India added 14.9 GW of solar capacity in the first half (1H) of calendar year 2024, a 282% year-over-year (YoY) increase, according to Mercom India Research’s latest Q2 2024 India Solar Market Update. The installations topped all previous half-yearly and annual installations.

The commissioning of several previously delayed projects contributed to capacity additions in the year’s first half.

Solar capacity added in the second quarter (Q2) of 2024 stood at 5 GW, up 170% YoY from 1.8 GW. However, installations fell 49% quarter-over-quarter (QoQ) from 9.9 GW.

During the quarter, 4.3 GW of large-scale solar projects were commissioned, including nearly 1.8 GW of open access projects. While large-scale solar capacity additions fell 55% QoQ, they rose 191% YoY.

The reimposition of the Approved List of Models and Manufacturers (ALMM) order impacted several open access projects. Grid connectivity and transmission infrastructure delays further affected large-scale solar project additions during the quarter.

Priyadarshini Sanjay, Managing Director, Mercom India, emphasized that the sequential decline does not indicate a trend, as the previous quarter was an outlier due to a surge in installations ahead of the ALMM reimposition from April 2024.

Rajasthan, Gujarat, and Karnataka led large-scale solar capacity additions, contributing 30%, 22%, and 21% of the total quarterly installations.

In Q2 2024, 10.7 GW of tenders were announced, down 22% from 13.6 GW in Q2 2023 and 65% QoQ from 30.7 GW.

Sanjay noted that the lower tender numbers could have been due to the delay in the Ministry of New and Renewable Energy (MNRE) releasing the bidding trajectory for the year and concerns over tepid response and higher bids after the ALMM reimposition.

During the quarter, 6.7 GW of solar projects were auctioned, consistent with Q2 2023, though auction activity decreased by 73% from 25.1 GW in Q1 2024.

In 1H 2024, India added 20.8 GW of new power capacity, with renewable sources, including large hydro, accounting for 81% and solar alone making up 71% of the capacity additions.

As of June 2024, India’s cumulative installed solar capacity reached 87.2 GW, with utility-scale projects making up 87% and rooftop solar 13%. Solar energy now constitutes 19.5% of India’s installed power capacity and 44% of the total installed renewable energy capacity.

Rajasthan, Gujarat, and Karnataka were the leading states for cumulative installed large-scale solar capacity, contributing 29%, 15%, and 14% of the national total, respectively.

The top 10 states accounted for 94% of the cumulative large-scale solar installations as of June 2024.

India’s large-scale solar project pipeline stood at 146 GW, with another 104 GW of projects tendered and awaiting auction as of June 2024.

The project pipeline looks attractive, but according to Sanjay, significant challenges due to transmission infrastructure constraints, particularly in Rajasthan, remain. Hybrid and energy storage projects may help alleviate this issue by utilizing the same transmission lines.

Solar module and cell imports dropped 61% QoQ and 16% YoY. The exports were down almost 30% QoQ, with only a marginal drop YoY.

The average cost of large-scale solar projects decreased by 2% QoQ and 26% YoY, improving project internal rates of return. However, with the ALMM imposition, this trend may reverse as Indian modules, especially Domestic Content Requirement (DCR) modules, are more expensive, and supply may struggle to meet growing demand.

In 1H 2024, 41.4 GW of tenders were announced, marking the highest half-yearly bid invitations, up 51% from 27.5 GW in 1H 2023.

Additionally, 31.8 GW of projects were auctioned, a 321% increase from 7.6 GW in 1H 2023, setting a new high for half-yearly and annual auction announcements.

With the strong demand from the commercial and industrial (C&I) market, Sanjay expects the demand for open access and rooftop solar to grow significantly.

Mercom’s Q2 2024 India Solar Market Update report is 85 pages long and covers all facets of India’s solar market. For the complete report, visit:https://www.mercomindia.com/product/q2-2024-india-solar-market-update