The second quarter (Q2) of the calendar year (CY) 2021 brought some good news for the solar sector, with India adding 2,488 MW of solar capacity, an increase of 19% quarter-over-quarter (QoQ) compared to 2,090 MW installed in Q1 2021. The figures were revealed in Mercom India Research’s latest report, Q2 2021 India Solar Market Update.

Solar installations were up by 1,114% year-over-year (YoY) compared to 205 MW added in Q2 2020. Installations in Q2 2020 were adversely affected by the Covid-19 pandemic. The capacity additions in Q2 2021 were the highest in a quarter since Q2 2018.

The report revealed that the cumulative solar installations at the end of Q2, 2021 reached 43.6 GW.

In the first half (1H) of 2021, India added 4,578 MW of solar capacity, growing 251% over the same period last year, surpassing installations in all of 2020.

The report states that installations increased despite the second wave of the Covid-19 pandemic and the lockdown imposed by various states during 1H. The growth was attributed to targeted lockdowns this year, enabling the solar industry to better deal with the contingencies.

“Even with a strong quarter, the industry continues to battle uncertainties around higher component costs and logistical issues. With duties and import restrictions, purchasing quality solar components at the best price will be the biggest challenge for the industry going forward as solar system costs ticked up for the fourth quarter in a row,” said Raj Prabhu, CEO of Mercom Capital Group. “The demand for building large-scale projects is extremely high, while auctions have slowed down. The government focus has shifted towards building domestic manufacturing capacities.”

The report forecasts solar installations in the range of 8-9 GW in the calendar year (CY) 2021, as the industry fared much better during the second wave of the Covid-19 pandemic. The report provides detailed analyses and forecasts for the best, medium, and worst-case scenarios.

The report states that the average selling prices of solar modules have risen for the fifth quarter in a row, and this trend would continue for another couple of quarters. Similarly, freight charges are also moving up, showing no signs of recovery in the short term.

Over the last six months, the rising price trends in commodities, including steel, aluminum, and copper, have started to take a toll on solar developers. In addition, the spike in steel prices has exacerbated the situation for engineering, procurement, and construction players and module manufacturers in the solar space.

According to the report, the large-scale solar project development pipeline stood at 52.8 GW,  with 28 GW of projects tendered and pending auction at the end of Q2 2021.

Gujarat and Rajasthan were the top two states in installations, followed closely by Uttar Pradesh and Andhra Pradesh. The top ten states accounted for 95% of the total installations during the quarter.

“Although the component costs continue to rise, bids have fallen recently, bucking the trend as developers are taking a win-at-all-costs approach as new projects are not being auctioned at the required pace for the developers to sustain their operations,” added Prabhu.

The report also adds that the new solar capacity additions in 1H 2021 were the highest ever for any year at 53% of the total power capacity additions. Renewables, including solar, wind, and hydro, made up 71% of total capacity additions in 1H 2021.

Key Highlights from the Mercom India Research’s latest report, Q2 2021 India Solar Market Update:

• In Q2 2021, India added 2,448 MW of solar, increasing 19% compared to 2,090 MW in Q1 2021. YoY installations rose by 1,114% compared to 205 MW in Q2 2020
• In 1H 2021, India added 4,578 MW of solar, a 251% increase compared to the same period last year
• The cumulative installed capacity was around 43.6 GW at the end of Q2 2021
• The large-scale solar project pipeline in India stood at 52.8 GW, with 28 GW tendered and pending auction at the end of Q2 2021
• Mercom forecasts installations of approximately 8-9 GW for CY 2021
• Solar’s share of new power capacity additions was the highest ever in 1H of any year
• Investments in the solar sector were up by 120% compared to Q1 2021

For the complete report, please visit: https://mercomindia.com/product/q2-2021-india-solar-market-update/