India will add a record 10 GW of solar capacity in the first quarter of 2024, representing a nearly 400 per cent year-on-year increase

This figure represents a nearly 400 percent year-on-year (YoY) growth compared to over 2 GW installed in Q1 2023, according to the recent Q1 2024 India solar market update from Mercom India Research.

Quarter-on-quarter (QoQ) capacity addition also saw a dramatic jump of 414 per cent, rising to nearly 2 GW in the fourth quarter of 2023.

India will install 9.7 GW of large-scale solar capacity in the first quarter of 2024, including 1.8 GW from open access solar projects. This represents a 524 percent quarter-on-quarter increase and nearly 534 percent year-on-year growth.

Priya Sanjay, Managing Director, Mercom India, said, “The surge in installations in Q1 2024 was driven by the commissioning of several delayed projects that had received extensions in previous quarters due to high module prices. The fall in module prices and the suspension of orders on the Approved List of Models and Manufacturers (ALMM) helped developers import modules at lower costs, making it easier to complete projects.”

Many projects were started ahead of time to take advantage of the ALMM order suspension.

Additionally, providing grid connectivity to previously stalled projects in Great Indian Bustard habitat contributed significantly to the record breaking installations.

“A large pipeline of large-scale projects is scheduled for 2024, setting India up for a record-breaking year by a significant margin. Assuming stability in policy and supply chains, and if government agencies continue to auction projects and meet set targets, India is set to become one of the top three solar markets globally”, commented Mercom Capital Group CEO Raj Prabhu.

In the first quarter of 2024, India added 15.2 gigawatts of new power capacity, with solar contributing 66 per cent.

Rajasthan and Gujarat led the way in large-scale solar power installation, contributing 38 per cent and 35 per cent of capacity addition, respectively, while Madhya Pradesh stood second with 8 per cent.

India's total installed solar power capacity will reach 82 GW by March 2024. Solar power accounts for 18.5 percent of India's total installed power capacity and 43 percent of the total installed renewable energy capacity.

Rajasthan has the highest total installed large-scale solar capacity at 29 per cent of the national level, followed by Gujarat and Karnataka at 14 per cent each.

According to Priya Sanjay, Gujarat's proactive approach to renewable energy, especially residential solar and wind-solar hybrid power projects, has enabled it to outperform Karnataka. “Gujarat's vision and supportive infrastructure and policies have attracted many large-scale projects,” she said.

As of the end of the first quarter of 2024, India's large-scale solar project pipeline stood at 143.3 GW, with an additional 93.1 GW of projects pending tendering and auctions. The average cost of large-scale solar projects declined by 7 per cent quarter-on-quarter and 28 per cent year-on-year, leading to a significant improvement in the internal rate of return of projects.

“The decline in the average cost of large-scale solar projects is primarily due to the falling prices of solar modules,” said Priya Sanjay.

During the quarter, a total of 30.7 GW of tenders were announced, up 122 per cent from last year and 92 per cent quarter-on-quarter. Additionally, 25 GW of solar projects were auctioned, up 229 per cent quarter-on-quarter and 2,957 per cent year-on-year.

Priya Sanjay said the surge in tendering activity was driven by agencies adhering to set targets and timelines. Earlier, delays in auctions and signing of power purchase agreements (PPAs) discouraged bidders as it led to funds getting locked up.

However, streamlined auctions and attractive tariffs have revived the process, leading to a faster signing of PPAs and increased interest from developers.

However, inadequate transmission infrastructure and delays in land acquisition may hamper the timely commissioning of the project.

Developers are rushing to complete projects before the June 2025 ISTS fee waiver deadline.

Rising land costs and a scarcity of prime sites for solar power could further complicate the situation.