January 22, 2026
A new report from research agency Wooden Mackenzie notes that solar energy has a big year in store for it in 2026, positioning itself as the “foundational technology for growing new energy demand.”
The report, titled ‘Global solar energy: three things we should pay attention to in 2026’ says cumulative solar capacity installed worldwide is advancing for 2026 and beyond.
With capacity set to more than double, to almost 8 TWdc over the next eight years, Wood Mackenzie says the near-term forecast looks good for the solar industry.
“Looking ahead to 2026, our predictions for solar technology include its ability to address energy demand growth, the prospects for solar on balconies and the implications of a new mega-project in the Middle East,” the company says.
Bounce back
After a “challenging” year for the global solar market in 2025, the technology is poised to take a new turn in 2026, the report said.
“In China, the world’s largest market, structural changes in energy market policies have led to significantly fewer solar installations in the second half of 2025 compared to the first half,” Wood Mackenzie officials said. “Although the country is estimated to have achieved a record deployment of nearly 400 GW by 2025, the market will see its first contraction in 2026. In the US, a flurry of policy changes and executive actions from the Trump administration created an uncertain and unstable environment for solar energy, resulting in numerous project cancellations and delays.”
The report adds that India, which is poised to dethrone the US as the world’s second-largest solar market, has seen challenges leading to limited deployments in 2026.
Solar energy will play a key role in meeting the sharply rising energy demand in the coming years, the report said. With electricity load growth accelerating thanks to the electrification of manufacturing, the rise of data centers and a host of other factors, solar energy will remain one of the most important new energy sources on the grid for the rest of the decade, says Wood Mackenzie.
“In the US, our latest energy outlook estimates annual energy demand growth at 2.9% through 2035,” the report says.
“Wood Mackenzie’s tracking of large load requests brings the total committed and under construction pipeline to 160 GW, or 22% of peak demand in 2024. Under such intense growth conditions, every energy source is on deck to serve this load.”
Balcony solar panels herald a new era for the US
Balcony solar systems for residential areas have grown in Germany. Thanks in part to the high percentage of people living in multi-storey apartments, equipped with balconies of course, the country has become the leader in plug-in balcony solar panels. But in 2026 and beyond, that growth is expected to make the journey across the Atlantic, Wood Mackenzie said.
“The appeal of solar on balconies is that a few solar panels and an inverter can be plugged directly into a wall socket and provide some electricity to a home – without the need for an electrician, utility interconnection approval or time-consuming permitting,” says Michelle Davis, Global Head of Solar at Wood Mackenzie.
In particular, Wood Mackenzie officials cited a San Francisco-based nonprofit Brightsaver as a strong supporter of the legislation, and one who expects these bills to pass quite easily.
However, the jury is still out on the extent of balcony solar adoption in America. Due to different electrical safety standards and energy rates than in Europe, the prospects for solar on balconies in the US currently remain uncertain.
“Some have argued that homeowners would like to add these units to backyards, etc., but it is unclear how attractive this will be to American homeowners, especially those concerned about aesthetics,” the company says. “Finally, while payback times for balcony solar are typically short, the overall bill savings are modest ($20 per month or less). Electricity rates in Europe are generally higher than those in the US, making for a more attractive value proposition.”
UAE mega project takes center stage
In October 2025, Masdar and the Emirates Water and Electricity Company (EWEC) breaking ground on the world’s first gigawatt-scale sustainable project with a capacity of 1 GW of baseload power, 24 hours a day.
At a price tag of nearly $6 billion, the project will integrate a 5.2 GWW DC solar facility and a 19 GWh battery storage system in Abu Dhabi. The project “represents a structural shift in the development of hybrid projects” in the Middle East, Wood Mackenzie representatives say.
“Rather than using battery storage as ancillary grid support or to smooth out the generation profile, the system was designed from the start to deliver robust sustainable generation,” the company says. “This directly targets customers with inflexible load profiles, such as data centers and artificial intelligence hubs. This is no surprise given the intense new demand growth expected from these sources.”
While still far too expensive to replicate around the world, the UAE’s mega-project could redefine baseload power around the world when it becomes operational in late 2027. The cost of gas-fired power plants is expected to continue to rise, making hybrid solar and storage like this a more viable option than ever.
Tags: commercial and industrial, modules, project, residential solar, utility, utility scale
