India’s Solar Capacity Installation Down By 44.1%, Delayed Projects To Add To 2024 Installations

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Large-scale solar installations saw a notable decline of 50.8% YoY to 5.8 GW from 11.7 GW in 2022, constituting 77.2% of the annual capacity additions

India’s solar capacity installations went down to 7.5 GW in 2023, marking a 44.1% drop from the 13.4 GW installed in 2022.  The solar sector accounted for 48.5% of new power capacity additions in 2023, while renewable energy sources overall contributed 68.2% to the new power capacity added during the year. 

Solar Capacity installation
Annual solar installations in India according to Mercom Report

The slowdown in installations during January-September 2023 was primarily due to extensions granted to several large-scale solar and hybrid power projects facing delays due to land and transmission issues.  The oversupply of modules in China led to a consecutive decline in the average selling prices of solar modules over the last four quarters. 

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According to a Mercom report, large-scale solar installations saw a notable decline of 50.8% YoY to 5.8 GW from 11.7 GW in 2022, constituting 77.2% of the annual capacity additions, while rooftop solar contributed 22.8%. The average large-scale solar system costs significantly reduced in 2023, with Q4 2023 recording the lowest-ever quarterly average project cost since the onset of large-scale solar capacity additions in India. The costs in Q4 2023 fell by 14.3% QoQ and 26.6% YoY.

The fourth quarter of 2023 saw a 6.6% decrease in solar capacity additions compared to the previous quarter, adding 1.8 GW, and a 41.3% drop from the 3.1 GW added in Q4 2022. 

Challenges in securing transmission connectivity increased further with the change in project timelines, and during Q3, project developers lacked clarity on application procedures under the amended regulations for long-term access to transmission networks. 

Clarifications issued by the Central Electricity Regulatory Commission (CERC) towards the end of the quarter are expected to ease the process over the next few quarters. Several projects in the habitat of the Great Indian Bustard (GIB) are still awaiting a Supreme Court order to receive transmission connectivity.

Top ten states In solar installations
Top ten states – Large-scale solar installations

As of December 2023, India’s cumulative installed solar capacity reached 72 GW, with the large-scale solar project pipeline standing at 105.3 GW and an additional 70.6 GW of projects tendered and pending auction. The top ten states account for 94.7% of the cumulative utility-scale solar installations, with Rajasthan, Karnataka, and Gujarat being the top three states, accounting for 54.8% of the total installations.

Delayed large-scale projects auctioned by entities such as the Solar Energy Corporation of India (SECI), NHPC, NTPC, and the Indian Renewable Energy Development Agency (IREDA), granted extensions between December 2022 and June 2023, are expected to significantly contribute to capacity additions in 2024, potentially raising the annual installation numbers.

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