India Solar Power Market

India’s solar power sector is shaped by a mi of strong policy support, falling technology costs, and rapidly growing energy demand. Government initiatives like the National Solar Mission and ambitious renewable targets have driven large-scale capacity additions, while competitive bidding has pushed tariffs to record lows, increasing solar’s attractiveness versus conventional power. At the same time, the market faces challenges such as land acquisition hurdles, grid integration constraints, and dependence o n imported components—though domestic manufacturing is gaining momentum under schemes like the Production Linked Incentive Scheme. Rising corporate demand for clean energy, growth in rooftop installations, and investments from global players continue to intensify competition and innovation, making India one of the fastest-evolving solar markets globally.

4.3 .1 RISING ENERGY DEMAND India's electricity appetite has grown at a pace that few economies can match. Following a strong 8.3% increase in 2023, electricity demand in India grew 5.8% year-on-year in 2024 amid robust economic expansion, with peak electricity load rising from 148 GW in 2014 to 250 GW — a 68% jump — in 2024, driven by the rapid expansion of industry, agricultural development, and rising use of air conditioning and appliances across residential and commercial sectors. This persistent surge in demand has made it structurally impossible for conventional fossil fuel-based capacity alone to keep pace, effectively positioning solar power as the most scalable and cost-competitive solution to bridge the widening supply gap. The demand trajectory shows no sign of slowing. India consumed 1,694 billion units of electricity in FY25 — an increase of 33% over FY21 — translating into a five-year CAGR of 7.4%, and energy demand is expected to grow in the range of 6–6.5% over the next five years, according to the ratings agency ICRA. The IEA's World Energy Outlook 2025 confirms India as the single largest contributor to the absolute increase in global energy demand through 2035, surpassing the growth seen in China during its comparable phase, with total energy demand projected to expand at roughly 3% annually through that period. Against this backdrop, the government's ambition of reaching 500 GW of non-fossil fuel capacity by 2030 is not merely an environmental aspiration — it is an economic necessity, with solar PV emerging as the fastest and most economical route to delivering new generation capacity at scale. FIGURE 6 INDIA TOTAL ENERGY CONSUMPTION, 2005-2024 Source: India Climate & Energy Dashboard (ICED), NITI Aayog & MRFR Analysis Copyright © 2026 Market Research Future 39 Multiple structural factors underpin this rising demand, making it a durable and multi-decade driver for solar investment. The IEA notes that electricity demand in India has been rising sharply due to increases in commercial and residential space, a surge in ownership of air conditioners and appliances, and rising demand from industry — and the country has seen the third-largest growth in power generation capacity in the world, after China and the United States, over the past five years. Per capita electricity consumption has risen by 45.8% to 1,395 kWh in 2023–24 from 957 kWh in 2013–14, even as energy shortages have been reduced from 4.2% in 2013–14 to just 0.1% in 2024–25. The latent headroom for per capita consumption to grow further — India still sits well below developed-country benchmarks — means the pipeline of incremental demand remains enormous. A critical new frontier amplifying this demand pressure is the explosion of digital infrastructure. The data center market in India requires huge capacities of power, with the market size of data centers at roughly 8 GW by 2025, and an estimated 20 GW of s olar power needed specifically for data centers by 2030. TERI researchers project that by 2030, data centers could account for up to 6% of India's total electricity demand — a sharp rise from less than 1% today — with AI being the primary driver of this surge, as AI- focused hyperscale facilities can individually consume as much power as 100,000 homes. This has made solar procurement a strategic imperative for operators: companies such as Nxtra by Airtel, CtrlS, and AdaniConneX have already committed to sour cing substantial portions of their power from captive solar and renewable power purchase agreements, creating a large and growing class of industrial solar off-takers. The convergence of broad-based economic growth, urbanization, industrialization, and the digital economy has therefore made rising energy demand both the most compelling and the most enduring driver of the India solar power market. In FY 2024–25, India's electricity generation touched a new high of 1,821 billion units with renewables growing 11.4% year-on-year, and notably, the increased peak demand of 250 GW was met largely through renewable energy, underscoring the sector's expanding role in meeting real-time load requirements. India added a record 40 GW of solar capacity in 2025, supported by both utility-scale projects and rooftop installations, and the overall power sector is entering a phase of dynamic expansion driven by rising demand, rapid renewable capacity addition, supportive policies, and strong financial backing heading into 2026. As long as India's economy continues its rapid ascent, the energy-demand engine will remain the most powerful structural tailwind behind solar power's extraordinary growth story. Copyright © 2026 Market Research Future 40 4.3 .2 DECLINING COST OF SOLAR TECHNOLOGY The single most transformative driver behind India's solar power boom has been the dramatic and sustained fall in the cost of solar photovoltaic PV technology. Solar PV module costs in India have plummeted by appro imately 95%, from over ₹200 per watt in 2010 to under ₹9 per watt in 2024 — a tipping point identified by researchers at the India Energy & Climate Center at UC Berkeley. This is not merely an incremental improvement; it represents a structural shift in the economics of electricity generation. W hen India launched its National Solar Mission in 2010, the weighted average Levelized Cost of Electricity (LCOE) for utility-scale solar stood at 375.9 USD/MWh — some 51% above the global average. By 2022, it had declined to just 37.4 USD/MWh, an overall reduction of 90%. This steep cost curve has made solar not just competitive, but in many cases the cheapest source of new power generat ion in the country. At the project level, falling module prices have consistently pulled down the cost of large-scale solar installations. The average cost of large-scale solar projects in India fell 25.7% year-over-year in Q2 2024, with solar module costs declining for six consecutive

