Average Cost to Build Large-Scale Solar Projects Climbed by 23% YoY in Q3 2021

Project costs increased 10% over Q2 due to a rise in freight charges and module prices


The average cost of large-scale solar projects in the third quarter of 2021 (Q3 2021) was about ₹42.4 million (~$559,828)/MW, according to Mercom’s recently released Q3 2021 India Solar Market Update.

The cost increased by 23% compared to the same period last year when it was ₹34.5 million (~$455,322)/MW and a 10% rise from the previous quarter (Q2 2021) when the cost was about ₹38.6 million (~$509,433)/MW.

system cost

The rise in large-scale system costs in Q3 2021 is mainly attributable to an increase in freight charges solar components. The freight charges, which have been on an upward trajectory from the time of the Covid-19 outbreak, have adversely impacted the import of solar modules to India. The shortage of containers is another issue, creating problems in importing raw materials from China.

The rising price trends in commodities, including steel, aluminum, and copper, also contributed to the rise in large-scale system costs. The cost of the aluminum profile went up by 30-40% during the quarter. The prices of silicon and the EVA sheets have also gone up by 40-50%.

India added 2,835 MW of solar capacity in Q3 2021, an increase of 14% compared to 2,488 MW installed in Q2 2021. The figures marked a massive 547% year-over-year (YoY) surge.

As per the report, in 9M 2021, India added over 7.4 GW of solar capacity, which was higher by 335% compared to 1.73 GW in 9M 2020. The cumulative installed capacity at the end of Q3 2021 stood at 46.6 GW.

The average selling prices of solar modules have continued to rise. Module prices have surged, along with raw material prices after major manufacturers started cutting output in line with electricity constraints in China.

According to the report, the prices of polycrystalline modules from China increased by 4%, and Chinese mono PERC module ASPs increased by 17% QoQ. The prices of Chinese modules have increased for six sequential quarters, a trend that has never been seen in the past ten years.

A surge of solar project development delay cases linked to the overpricing led investors to pare back spending, while persistent supply chain problems hampered businesses.

Solar module manufacturers believe that prices of Chinese modules are expected to stay high until Q1 2022.

For the complete report, please visit: https://mercomindia.com/product/q3-2021-india-solar-market-update