Solar’s share of new power capacity additions was the highest ever in the first half of any year
August 31, 2021 – India added 2,488 megawatts (MW) of solar in the second quarter (Q2) of the calendar year (CY) 2021, a 19% increase quarter-over-quarter (QoQ), compared to 2,090 MW installed in Q1 2021, according to Mercom India Research’s newly released Q2 2021 India Solar Market Update. Solar installations were up 1,114% year-over-year (YoY) compared to 205 MW added in Q2 2020 when COVID crippled the sector. Solar capacity additions in India in Q2 2021 were the highest in a quarter since Q2 of 2018.In 1H 2021, India added 4,578 MW of solar, a 251% increase compared to the same period of last year. Installations exceeded 3.2 GW of solar installed in all of CY 2020.
According to the report, installations were significantly higher than the previous quarter despite various state level lockdowns because of the second wave of COVID. The lockdowns were very targeted, and the industry was well prepared this time around, which minimized the effect on solar projects.
“Even with a strong quarter, the industry continues to battle uncertainties around higher component costs and logistical issues. With duties and import restrictions, purchasing quality solar components at the best price will be the biggest challenge for the industry going forward as solar system costs ticked up for the fourth quarter in a row,” said Raj Prabhu, CEO of Mercom Capital Group. “The demand for building large-scale projects is extremely high, while auctions have slowed down. The government focus has shifted towards building domestic manufacturing capacities.”
Considering the industry fared much better during the second wave of COVID-19, Mercom is increasing its forecast by 23% in the medium-case scenario to approximately 8-9 GW in CY 2021. A detailed forecast with analyses is included in the report.
The report pointed out that solar module average selling prices have risen for an unprecedented five quarters in a row and could continue rising for another couple of quarters. Chinese polycrystalline modules were up 23% year-over-year. Freight charges have been climbing with no signs of recovery in the short term.
According to the report, at the end of Q2 2021, cumulative solar installations reached 43.6 GW.
India’s large-scale solar project development pipeline stands at 52.8 GW, along with 28 GW of projects tendered and pending auction at the end of Q2 2021.In Q2 2021, Rajasthan and Gujarat were the top states for solar, followed by Uttar Pradesh and Andhra Pradesh. The top ten states accounted for 95% of installations in the quarter.
With the focus of the solar sector in India shifting towards domestic manufacturing, local producers are ramping up capacities for modules and cells. An auction under the PLI program is anticipated any time soon.
“Although component costs continue to rise, low bids in auctions have fallen recently, with developers taking a win-at-all-costs approach due to a lack of new projects reaching auction fast enough for developers to sustain their operations,” said Prabhu.
According to the report, solar’s share of new capacity additions was the highest ever in the first half of any year, accounting for 53% of all power capacity added in 1H 2021. Renewables as a whole, including wind and hydro, made up close to 71% of capacity additions in the first half of 2021.
Key Highlights from Mercom India Research’s Q2 2021 India Solar Market Update
- In Q2 2021, India added 2,488 MW of solar, an increase of 19% compared to 2,090 MW installed in Q1 2021. YoY installations rose by 1,114% compared to 205 MW in Q2 2020
- In 1H 2021, India added 4,578 MW of solar, a 251% increase compared to the same period last year
- The cumulative installed solar capacity in India was about 43.6 GW at the end of Q2 2021
- The large-scale solar project pipeline in India stands at 52.8 GW, with 28 GW tendered and pending auctions at the end of Q2 2021
- Mercom forecasts installations of approximately 8-9 GW for CY 2021
- Solar’s share of new power capacity additions was the highest ever in the first half of any year
- Investments in the solar sector were up 120% compared to Q1 2021
Mercom India’s Q2 2021 report is 92 pages and covers all facets of India’s solar market. For the complete report, visit: https://mercomindia.com/product/q2-2021-india-solar-market-update/
About Mercom Communications India
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
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