Solar industry in 2020


The year 2020 began with an extremely positive forecast for India’s new solar capacity addition. Business intelligence company IHS Markit’s 2020 Global Photovoltaic Demand Forecast published in the first week of January said India will deploy 14 GW of new solar this year, helped by ever-cheaper solar modules and its huge project pipeline.

However, the nation struggled to cross even the 3 GW mark during the first nine months of the year mainly due to Covid-prompted disruption since March. According to a JMK Research report, for the period starting January 2020 till September 2020, about 2320 MW of solar capacity comprising 1437 MW of ground-mounted solar and 883 MW of rooftop solar was added in India. 

The capacity addition was below expectations even in the third quarter (July-September) as a surge in global demand drove up the module prices and the government extended safeguard duty on solar cell imports by a year, according to Bridge To India. (The duty was levied at 14.9% on cells imported from China, Vietnam and Thailand from July 30, 2020 until January 29, 2021. After that, it will fall to 14.5% until July 29, according to a Finance Ministry notification.)

Multi-crystalline module prices increased to US cents 18/W, up from US cents 16.5/W in June 2020. Prices for mono-PERC modules also rose to US cents 21/W from US cents 17.5/W just three months ago, BTI said. 

The nation-wide lockdown impacted project construction severely due to supply chain disruption and workforce shortages. However, the year also saw some quick steps by the government to address developers’ concerns.

Government measures

The Ministry of New and Renewable Energy (MNRE) announced a five-month blanket extension for completion to all renewable energy (wind and solar) projects under implementation as on the date of lockdown, i.e., March 25, 2020.

Responding to the industry bodies’ demand, the power ministry also extended inter-state transmission charges waiver to cover solar and wind projects commissioned up to June 30, 2023. The grid charges exemption would apply for 25 years from the date of commercial operation of such projects.

Most recently, the finance ministry’s order on bid security relaxation provides relief to developers who may be deterred from bidding in projects that require a high bid security amount. The auction, meanwhile, can see an increase in the bidding response and yield better tariffs. The move would also ease the liquidity concerns of developers and help bring their under-construction projects to completion.

RE contracts’ performance security requirement has been reduced from 5-10% to 3% of the contract value under the Finance ministry’s order dated November 12, 2020. The Finance Ministry order on performance security reduction shall apply to all the existing contracts/tenders concluded until December 31, 2021.

State-owned counterparties have been asked to remove the bid security and additional security deposit provisions from contracts. In place of bid security, only the bid security declaration provisions would be kept in the future bid documents.

The silver lining

The year witnessed a promising solar capacity auctioned off with increased international organizations’ participation, displaying their confidence in the Indian renewable energy industry even during pandemic times. 

Solar power tariffs hit a new low one after another auction. In June-July, the tariff declined to INR2.36-2.38/kWh in a 2 GW solar auction held by the Solar Energy Corporation of India (SECI). The auction saw Spanish developer Solarpack securing 300 MW of the tendered project capacity at a historic low solar electricity tariff of INR 2.36/kWh.

The price dipped further to INR 2-2.01/kWh in a 1.07 GW auction held by the SECI in November. The auction attracted a historic low solar electricity tariff of INR 2/kWh from Saudi Arab’s Aljomaih Energy and Water Company and Singapore-headquartered Sembcorp’s India arm Green Infra Wind Energy Ltd.

More recently, the solar electricity price touched an all-time low of INR 1.99/kWh in a 500 MW auction by Gujarat Urja Vikas Nigam Ltd, which is 0.5% lower than the previous record of INR 2/kWh set a month ago.

The year also saw successful auctions in newer products like assured peak-hour supply and round-the-clock supply.

In January end, SECI concluded what it called the world’s largest renewables-plus-energy-storage capacity tender. The procurement exercise to contract 1.2 GW of capacity in the form of assured supply of 600 MW of clean power for six hours daily during peak demand hours saw Greenko securing 900 MW of pumped storage capacity and Renew Power 300 MW of battery storage.

This was followed by SECI’s 400 MW ‘round-the-clock’ renewables tender to supply 24-hour electricity won by ReNew Power, which agreed to accept INR2.90/kWh ($0.0382315) for power generated. The tariff will increase by 3% per year for the first 15 years of the 25-year power supply deal secured by ReNew before becoming a fixed payment.


This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: