India’s solar sector capacity is projected to reach 214GW by 2030, with 66% of the incremental addition expected to come from solar energy, according to a recent report.
India’s solar sector is on the brink of significant growth in the next decade, with the country aiming to achieve 500GW of renewable energy capacity by 2030. A report by Kotak Institutional Equities predicts that India’s solar energy capacity will soar to 214 GW by 2030 from the current 82GW.
The expansion of solar capacity will be primarily fueled by initiatives such as the PM Surya Muft Bijli Yojana (rooftop solar), PM-KUSUM scheme (solar pumps), as well as industrial and utility-level additions. The report anticipates India’s solar capacity to reach 214GW by FY2030, up from 82GW in FY2024, driven by various factors including utility-level additions, rooftop solar, solar pumps, and industrial additions.
India’s total energy capacity is projected to reach 641GW by FY2030, up from 442GW in FY2024, with approximately 66% of the incremental addition expected to come from solar energy. As of FY2024, India has 70GW of installed solar module capacity and 7GW of solar cell capacity, with an additional 84GW of solar cell capacity expected to be added in the next three years.
The government’s focus on renewable energy expansion is set to double India’s installed capacity over the next 11 years, with 90% of the incremental addition coming from renewables. The National Green Hydrogen Mission could further boost demand estimates. Government measures such as trade barriers, production-linked incentive (PLI) schemes, have led to increased domestic production of solar cells and modules by Indian manufacturing companies.
The imposition of 50% tariffs on Chinese solar imports by the US and the implementation of the Uyghur Forced Labor Prevention Act in June 2022 (UFLP Act) have had a significant impact on the Indian solar manufacturing sector. These measures have played a crucial role in driving the exponential growth of the industry. It is essential to sustain such policies over the medium term to ensure the continued scaling up of the industry.
According to a recent report, the unit economics and return profile of the seven manufacturing options available to Indian companies are quite attractive across most categories. The current valuation of Indian solar manufacturing companies suggests that the sector will experience continued exponential growth in the medium term. However, as many players announce large capacity expansion plans, margins and return ratios are expected to normalize in the future.
Integrated Indian manufacturers (from ingot to module) and companies with a local US manufacturing presence are projected to have superior profitability and higher utilization over the medium term. Despite these positive projections, the report also warns of the risk of over-capacity in the Indian Solar Industry. It is anticipated that heightened competitive intensity will begin to impact margins starting in 2028.
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