Crisil Ratings Forecasts Record Solar Surge This Fiscal as Module Prices Drop, Enhancing Returns for 45 GW Pipeline

Representational image. Credit: Canva

In a noteworthy development, the solar industry is set to witness a significant boost as the prices of solar modules have been on a steady decline since October 2022. This trend is anticipated to elevate the internal rate of return (IRR) for a substantial 45 GW utility-scale solar project pipeline awarded since fiscal 2021. The decline in module prices is poised to accelerate the pace of solar capacity implementation, reaching a remarkable annual rate of 16 GW in the current fiscal year.


The slowdown in implementation observed in fiscals 2022 and 2023, attributed to pandemic-related disruptions and challenges linked to the protection of the Great Indian Bustard bird, is expected to be reversed. Delays were incurred due to extensions granted by relevant authorities, coupled with an upswing in module prices. Now, with a renewed decline in module prices and the resolution of pandemic-related issues, execution is projected to gain momentum, reaching a crescendo by fiscal 2026.


The reversal of falling module prices in the last quarter of fiscal 2021 impacted the returns of around 20 GW of projects auctioned in fiscals 2021 and 2022, constituting part of the aforementioned 45 GW solar project pipeline. Developers, factoring in declining module prices during bidding, faced challenges as raw material costs surged. The pandemic-induced extensions in commissioning dates provided relief, allowing developers to defer module purchases.

Also Read  Credence Solar Panels Achieves Historic BIS Certification for 670W Capacity - A Landmark in Indian Solar Manufacturing

With module prices currently down approximately 30% as of September 2023 compared to the average of the previous fiscal year, project IRRs are expected to witness an improvement of 300-500 basis points, averaging around 9%. This favorable trend in module prices is not only beneficial for projects auctioned in fiscals 2021 and 2022 but also for the 25 GW capacities bid since fiscal 2023. Higher bid tariffs for these projects, factoring in elevated module costs, are poised to see IRRs improve by 200-300 basis points.

The improved returns are anticipated to support the execution of nearly 16 GW of solar capacities in the current fiscal year, with the remaining 29 GW expected to be implemented over fiscals 2025 and 2026. However, projections remain contingent on potential geopolitical impacts on supply chains or the imposition of additional duties, which could potentially affect the IRRs of solar projects.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.