Record Growth, Record Losses: The Fragile Economics of Renewable Energy
Global renewable power is expanding faster than at any point in history — yet many of the companies supplying that growth are struggling to stay afloat. According to the International Energy Agency’s Renewables 2025 report, global renewable capacity is set to double by 2030, adding around 4,600 gigawatts (GW) of new generation — roughly equivalent to the combined power capacity of China, the European Union, and Japan. Nearly 80% of that expansion will come from solar photovoltaics (PV), followed by wind, hydro, bioenergy, and geothermal.
But beneath this surge lies a deep financial fault line. While installations are booming, the manufacturers producing turbines, panels, and related components are reporting steep losses — squeezed by oversupply, trade frictions, and collapsing margins.
A Tale of Two Crises: Solar and Wind
The solar industry’s pain is acute. In China — the world’s dominant producer of solar modules — panel prices have fallen by more than 60% since 2023, the result of a supply glut and fierce competition for market share. The IEA estimates that average margins have fallen to around –10%, leading to cumulative losses approaching USD 5 billion since early 2024.
For wind, the problem looks different but equally serious. Manufacturers outside China are losing money as well — USD 1.2 billion last year — driven by inflation, rigid fixed-price contracts, and years of permitting delays. While global installations remain robust, producers such as Siemens Gamesa, Vestas, and GE Vernova have all warned of continuing cost pressures.
These twin crises reveal a paradox: the faster the world deploys renewable energy, the weaker the industrial foundations of the sector appear to be.
The Roots of the Glut
Much of the strain traces back to the 2020s investment boom. Low interest rates, strong policy incentives, and post-pandemic stimulus triggered a global race to build manufacturing capacity.
In solar, Chinese firms expanded at a pace unmatched by demand, aided by state-backed financing and regional subsidies. Now, with factories operating far above market needs, the result is an unprecedented oversupply of panels and plummeting prices across global markets.
Wind manufacturers, meanwhile, faced the opposite challenge: costs for steel, copper, and logistics soared, but many companies were locked into pre-inflation contracts signed years earlier. Together, these forces have created a market where deployment soars — yet profitability collapses.
The Geopolitical Backlash
Governments are responding in divergent ways. The United States and European Union have both introduced or expanded tariffs and local-content rules aimed at protecting domestic manufacturers from China’s dominance.
While such measures may preserve jobs and industrial capacity, they risk driving up project costs and slowing installations.
Analysts warn that a fragmented trade environment could make the clean energy transition more expensive and geopolitically tense — especially as China controls over 80% of global solar module output and dominates supply chains for critical materials like polysilicon and rare earths.
Creative Destruction and Industry Consolidation
The IEA suggests that the current financial squeeze could trigger a period of “creative destruction” — with weaker firms exiting the market and stronger ones consolidating. Over time, this could yield a leaner, more resilient industry with steadier pricing and diversified supply chains.
However, the transition will be painful. Factory closures, cancelled orders, and trade barriers could disrupt the very supply chains needed to hit 2030 climate targets. Developers, for now, are benefiting from ultra-low equipment prices. But the IEA warns that “today’s bargains could be tomorrow’s shortages” if too many suppliers fail and investment dries up.
A Boom Built on Fragile Foundations
Despite the turmoil, demand for renewables remains undiminished. More than 80% of countries are expected to expand renewable capacity faster between 2025 and 2030 than in the previous five years.
The global clean energy transition is accelerating — but its industrial backbone is showing signs of strain.
The IEA’s message is blunt: the renewable revolution is real, but it risks becoming financially unsustainable without stronger policy coordination, diversified supply chains, and investment in manufacturing resilience. If the world wants to keep building at a record pace, it must first ensure the companies powering that progress can survive the storm.