India adds 10 GW solar capacity in 2021

Mumbai, Feb 28 (Bureau) India added 10 GW of solar capacity in 2021, a nearly three-fold increase as compared to 2020, a report by Mercom India Research said. According to the report, India had added 3.2 GW in 2020. During 2021, large-scale solar projects accounted for 83 per cent of installations. Rooftop installations increased by 138 per cent as compared to 2020. A significant number of projects were moved from 2020 to 2021 due to Covid-19 extensions, which boosted installation totals in 2021. “Solar installations in India in 2021 were the highest ever with the country breaching 10 GW for the first time in a year. Demand outlook for 2022 is strong, but significant challenges await the industry, beginning with the basic customs duty, import restrictions and the goods and services tax on top of global supply chain issues, and high component prices,” Mercom Capital Group Raj Prabhu said. Challenges aside, the Indian solar market has significant growth potential and is only just starting to take off, he added.

According to the report, the growth outlook going into 2022 remains strong, despite the Great Indian Bustard pending judgment and module supply constraints due to the Approved List of Models and Manufacturers (ALMM) mandate. The report highlights a rise in the average cost of projects in 2021 due to higher module, raw material prices and freight charges. Average large-scale project costs in Q4 increased 21.6 per cent year-on-year in 2021 – the highest ever rise over the past 10 years. In 2021, solar tenders dipped 4.3 per cent as compared to 2020, year-on-year and auctions fell 2.6 per cent compared to 2020. “The delay in signing power sale agreements (PSA) and lack of clarity regarding applicable duties were some of the reasons for the slowdown in tender and auction activity,” the report said.

The report noted that developers are procuring solar cells and modules in large quantities and stockpiling them ahead of the steep BCD that takes effect April 1, 2022. The industry is uncertain if DISCOMs will procure solar at higher prices when the 40 per cent BCD becomes effective. Rajasthan, Karnataka, and Andhra Pradesh were the top three states for cumulative large-scale solar capacity accounting for 50 per cent of installations in the country as of December 2021. In 2021, Rajasthan led capacity additions with 4.5 GW of solar, it said.