Key Points
- India added 34 GWdc of solar capacity in first half of 2026, up 38 per cent year on year
- Full year solar installations forecast to exceed 50 GWdc, breaking 2025 record
- Utility scale system prices to rise 20 per cent by Q4 2026 due to cell supply constraints
India will commission more solar capacity in 2026 than in any previous year, but the policy driving the surge is simultaneously creating a supply crunch that will push system prices up by 20 per cent by the fourth quarter, according to new research from energy consultancy Wood Mackenzie.
The country added 34 gigawatts of direct current (GWdc) solar capacity in the first half of 2026, a measure of raw panel output before conversion losses. This represents a 38 per cent increase over the same period last year, as developers raced to complete projects ahead of the June deadline for a new domestic manufacturing mandate.
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Full year additions are now forecast to exceed 50 GWdc, surpassing the previous record of 49 GWdc set in 2025, Wood Mackenzie said in its report titled “From Modules to Cells: India Deepens its Solar PV Push”.
The findings shows a growing concern which is at the heart of India’s solar ambitions. The government‘s push to build a fully integrated domestic supply chain is succeeding in driving installations, but the lack of domestic cell manufacturing capacity to match module production is creating bottlenecks that developers will pay for through higher equipment costs.
ALMM-II impact
“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.”
The Approved List of Models and Manufacturers-II (ALMM-II) is a government requirement that solar projects receiving public support must use modules made from domestically manufactured cells. It came into effect in June 2026, extending an earlier policy that covered only finished modules.
The 34 GWdc added in the first half of this year reflects a concentrated push by developers to complete projects before the mandate took effect. The accelerated build-out was further driven by the phased removal of waivers for inter-state transmission charges, which fell from 75 per cent to 50 per cent for projects commissioned from July 2026 onwards. These waivers are set to be phased out entirely after July 2028.
Momentum is expected to slow in the second half of 2026 as cell capacity constraints and rising module prices weigh on project development. However, ALMM-II waivers granted for net metering and open access projects until 31 December 2026 could provide some upside.
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The Ministry of New and Renewable Energy (MNRE) also agreed in July 2026 to waive the mandate for projects approaching completion, requiring applicants to have submitted applications by 23 July 2026.
Import shift
While ALMM-II has reduced India’s direct cell imports from China, sourcing has pivoted toward Southeast Asia. Indonesian cell imports nearly tripled in early 2026.
In the first five months of 2026, India imported 5 GW of wafers and 20 GW of cells, with wafer imports climbing 86 per cent year on year to support domestic cell production. Wafers are thin slices of semiconductor material that form the base layer of a solar cell.
India has imposed a 20 per cent basic customs duty on imported cells and modules. In September 2025, the Directorate General of Trade Remedies (DGTR) recommended additional anti-dumping duties of up to 30 per cent on Chinese-origin solar cells and modules. A final decision from the Central Government remains pending.
These duties have made Indonesian-origin supply an increasingly attractive alternative, though circumvention scrutiny may follow. Similar patterns of Chinese cell rerouting through third countries have been observed in other markets.
Any delay to the 14 GW of new cell manufacturing capacity currently under construction risks deepening import reliance and driving prices beyond current estimates. A total of 130 GW of additional cell capacity is expected to come online by 2029, requiring a compound annual growth rate of 49 per cent from the 2026 full-build baseline of 88 GW.
Price outlook
Even as new cell capacity comes online, Wood Mackenzie expects insufficient utilisation to keep supply short of demand in 2027. Cell production is projected to reach 29 GW next year, still falling 21 GW short of the average annual module demand of 50 GW.
As a result, system prices are forecast to decline by just 3 per cent between Q4 2026 and Q4 2027.
“Prices are expected to stabilise through 2029 as additional cell capacity comes online, but the transition will require policy consistency and timely execution by manufacturers,” said Mathew Thomas, research analyst, Wood Mackenzie.
By the numbers
- 50 GWdc
- Forecast solar installations in India for 2026
- 20%
- Price rise expected for utility-scale systems by Q4 2026
- 38%
- Year on year increase in H1 2026 solar additions
“The rollout of ALMM-II may follow ALMM-I’s pattern of multiple exemptions, though the impact should be more contained given greater preparedness among suppliers, developers and policymakers.”
The MNRE plans to implement ALMM-III in June 2028, extending the domestic content mandate to solar wafers. This would require projects to use modules made from domestically manufactured cells that are themselves made from domestically produced wafers.
Your Questions, Answered
What is ALMM-II and why does it matter for Indian solar projects?
ALMM-II is the Approved List of Models and Manufacturers-II mandate requiring solar projects receiving government support to use modules made from domestically manufactured cells. It came into effect in June 2026 and aims to build a fully integrated domestic solar supply chain in India.
How much solar capacity did India add in the first half of 2026?
India added 34 GWdc of solar capacity in the first half of 2026, representing a 38 per cent increase over the same period in 2025. Full year additions are forecast to exceed 50 GWdc.
Why are solar system prices rising despite record installations?
Domestic cell manufacturing capacity has not kept pace with module production, creating supply constraints. Wood Mackenzie forecasts utility-scale system prices will rise 20 per cent by Q4 2026 as developers compete for limited domestically produced cells.
When will India implement ALMM-III for solar wafers?
The Ministry of New and Renewable Energy plans to implement ALMM-III in June 2028, extending the domestic content mandate to solar wafers and requiring fully integrated domestic manufacturing from wafer to module.