India has seen tremendous growth in solar power installations over the past decade, driven by supportive government policies, falling prices and increased commitment to renewable energy targets. Solar power currently accounts for over half of the total renewable energy mix in the country. In 2023, the cumulative installed capacity of solar projects crossed the threshold of 70 GW, with Rajasthan emerging as the largest base for solar installations followed by Gujarat and Tamil Nadu, with installed capacities of 18.1 GW, 10.5 GW and 7.3 GW respectively.
As the year ends, we review the major developments in India’s solar power space…
Policy interventions at a glance
The Indian government has set ambitious targets for 2030, aiming for 500 GW of non-fossil-fuel-based capacity, including 280 GW of solar and 140 GW of wind. To meet these targets, the government has committed to bidding out approximately 50 GW of renewable energy capacity annually over the next five years. This process will be facilitated by central renewable energy implementing agencies such as NTPC, SECI, NHPC and SJVN.
During its G20 presidency, India unveiled the “Roadmap of Solar Energy for Universal Energy Access”, emphasising the crucial role of solar energy in achieving widespread electricity access and delivering socio-economic benefits. The 2023-24 Union Budget reaffirmed this commitment by increasing allocations for green infrastructure. The outlay for renewable energy experienced a nearly 50 per cent boost compared to the previous year, signalling a strong commitment to India’s climate mitigation goals.
To boost domestic module manufacturing and reduce dependence on imports, the government has introduced a production-linked incentive (PLI) scheme. With a substantial outlay of Rs 240 billion, the scheme aims to achieve GW-scale manufacturing capacity in high efficiency solar photovoltaic (PV) modules. Tranche I of the scheme, with an outlay of Rs 45 billion, witnessed the issuance of letters of award for setting up 8,737 MW of fully integrated solar PV module manufacturing units. Tranche II, with an outlay of Rs. 195 billion, progressed with the issuance of scheme guidelines and tender documents for solar PV manufacturers. The government allocated a total 39,600 MW of domestic solar PV module manufacturing capacity to 11 companies under the PLI scheme.
An interesting development in the space was the temporary relaxation of the Approved List of Models and Manufacturers (ALMM) stipulation. This was in acknowledgement of the difficulties faced by developers in sourcing modules exclusively from ALMM suppliers. However, challenges related to tariffs, including basic customs duties on cells and modules, still persist.
Additionally, with the amendment to the Green Energy Open Access Rules, the transition to renewable energy (especially solar) in the commercial and industrial (C&I) sector is expected to become smoother. This move aims to make solar power more appealing to both producers and consumers in these sectors.
Recently, the government also introduced a star labelling programme for solar panels, emphasising quality standards. The programme, developed by the Bureau of Energy Efficiency, will commence in January 2024 and last for a period of two years.
These policy developments signal the growing maturity of the Indian solar segment, and also highlight the increased coordination between market demands and regulatory action. With the government taking decisive steps towards manufacturing as well, a fundamental shift is set to occur in India’s solar power landscape.
Recent projects and auctions
The first half of 2023 was a dynamic period for the Indian solar segment, marked by significant developments vis à vis tenders and auctions. In January 2023, Tata Power Solar successfully commissioned a 25 MW solar project in Gujarat. February 2023 witnessed NTPC issuing a tender for 1 GW of solar projects in Maharashtra, and ReNew commissioning a 105 MW solar project in Gujarat. Tenders for substantial solar projects proliferated across various states, reflecting the industry’s robust momentum.
March 2023 brought further advancements, including the commissioning of a 200 MW solar project in Rajasthan by Vikram Solar and a 150 MW project in Maharashtra by Adani Green Energy Limited (AGEL). In April 2023, ReNew commissioned a 16.8 MW solar project in Telangana, and SunEdison secured a 150 MW project in the same region. May 2023 witnessed L&T announcing a 200 MW solar project in Rajasthan, while Juniper Green Energy and Tata Power Renewable Energy Limited emerged as the winners of Tata Power’s 225 MW auction, winning capacities of 75 MW and 150 MW at tariffs of Rs 3.27 per kWh and Rs 3.28 per kWh respectively. In June 2023, YES BANK signed an MoU with Indian Railways for solar projects, emphasising cross-sector collaborations.
August 2023 brought news of SJVN winning 320 MW of solar projects in Assam, while various collaborations and contracts were announced. In September 2023, Rayzon Solar collaborated with LUXRA to manufacture PV modules in India, showcasing the industry’s collaborative spirit.
October 2023 saw JDVVNL issuing a tender for 495 MW of solar projects, aligning with the ongoing trend of competitive procurements. AGEL’s subsidiary commissioned a 150 MW solar project in Rajasthan, contributing to the state’s renewable energy portfolio. NLC India secured an 810 MW solar project in Rajasthan, reflecting the continued growth in solar capacity. Edify Energy received government approval for a 600 MW solar park in Queensland, indicating a global dimension to India’s solar endeavours.
