- The global market for six leading clean energy technologies exceeded $1.1 trillion in 2025 despite falling equipment prices, according to the IEA.
- Manufacturing investment declined from nearly $220 billion in 2023 to below $200 billion in 2025 as surplus capacity weakened returns.
- Solar manufacturing capacity is more than twice current demand, while battery cell capacity is more than three times demand.
Global demand for clean energy technology is growing rapidly, but manufacturing capacity has expanded even faster, increasing pressure on margins and raising the risk that poorly targeted industrial subsidies will support factories without viable markets.
The combined market for solar panels, wind turbines, batteries, electric vehicles, heat pumps and electrolysers surpassed $1.1 trillion in 2025, according to new analysis from the International Energy Agency (IEA). Its value has grown by an average of about 20% a year over the past decade.
That expansion occurred even as solar module prices fell by around 50% between 2023 and 2025 and battery pack prices declined by approximately 30%. The market’s rising value therefore reflects substantial growth in deployment rather than simply higher equipment prices.
Manufacturing economics have been less favourable. Investment in new production facilities reached nearly $220 billion in 2023 before declining during the next two years to an estimated figure below $200 billion in 2025.
Battery and electric vehicle plants accounted for more than three quarters of manufacturing investment in 2024. Solar investment more than halved as surplus capacity and fierce price competition damaged producer margins, particularly in China. Wind manufacturing investment also declined amid supply chain difficulties and disappointing European auction results.
Installed solar manufacturing capacity was more than twice global demand in 2024, excluding inventory accumulation. Meanwhile, battery cell manufacturing capacity was three times greater than demand.
This does not mean the energy transition is running out of customers. Under policies already in force, the IEA expects the combined technology market to reach around $1.9 trillion by 2035. If governments implement their wider stated commitments, it could exceed $2.6 trillion, with electric cars representing roughly three quarters of the total.
The challenge is one of timing, location and industrial concentration. China has accounted for about 70% of cumulative manufacturing investment since 2020. Its gross exports of the technologies covered by the IEA exceeded $160 billion in 2025, up 11% from the previous year.
Other regions are responding. Manufacturing investment in the EU almost doubled between 2023 and 2024, while Korea recorded a 25% increase and India more than 65%. Tariffs and local content rules have also proliferated. The average announced tariff and duty rate across the solar supply chain rose ninefold in 2024 to approximately 36%.
Protection can create domestic capacity, but it also raises deployment costs and risks duplicating factories that already exist elsewhere. The IEA’s central conclusion is that governments must decide where domestic production is strategically valuable and where trade remains the cheaper and faster option.
“Governments cannot prioritise everything at once in their industrial strategies,” the agency said.
That warning is directly relevant to the UK, where the government wants clean energy investment to exceed £30 billion a year by 2035 and has directed supply chain support towards areas including floating offshore wind platforms, electrical cables and hydrogen infrastructure.
Attempting to compete at scale in commoditised solar modules or standard battery cells would expose British projects to severe Chinese price competition. A more sustainable strategy would concentrate public support on technologies and capabilities where the UK has established engineering, research or market strengths, including offshore systems, advanced materials, power electronics, nuclear technology and system integration.
The IEA’s numbers show why clean tech market growth and manufacturing profitability should not be treated as the same thing. The opportunity is enormous, but an expanding market does not make every proposed factory economically viable.
