India added 2,056 MW of solar in the first quarter (Q1) of 2021, a 37% increase quarter-over-quarter (QoQ), compared to 1,505 MW installed in the fourth quarter of 2020. These findings were revealed in Mercom India Research’s latest Q1 2021 India Solar Market Update.
Solar installations in Q1 2021 were up by 88% year-over-year (YoY) compared to 1,090 MW added during the same period last year. Solar capacity additions in India in Q1 2021 were the highest in a quarter since Q3 2019.
According to the report, solar installations improved considerably in Q1 2021, with developers completing their delayed projects from last year. Commercial and industrial businesses were rapidly installing rooftop solar, taking advantage of cost savings during challenging market conditions.
In Q1 2021, large-scale solar projects totaled 1,749 MW, up by 43% QoQ, and 307 MW were added in rooftop solar installations, an 8% growth from the last quarter.
“With the second wave of the pandemic hitting the country, the industry is battling solar modules and other component price rise and volatility. Even more concerning is the uncertainty in procurement as the market is fluid. Policy restrictions and duties have added to the price rise and unpredictability”,” said Raj Prabhu, Chief Executive Officer at Mercom Capital Group.
The report forecasts solar installations of approximately 7 GW in 2021 as project timelines are extended due to the second wave of Covid-19. The report goes into a detailed analysis of three different forecast scenarios based on Best, Medium, and Worst-case scenarios.
The report details the effect of the lockdown imposed on major states due to the second wave of the coronavirus pandemic since the end of April 2021, along with labor issues and supply disruption affecting construction activity.
The average selling prices of solar modules have risen sharply along with other components, including iron, copper, aluminum, and steel. Freight charges are high all over the world, and the dearth of shipping containers is also widespread. The shortage of solar glass and backsheets continue to be issues of concern, according to the report’s findings.
“Due to the targeted lockdowns, this time around, disruptions and labor issues are not as widespread as last year. However, most of the lockdowns are in important solar states like Rajasthan, Maharashtra, and Uttar Pradesh, which will significantly impact installation totals this year,” added Prabhu.
According to the report, at the end of Q1 2021, cumulative solar installations reached 41 GW. Of this, 35.5 GW was from large-scale projects, while 5.4 GW was from rooftop solar installations.
The large-scale solar project development pipeline stands at 53.6 GW, along with 24.1 GW of projects tendered and pending auction at the end of Q1 2021.
In Q1 2021, Rajasthan, Uttar Pradesh, Gujarat, and Andhra Pradesh were the top states. The top five states accounted for 81% of the installations in the quarter.
The report has identified a surge in demand for rooftop solar, especially from the industries that see solar as the best choice for reducing their operating expenses. The pandemic has prompted several industries to go solar. Although opportunities are flooding, installers face a dilemma as module procurement has been a difficult affair with soaring prices.
“The solar industry is grappling with how to move forward amid so much uncertainty. Bidding for auctions in the future will be extremely challenging, and developers must give themselves a lot of room to factor in the risks and price volatility. This is the first time we have seen module prices rise four quarters in a row in the last five to six years. Bidding low in anticipation that module prices will perpetually fall is an extremely risky strategy in today’s market,” Prabhu noted.
According to the report, solar installations accounted for 33% of all power capacity added in Q1 2021. Renewables as a whole, including wind and hydro, made up close to 50% of capacity additions in the quarter.
Key Highlights from Mercom India Research’s Q1 2021 India Solar Market Update
- In Q1 2021, India added 2,056 MW of solar installations, an increase of 37% compared to 1,505 MW installed in Q4 2020. YoY installations rose by 88% compared to 1,091 MW in Q1 2020
- In Q1 2021, 1,749 MW was added from large-scale solar installations and 307 MW from rooftop solar
- Rooftop solar installations increased 8% compared to 285 MW added in Q4 2020. YoY the installations were by 58%, compared to 194 MW installed in Q1 2020
- The cumulative installed solar capacity in India was about 41 GW at the end of Q1 2021
- The large-scale solar project pipeline in India stands at 53.6 GW, with 24.1 GW tendered and pending auctions at the end of Q1 2021
- Mercom forecasts installations of approximately 7.1 GW for CY 2021
- Solar now represents 10.7% of the total installed power capacity in India as of Q1 2021
For the Complete Report, visit: https://mercomindia.com/product/q1-2021-india-solar-market-update
Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.