Noida, Aug 13 (APAC Media): India is on track to commission more solar power capacity in 2026 than in any previous year, as strong policy support drives a record expansion of the renewable energy sector, according to a Wood Mackenzie report.
However, the policies underpinning the surge are also creating a supply crunch, which is expected to push solar system prices significantly higher, the energy research firm said.
India added 34 GWdc of solar capacity in the first half of 2026, up 38% from a year earlier, as developers rushed to commission projects ahead of a June deadline linked to the Approved List of Models and Manufacturers-II (ALMM-II).
Solar capacity additions for the full year are expected to top 50 GWdc, exceeding the previous record of 49 GWdc set in 2025, according to Wood Mackenzie’s report, From Modules to Cells: India Deepens its Solar PV Push.
“India’s ALMM-II mandate is a bold step toward building a fully integrated domestic solar supply chain, but cell manufacturing capacity has simply not kept pace with modules,” said Sureet Singh, Research Analyst, Wood Mackenzie.
“The near-term cost impact is unavoidable, and developers will need to navigate a difficult transition period before prices stabilise,” it added.
India’s Solar Module & Cell Manufacturing Capacity (GW)
India added 34 GWdc of solar capacity in the first half of 2026 as developers accelerated project commissioning ahead of the implementation of ALMM-II, which requires modules used in government-supported projects to be made with domestically manufactured cells.
The build-out was also supported by the phased withdrawal of waivers on inter-state transmission charges. The waiver fell to 50% for projects commissioned from July 2026 and is scheduled to end entirely after July 2028.
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Growth is expected to moderate in the second half as cell shortages and higher module prices weigh on project development. However, exemptions from ALMM-II for net-metering and open-access projects until December 31 could provide some upside.
The Ministry of New and Renewable Energy also agreed in July to waive the mandate for projects nearing completion, provided applications were submitted by July 23.
India’s ALMM-II regime has reduced direct solar cell imports from China, but sourcing is shifting towards Southeast Asia, with Indonesian cell imports nearly tripling in early 2026.
India imported 5 GW of wafers and 20 GW of cells in the first five months, while wafer imports rose 86% year-on-year, supporting domestic manufacturing. India imposes a 20% basic customs duty on imported cells and modules.
The Directorate General of Trade Remedies in September 2025 recommended anti-dumping duties of up to 30% on Chinese-origin products, pending a final decision. Delays in commissioning 14 GW of capacity under construction could increase import dependence and push prices higher.
Prices to remain elevated through 2027
Solar cell prices are expected to remain elevated through 2027 as new capacity fails to fully meet demand, Wood Mackenzie said. Cell production is projected at 29 GW next year, leaving a 21 GW shortfall against average annual module demand of 50 GW. System prices are forecast to decline only 3% between the fourth quarters of 2026 and 2027.
Solar prices are expected to stabilise through 2029 as more cell manufacturing capacity comes online, but policy consistency and timely execution by manufacturers will be key to the transition, said Mathew Thomas, research analyst at Wood Mackenzie.
Thomas said the rollout of ALMM-II could see a pattern similar to ALMM-I, which had multiple exemptions. However, he expects the impact to be more limited as suppliers, developers and policymakers are better prepared this time. He said the Ministry of New and Renewable Energy’s plan to introduce ALMM-III in June 2028, covering solar wafers, shows that India’s push for greater domestic content is set to continue.
–ENDS–
Disclaimer:Â This article is for informational purposes only. APAC Media is not liable for any investment decisions or losses. Please conduct your own research or consult a financial advisor before investing.
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