Solar made up 82% of all new power capacity added in 2022; Coal dropped to below 5% of new capacity

New Delhi – February 22, 2023 – India added 13 gigawatts (GW) of solar capacity in the calendar year (CY) 2022, a 27% increase year-over-year (YoY), compared to 10.2 GW installed in CY 2021. Data was revealed in the newly released 2022 Q4 & Annual India Solar Market Update by Mercom India Research.

During CY 2022, large-scale solar projects accounted for 87% of installations and saw a 33% surge YoY. Rooftop installations decreased by 3.7% YoY.

In Q4 2022, India added 2.6 GW of solar, a marginal decrease (2.5%) from 2.7 GW installed in Q3 2022. Installations were down 5% YoY compared to 2.8 GW in Q4 2021.

India’s cumulative installed solar capacity now stands at 63 GW.

India’s large-scale solar project pipeline stood at 58 GW, with another 51 GW of projects tendered and pending auction at the end of 2022.

“Though impressive, record solar capacity additions in 2022 were barely half the 27 GW in annual installations needed to meet the 280 GW target by 2030. Policies must be quickly retooled and hurdles removed to double the annual pace of installations and attract the needed investments,” said Raj Prabhu, CEO of Mercom Capital Group.

According to the report, the growth outlook going into 2023 remains uncertain, with the pending judgment on projects stranded in the Great Indian Bustard region, the pending announcement on Approved lists of Models and Manufacturers (ALMM), and expected project extensions per MNRE’s direction to Solar Energy Corporation of India, Indian Renewable Energy Development Agency, NHPC, and NTPC.

The report highlights a rise in the average cost of projects throughout CY 2022 due to higher module prices and supply constraints. Average large-scale system costs in Q4 2022 increased by 7.3% YoY making it an unprecedented ten quarters of project cost increases in a row.

In 2022, solar tenders increased 23% YoY, while auctions fell 29% compared to 2021. Implementation of Basic Customs Duty (BCD), shortage of modules enlisted under the ALMM, and various policy announcements and amendments resulted in lower auction activity in 2022.

The Government of India may lift the requirement of ALMM-approved modules for domestic solar project development for two years. If this happens, a significant project capacity stands to benefit from the expected increase in module availability in 2023 and 2024.

Rajasthan, Karnataka, and Gujarat were the top three states for cumulative large-scale solar capacity accounting for 54% of installations in the country as of December 2022.

In 2022, Rajasthan led large-scale solar capacity additions.

“Solar accounted for over 80% of new installed capacity and over 90% when combined with wind, an impressive turnaround from the days of coal domination. Coal generation fell to less than 5% of new capacity added – the lowest ever,” added Prabhu.

India’s installed renewable energy capacity, including large hydropower projects, stood at 167 GW, accounting for 41% of the overall power mix at the end of December 2022. Newly installed solar capacity in 2022 reached a new high, making up 82% of all new power capacity in 2022.

Solar now accounts for 15% of India’s total installed power capacity and almost 38% of the total installed renewable capacity as of 2022. Wind and solar made up 93% of new power capacity additions in 2022.

Key Highlights from Mercom India Research’s 2022 Q4 & Annual India Solar Market Update:

• India added 13 GW of solar in CY 2022, a 27% increase compared to 10.2 GW installed in CY 2021
• Installations in 2022 were the highest ever recorded in India
• In Q4 2022, India added 2.6 GW of solar
• The cumulative solar capacity installed in India was approximately 63 GW at the end of Q4 2022
• India’s large-scale solar project pipeline stood at 58 GW, with another 51 GW of projects tendered and pending auction
• Rajasthan, Karnataka, and Gujarat were the top three states for cumulative large-scale solar installations
• Solar accounted for 82% of new power capacity additions in 2022, the highest recorded in any year
• Renewable energy sources accounted for 96% of new power capacity added in 2022

Mercom’s 2022 Q4 & Annual India Solar Market Update report is 151 pages and covers all facets of India’s solar market. For the complete report, visit:  https://mercomindia.com/product/q4-2022-india-solar-market-update/

About Mercom India

Mercom India (formerly Mercom Communications India), a subsidiary of U.S.-based Mercom Capital Group, is a clean energy research and communications firm in India recognized worldwide for its expertise in Indian cleantech markets. Located in Bangalore, India, Mercom has been providing communications and research services across India for clean energy organizations since early 2009. For more information, visit: https://mercomindia.com 

About Mercom’s India Solar Market Update

Mercom’s India Solar Quarterly Update is the most in-depth and accurate report available on the state of the Indian Solar Market. The report covers the entire solar market, pricing, policies, and forecast that will help companies navigate the challenges as well as take advantage of opportunities in the market. For more information visit: https://mercomindia.com/research/