India is seeing robust growth in solar installations in 2021 despite developers facing a host of market challenges, according to Mercom India Research’s newly released Q3 2021 India Solar Market Update.
Increased raw materials costs, severe volatility in module availability and price, power curtailment in several states, and high freight charges have all added to the difficulties for the developers. Notwithstanding that, India’s solar addition in the first nine months of 2021 totaled over 7.4 GW, a 328% increase YoY compared to the 1.73 GW installed in the same period in 2020, stated Mercom in its report.
India added 2,835 MW of solar in the third quarter (Q3) of the calendar year (CY) 2021, 14% more than 2,488 MW installed in Q2 2021. Year-over-year (YoY) installations in Q3 were 547% up.
Strong growth despite challenges
“Despite supply challenges, the Indian solar market is headed towards one of best years on record, and a complete turnaround from 2021, which was one of the worst years for solar due to Covid-19,” said Raj Prabhu, CEO of Mercom Capital Group. “We expect a strong 2022 despite the high price of components and uncertainties surrounding the Great Indian Bustard (GIB) related transmission issue in Rajasthan. An increase in GST, curtailment, and payment issues are adding to the challenges facing developers and constraining growth.”
The average selling prices of solar modules rose steeply during the third quarter. Prices of mono PERC modules surged over 15% QoQ, with supply constraints after major manufacturers started cutting output in China. Freight charges peaked at around $9,000 per container in the quarter.
“Manufacturing capacity ramp-up continues at a brisk pace as domestic producers look to take advantage of the 40% basic customs duty scheduled to be imposed from April 2022. In the second quarter of next year, we can expect to see procurement strategies starting to change drastically as imports become expensive,” added Prabhu.
According to the report, module prices have now been increasing for six consecutive quarters, a trend not seen in the past ten years.
This quarter also saw the largest QoQ increase in large-scale system costs by over 10% attributed to the increase in raw material and component prices.
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