India’s Solar Additions Dropped 44% YoY with 7.5 GW in 2023

February 23, 2024 – India installed 7.5 gigawatts (GW) of solar capacity in the calendar year (CY) 2023, a 44% decrease year-over-year (YoY) from 13.4 GW installed in CY 2022, according to the recently released Q4 & Annual 2023 India Solar Market Update by Mercom India Research.

In 2023, large-scale solar installations fell 51% YoY to 5.8 GW from 11.7 GW in 2022. Extensions granted to several large-scale projects and delays primarily due to land and transmission issues impacted capacity additions during the year. Large-scale solar accounted for 77.2% of annual solar capacity additions, and rooftop solar contributed 22.8%.

In Q4 2023, India added 1.8 GW of solar capacity, a 6.6% decrease compared to the 1.9 GW installed in Q3 2023. Installations fell 41% compared to 3.1 GW installed in Q4 2022. Compliance with grid connectivity regulations, projects in line to secure power evacuation in the habitat of Great Indian Bustard (GIB), and project extensions continued to impact quarterly capacity additions.

Compliance with amended grid code provisions added to power evacuation challenges, leading to project delays.

As of December 2023, the cumulative installed solar capacity stood at 72 GW. Utility-scale projects accounted for 85.4%, and rooftop solar accounted for 14.6% of cumulative installations.

India’s large-scale solar project pipeline stood at 105.3 GW with another 70.6 GW of projects tendered and pending auction at the end of 2023.

“As anticipated, 2023 was an underwhelming year for solar additions in India. Nevertheless, the outlook is bright as a significant pipeline of large-scale projects is slated for 2024, setting the stage to make it the best year for solar in India by a considerable margin. Barring any setbacks on the policy front and supply disruptions, I am optimistic that India is finally on the cusp of becoming a 20+ GW a year market,” commented Raj Prabhu, CEO at Mercom Capital Group.

Average large-scale solar system costs dropped through 2023. In Q4 2023, the lowest-ever quarterly average project costs – since the onset of large-scale solar capacity additions in the country – were recorded. Average large-scale system costs in Q4 2023 fell 14.3% quarter-over-quarter (QoQ) and 26.6% YoY.

In 2023, 57 GW of tenders were floated, up 50% compared to 38 GW in 2022. In 2023, 22 GW of projects were auctioned, up 82% YoY. Falling module prices, a steady supply of balance of systems (BoS) and modules, and stable BoS prices were some of the reasons behind the uptick in auction activity in 2023.

Rajasthan, Karnataka, and Gujarat were the top three states for cumulative large-scale solar capacity, accounting for 54.8% of installations in the country as of December 2023.

In 2023, Rajasthan led large-scale solar capacity additions.

India’s installed renewable energy capacity, including large hydropower projects, stood at 179.5 GW, accounting for 42% of the overall power mix at the end of December 2023. Solar energy projects accounted for 48.5% of all new power capacity added in 2023.

As of December 2023, solar energy accounted for 16.9% of India’s total installed power capacity and almost 40.1% of the total installed renewable energy capacity as of 2023. Wind and solar made up 66.7% of new power capacity additions in 2023.

Key Highlights from Mercom India Research’s Q4 & Annual 2023 India Solar Market Update :

India added 7.5 GW of solar in CY 2023, a 44.1% decrease compared to the 13.4 GW installed in CY 2022

In Q4 2023, India added 1.8 GW of solar, down 6.6% QoQ and 41.3% YoY

Cumulative installed solar capacity in India reached nearly 72 GW as of December 2023

India’s large-scale solar project pipeline stood at 105.3 GW, with another 70.6 GW of projects tendered and pending auction

Rajasthan, Karnataka, and Gujarat were the top three states for cumulative large-scale solar installations

Solar accounted for 48.5% of new power capacity additions in 2023

Renewable energy sources accounted for 68.2% of new power capacity added in 2023