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Large-Scale Solar Costs Rise Again in India as Demand for Domestic Modules Surges

India Solar Market Update, large-scale solar project costs in India increased for the second consecutive quarter, driven primarily by rising domestic module prices and regulatory compliance costs. Average project costs rose 3% quarter-over-quarter (QoQ) and 1% year-over-year (YoY).

The average selling price (ASP) of Indian-made DCR-compliant monocrystalline PERC and TOPCon modules increased by 0.3% QoQ, spurred by demand from PM Surya Ghar and PM KUSUM schemes, along with rising input costs and a scramble for limited production slots. In contrast, non-DCR module prices dipped slightly, correcting from previous highs caused by anti-dumping duties on solar glass and aluminum frames.

Solar modules now account for 48% of total project costs, up from 47% last quarter. Regulatory frameworks like the Approved List of Models and Manufacturers (ALMM) and BIS compliance have increased certification and operational costs for manufacturers, contributing to the upward pressure on module pricing. Limited bulk discounts and regional demand spikes are also straining the value chain.

On the other hand, solar inverter prices declined by 0.5% in Q1 2025, now representing about 6% of total system cost. The market is gradually transitioning from central to string inverters, preferred for their faster repair and easier replacement. Costs for mounting structures and other BoS components remained stable at 9% and 2%, respectively.

India added 6.7 GW of solar capacity in Q1 2025—a 25?cline YoY and 14% down from Q4 2024. By March 2025, India’s cumulative solar capacity stood at 104.6 GW, indicating a slowdown amidst rising project costs and evolving policy and supply chain dynamics.