In a Tumultuous Year, Utility-Scale Solar Installations Decline 39% in FY21

According to a new report by JMK Research, about 3.5 GW of new utility-scale solar capacity was added in India in the fiscal year 2021 (April 2020-March 2021). Compared to the previous year (FY20), installations were about 39% lesser. While the wind capacity of the country increased by 1.5 GW in FY2021, it was found to be 28 percent lower than the capacity in FY2020.

That predicting has been a tough business in a volatile year becomes clear when we see that JMK, in a previous report, (Q4 2020 India RE Updates), had predicted that new solar capacity of 2.2 GW would be added in Q1 of FY21 and about 9.7 GW of new solar capacity would be commissioned in 2021. On the other hand, it was expected that 0.7 GW of new wind capacity would be added in Q1 FY21 and 2.5 GW of new wind capacity would be added in 2021. Gujarat, Rajasthan, Tamil Nadu, Uttar Pradesh, and Andhra Pradesh were the leading states with most of the large-scale solar installations during FY2021 (till March 31).

As for rooftop solar capacity, the report finds that despite the pandemic-imposed lockdown and restrictions, about 2 GW of new capacity was added in FY2021. Gujarat and Maharashtra together contributed nearly 50% of all those rooftop solar installations, followed by Rajasthan, Tamil Nadu, Haryana, and Uttar Pradesh, which also added maximum rooftop solar capacity in FY2021. Additionally, JMK predicts that about 2.5-3 GW of new rooftop solar capacity will be added in FY2022.

India’s wind sector witnessed a 28% decline in new capacity addition in FY2021 as compared to the addition in FY2020. States like Gujarat, Karnataka, and Tamil Nadu contributed maximum wind capacity addition during this period. 

JMK Research estimates, about 10 GW of new utility-scale solar capacity and 3.5 GW of new wind capacity are expected to be installed in FY22. “This is about 25 percent below that of our initial estimate which was made before the second wave of COVID-19 hit in India,” says the report. 

Due to this, MNRE, in its recent notification dated 12 May 2021, had stated that the renewable energy projects having their commissioning dates on or after 1 April 2021 can claim extension owing to the second surge of the COVID-19 pandemic. MNRE also mentioned that, on receipt of an application for the time extension, the implementing agency would not initiate any coercive action on the project to recover the penalty against delayed commissioning, until the extended time frame is decided upon.

Furthermore, the report indicates that due to the lockdowns imposed across several states, a shortage of labor and delays in equipment supplies could further lead to obstruction in the commissioning of nearly 3-4 GW of solar and wind projects. Subsequently, the rooftop solar market too might again face payment delay issues for OPEX projects as there is uncertainty looming over the implementation of full or partial closure of manufacturing and business units. 

Nevertheless, from a macro-perspective of JMK, industry growth in the future is expected to be highly positive as solar energy procurement still presents as a cost optimization channel. This has become more relevant amidst the pandemic where the C&I market’s price sensitiveness has become sharper.