India added 13 GW of solar capacity in the calendar year (CY) 2022, a 27% increase year-over-year (YoY), compared to 10.2 GW installed in CY21.

However, several challenges, including the higher cost of solar projects, continue to pose challenges in 2023.

India’s cumulative installed solar capacity now stands at 63 GW, according to Mercom India Research’s newly released 2022 Q4 & Annual India Solar Market Update.

Large-scale solar projects accounted for 87% of installations and saw a 33% surge YoY in CY22. Projects that were delayed and pending installation due to the second wave of COVID-19 in 2021 added to the capacity installed during 2022.

India’s large-scale solar project pipeline stood at 58 GW, with another 51 GW of projects tendered and pending auction at the end of 2022.

Rooftop solar installations decreased by 3.7% YoY during the year.

“Though impressive, record solar capacity additions in 2022 were barely half the 27 GW in annual installations needed to meet the 280 GW target by 2030. Policies must be quickly retooled and hurdles removed to double the annual pace of installations and attract the needed investments,” said Raj Prabhu, CEO of Mercom Capital Group.

India added 2.6 GW of solar in the fourth quarter (Q4) of 2022, a quarter-over-quarter drop of 2.5%.

Installations were down 5% compared to 2.8 GW in the same period last year.

According to the report, the growth outlook going into 2023 remains uncertain, with the pending judgment on projects stranded in the Great Indian Bustard region, the pending announcement on the Approved List of Models and Manufacturers (ALMM), and expected project extensions per the Ministry of New and Renewable Energy’s direction to Solar Energy Corporation of India, Indian Renewable Energy Development Agency, NHPC, and NTPC.

The report highlights a rise in the average cost of projects throughout CY22 due to higher module prices and supply constraints. Average large-scale project costs in Q4 2022 increased by 7.3% YoY making it an unprecedented ten quarters of project cost increases in a row.

Solar tenders increased 23% YoY in CY22, while auctions fell 29%. Implementation of Basic Customs Duty, shortage of modules enlisted under ALMM, and various policy announcements and amendments resulted in lower auction activity in 2022.

Rajasthan, Karnataka, and Gujarat were the top three states for cumulative large-scale solar capacity accounting for 54% of installations in the country as of December 2022.

Rajasthan led large-scale solar capacity additions in CY22.

“Solar accounted for over 80% of new installed capacity and over 90% when combined with wind, an impressive turnaround from the days of coal domination. Coal generation fell to less than 5% of new capacity added – the lowest ever,” added Prabhu.

India’s installed renewable energy capacity, including large hydropower projects, stood at 167 GW. This amounted to 41% of the overall power mix at the end of December 2022.

Newly installed solar capacity reached a new high in 2022, making up 82% of all new power capacity added in 2022.

Solar now accounts for 15% of India’s total installed power capacity and almost 38% of the total installed renewable capacity as of 2022.

Wind and solar made up 93% of new power capacity additions in 2022.

Mercom’s 2022 Q4 & Annual India Solar Market Update report is 151 pages and covers all facets of India’s solar market. For the complete report, visit:  https://mercomindia.com/product/q4-2022-india-solar-market-update/