The first quarter (Q1) of 2024 witnessed a notable 28.2% year-over-year (YoY) decline in the average cost of large-scale solar power projects in India, primarily attributed to a significant reduction in module prices. This decline marks the fifth consecutive quarter of diminishing costs since Q1 2023, with Q1 2024 recording the lowest quarterly average project cost. According to the recently released Q1 2024 India Solar Market Quarterly Update by Mercom India Research, this decrease in system costs has positively impacted the cost of capital and boosted the internal rate of returns for large-scale solar projects, thereby driving capacity additions.

During Q1 2024, India accomplished a significant milestone by adding over 10 GW of solar capacity, marking the highest quarterly installation to date. Notably, the average selling price (ASP) of Chinese monocrystalline passivated emitter rear contact (mono PERC) modules plummeted by 12.4% quarter over quarter (QoQ) and 48.3% YoY, while Indian mono PERC modules saw a QoQ decline of 13.6% and a YoY decrease of 41.7%.

In terms of imports, India imported solar cells and modules worth over $2 billion in Q1 2024, down 2.1% QoQ from the previous quarter but up 147.5% YoY. Solar cells constituted 20.9% of the quarter?s imports, with solar modules accounting for the remaining 79.1%. The oversupply of photovoltaic (PV) materials and products in China contributed to reduced prices for both Chinese and Indian modules during the quarter.

Despite this decline in module prices, the average cost of projects adhering to domestic content requirements (DCR) was notably higher due to limited cell production capacity in India. Additionally, project developers favoured central over string inverters for large-scale projects due to their lower costs and reliability. While the cost of mounting structures dropped by 3.6% QoQ, other Balance of System (BoS) components remained largely unchanged from Q4 2023, contributing 1.6% to the average system price.

Looking ahead, the average large-scale project costs may see an uptick starting Q2 2024 due to the reintroduction of the Approved list of Models and Manufacturers (ALMM) orders on all solar projects by the Ministry of New and Renewable Energy. This measure, aims to prevent cheaper module imports, potentially impacting project costs in the coming quarters.

(Source: Mercom)