India set a new record by adding over 10 GW of solar capacity in the first quarter of 2024, showing a nearly 400% year-over-year increase compared to the previous year. This surge in installations was primarily driven by the commissioning of delayed projects, falling module prices, and the suspension of the Approved List of Models and Manufacturers (ALMM) order, allowing developers to import modules at lower costs. The Great Indian Bustard habitat’s grid connectivity also played a role in the increased installations.
Rajasthan and Gujarat led the large-scale solar installations in Q1 2024, together accounting for 73% of the total capacity additions. India’s cumulative installed solar capacity reached 82 GW as of March 2024, representing 18.5% of the total installed power capacity and 43% of the total installed renewable energy capacity. The reduction in the average cost of large-scale solar projects by 7% QoQ and 28% YoY has significantly improved the projects’ internal rate of return.
By the end of Q1 2024, India’s large-scale solar project pipeline stood at 143.3 GW, with an additional 93.1 GW of projects tendered and pending auction. The surge in tendering activity, with tenders totaling 30.7 GW announced during the quarter, was attributed to agencies adhering to defined targets and timelines, leading to quicker PPA signings and increased developer interest. However, inadequate transmission infrastructure and delays in land acquisition could hinder timely project commissioning.
Developers are working towards completing projects before the June 2025 ISTS charges waiver deadline amid rising land costs and the scarcity of prime sites for solar installations. The proactive approach to renewable energy in states like Gujarat with residential solar and wind-solar hybrid power projects has attracted numerous large-scale projects. With a substantial pipeline of projects scheduled for 2024 and assuming stability in policy and supply chains, India is poised to be among the top three solar markets globally.
In conclusion, the significant increase in solar capacity installations in India in Q1 2024 indicates a promising outlook for the country’s renewable energy sector. The record-breaking installations, driven by various factors such as falling module prices and favorable policies, underscore India’s commitment to achieving its renewable energy targets. As the solar energy sector continues to grow and evolve, addressing challenges such as transmission infrastructure and land acquisition delays will be crucial to ensuring the timely completion of projects and sustaining the momentum in India’s solar industry.
