The Indian solar energy market is poised for substantial growth, with an anticipated compound annual growth rate (CAGR) of 19.80% during the forecast period according to Mordor Intelligence Report. As of this year, India’s solar market is projected to reach 79.07 gigawatts (GW), with expectations to soar to 195.11 GW in the next five years. This remarkable expansion is driven by a combination of decreasing costs, increasing flexibility of solar systems, and the environmental benefits of solar power.
The declining cost of solar technology has made it more accessible and attractive. Over the medium term, these economic benefits, coupled with advancements in solar systems, have enhanced their adaptability and efficiency. This makes solar power a viable and greener alternative to traditional energy sources.
Despite the positive outlook, the market faces challenges, particularly in transmission and distribution losses and the unpredictability of power supply continuity. These issues need addressing to ensure a stable and efficient solar energy infrastructure.
India’s geographical advantage with abundant solar irradiance throughout the year provides significant potential for solar energy utilization. Regions such as Rajasthan, Gujarat, and Andhra Pradesh are particularly well-suited for solar energy projects due to their high solar exposure. Coupled with foreign investments and research and development efforts, these areas are expected to lead the way in solar energy adoption.
The solar photovoltaic (PV) segment is set to dominate the market, primarily due to the decreasing costs of solar modules and their versatile applications. According to the International Renewable Energy Agency (IRENA), India’s installed solar PV capacity increased from 49.3 GW in 2021 to approximately 62.8 GW in 2022, marking a significant 31% growth. This surge is attributed to extensive utility-scale installations and the government’s commitment to enhancing solar PV capacity.
Noteworthy projects like NTPC’s 56 MW solar PV project in Surat and RIL’s ambitious USD 80.61 billion investment in Gujarat for setting up 100 GW of renewable energy power plants highlight the robust growth trajectory of the solar PV segment. These developments underline the segment’s potential to maintain the largest market share over the forecast period.
Government Initiatives: A Catalyst for Growth
Supportive government policies are a significant catalyst for market growth. The Ministry of New and Renewable Energy (MNRE) has been at the forefront, implementing various schemes to promote renewable energy. Initiatives such as the Solar Park Scheme and Viability Gap Funding (VGF) Scheme have been crucial in driving solar energy adoption. Additionally, the National Thermal Power Corporation Limited (NTPC) and private enterprises like Reliance Industries (RIL) have undertaken substantial projects to expand solar capacity.
The MNRE’s national wind-solar hybrid policy, for instance, aims to reduce the variability in renewable energy generation and improve grid stability. Additionally, the Delhi government’s Solar Policy 2022 plans to escalate the installed capacity from 2,000 MW to 6,000 MW within two years, significantly increasing the share of solar energy in the city’s electricity demand.
Key Collaborations and Investments
Strategic partnerships and investments are pivotal in propelling the solar energy market forward. In December 2022, the Government of India, in collaboration with the Solar Energy Corporation of India Limited (SECI) and the World Bank, secured substantial funding to boost renewable energy capacity. This included a USD 150 million International Bank for Reconstruction and Development (IBRD) loan, a USD 28 million Clean Technology Fund (CTF) loan, and a USD 22 million CTF grant.
Moreover, Amazon India’s announcement of three solar farm projects in Rajasthan with a total capacity of 420 MW and SJVN’s 125 MW solar project in Uttar Pradesh are indicative of the increasing involvement of private sector giants in the renewable energy landscape.
The future of India’s solar energy market looks promising, driven by favorable government policies, technological advancements, and significant investments. Despite challenges, the country’s abundant solar resources and supportive infrastructure position it well for substantial growth. As India continues to advance towards its renewable energy goals, the solar energy market is set to play a pivotal role in shaping a sustainable energy future.
