New Delhi, August 13: India is poised to set a new record in solar energy capacity growth by 2026. According to a recent report by Wood Mackenzie, the country added 34 gigawatts direct current (GWDC) of solar power capacity in the first half of 2026 (January-June), marking a 38% increase compared to the same period last year. At this pace, India could exceed 50 gigawatts of solar capacity for the entire year, which would be the largest annual expansion in the nation’s history.
The report indicates that India is on track to install more solar capacity this year than in any other year to date. However, the policies driving this rapid growth are also putting pressure on the domestic supply chain, which may lead to increased costs for solar projects in the near term.
Experts note that developers have been racing to complete projects ahead of the June 2026 deadline for the Approved List of Models and Manufacturers-II (ALMM-II). This urgency has resulted in a significant acceleration in the construction and commissioning of solar energy projects during the first half of the year.
Suri Singh, a research analyst at Wood Mackenzie, stated that ALMM-II is a crucial step towards developing a fully integrated domestic solar supply chain in India. However, the growth of solar cell manufacturing capacity in the country has not kept pace with solar module production. As a result, cost increases are almost certain in the short term, and developers may face challenges until prices stabilize.
Another factor contributing to the surge in the solar energy sector this year is the gradual reduction of inter-state transmission charge exemptions. This exemption has been cut from 75% to 50% for projects commissioned from July 2026, with plans to phase it out entirely after July 2028. Consequently, many developers have accelerated project completions ahead of the deadlines.
The report also warns that the pace of growth may slow in the second half of 2026, primarily due to the lack of domestic solar cell production capacity and rising module prices, which could exert pressure on the development of new projects.
Nevertheless, there are some positive signs. The government has exempted net metering and open access projects from ALMM-II regulations until December 31, 2026, which may allow for additional capacity to be added in the coming months.
Additionally, the Ministry of New and Renewable Energy (MNRE) provided relief in July 2026 for projects that were nearly complete. The ministry agreed to exempt projects that applied by July 23, 2026, from ALMM-II requirements.
The report also highlights that the implementation of ALMM-II has reduced direct imports of solar cells from China. While imports have not ceased entirely, their sources have shifted. In early 2026, solar cell imports from Indonesia nearly tripled, indicating that companies are seeking alternative sources.
In the first five months of 2026, India imported 5 gigawatts of wafers and 20 gigawatts of solar cells. To support domestic solar cell production, wafer imports saw an annual increase of 86%.
Matthew Thomas, another research analyst at Wood Mackenzie, believes that as additional solar cell manufacturing capacity is established in the country, prices will gradually stabilize. He anticipates that the market could reach a more balanced state by 2029, but this will require policy stability and timely capacity expansion by manufacturers.
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