India Solar Energy Market Outlook to 2028

India Solar Energy Market Overview

The India solar energy market is valued at USD 10.5 billion, driven by a combination of favorable government policies, cost reductions in solar technologies, and the increasing need for clean, renewable energy sources. India's commitment to increasing solar capacity through initiatives like the National Solar Mission has helped propel this growth. Additionally, declining costs of photovoltaic (PV) cells, availability of vast solar potential due to the country's geographical position, and supportive financing options for solar power developers have collectively supported the expansion of the market. This figure is backed by data from the Ministry of New and Renewable Energy (MNRE) and other governmental bodies.

The India solar energy market is largely dominated by regions like Gujarat, Rajasthan, and Tamil Nadu due to their higher solar irradiance levels and the availability of vast land banks. Gujarat leads with its proactive state government policies, while Rajasthan has the largest solar park in the world. Tamil Nadus solar dominance is driven by strong infrastructure and industrial demand. These states also benefit from clear state-level policy frameworks and investment incentives, encouraging significant private sector involvement.

The Indian government mandates that distribution companies (DISCOMs) must source a certain percentage of their energy from renewable sources, including solar. In 2024, the RPO for solar stands at 10.5%, encouraging states and private players to ramp up their solar investments. Non-compliance with RPO targets can result in penalties, making this regulation a key driver of solar energy demand.

India Solar Energy Market Segmentation

By Technology: The market is segmented by technology into Photovoltaic (PV) and Concentrated Solar Power (CSP). The dominant segment in the India solar energy market is PV technology, which holds approximately 95% of the market share in 2023. PV's dominance is driven by its lower cost, scalability, and the ease with which it can be deployed in both utility-scale and rooftop solar projects. Additionally, PV systems have witnessed rapid technological advancements, contributing to their growing adoption.

By Application: The market in India can be segmented by application into utility-scale solar power, rooftop solar power, off-grid solar, and solar water pumps. Utility-scale solar is the most significant application, holding around 75% of the market share in 2023. This segment's dominance is driven by large solar parks such as the Bhadla Solar Park in Rajasthan. The utility-scale segment benefits from government-backed auctions and long-term Power Purchase Agreements (PPAs) with DISCOMs, which secure stable revenue streams for developers.

India Solar Energy Market Competitive Landscape

The India solar energy market is dominated by several large players who are responsible for a significant portion of installed solar capacity. These companies range from domestic players to international companies that have entered the Indian market through partnerships or direct investments. The market is characterized by significant competition, primarily driven by price-sensitive bidding processes and the rapid pace of solar technology advancements. The consolidation of the market is evident, with the top five companies controlling a significant portion of the market.

Company

Year Established

Headquarters

Installed Capacity

Key Projects

Revenue (INR Cr)

No. of Employees

Global Operations

Recent Acquisitions

Tata Power Solar Systems

1989

Mumbai, India

Adani Green Energy

2015

Ahmedabad, India

Re New Power

2011

Gurugram, India

Vikram Solar

2006

Kolkata, India

Azure Power

2008

New Delhi, India

India Solar Energy Industry Analysis

Growth Drivers

Government Initiatives: The National Solar Mission (NSM) has been a key driver for solar energy growth in India. As of 2024, the Indian government, through the Ministry of New and Renewable Energy (MNRE), has achieved an installed solar capacity of over 70 GW, with a target of reaching 100 GW by 2025. This mission has seen significant investment from both domestic and international sources, pushing India to become the fifth-largest solar power producer globally. These initiatives also align with India's broader goals of generating 500 GW of renewable energy by 2030.

Reduction in Solar Power Costs: The cost of solar energy in India has dropped significantly, with solar tariffs as low as 1.99 per k Wh in 2022, making it one of the most competitive energy sources. Government subsidies and incentives like the Production Linked Incentive (PLI) scheme have reduced the cost of solar energy equipment, fostering further adoption. India has also implemented various state-level policies to encourage solar park development and rooftop solar projects, making solar energy affordable for both residential and industrial users.

Increasing Energy Demand: India's growing economy and rapid urbanization have led to a surge in energy demand, projected to be over 1,400 TWh in 2024. Solar energy, with its vast potential, is seen as a critical component in meeting this demand. Additionally, coal dependency is being phased out, with renewable energy making up over 25% of the countrys energy mix by 2024. Solar energy, given its scalability and decreasing costs, is set to become a major contributor to the energy supply. CEA Source

Market Challenges

High Land Acquisition Costs: Land acquisition remains a significant barrier for large-scale solar projects in India. In states like Gujarat and Rajasthan, prime locations for solar farms, land prices have surged to 30-40 lakhs per hectare in 2024. This cost increase hampers project viability, especially in rural areas where land conversion laws and compensation delays further add to the financial burden on developers.

Policy and Regulatory Uncertainty: Frequent changes in government policies and state-level regulatory frameworks present challenges to the solar industry. For instance, changes in Renewable Purchase Obligations (RPOs) and delays in tariff approvals by State Electricity Regulatory Commissions (SERCs) create uncertainty for investors and developers. Despite central government efforts to streamline policies, inconsistent implementation across states continues to hinder market expansion.

India Solar Energy Market Future Outlook

Over the next five years, the India solar energy market is expected to see substantial growth, driven by sustained government support, declining costs of solar panels, and increasing demand for clean energy. India's ambitious goal of achieving 100 GW of solar capacity will further catalyze market expansion. The country is also likely to witness an increase in rooftop solar installations, supported by net metering policies and financial incentives. Investments in advanced solar technologies, such as bifacial PV modules and solar-plus-storage solutions, are expected to play a pivotal role in shaping the market's future.

Future Market Opportunities

Rooftop Solar Growth Potential: Rooftop solar installations in India reached 8.2 GW by 2024, but the potential remains far higher, especially in urban and semi-urban areas. Government schemes like the Grid-Connected Rooftop Solar Program have provided financial assistance, pushing growth. With the target of 40 GW rooftop solar by 2025, there is ample opportunity for residential and commercial sectors to tap into this energy source, offering immediate savings on electricity bills and reducing grid dependence.

Rural Electrification: Solar energy is playing a transformative role in rural electrification. The Saubhagya Scheme has provided solar-powered electricity connections to over 27 million households in rural India by 2024. Standalone solar installations are proving viable for remote areas, reducing the need for grid infrastructure. Furthermore, the solar mini-grid market is growing in villages where grid access remains limited. These solutions are critical for achieving India's universal electrification targets.
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