Solar Prices Fall by 12% in the first quarter of 2025 Effects on India's Renewable Energy Sector
In the first quarter of 2025, India experienced a remarkable decline of 12 percent in the cost of solar photovoltaic (PV) systems for the first time in history. This is a turning point for the country's renewable energy sector. The improvements in domestic manufacturing, as well as greater economies of scale, are linked to this decline. Significantly, by March 2025, India's solar cell manufacturing capacity escalated almost threefold to 25 GW, strengthening the supply chain and diminishing dependence on imports.
Even with the cuts in spending, solar installations for the first quarter of 2025 were at 6.7GW, which is a 25-percent decline from the previous year's 9 GW in the first quarter of 2024. General restraint with substation capacities, bottlenecks in transmission systems, and delays in signing power purchase agreements (PPA) slowed the process.
In the first quarter of 2025, the total renewable power in India reached 47.6 percent solar energy with an overall contribution of 22 percent power capacity. This shows the growth in the importance of the industry for energy in the country.
Nonetheless, tenders for solar projects during the period went down from 30.7 GW in the first quarter of 2024 to 14.4 GW in the first quarter of 2025, marking a 53 percent contraction year-on-year. This drop may affect future supply and demand and investor sentiment. In order to avail of the cost benefits while remedying the infrastructural difficulties, India needs to improve grid capacity, ease regulations, and promote investment in transmission infrastructure. The country still aims to reach 500 GW of renewable energy capacity by the year 2030.
India's solar manufacturing expanded significantly in 2025 due to the PLI Schemes. Companies such as Tata Power Solar, Adani Solar, and Waaree Energies increased their integrated solar module production. The Government's initiative reduced the reliance on Chinese imports and further helped in the 12 percent reduction of solar modules priced at the beginning of 2025. The new plants for polysilicon and wafer manufacturing in Gujarat and Andhra Pradesh also enhanced cost efficiency.
