Supply and demand imbalance, higher prices are hitting utility-scale solar energy in India



India’s annual electricity-scale solar deployment is expected to slow in 2023 after a record 14 GW addition in 2022, according to a new report by the International Energy Agency IEA.

According to a new IEA report, India’s annual utility solar installations are expected to decline by nearly 20% in 2023 due to supply chain challenges, lower auction volumes and trade policies. According to it, India achieved a record 14 GW of capacity addition in 2022, mainly through auctions. However, auction volumes in 2022 fell by about a third, it noted.

Tariffs found in the 2022 auctions increased by 15% compared to 2021, preventing financially distressed distribution companies (DISCOMs) from entering into contracts. Some states that met their renewable purchase obligations avoided additional auctions, while hybrid bids caught the eye of state agencies.

The IEA estimates that the reduced capacity granted in 2022 will slow the increase in solar PV capacity in 2023. In addition, short-term supply and demand imbalances and higher prices due to import tariffs will affect the expansion of solar power in 2023 and 2024. According to the IEA.

According to the IEA, developers are prioritizing high-performance, high-end modules to facilitate cost-effectiveness and low-cost financing. However, demand for these modules will outstrip supply in the short term, as major producers offering modules over 500 W reported total production capacity of less than 5 GW.

The April 2022 import tariffs on solar modules and cells led to a 30-40% price increase in the second half of the year, affecting the bankability of the project. As a result, developers had to postpone or cancel projects until solar prices fell. The government responded by postponing the ALMM requirements and extending the deadlines for commissioning projects ordered by April 2024.

While government action has addressed some challenges, a temporary supply-demand mismatch for high-end PV modules will prevent a rapid expansion of PV at utility scale in 2023 and 2024. However, the IEA predicts rapid deployment of PV in India after 2025, driven by higher PV modules. auction volumes and lower prices.

According to the report, India will achieve full self-sufficiency in the supply of solar electricity in the next four to five years, when the production capacity granted in the production-linked support system is put into use.

In summary, the IEA expects India’s renewable energy capacity addition to pick up in 2023 and 2024 with faster deployment of onshore wind, hydro and distributed solar.

Source: IEA

David is a passionate writer and researcher who specializes in solar energy. He has a strong background in engineering and environmental science, which gives him a deep understanding of the science behind solar power and its benefits. David writes about the latest developments in solar technology and provides practical advice for homeowners and businesses who are interested in switching to solar.

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