Solar installations in India dropped 44.1% in the calendar year (CY) 2023, with a capacity of 7.5 GW added against 13.4 GW in 2022, according to Mercom India’s Q4 & Annual 2023 India Solar Market Update.

Large-scale solar installations saw a year-over-year (YoY) drop of 50.8%, accounting for 5.8 GW from 11.7 GW in 2022.

Large-scale solar installations constituted 77.2% of the total annual capacity additions, while rooftop solar made up the remaining 22.8%.

Priya Sanjay, Managing Director of Mercom India, said, “Module price drops in Q3 led to increased orders, but grid compliance and last-minute connectivity issues due to new regulations caused project commissioning delays.”

Capacity additions also dropped because of extensions granted to various large-scale projects and land and transmission challenges.

In Q4 of 2023, solar capacity additions dipped by 41.3% to 1.8 GW from 3.1 GW in the same quarter of 2022. On a quarter-over-quarter basis, installations came down 6.6% from 1.9 GW.

The challenges in adhering to grid connectivity regulations, addressing power evacuation concerns in areas inhabited by the Great Indian Bustard (GIB), and project extensions collectively contributed to the decline in quarterly capacity additions.

Furthermore, compliance with amended grid code provisions intensified challenges in power evacuation, leading to delays in project implementation.

MNRE has recently opted to refrain from imposing penalties for project commissioning delays.

“The decision to eliminate penalties for project commissioning delays reflects an acknowledgment of completed projects facing challenges in adhering to the new regulations for connectivity. The government aims for larger project numbers and feels high penalties and low tariffs could lead developers to abandon projects,” Priya Sanjay said.

The MNRE realizes the complexities of new regulations like General Network Access (GNA) and grid compliance at a time when developers have already invested significantly. The ministry chose to be lenient towards completed projects awaiting final regulatory approval, emphasizing their commitment to supporting successful project outcomes.

In Q4, large-scale solar projects constituted 77.4% of capacity additions, while rooftop solar accounted for 22.6%.

The cumulative installed solar capacity in India reached 72 GW by December 2023, with utility-scale projects making up 85.4% and rooftop solar contributing 14.6% to the overall installations.

According to the report, India’s large-scale solar project pipeline is 105.3 GW, with an additional 70.6 GW of projects tendered and awaiting auction as of the end of 2023.

Priya Sanjay opined, “Compared to most of 2023, market challenges like ALMM and high module prices no longer hinder projects. The absence of these financial obstacles allows previously stalled projects from 2023 to potentially proceed toward commissioning now. However, the government must ensure adequate substations and transmission infrastructure to accommodate the large capacity of projects commissioning in the first quarter of 2024.”

The delayed large-scale projects, auctioned by entities such as Solar Energy Corporation of India (SECI), NHPC, NTPC, and Indian Renewable Energy Development Agency (IREDA), and granted extensions from December 2022 to June 2023, are anticipated to make substantial contributions to the 2024 capacity additions.

Throughout 2023, there was a consistent decline in the average cost of large-scale solar systems. The fourth quarter marked a historic low, recording the lowest-ever quarterly average project cost since the initiation of large-scale solar capacity additions in the country. The average costs for large-scale systems in Q4 witnessed a 14.3% QoQ decrease and a substantial 26.6% YoY decline.

As of December 2023, Rajasthan, Karnataka, and Gujarat emerged as the leading states in terms of cumulative large-scale solar capacity, collectively contributing to 54.8% of the country’s installations. Additionally, in 2023, Rajasthan took the lead in large-scale solar capacity additions.

Mercom’s Q4 & Annual 2023 India Solar Market Update report is 88 pages and covers all facets of India’s solar market. For the complete report, visit https://mercomindia.com/product/q4-2023-india-solar-market-update/