India’s Solar Capacity Soars with Record 14.9 GW Additions in First Half of 2024

India's solar energy sector has reached new heights with the addition of 14.9 GW of solar capacity in the first half (H1) of 2024, marking a 282% increase compared to the same period last year, according to Mercom India Research's latest Q2 2024 India Solar Market Update. This substantial growth sets a new benchmark for half-yearly and annual solar installations in the country.

Record-Breaking Growth Amidst Challenges

The impressive growth in solar capacity can be attributed to the commissioning of several delayed projects, which contributed significantly to the total additions in H1 2024. The second quarter (Q2) of 2024 alone saw 5 GW of solar capacity additions, reflecting a 170% year-over-year (YoY) increase from 1.8 GW. However, this was a 49% decline from the previous quarter, which saw a surge of 9.9 GW due to a rush to complete installations before the reimposition of the Approved List of Models and Manufacturers (ALMM) order in April 2024.

Large-scale solar projects accounted for 4.3 GW of the total capacity added in Q2 2024, including nearly 1.8 GW from open access projects. Despite a 55% quarter-over-quarter (QoQ) decline, large-scale solar installations saw a 191% YoY increase. However, grid connectivity and transmission infrastructure delays, along with the ALMM order's reimposition, impacted several open access projects.

State States in Solar Expansion

Rajasthan, Gujarat, and Karnataka emerged as the top contributors to large-scale solar capacity additions in Q2 2024, accounting for 30%, 22%, and 21% of the total installations, respectively. These states continue to lead in cumulative installed large-scale solar capacity, representing 29%, 15%, and 14% of the national total as of June 2024.

Tenders and Auctions: A Mixed Bag

The first half of 2024 saw a record 41.4 GW of solar tenders announced, the highest ever for a half-yearly period, and a 51% increase from 27.5 GW in H1 2023. However, tender announcements in Q2 2024 fell by 22% to 10.7 GW compared to 13.6 GW in Q2 2023 and significantly lower than the 30.7 GW announced in Q1 2024. The dip in tender numbers could be due to delays in releasing the bidding trajectory for the year by the Ministry of New and Renewable Energy (MNRE) and concerns over tepid responses and higher bids following the ALMM reimposition.

Meanwhile, auction activity remained steady in Q2 2024, with 6.7 GW of solar projects auctioned, consistent with Q2 2023. However, this was a 73% decrease from the 25.1 GW auctioned in Q1 2024. Despite these fluctuations, H1 2024 saw a significant 321% YoY increase in auctioned projects, reaching 31.8 GW, setting a new record for half-yearly and annual auction announcements.

India's Current Solar Landscape: A Growing Force

As of June 2024, India's cumulative installed solar capacity reached 87.2 GW, with utility-scale projects comprising 87% and rooftop solar making up 13%. Solar energy now accounts for 19.5% of India's total installed power capacity and 44% of its total installed renewable energy capacity. The country's large-scale solar project pipeline stands at 146 GW, with an additional 104 GW of projects tendered and awaiting auction.

The average cost of large-scale solar projects decreased by 2% QoQ and 26% YoY, leading to improved project internal rates of return. However, this trend may face challenges due to the ALMM imposition, as domestic modules, especially those under the Domestic Content Requirement (DCR), are more expensive, and supply may struggle to keep up with growing demand.