The India solar power market is expected to grow at a CAGR of more than 40% during the forecast period 2020 - 2025. Major factors driving the market studied are the declining cost of the solar module and the government policies like allowing 100% FDI under automatic route for renewable power generation and distribution projects which is expected to increase the participation from global players into the Indian market. Moreover, the sharp decline in prices of solar technologies in the recent years by about 52% between 2010 and 2015 (in kWh terms) has been one of the biggest drivers in the adoption of solar PV in the country. However, The cost of modules produced in China is 8-10% cheaper than the one manufactured in India and about 80-85% of the solar modules used in India are manufactured in China. Therefore, the huge dependency on imports has affected domestic manufacturing in the country, which is further expected to hinder the growth of the market.
- The solar PV segment dominated the market share in 2019 and is expected to be the largest segment during the forecast period, owing to supportive government policies to penetrate clean energy generation in the country's energy mix.
- India has abundant availability of solar irradiance and receives solar energy throughout the year. This has created enormous opportunities to exploit solar energy from the sunniest sites in the country, especially, Rajasthan, Gujarat and Andhra Pradesh. The aforementioned factor clubbed with foreign investment and extensive R&D projects provides an opportunity for the growth of the solar energy market in India.
- The Government of India has taken several initiatives with the Ministry of New and Renewable Energy (MNRE) drafting plans and putting out tenders, which in turn is expected to drive the market during the forecast period.
Key Market Trends
Solar PV to Dominate the Market
- According to IRENA, India had a total installed capacity of more than 34 GW of solar PV. Moreover, India is endowed with a very vast solar energy potential. The average solar radiation incident over the land is in the range of 4-7 kWh per day. Solar power played an almost non-existent role in the Indian energy mix until 2007.
- Moreover, Solar energy is becoming inexpensive in comparison to other conventional energy sources due to innovations in the solar sector that have reduced the global average selling prices of solar PV. With the anticipated improvements in technology and increased supply of panels from China/Europe, the capital costs are expected to stabilize at lower levels. As a result, investors/developers are expected to focus on the commercial viability of solar projects.
- With the government promoting solar installation in the rural areas by providing subsidized solar panels and another incentive, the solar PV installation is expected to increase during the forecast period and is expected to drive the market.
- So far, only five CSP projects, namely, ACME solar tower (2.5 MW), Dhursar (125 MW), Godawari solar project (50 MW), Megha solar plant (50 MW), and national solar thermal power facility (1 MW) have started operations in India. Owing to factors, such as, huge capital expenditure, difficulty in securing land and water, and insufficient DNI data, other projects have been delayed.
Supportive Government Policies Driving the Market
- The country has identified the potential of renewable energy, such as solar and wind, in decarbonizing the economy and meeting targets as per the Paris Agreement, and the Government of India has been bent towards increasing the share of renewables in the country's energy mix.
- The government is aiming at 25,750 megawatts (MW) of new power generation capacity from solar plants under the ambitious Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme by 2022, with total financials of more than Rs. 32,000 crore.
- The Ministry of New and Renewable Energy had launched the scheme in 2019, with three components -- installation of 10,000 MW capacity through small renewable energy-based power plants of capacity up to 2 MW each on barren or fallow land of farmers; installation of 17.5 lakh standalone off-grid solar water pumps; and solarisation of 10 lakh existing grid-connected agriculture pumps.
- Moreover, the government in planning is to add 175 GW of renewable energy by 2022 which includes 100 GW of solar and 60 GW of wind energy. The country has spend more on investment in solar PV than in all fossil fuel sources of electricity generation together. Therefore, the government schemes and plans to increase the renewables share in energy mix is expected to drive the solar energy market in India,
The India solar energy market is fragmented. Some of the major companies includes Adani Group, EMMVEE SOLAR, Azure Power Global Limited, JinkoSolar Holdings Co. Ltd, and First Solar Inc.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support