November 2023 witnessed an NHPC tender for 3 GW of interstate transmission system-connected solar projects being oversubscribed by 15 developers, highlighting the scale of future developments. The final average price came in at Rs 2.52 per kWh, with nine different developers being allocated 250-300 MW of capacity. Meanwhile, NTPC REL issued a tender for a substantial 900 MW solar project, adding to the pipeline of upcoming projects.
Emerging C&I sector
The C&I sector in India is poised for remarkable growth in renewable energy adoption, propelled by the country’s strong emphasis on decarbonisation, and the announcement of the goal of achieving net zero by 2070. Despite the predominant focus on utility-scale solar plants, the C&I sector stands out as the largest consumer, accounting for nearly half of the country’s power consumption. Drivers of this demand include global corporate environmental mandates, the economic viability of renewable energy given the 80 per cent reduction in tariffs over the last decade, and technological advancements such as affordable battery storage, as well as emerging markets such as virtual power plants and independent renewable energy certificates.
With India’s rapid economic growth, increased power demand and the introduction of Green Energy Open Access Rules – especially the reduction of open access transactions limits – the C&I sector is set to experience substantial expansion in its adoption of low-cost renewable energy. Government initiatives, regulatory support and the availability of sustainability-linked loans are further contributing to the positive outlook, though challenges in implementation across states necessitate streamlined processes and unified efforts for sustained growth in the sector’s green energy transition.
Rooftop still lagging in momentum
The rooftop solar segment is a crucial component of India’s solar sector, providing on-site solar installations connected through a behind-the-meter configuration. As of November 2023, the cumulative installed capacity of rooftop solar in India has reached 11.1 GW, constituting approximately 15 per cent of total solar installations. Despite a government target of 40 GW by 2022, only 8.1 GW had been installed by the end of 2022, leading to a timeline extension for the programme until March 2026.
Several challenges are hindering the growth of rooftop solar, including inconsistent net metering policies across states and financing difficulties. Regulatory issues, such as delays in approval of net metering by state discoms, contribute to the challenges. Additionally, the implementation of the Green Open Access Rules in some states has shifted market attention from rooftop solar to open access.
Floating solar
India entered the floating solar domain in 2015. Studies estimate India’s floating solar potential at 206 GW to 280 GW, with states such as Madhya Pradesh, Maharashtra and Odisha at the forefront. The competitive market and increasing stakeholder participation, along with technology advancements, suggest a narrowing cost disparity between ground-mounted and floating solar plants. As tenders and auctions grow, the floating solar market is poised for continued expansion. The growth is driven by factors such as land neutrality, improved energy yield, synergy with existing power plants, easier installation and environmental benefits, making it an increasingly attractive option for sustainable energy solutions.
The floating solar landscape in India reflects growing interest and engagement, with prominent agencies such as NHPC Limited, NTPC Limited and Solar Energy Corporation Limited tendering for projects ranging from 1 MW to 300 MW across Telangana, Punjab, Kerala, Odisha, Jharkhand and West Bengal. Auctions between May 2022 and August 2023 featured tariff rates between Rs 3.21 and Rs 3.93 per kWh, with significant projects under SJVN Green Energy Limited and AmpIn Energy Transition Limited.
Despite a target of 10 GW by 2022, the current installed capacity is just 346 MW (according to Renewable Watch Research), with over 4,100 MW at various stages of development and a further 4,400 MW announced for development. India’s potential remains largely untapped. It requires timely addressal of key issues and the nurturing of research, regulatory frameworks and support mechanisms for sustainable growth.
Manufacturing sector set to soar
Several major solar panel manufacturing companies in India have significant manufacturing plans. Adani Solar and Reliance Industries are separately setting up a 10 GW solar PV manufacturing chain in India, and are set to become India’s largest vertically integrated cell and module manufacturers. Other companies, such as Vikram Solar, Waaree, Jakson, and Tata Power Solar, are also scaling up their current capabilities and ambitiously working to meet India’s green energy goal of 500 GW by 2030. The government’s supportive policies are anticipated to propel PV manufacturing in India, and the country’s solar PV module capacity is set to reach 110 GW by 2026, as per an analysis by the Institute for Energy Economics and Financial Analysis.
Outlook
The outlook for India’s solar segment appears strong, as the pace of installation is expected to further accelerate given the strong long-term demand outlook. Various verticals such as the utility-scale, C&I, rooftop and floating solar markets, as well as the domestic manufacturing space, are growing at a steady pace. The healthy project pipeline and stream of new tenders also point to a sustained growth momentum, going ahead.
