ReNew Power has an installed solar and wind capacity of almost 10 GW in India. Image: ReNew Power.
India installed just over 2 GW of solar in the first quarter of 2021 as the country recovered from delays related to COVID-19, but installations for the full year could fall well below earlier estimates, according to a forecast.
Research and consulting firm Bridge to India says in an update to its Solar Compass report released today that 2,105 MW of solar energy was installed in the first quarter of 2021, bringing the country's total cumulative capacity to 44.2 GW.
Mercom India's solar market update shows a broadly similar number, stating that 2.05 GW of solar energy was installed in the quarter, up from the 1.5 GW in the fourth quarter of 2020 and an 88% increase from the 1.1 GW in the first quarter of 2020.
Those numbers make the first quarter of 2021 the most productive quarter for solar use in India since the third quarter of 2019, fueled by an onslaught of projects that were delayed year over year.
But the prospects for future quarters look “bleak” according to Bridge to India, as the development situation is becoming more complicated due to further pandemic-related lockdown measures implemented in India and rising project implementation costs.
The cost of solar modules has risen in recent weeks due to the rising prices for polysilicon, while other components have also faced similar restrictions in the supply chain and prices have been adjusted accordingly. Bridge to India said prices for modules and other equipment have remained relatively stable to date, but the risk of delays has increased and some suppliers will renegotiate contracts due to supply chain restrictions.
In addition, India recently adopted a base tariff of 25% on cells and 40% on modules, further increasing the price of imported solar components.
While auction and bidding activity has remained strong – more than 19GW of solar power was sold through tenders and auctions in India in the first quarter – Bridge to Inside said the persistent reluctance of the country's distributors, or DISCOMs, to sign power purchase agreements is after as before a “main concern”. The managing director of Bridge to India, Vinay Rustagi, spoke to the sister publication PV Tech Power earlier this year about the problems related to DISCOMs and other political hurdles.
Mercom India is now forecasting that only 7 GW of solar will be installed in India this year, a 3 GW revision of the 10 GW forecast at the beginning of the year and considerably weaker than the 12 GW and 13.5 originally forecast by BloombergNEF and Bridge to India, respectively GW.
“With the second wave of the pandemic hitting the country, the industry is struggling with price increases and volatility for solar components. Even more worrisome is the sourcing uncertainty as bottlenecks are widespread. Policy restrictions and obligations have contributed to rising costs and unpredictability, ”said Raj Prabhu, CEO of Mercom Capital Group.