Mercom India Research believes India installed its highest ever annual solar capacity in the year 2021 with 10 GW representing an increase of 210% on annual basis, compared to 3.2 GW it reported for 2020, taking the cumulative to 49.3 GW at the end of last year.
It represented 62% of all power capacity additions in 2021. Last year, the market attracted nearly $10 billion in investments reflecting 254% annual growth. During 9M/2021 alone, 7.4 GW was installed.
The parent of Mercom India Research, Mercom Capital Group CEO Raj Prabhu said he hoped this is the beginning of a trend and indication that the market has matured and scaled.
Back in December 2021, Mercom analysts had guided for 7 GW annual additions in 2021 citing impacts from COVID-19, rising module costs and policy restrictions (see 88% YoY Increase In Indian Solar Installations In Q1/2021).
The analysts do point out the challenges of higher module and raw material costs, not to forget higher freight charges that plagued the market in 2021, but the installations picked up pace with the expiration of safeguard duty in July 2021.
The state of Rajasthan installed 4.5 GW of utility scale solar followed by Gujarat with 1.2 GW and Uttar Pradesh with 885 MW. Together the trio accounted for 79% of total installations in 2021.
The double-digit additions comprise 2.6 GW of new capacity added in Q4/2021 which was a sequential drop of 7% over 2.8 GW in Q3/2021, with average large-scale project costs increasing 21.6% annually—'highest ever' over the past decade. Utility scale solar capacity accounted for 2.2 GW while rooftop solar 402 MW.
"This year, significant challenges await the industry, starting with the basic customs duty (BCD), import restrictions, unexpected goods and services tax (GST) on top of global supply chain issues, and high component prices. Challenges aside, the Indian solar market has significant growth potential and is just getting started," added Prabhu.
Mercom's 2021 Q4 & Annual India Solar Market Update report can be purchased from its website.
According to the Ministry of New and Renewable Energy (MNRE), India's cumulative installed solar power capacity till January 2022 had exceeded 50 GW milestone with Rajasthan accounting for 10.5 GW in total (see 50 GW Solar Milestone For India).