India installed 6.7 GW of new solar PV capacity in Q1 2025, marking a decline of 25% year-on-year (YoY), and 14% quarter-on-quarter (QoQ). Mercom India Research attributes the slowdown to multiple challenges, including the rising cost of domestically produced modules, their limited availability, and the lack of sufficient substation and transmission infrastructure for power evacuation.
New additions during the reporting quarter include 5.5 GW from large-scale projects, which declined 15% QoQ and 36% YoY. Open access installations made up around 19.8% of this capacity. Rajasthan accounted for 35% of the total large-scale capacity, while 30% was contributed by Gujarat, followed by 16% in Maharashtra.
Rooftop solar accounted for 18% of the quarterly additions with over 1.2 GW capacity.
As per Mercom’s Q1 2025 India Solar Market Update report, while the emergence of several new manufacturers entering the transformer market is a positive, transmission infrastructure is a big bottleneck.
“Even of someone decides today to commission a substation or a transmission line, it will take 12 to 18 months for it to come online,” points out Mercom India Managing Director Priya Sanjay.
Even for domestic content requirement modules, the supply remains limited. Meaningful capacity increases are likely to materialize next year, she added. At the recent TaiyangNews Solar Technology Conference.India 2025, National Solar Energy Federation of India (NSEFI) CEO Subrahmanyam Pulipaka projected the country to become a 160 GW solar module manufacturing market by 2030, doubling from its current capacity of around 80 GW, but will continue to lag behind in solar cell capacity (see TaiyangNews STC.I 2025 Day 1: Innovation & Strategic Collaborations Key To India’s Solar Manufacturing Success Story).
The average cost of large-scale solar projects rose 3% QoQ and 1% YoY, thanks to inflation.
Nevertheless, solar capacity additions accounted for 54% of the 12.3 GW of new power capacity the country added during the quarter, as its total installed solar capacity reached 104.6 GW. As of March 2025, solar energy represented 22% of the national power mix.
The future looks bright as the large-scale solar project pipeline stood at 180.4 GW at the end of Q1 2025, with an additional 127.8 GW worth of projects tendered and awaiting auction. However, a backlog of power sale agreements is pushing back tender activity, which impacts funding for projects, especially since foreign investors backed developers don’t get any visibility on fund deployment.
During the reporting quarter, 6.4 GW of solar projects were auctioned, a 39% sequential and a 74% annual decline, while 14.4 GW of tenders announced represented a 5% QoQ and a 53% YoY decline.
Sanjay does not see the auction and tender activity improving in the coming quarters.
Unless there is more clarity, developers and investors will be hesitant to move forward with new bids due to policy uncertainty around ISTS extension, lack of transmission infrastructure, and concerns about module availability, points out Sanjay.
The complete report can be purchased from Mercom’s website.
