there, driven by incentives and the need to bypass Southeast Asian tariffs while meeting global demand.
Cumulative installed solar power capacity in China from 2012 to 2024 (gigawatts)
Solar Tech Shifts for Greater Efficiency
The solar industry is gearing up for major advancements in technology that will boost efficiency and reduce costs. The study shows:
- TOPCon and HJT Cells: These technologies will replace p-type PERC in utility-scale solar, offering better efficiency and higher power density.
- Higher Panel Ratings: Modules with ratings over 650 Wp are common, with some exceeding 750 Wp. By 2025, wattages could surpass 800 Wp.
- Land Use Reduction: Larger modules can cut land use by 15%, saving 5-10% on project costs, though size increases installation and transportation challenges.
Additionally, inverters can shift towards more efficiency up to 2000 Vdc. This change will allow longer strings of powerful modules. This will further lower costs and boost scale. Also, smart AI-powered trackers will enhance production by 2-6%. They will help protect against the weather too. Companies like Nextracker and GameChange Solar are leading this trend.
Policy Uncertainty to Cloud Global Solar Projects
Last year elections have reshaped governments worldwide, introducing policy changes that are causing uncertainty for the solar sector. A stellar example is the United States where the Trump administration has questioned the future of renewable energy incentives. It includes tariffs on solar imports and a lack of clarity on tax credits. These uncertainties are creating significant concerns for developers, making long-term solar investments appear riskier.
Amid these policy shifts, the U.S. is still witnessing a surge in solar manufacturing projects. Tariffs on solar products from Cambodia, Malaysia, Thailand, and Vietnam are driving investments in local module, cell, and wafer production.
Europe’s Strained Incentives
In Europe, declining financial incentives are impacting the economics of solar projects. In Germany, reductions in capital expenditure rebates and export compensation for distributed solar projects pose significant financial barriers. Similarly, policy shifts in the Netherlands and Italy are expected to dampen growth in distributed solar energy.
Furthermore, some countries like South Africa are projecting protectionist policies that prioritize local content mandates. Such policies only increase costs, delay solar project development, and create hurdles for international market growth.
Transmission Bottlenecks: A Major Setback for Solar
In 2025, transmission and interconnection bottlenecks might throw crucial challenges. As solar energy production continues to rise, many regions are struggling to upgrade their grid infrastructure to meet the growing demand for renewable energy.
These delays in expanding transmission capacity are holding back new solar projects, creating a gap between the available energy supply and the demand for it. As a result, solar power can’t reach consumers as quickly as it’s being produced, slowing progress in the transition to cleaner energy.
The Bottom Line: 2025 Will be a Transition Year for the Solar Industry
The above analysis shows a crucial turning point for the global solar industry. While the demand for renewable energy is stronger than ever, the sector is facing several challenges that could slow its progress.
Despite these hurdles, the long-term future for solar energy remains bright. The industry is at a pivotal moment where smart adaptation, strategic planning, and support for stable policies will be key. As nations work to meet decarbonization goals, overcoming these obstacles will be essential for solar to continue driving the global energy transition.
- FURTHER READING: SolarBank’s $49.5M Qcells Deal Accelerates U.S. Solar Growth – Exclusive Interview with CEO Dr. Richard Lu
The post Global Solar Growth to Stabilize at 493 GW in 2025, Predicts Wood Mackenzie appeared first on Carbon Credits.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
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