Global Solar Funding Drops 39% as Policy Shifts Bite
Corporate investment in solar plummeted to $10.8 billion in early 2025—a staggering 39% drop from last year’s $17.6 billion. Mercom India’s latest report reveals deal volume shrank too, with just 78 transactions compared to 88 previously. This global solar funding decline raises questions about market dynamics amid shifting policies and economic pressures.
Policy Changes Cripple Solar Momentum
Regulatory uncertainty explains much of this slump. The Inflation Reduction Act initially spurred artificial demand spikes as projects raced to lock in subsidies. Now, delayed Treasury guidelines on domestic content rules have developers hitting pause. “We’re seeing hesitation on utility-scale projects over $50 million,” notes a SunPower analyst. Even commercial divisions of companies like Enphase Energy report 18% booking declines last quarter.
Battery Storage Emerges as Bright Spot
While overall funding stumbles, energy storage attachments tell a different story. Over 60% of new solar farms now include battery systems like the advanced home storage solutions hitting markets. That’s up from 42% in 2024. Storage solves two headaches: dodging peak demand charges and capitalizing on grid price spikes. A 200MW Texas project recently recouped its battery investment in just 11 months.
Investors Shift Focus to Disruptive Tech
Venture capital hasn’t abandoned solar, but it’s gotten selective. Thin-film and perovskite startups captured 73% of early-stage funding, while traditional manufacturers scramble. This mirrors trends seen in renewable expansion projects where innovation takes priority. “The smart money wants disruption, not incremental gains,” explains a Clean Energy Ventures partner.
The Solar Cost Paradox
Module prices keep falling—now half of 2022 levels—but financing costs have doubled. With Treasury yields near 4.8%, solar’s 6-8% returns look less attractive to institutional investors. This squeeze particularly impacts industrial rooftop solar sustainability projects where margins are tighter.
Market Outlook: Cautious Optimism
Second-half projections hint at potential recovery if policy clarity emerges. Meanwhile, Asia’s appetite remains strong—Japanese firms invested $2.1 billion in Vietnamese solar-storage hybrids recently. As SEIA’s circular economy plan suggests, the industry may be evolving rather than declining. Solar’s fundamentals remain robust despite short-term headwinds.
