Average Cost of Large-Scale Solar Projects Drop 27% YoY in Q4 2023

The plunge in solar module prices brought down project costs


The average cost of large-scale solar power projects in India declined by 26.6% year-over-year (YoY) in the fourth quarter (Q4) of 2023 following a drop in module prices.

Large-scale solar system costs declined throughout 2023. The Q4 2023 quarter recorded the lowest-ever quarterly average project cost since the beginning of large-scale solar capacity additions in the country.

These findings were published in Mercom India Research’s recently released Q4 and Annual 2023 India Solar Market Update.

The October to December 2023 period witnessed the lowest recorded module prices, leading to a significant fall in project costs. Lower costs have allowed developers to reduce their capital investments and increase project returns, which in turn is expected to boost installations significantly in 2024.

The average selling price (ASP) of Chinese mono PERC modules fell 28.9% QoQ and 50.9% YoY. The ASPs of Indian mono PERC modules dropped 29.9% QoQ and 37.3% YoY.

The country imported 9.5 GW of solar modules in Q4 2023, primarily to meet commissioning deadlines in March 2024.

Solar cell and module imports in the year totaled $5 billion (~₹416.8 billion), up 89.3% YoY compared to $2.6 billion (~₹208.3billion).

The suspension of the Approved List of Models and Manufacturers regulation drove the rise in imports of solar modules, which form over 50% of project costs.

In February 2024, MNRE reimposed the ALMM order on utility-scale and subsidized rooftop solar projects from April 1, 2024. Utility-scale solar projects in the advanced stage of construction for which module procurement orders have been placed by March 31, 2024, were exempted from the mandate along with open access and rooftop solar projects by C&I entities. However, the reimposition order was held in abeyance by the Ministry.

The solar industry stakeholders now await a clarification on the reimposition to understand the impact on project costs.

According to the report, the prices of power conditioning units fell 5.2% QoQ. During the quarter, the industry showed a preference for central inverters over string inverters for their projects. The cost of other BoS components remains unchanged compared to Q3 2023.

In 2023, India added 7.5 GW of solar capacity, a 44.1% drop from 13.4 GW installed in 2022. The cumulative installed solar capacity, including rooftop solar installations, surpassed 72 GW as of December 2023.

Mercom’s Q4 2023 India Solar Market Quarterly Update 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/q4-2023-india-solar-market-update.