The average cost of large-scale solar power projects in India fell 28.2% year-over-year (YoY) in the first quarter (Q1) of 2024, primarily due to a significant drop in module prices over the year.

Since Q1 2023, large-scale solar project costs have dropped consecutively for five quarters. Q1 2024 recorded the lowest quarterly average project cost. The average project cost was down 7.1% quarter over quarter (QoQ).

These findings were published in Mercom India Research’s recently released Q1 2024 India Solar Market Quarterly Update.

The significant fall in system costs has lowered the cost of capital and increased the internal rate of returns for large-scale solar projects, driving capacity additions.

In Q1 2024, India achieved a significant milestone by adding over 10 GW of solar capacity in Q1 of 2024, the highest quarterly installation to date.

The average selling price (ASP) of Chinese monocrystalline passivated emitter rear contact (mono PERC) modules fell 12.4% QoQ and 48.3% YoY, and the ASP of Indian mono PERC modules was down 13.6% QoQ and 41.7% YoY.

India imported solar cells and modules worth over $2 billion (~₹166.9 billion) in Q1 2024, down 2.1% QoQ compared to $2.05 billion (~₹170.9 billion) in Q4 2023. Imports were up 147.5% YoY from $812 million (~₹66.7 billion) in Q1 2023. Solar cells accounted for 20.9% of the quarter’s imports, and solar modules 79.1%.

The oversupply of photovoltaic (PV) materials and products in China lowered the prices of both Chinese and Indian modules in the quarter.

However, due to limited cell production capacity in India, the average cost of projects with modules complying with domestic content requirements (DCR) was considerably higher than those of non-compliant modules.

During the quarter, project developers preferred central over string inverters for large-scale projects due to their lower costs and reliability.

The cost of mounting structures dropped 3.6% QoQ. The cost of other BoS components remained largely unchanged from Q4 2023, contributing 1.6% to the average system price.

The average large-scale project costs could increase starting Q2 2024 due to the reimplementation of the Approved list of Models and Manufacturers (ALMM) orders on all solar projects, including rooftop and open access solar projects for private consumers by the Ministry of New and Renewable Energy has notified the implementation from April 1, 2024. The ALMM order will prevent cheaper module imports.

Mercom’s Q1 2024 India Solar Market Quarterly Update is 93 pages long and covers all facets of the Indian solar market and a detailed analysis of the project cost trends. For the complete report, visit: https://www.mercomindia.com/product/q1-2024-india-solar-market-update