India added a record 27 GW of solar capacity in the first half (1H) of 2026, up 49% year-over-year (YoY) from 18 GW, according to Mercom India Research’s newly released Q2 and 1H 2026 India Solar Market Update.

India added nearly 6 GW of solar open access capacity in 1H 2026, up 42% YoY compared to 4 GW, according to Mercom India’s newly released Q2 2026 India Solar Open Access Market Report.

India’s push to build a domestic solar manufacturing ecosystem is creating new challenges for manufacturers. While policy measures such as the Approved List of Models and Manufacturers (ALMM) and Domestic Content Requirement (DCR) are driving localization, the industry is grappling with a widening mismatch between module and cell manufacturing capacity, increased domestic cell prices, and financing constraints.

As India’s rooftop solar market expands, the quality of balance-of-system components and installation practices is becoming increasingly important to project performance. Failures involving connectors, cables, isolators, mounting structures, earthing systems, and electrical protection equipment can lead to generation losses, repeated maintenance, equipment damage, and safety risks.

The average system cost of large-scale solar projects declined across most module technologies during the second quarter (Q2) of the calendar year 2026. Quarterly movements remained relatively narrow, and the overall cost structure was largely unchanged, with Chinese module-based projects remaining the most cost-competitive and projects mandated to use DCR modules at the higher end.

The government recently told Parliament that over 5,400 power sector cases are pending before electricity sector regulators and the courts. Cases involving the Ministry of Power numbered 1,303, while 2,911 and 1,193 petitions are pending before the Appellate Tribunal for Electricity and the Central Electricity Regulatory Commission (CERC), respectively, bringing the total to 5,407, as of June 30, 2026.

CERC tweaked the deviation settlement framework for future wind and solar projects by bringing them under the same rules as those applicable to general sellers.

The Gujarat Electricity Regulatory Commission has reduced the banking charge for green energy open access consumers to ₹1 (~$0.011)/kWh from September 1, 2026, to March 31, 2027.

The Karnataka Electricity Regulatory Commission has expanded net metering for distributed solar photovoltaic projects to all consumer categories and raised the maximum permissible capacity to 1 MW from the 500 kW proposed in its draft regulations.

The Ministry of New and Renewable Energy (MNRE) has directed original equipment manufacturers listed under ALMM for wind turbines to submit their cybersecurity compliance status by August 31, 2026.

MNRE has clarified the applicability of ALMM List II for solar cells across multiple categories of solar projects. The clarification covers projects awarded through competitive bidding, net metering and open access, rooftop solar installations on government buildings, behind-the-meter projects, and projects subject to domestic content requirements.

Nearly 248 GW of power grid connectivity and General Network Access granted to renewable energy and storage projects is expected to become effective between August 2026 and 2031. Around 53.4 GW of renewable, storage, and hydro connectivity is expected to become effective in 2026, followed by nearly 80 GW in 2027.

The sharp rise in key commodity prices, coupled with a weaker rupee, policy uncertainty, and geopolitical disruptions, is intensifying cost pressures across India’s solar value chain in 2026. Higher input costs are squeezing manufacturers’ margins, while rising module and equipment prices are beginning to weigh on project economics for developers.

As a conditional relief measure for renewable energy developers granted grid connectivity access, CERC recently introduced a standardized mechanism that allows them additional time to meet land, financial closure, and commercial operation milestones by paying milestone extension charges.

India’s rooftop solar market continues to see consumer interest, but distribution infrastructure and utility-level processes are hindering demand from translating into installations and commissioned projects. Installer feedback from southern states points to delays in grid approvals, component shortages, documentation issues, and interconnection procedures. The pace of rooftop solar deployment increasingly depends on distribution-grid readiness and last-mile execution.

Developers are accelerating project commissioning ahead of the December 31, 2026, ALMM List-II exemption deadline, tightening module supply and pushing up project costs. Industry executives say the rush to procure in the coming months could tighten TOPCon module availability and place additional pressure on already constrained domestic cell supply.

The widening price gap between DCR-compliant and non-DCR modules is reshaping procurement and investment decisions across India’s solar industry. Higher module prices, constrained domestic cell availability, and longer delivery timelines are increasing project costs, delaying financial closures, compressing installer margins, and slowing project execution across the residential, commercial and industrial (C&I), and utility-scale segments.

Over 105 GWh of battery energy storage system capacity is expected to be in place in India by 2029-30, according to data from the Central Electricity Authority.  According to the indicated commissioning timeline, nearly 65% of the awarded energy storage capacity is expected to be commissioned in 2027-28, with the remaining 35% scheduled for 2028-29.

Solar cell imports in Q2 2026 rose 33.2%, while module imports fell 75.5% compared to the previous quarter. This contrast reflects India’s expanding domestic module manufacturing base, which is increasing demand for imported cells while reducing the need for finished module imports.