4.5 .1 DOMESTIC MANUFACTURING BOOM AND SELF -RELIANCE India's solar manufacturing story is one of the most dramatic industrial transformations of the decade. Domestic solar equipment manufacturing capacity has grown from just 2.3 GW in 2014 to 100 GW in 2025 — a milestone experts describe as "historic" — with the Union Minister of New and Renewable Energy attributing this to the Production Linked Incentive (PLI) Scheme for high-efficiency solar modules and the broader push toward an Atmanirbhar Bharat (self-reliant India). By February 2026, India's solar module capacity under the Approved List of Models and Manufacturers (ALMM) had reached approximately 162 GW, against a domestic requirement of 50–55 GW, and is projected to reach 215–220 GWp by FY28. This extraordinary scale-up is not merely a supply-side story — it represents a structural realignment of India's energy security posture, reducing its historic vulnerability to import disruptions from dominant foreign suppliers. FIGURE 7 INDIA SOLAR MODULE MANUFACTURING CAPACITY, 2020-2025 Source: Ministry of New and Renewable Energy (MNRE), Press Information Bureau (PIB) & MRFR Analysis Copyright © 2026 Market Research Future 45 The policy architecture underpinning this boom has been deliberate and layered. Under the PLI scheme, Tranche-I allocated INR 4,500 crore for 8.737 GW of fully integrated manufacturing units, while Tranche-II issued letters of award for 39.6 GW of fully or partially integrated units with a PLI allocation of INR 13,937 crore — covering 15.4 GW of fully integrated (polysilicon to module), 16.8 GW of partially integrated (wafer to module), and 7.4 GW of cell and module capacity. Alongside the PLI, the ALMM framework has served as a demand-side anchor, mandating that government-backed solar projects source only domestically approved modules. A significant escalation of this mandate, effective June 2026, requires all clean energy projects to use domestically manufactured solar cells — expected to drive a massive expansion in cell production to match the already-high module capacity. Together, these tools have created a reinforcing loop between policy-guaranteed demand and expanding domestic supply. The self-reliance push is now moving decisively up the value chain. While large-scale solar parks and rooftop installations are undergoing accelerated deployment, the next step in self-reliance is the indigenization of solar cells — a far more technical challenge than module assembly. Capacity expansion under PLI has reached 2.2 GW at the wafer stage, 9.7 GW at cells, and 18.6 GW at modules, with the government proposing to add wafers to the ALMM from June 2028 — contingent on at least three domestic wafer units with 15 GW of combined capacity. Leading Indian conglomerates are rising to this challenge: Reliance Industries, Tata Power, and Adani Group are making substantial investments to establish vertically integrated manufacturing facilities covering the entire value chain from polysilicon to modules. Waaree Energies, meanwhile, became the first Indian manufacturer to cross 1 GW of monthly module output, signalling that Indian firms are achieving global-scale operational maturity. Technology upgrading is emerging as a parallel opportunity within the manufacturing boom. India's solar manufacturing for 202 6 is focused not just on capacity expansion but on a decisive shift from basic PERC technology to higher-efficiency n-type TOPCon, Heterojunction (HJT), and bifacial modules. This technological leap is critical — it enables Indian manufacturers to compete on quality and efficiency, not just cost. Recognizing the urgency of skill development to support this transition, the FY2026 budge t allocated INR 3,000 crore for the ITI upgradation programme — a steep rise from INR 294 crore in the revised estimates of FY25 — while the overall skill ministry budget more than doubled to INR 6,017 crore. Investments like these ensure that manufacturin g capacity expansion is matched by a workforce capable of operating and maintaining advanced fabrication lines. The long-term prize of this manufacturing self-reliance extends well beyond domestic energy security — it positions India as a credible global supplier. The solar sector has already become the backbone of India's renewable energy expansion, contributin g approximately 86% of new capacity additions between April 2024 and January 2025. As India approaches and surpasses module self-sufficiency, the opportunity to become a global alternative to China in solar PV supply is increasingly tangible. India histo rically relied on imports for cells, wafers, and upstream components, but domestic availability increased significantly through 2025, giving EPC players and developers more local options and greater supply chain confidence. With geopolitical pressures prompting many nations to diversify away from single-source solar supply chains, India's expanding, policy-backed, and increasingly vertically integrated manufacturing ecosystem is well-placed to serve not just its own 500 GW ambition by 2030, but a growing share of global solar demand. Copyright © 2026 Market Research Future 46 4.5 .2 ROOFTOP AND DISTRIBUTED SOLAR SURGE The rapid surge in rooftop and distributed solar is emerging as one of the most transformative opportunities within India’s so lar power market, shifting the sector from a predominantly utility-scale model to a more decentralized, consumer-driven paradigm. While India added a record ~36–38 GW of total solar capacity in 2025, distributed segments—especially rooftop solar—are increasingly contributing a meaningful share, accounting for nearly 19% of annual additions. This diversification reduces grid dependence, enhances energy access, and opens up new demand pools across residential, commercial, and industrial (C&I) consumers. A key indicator of this opportunity is the unprecedented growth in roof

