Economy

India adds 4.5GW solar capacity in H12021, surpasses installations in CY 2020

Our Bureau Hyderabad | Updated on August 31, 2021

Mercom forecasts solar capacity addition of 8-9 GW by the end of the year

In the first half (H1) of 2021, India added 4,578 Mega Watts (MW) of solar capacity, a 251% increase compared to the same period last year. In all of last year, only 3.2 GW of solar power capacity was added.

During the second quarter of the calendar year 2021, India added 2,488 MW of solar capacity , a 19% increase quarter-over-quarter(Q-o-Q), compared to 2,090 MW installed in Q1 2021, according to Mercom India Research’s India Solar Market Update for Q2 2021.

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 addition in India in Q2 2021 was the highest in a quarter, since Q2 of 2018.

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“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 went 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.”

Mercom is increasing its forecast by 23% to 8-9 GW in CY 2021.

Hike in prices

The 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 power installations, 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 programme is anticipated.

The solar energy sector’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 H1 2021. Renewables as a whole, including wind and hydro, made up close to 71% of capacity additions in the first half of 2021.

Published on August 31, 2021

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