Average cost of large scale solar projects surges 12% in Q2 2021

07 Sep 2021 CW Team

The average cost of large-scale solar projects in the second quarter (Q2) of 2021 was Rs 38.6 million per MW and it rose by 12% against the same period last year, according to Mercom’s recently released Q2 2021 India solar market update.

The cost rose by 12% against the same period last year when it was Rs 34 million per MW, and a 5% rise from Q4 2020 when the price was around Rs 35.3 million per MW.

Along with a shortage of some raw materials, the prices have risen due to the increase in the component costs led by modules and other commodities. The global steel costs rose in the first four months of 2021. But steel producers struggled to supply as the production was less due to iron ore shortage, the raw material used to manufacture steel.

Meanwhile, the average cost per MW for rooftop solar installations was around Rs 39.6 million per MW, increased by 8% from the same period last year when prices stood at Rs 36.5 million. The average price for setting up rooftop solar systems was Rs 38 million per MW in the previous quarter, up roughly 4% quarter-over-quarter (QoQ).

Increasing solar module average selling prices (ASPs) continued in Q2 2021, driven by expensive polysilicon and higher raw material costs. Freight charges have continued to be high since last year because of the shipping container shortages and global logistical difficulties.

The container shortage issue has not yet been fixed, ending in high freight costs, adversely impacting module costs. The solar module prices had risen due to the supply-demand gap, adding more financial burden on rooftop solar developers.

The rooftop solar sector has been witnessing better financing opportunities with a decline in the cost of debt, grown availability of equity, and the overall price of financing going down.

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Also read: Govt approves 45 solar parks under solar park scheme

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