4.4 .1 LAND ACQUISITION AND AVAILABILITY ISSUES India's dense population and competing demands for agriculture, housing, infrastructure, and industry make large-scale land acquisition for solar parks increasingly difficult. A utility-scale solar plant typically requires between 4 to 5 acres per megawatt, meaning that India's ambition of reaching 500 GW of renewable capacity by 2030 — with solar contributing an estimated 280 GW — translates into an enormous and sustained demand for contiguous land. Securing large, contiguous land parcels is particularly challenging due to fragmented landholdings, unclear ownership and title records, limited digitization of land records, and lengthy approval processes. These structural impediments have made land, rather than technology or financing, the most persistent bottleneck on the ground. The regulatory and legal framework surrounding land acquisition adds another layer of complexity. The Right to Fair Compensat io n and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act), while progressive in intent, has introduced mandatory Social Impact Assessments (SIAs), consent requirements, and compensation disputes that significantly extend timelines. Around 35% of unresolved issues in large infrastructure projects are related to land acquisitio n, and the solar sector is no exception. Solar park projects under the Inter-State Transmission System (ISTS) often face delays due to inadequate land acquisition processes prior to project auctions, resulting in infrastructure unpreparedness and delays in project develo pment even after allocation. Compounding this, of all the key states where maximum wasteland is available, only four states — Rajasthan, Madhya Pradesh, Maharashtra, and Gujarat — have framed adequate policies for government land allocation for renewable projects. This policy vacuum across most states leaves developers navigating a patchwork of inconsistent, often contradictory, state-level rules. State-level developments in 2024–2025 have further illustrated how swiftly the regulatory environment can shift against developers. At the beginning of 2024, the state government of Rajasthan — India's most solar-rich state — announced amendments to its land allocation policies mandating that solar companies secure numerous additional clearances, restricting leasing on specific categories of government land, and applying stronger conditions for transferring agricultural land to solar use. These changes also increased stamp duty and registration costs for land-related instruments, directly affecting project valuation and deal pricing. In Gujarat, the Torrent Power vs. SECI dispute highlighted the challenges that can arise when aligning renewable energy goals with practical realities — the delay in land allotment for nearly 500 MW of wind power capacity was caused by changes in land allocation policies by the Gujarat government, underscoring the complexities of navigating regulatory frameworks while advancing renewable energy projects. The private land acquisition route, while an alternative to government-sponsored solar parks, carries its own considerable risks. Private land acquisitions can involve hundreds of individual plots, and unlike solar parks where the state government aggregates land and grants sub-leases to developers, private acquisitions expose investors to title risks, land ceiling laws, and conversion processes. In Rajasthan, despite its solar policy framework, local revenue authorities continue to insist that developers comply with the Rajasthan Land Revenue (Conversion of Agricultural Land for Non-Agricultural Purposes in Rural Areas) Rules, 2007 — a time- consuming and costly process — and where landholdings exceed prescribed ceiling limits, developers are required to obtain additional approvals. The disconnect between the Solar Policy and land laws persists because while the solar policy falls under Rajasthan's Renewable Energy Corporation Limited, land acquisition falls under the jurisdiction of the land revenue department. This inter-departmental disconnect is a microcosm of a national problem. The cumulative effect of these issues is measurable in stalled capacity and lost investment. Additional renewable capacity remains stalled due to land acquisition challenges, unsigned power purchase agreements, equipment transport difficulties, and delays in transmission clearances. As of late 2025, an estimated 40–45 GW of awarded solar capacity remains "stranded" because Power Sale Agreements have not been signed, with land uncertainty being a key factor discouraging developers from moving to the Copyright © 2026 Market Research Future 42 financial closure stage. Transmission infrastructure projects are similarly affected, with landholder opposition and right -of-way disputes delaying several critical developments and slowing the pace of grid expansion needed to support renewable energy gro wth. While innovations such as agrivoltaics, floating solar, and rooftop systems offer partial relief by sidestepping ground-level acquisition entirely, they cannot substitute for the large-scale utility projects that India's 500 GW target ultimately demands. Without structural reforms — including a uniform national land policy for renewable energy zones, faster digitization of land records, and genuine single-window clearance mechanisms — land acquisition will continue to be one of the most consequential restraints on India's solar ambitions. Copyright © 2026 Market Research Future 43 4.4 .2 GRID INTEGRATION AND TRANSMISSION CONSTRAINTS India's solar power ambitions are running headlong into a structural bottleneck: the transmission network is simply not keeping pace with the speed of generation capacity addition. Over 50 GW of renewable energy capacity remained stranded nationwide as of June 2025, leading to project delays and increasing per-unit tr