China’s Solar Market Slows In Early 2026 Amid Policy Shift And Pricing Reforms

China’s solar energy sector has started 2026 on a slower note, with new installations dropping by more than 17% in the first two months of the year. According to official data, the country added 32.48 GW AC of solar capacity in January and February, compared to 39.47 GW AC during the same period in 2025. This figure is also lower than the 36.72 GW AC installed in early 2024, indicating a cooling trend in the world’s largest solar market.

This slowdown was expected by industry experts as China moves through a major shift in its energy policy. For many years, solar growth in the country was supported by attractive feed-in tariffs, which encouraged rapid project development. This led to a record-breaking year in 2025, when installations reached around 317 GW AC. However, the government is now reducing its reliance on subsidies and introducing market-based pricing. As a result, the pace of new installations has naturally slowed.

The current trend suggests that 2026 could become the first year in more than seven years where China’s annual solar installations decline. Industry estimates indicate that total installations this year could fall between 24% and 43% compared to 2025 levels. Since China plays a major role in the global solar market, this slowdown may also impact global growth. Combined with expected challenges in other key markets, the world could see a rare year of negative growth in solar deployment.

Several factors are contributing to this temporary decline. Rising raw material costs are increasing project expenses, while grid constraints are making it harder to connect new capacity. At the same time, lower power tariffs are affecting project returns. These issues are creating short-term challenges for developers and investors.

Despite this slowdown, China’s long-term commitment to solar energy remains strong. The government’s upcoming five-year plan focuses heavily on expanding clean energy infrastructure. It includes the development of large renewable energy bases that combine solar, wind, and hydropower to reduce dependence on fossil fuels.

By the end of February 2026, China’s total installed solar capacity had reached 1.23 TW, showing a strong year-on-year increase of over 33%. This indicates that while short-term growth has slowed, the overall expansion of solar capacity continues at a significant pace.

Most experts believe that 2026 will be a year of adjustment for the sector. As the market adapts to new pricing systems and improvements are made to grid infrastructure, solar deployment is expected to recover. Growth is likely to pick up again from 2027, supporting China’s long-term clean energy goals.