India's newly installed PV capacity exceeded 12 GW in H1, with the annual PV installation expected to reach a new high [SMM Analysis]

As of June 2024, India's PV installed capacity reached 85.47 GW, with utility-scale projects accounting for nearly 78% and rooftop solar over 15%. PV currently accounts for 19.5% of India's power capacity and over 44% of its total renewable energy capacity.

Rajasthan, Gujarat, and Karnataka ranked top three in large-scale PV system installations, accounting for 29%, 15%, and 14% of the country's total capacity, respectively.

In 2024Q1, India added approximately 8.5 GW of PV capacity, up 143% YoY from the first quarter of last year. In 2024Q2, about 3.7 GW of PV capacity was added. In H1 2024, India cumulatively installed 12.2 GW of PV capacity, up YoY from the same period last year.

Since India's fiscal year runs from April to March of the following year, the first quarter of each year is a peak installation period, with the highest annual installed capacity and a large number of centralized PV projects connected to the grid.

At the end of 2023, global module prices plummeted, significantly reducing construction costs for Indian power station developers. The average cost of large-scale PV projects fell 7% QoQ and 28% YoY, enhancing project development willingness. Meanwhile, before the ALMM list restart, Indian developers imported a large number of low-cost modules, completing the final sprint of their fiscal year, achieving nearly 5 GW of new grid-connected large-scale PV projects in 2024Q1.

In 2024Q2, 2.1 GW of large-scale PV projects were connected to the grid. Although the newly installed capacity of large-scale PV projects decreased by 58% from 2024Q1, it increased by over 191% YoY compared to 2023Q2.

India's ground-mounted PV projects are driven by the PM-KUSUM scheme for farmer energy security and development, solar parks, and ultra-mega solar power projects, with each project receiving a subsidy of 2 million rupees per MW (approximately $24,000 per MW) or 30% of the total cost. The government is also actively granting construction permits for PV projects under these schemes to various developers.

Although rooftop PV installations were relatively sluggish in H1 2024, the Indian government is accelerating the deployment of rooftop PV systems. In February 2024, the government launched the PM-Surya Ghar Prime Minister's Solar Home Scheme (Phase II of the rooftop PV plan), aiming to install rooftop PV systems in 10 million households to reduce electricity bills and enhance national energy security, targeting a cumulative rooftop PV installed capacity of 40 GW by March 2026.

In mid-July, the Asian Development Bank (ADB) approved a $240.5 million loan to fund India's rooftop PV systems, which will help the Indian government expand renewable energy usage. This financing will contribute to the Prime Minister's Surya Ghar plan, encouraging developers and end-users across India to install rooftop PV systems nationwide.

In recent years, ALMM and BCD have been major constraints on the development of India's PV market. Currently, India still faces project delays due to administrative processes, and the restrictions of the ALMM list highlight the supply gap issue in India. However, the steady decline in module prices has improved the yield of centralized PV projects, with average costs of large PV systems decreasing. Ground-mounted projects are recovering growth driven by power auction waves, and rooftop PV systems are accelerating deployment under subsidies and plans. The Indian government has also introduced several PV policies, including tax exemptions, subsidies, and production incentives, to advance India's renewable energy transition. India's long-term demand is optimistic, with expectations that India's newly installed PV capacity will exceed 20 GW for the first time in 2024.