Average Large-Scale Solar System Costs Declined by 12%, Rooftop by 9% YoY in Q1 2020

The average large-scale solar system cost was approximately ₹35 million (~$0.46 million) in Q1 2020, 12% lower compared to ₹40 million (~$0.53 million) during Q1 of 2019, according to Mercom’s recently released Q1 2020 India Solar Market Update. Costs were down by 3% compared to Q4 2019.

Solar capacity additions in India in Q1 2020 were at its lowest since Q4 2016 at 1,080 MW, a 39% decrease year-over-year (YoY) compared to 1,761 MW added in Q1 2019.

The COVID-19 outbreak has had a huge adverse impact on the solar industry in India. The disruption in India’s solar supply chain began with the work stoppage that started in China in February 2020, followed by the lockdown that was imposed in India.

Q1 2020 Average Large-scale Solar Project Cost per MW

The average rooftop solar system cost was ₹37 million (~$0.49 million) in Q1 2020, 9% lower compared to approximately ₹40.6 million during Q1 of 2019. Rooftop solar costs declined by 3%  compared to Q4 2019. Like large-scale projects, the decline in system costs is mostly a result of lower module prices.

Average Rooftop Solar System Cost in India per MW

With prices declining, solar modules made up approximately 45% of the total project cost in the quarter compared to 54% in Q1 2019.

The quarter also saw a 9% quarter-over-quarter (QoQ) decline in Chinese solar module average selling prices (ASP) and about 4.4% QoQ decline in domestic Indian module ASPs. The Indian solar market is still dependent on multicrystalline solar modules, but things are now changing. We are seeing developers looking to order Mono PERC, heterojunction, and bifacial modules while trying to get the best return on investment. We expect the transition to speed up, and multicrystalline modules phased out as we go into 2021.

Inverter prices in India are also low compared to other markets globally. Chinese inverter prices have been very competitive, and Chinese suppliers have largely replaced most of the European inverters.

Once the supply chain bottlenecks ease, we could see a situation of module oversupply and price declines again as project activity resumes. Subscribe to Mercom India Q1 Quarterly Update reports for the module and system costs trends, along with their analysis for large-scale and rooftop projects.

Our upcoming webinar, ‘India Solar Market Overview and Outlook’ on June 5, 2020, at 11 am (IST) will discuss the supply chain issues and how the solar industry in India is moving forward during COVID-19.


Image credit: Azure Power