India installed 7,346 megawatts (MW) of solar in the calendar year (CY) 2019, a 12% decline year-over-year (YoY), compared to 8,338 MW installed in 2018, according to Mercom India Research’s newly released Q4 & Annual 2019 India Solar Market Update.
Large-scale solar projects accounted for 85% of installations with 6,242 MW and saw a 7% YoY decline, and rooftop solar made up the remaining 15% adding 1,104 MW, a 33% drop YoY.
Karnataka was the top state for solar in 2019 with 1.8 GW, followed by Rajasthan and Tamil Nadu. Together, these three states accounted for almost 70% of solar installations in 2019.
“The demand outlook for 2020 looks better with a stronger project pipeline, and we should see the solar market resume year-over-year growth again. But a lot will depend on the economy and lending situation getting back on track, the impact of coronavirus, and the outcome of the 20% basic customs duty announced in the recent budget,” said Raj Prabhu, CEO of Mercom Capital Group.
At the end of 2019, cumulative solar installations reached almost 35.7 gigawatts (GW). Large-scale projects accounted for 31.3 GW (87.6%), whereas rooftop solar installations accounted for 4.4 GW (12.4%).
The large-scale solar project development pipeline stands at 23.7 GW, with 31.5 GW of projects tendered and pending auction at the end of Q4 2019.
The Indian solar market added 1,897 MW in Q4 2019, a 12.8% decrease, compared to 2,177 MW installed in Q3 2019. However, installations were up by 15.6% compared to 1,641 MW installed in Q4 2018. In Q4 2019, large-scale solar projects came to 1,593 MW, while rooftop solar installations came to 304 MW, an increase of 24.1% compared to 245 MW in Q3 2019.
According to the report, multiple reasons led to the decline in large-scale solar additions in 2019 including: elections, a slowing economy, liquidity issues, tariff caps, lack of financing, curtailment, payment delays, and PPA renegotiations in Andhra Pradesh.
Rooftop installations declined for the first time in five years. The report pointed to the slowdown in the economy in 2019 as a significant factor, along with liquidity issues in the market following the NBFC crisis which made it extremely difficult for installers to finance rooftop projects in a tough economy.
“There are several challenges facing the industry, but a few fixes that could immediately turnaround the sector would be to remove tariff caps in reverse auctions, getting government agencies to make timely payments and facilitate lending to get the solar market moving in the right direction again,” added Prabhu.
After five consecutive years of decline, coal accounted for a majority of the power installations with 7.8 GW and made up 44.1% of the installed capacity, followed by solar with 7.3 GW. Wind accounted for 2.4 GW followed by small hydro and other renewables with 154 MW and 82.5 MW respectively. Even with coal installations rising, renewables collectively still made up a majority of the installations in 2019.
While 2019 was a lost year for India’s solar sector, Mercom India Research expects solar installations to rise by 17% YoY to approximately 8.5 GW by the end of 2020.
Mercom also estimates solar installations in the 65-70 GW range by 2022 based on current market conditions. The government has set a solar installation target of 100 GW by 2022.