BloombergNEF Forecast: India To Surpass US As World’s Second-Largest Solar Market In 2026, With Capacity Additions Rising 6% To Over 50 GW

India is poised to overtake the United States as the world’s second-largest solar market in 2026, supported by steady installation growth even as the US experiences a significant slowdown. According to forecasts from BloombergNEF, India’s solar capacity additions are expected to increase by 6% this year, reaching just over 50 gigawatts. Utility-scale solar projects will continue to account for the majority of new capacity, while government subsidies are supporting the growth of residential rooftop installations.

In contrast, US solar installations are forecast to decline by 14% in 2026, dropping to 44 gigawatts. The decline is largely due to the One Big Beautiful Bill Act, which requires projects starting construction after the end of 2025 to comply with “foreign entity of concern” rules to qualify for tax credits. This added regulatory hurdle is expected to slow development, causing the US to relinquish its position as the world’s second-largest solar market, a spot it has held since 2019.

China remains the largest solar market globally, despite an expected decrease in annual additions. BloombergNEF projects that China will add 321 gigawatts of solar capacity in 2026, representing a 14% decline. As a result, global solar installations are projected to fall for the first time this year. While other countries, including India, are set to see strong growth, it will not fully offset the shortfall caused by China’s slowdown.

India’s solar sector has been growing rapidly, with the country adding a record 35 gigawatts of alternating current (AC) solar capacity in the first 11 months of last year. This pace positions India on track to achieve its 2030 target of 500GW(AC) of non-fossil fuel capacity. Leading solar power producers such as Adani Green Energy, NTPC, ReNew, Avaada, and Tata Power are expected to benefit from the increasing share of solar energy in India’s power mix.

Renewable energy auctions have been a key driver of this growth. In 2024, India auctioned a record 60GW(AC) of renewable capacity, which resulted in 42GW(AC) of projects still awaiting firm offtake contracts. If these projects remain unsigned, they could be canceled, posing a downside risk to future capacity additions and potentially threatening the country’s 2030 renewable energy targets.

Policymakers in India are also focusing on increasing the localization of the photovoltaic (PV) supply chain. Solar projects are required to use modules listed on the Approved List of Models and Manufacturers (ALMM), which has largely excluded overseas factories. This policy has acted as an effective trade barrier, encouraging a surge in domestic manufacturing investment. Leading Indian solar manufacturers such as Waaree Energies, Vikram Solar, and Premier Energies have entered the market in the last two years, with more companies seeking to go public to raise capital for capacity expansion.

Currently, India’s module manufacturing capacity stands at around 125 gigawatts per year, raising concerns about potential overcapacity and the need for industry consolidation. Meanwhile, capacity for upstream components required to manufacture these modules remains below domestic demand, meaning the country still relies on imports for certain key materials.