India added 10GW of new solar capacity in the calendar year (CY) 2021, a 210% increase compared to 3.2GW installed in CY 2020, according to the newly released Q4 and Annual 2021 India Solar Market Update by Mercom India Research.
Large-scale solar projects with 8.3GW accounted for 83% of overall PV installations and saw a 230% surge YoY. Rooftop solar installations made up the remaining 17% by adding 1.7 GW, a 138% increase YoY.
A significant number of projects stretched from 2020 to 2021 due to project timeline extensions provided by the Ministry of New and Renewable Energy on account of Covid-19. This boosted the overall installation in 2021.
India’s cumulative installed PV capacity reached approximately 49 GW at the end of 2021.
The report projects strong PV growth in 2022, despite the module supply constraints due to the Approved List of Models and Manufacturers (ALMM) mandate. It identifies basic customs duty and rising component prices among other challenges facing the industry on the supply side.
“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. Challenges aside, the Indian solar market has significant growth potential and is only just starting to take off,” said Raj Prabhu, chief executive officer of Mercom Capital Group.
The report noted the average project cost rose in CY 2021 due to higher module and raw material prices, and freight charges. Average large-scale project costs in Q4 increased 21.6% YoY in 2021 – the highest ever rise over the past ten years. Average rooftop solar costs in Q4 2021 rose 14.8% YoY.
“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% BCD becomes effective,” it stated.
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