India installed 1.7 GW of rooftop solar capacity in 2023, the second-highest annual installation numbers on record, according to Mercom India Research’s newly unveiled 2023 Q4 & Annual Mercom India Rooftop Solar Market Report.

However, the capacity addition rose only by 3.7% as many commercial and industrial (C&I) consumers held off on new projects while waiting for solar module prices to stabilize. Lower module prices forecasted in early 2024 are expected to help companies reduce project costs.

“The cost of modules was still high in the first half of the year,” said Priya Sanjay, Managing Director, Mercom India, explaining the rationale behind C&I consumers holding back on installations in 2023. “There was a lot of confusion about the applicability of ALMM (Approved List of Models and Manufacturers) mandate to rooftop solar projects.”

Earlier this month, the Ministry of New and Renewable Energy kept in abeyance its recent order reimposing the ALMM regulation from April 1, 2024. The ministry had earlier confirmed the reimposition of ALMM with exemptions for projects set up under open-access solar and those in advanced stages of construction and rooftop solar projects with no subsidy.

India’s cumulative rooftop solar installations reached 10.5 GW by the end of December 2023.

The residential segment was the primary driver of new rooftop solar additions in 2023, accounting for over half of the capacity added. The report also found that rooftop solar system costs decreased 10% quarter-over-quarter and 21.6% year-over-year (YoY), helped by falling prices of solar modules.

In the fourth quarter (Q4) of 2023, rooftop solar installations declined 5.8% from the previous quarter to 406 MW. Installations fell 15.9% from 483 MW last year.

“The cost started falling in the later part of the year, and installers waited for it to stabilize,” said Priya Sanjay.

State-wise installations

Gujarat led rooftop solar additions in Q4, representing 42.6% of the quarter’s total. At the end of 2023, Gujarat was once again the leader, accounting for 27.3% of cumulative solar rooftop installations, followed by Maharashtra and Rajasthan, with 13.3% and 8.1%, respectively.

“Gujarat DISCOMs mean business,” said Priya Sanjay, adding that the state’s distribution companies, some of the highest rated in the country, are consistently reducing the subsidized consumer numbers by installing rooftop solar systems for agricultural and residential users.

But tendered rooftop solar capacity fell 45.7% in 2023 from 2022. Uttar Pradesh was the most active state for tenders, accounting for 44.2% of the 1.2 GW capacity tendered during the year.

Tenders for rooftop solar systems on government buildings accounted for nearly 57% of the announced tender capacity.

The top 10 states made up 77.3% of India’s total installed rooftop solar capacity.

The 59-page report provides an in-depth analysis of India’s rooftop solar market development, trends, state-wise installations, policies, and outlook. For the complete report, visit: https://www.mercomindia.com/product/rooftop-solar-market-report-q4-2023