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Published on June 5th, 2019 | by Smiti


Low Margins, Cheaper Modules Make India Lowest-Cost Producer Of Solar PV

June 5th, 2019 by  

The International Renewable Energy Agency (IRENA) has issued a new report, entitled Renewable Power Generation Costs in 2018. The report finds India as the country with lowest installation cost for solar PV power plants. IRENA has compared costs for 19 countries with large solar PV installed capacities.

Overall Cost

IRENA has reported that India had the lowest cost of installation for solar PV power plants in 2018. The agency compared installation costs for 19 countries including heavyweights like China, United States, Japan, Italy, Japan and Germany. The agency compared costs across multiple components like modules and inverters, balance of system hardware, installation costs and soft costs.

The total cost of installation per kilowatt in India in 2018 was US$793 while the average cost of installation among the 19 countries was US$1,427/kW. Canada had the highest cost of installation at US$2,427/kW. Italy had the second-lowest cost of installation at US$870/kW. China was the only other country with cost of installation at less than US$1,000/kW.

Module & Inverter Costs

Modules and inverters are among the largest contributors to installation costs of a solar PV project. The cost of modules in India was determined as US$309/kW, the third-lowest among 19 countries. Interestingly, China was not the country with the lowest cost of modules, it was France at US$267/kW.

Installation Costs

Under the category of installation costs, IRENA considered 7 components, including grid connection, cabling, monitoring and control, and mechanical and electrical installation. In five of these seven components India ranked in the top five countries in terms of lowest cost. In safety and security India ranked 18th, i.e. second-highest cost. Safety and security-related costs in India were US$34/kW compared to US$23, the average of 19 countries.


Profit margin, a component of soft costs, is among the three components in which India ranked first, i.e., lowest cost. Indian developers took a profit margin of just US$33/kW, compared the average of US$155/kW. Developers in Canada charged the highest margin at US$391/kW, or around 16% of the total cost. In India the profit margin was just 4% while the average for all countries it was 11%.

Financing Costs

Profit margin in India was the lowest despite comparatively high financing costs. In terms of cost of finance India ranked 11th among the 19 countries compared. At US$54/kW financing cost contributed nearly 7% to the total cost of installation in India compared to just 4% on average among the 19 countries.

Areas of Concern

Apart from financing costs, which are high in almost all developing markets, some areas of concern that Indian government and project developers should look into are safety and security, incentive application and customer acquisition. India ranked below 10 in these four areas. Together these four components contributed 18% to the total installation cost in India compared to just 10% on average for the 19 countries. 

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About the Author

works as a senior solar engineer at a reputed engineering and management consultancy. She has conducted due diligence of several solar PV projects in India and Southeast Asia. She has keen interest in renewable energy, green buildings, environmental sustainability, and biofuels. She currently resides in New Delhi, India.

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