According to Mercom India Research, cumulative solar installations in India reached ~36.8 GW in March 2020
May 20, 2020 – India added 1,080 megawatts (MW) of solar in the first quarter (Q1) of 2020, a 43% decline quarter-over-quarter (QoQ), compared to 1,897 MW installed in Q4 2019, according to Mercom India Research’s newly released Q1 2020 India Solar Market Update. Solar installations were down by 39% year-over-year (YoY) compared to 1,761 MW added in Q1 2019. Solar capacity additions in India in Q1 2020 were the lowest in a quarter since Q4 2016.
In Q1 2020, large-scale solar projects totaled 886 MW, and rooftop solar installations added up to 194 MW.
“The lockdown in the country disrupted the supply chain, lowered power demand, resulted in currency fluctuations making component costs unpredictable, and has exacerbated the liquidity issues. We are cutting our solar demand forecast by about 40% from our previous estimates based on the COVID effect on the market,” said Raj Prabhu, CEO of Mercom Capital Group.
The report forecasts solar installations of approximately 5 gigawatts (GW) in 2020 as project timelines are extended and moved to 2021. The report goes into a detailed analysis of three different forecast scenarios.
The report identifies the lockdown imposed on the entire country due to the coronavirus pandemic since March 25, 2020, and the supply disruption caused by the shutdown in China as the reasons for solar installation declines in Q1 2020.
The disruption in India’s solar supply chain began with the work stoppage that started in China in February 2020. As a result of the supply shortage, construction activity was affected even before the lockdown was imposed in India.
The report noted that components shipping from China has yet to resume. Logistical issues are preventing goods from reaching project sites. Labor issues are also looming; most of the companies do not have the labor force to begin construction or production right away.
“As the market gets ready to open back up, we can expect to see shortages resulting in an increase in labor and component costs in the near-term. The next couple of months is critical, and any further extensions could mean further reductions in our forecast,” said Prabhu.
According to data from the report, at the end of Q1 2020, cumulative solar installations reached 36.8 GW. Large-scale projects accounted for 32.2 GW, whereas rooftop solar installations accounted for 4.6 GW.
The large-scale solar project development pipeline stands at 36.9 GW, along with 38.8 GW of projects tendered and pending auction at the end of Q1 2020.
Karnataka topped the list of states for cumulative large-scale solar installations accounting for about 23% of the total installed capacity in the country. Rajasthan was ranked second with 15% of installed capacity. Andhra Pradesh, Tamil Nadu, and Telangana rounded out the top 5 states for large-scale solar.
The report found that rooftop installations have been severely affected as businesses have been under lockdown. The commercial and industrial segment, which made up 96% of installations in Q1, was especially hard hit. However, demand has started picking up, and some key Industries like Textiles and Pharmaceuticals are ramping back up, in a positive sign for the industry.
“The next phase, when the country opens back up in stages, is important to monitor. If the outbreak intensifies after re-opening, then all bets are off. But if things go as planned, the solar industry should be up and running fairly quickly,” Prabhu noted.
Per the report, despite a tough quarter, solar installations accounted for an impressive 65% of all power capacity added in Q1 2020. Renewables as a whole, including wind and hydro, made up for a record 95% of capacity additions in the quarter.
Key Highlights from Mercom India Research’s Q1 2020 India Solar Market Update
- In Q1 2020, India added 1,080 MW of solar installations, a decline of 43% compared to 1,897 MW installed in Q4 2019. YoY installations declined by 39% compared to 1,761 MW in Q1 2019
- In Q1 2020, large-scale solar installations added up to 886 MW, while rooftop installations accounted for 194 MW
- 194 MW of rooftop solar projects were installed in Q1 2020, a decline of 36% compared to 304 MW added in Q4 2019. YoY installs fell by 26%, compared to 263 MW installed in Q1 2019
- Cumulative solar installed capacity in India was approximately 36.8 GW at the end of Q1 2020.
- The large-scale solar project pipeline in India stands at 36.9 GW with 38.8 GW tendered and pending auctions at the end of Q1 2020.
- Mercom forecasts installations of approximately 5 GW for CY 2020.
- In Q1 2020, investments in the India solar sector totaled over $970 million (~₹72.9 billion), 40% lower compared to Q4 2019.
- Solar now represents 9.8% of the total power installed capacity in India as of Q1 2020.
- Electricity generated from solar in FY 2019-20 accounted for 3.6% compared to 2.85% in FY 2018-19.
Mercom Communications India, a subsidiary of U.S.-based Mercom Capital Group, is a clean energy research and communications firm in India recognized worldwide for its expertise in Indian cleantech markets. Located in Bangalore, India, Mercom has been providing communications and research services across India for clean energy organizations since early 2009. For more information, visit: http://www.mercomindia.com
About India Solar Market Update - Mercom’s India Solar Quarterly Update is the most in-depth and accurate report available on the state of the Indian Solar Market. The report covers the entire solar market, pricing, policies, and forecast that will help companies navigate the challenges as well as take advantage of opportunities in the market. For more information visit: https://mercomindia.com/research/
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