2.7 GW in One Quarter: India's C&I Solar Market Hits Near-Record Pace Ahead of Regulatory Reset
India's commercial solar procurement market has rarely moved this fast, and the policy forces that drove the sprint are about to reset.
India's commercial and industrial solar buyers, factories, data centres, IT campuses, and large manufacturers, added 2.7 GW of open-access solar capacity in the first three months of 2026, the second-highest quarterly total on record. The figure, from Mercom India's Q1 2026 Solar Open Access Market Report published on 22 May, represents a 160% increase from the 1 GW installed in Q1 2025 and a 55% jump from the 1.7 GW added in Q4 2025. Cumulative open-access solar capacity across India now stands at 32.9 GW.
The number looks like a clean acceleration story. It is not entirely one.
Two Deadlines, One Rush
Behind the record quarter sits a well-documented mechanism: Indian solar developers and C&I buyers raced to commission projects before two policy deadlines simultaneously tightened the economics of new open-access solar.
The first was the ALMM List-II mandate. From 1 June 2026, all eligible solar projects must source cells from MNRE-approved domestic manufacturers, not imported Chinese cells. With India's domestic cell manufacturing capacity sitting at around 27 GW against module capacity exceeding 91 GW, developers anticipated higher procurement costs and constrained supply after the deadline. Getting projects across the commissioning line before June 1 meant locking in current module pricing.
The second was the progressive phaseout of the Inter-State Transmission System charge waiver. Projects commissioned from July 2025 onward began absorbing 25% of applicable ISTS charges, rising in 25% increments annually until full charges apply from July 2028. For interstate open-access deals, that cost escalation can be decisive: Priya Sanjay, Managing Director at Mercom India, noted that once developers sign power purchase agreements with C&I consumers, tariffs are largely fixed, leaving no room to absorb higher transmission costs later. Commissioning before the next step-up was the rational move.
The result was a front-loaded quarter driven less by organic demand growth than by deadline management.
Who Is Building, and Where
Rajasthan led Q1 2026 capacity additions, accounting for 39% of the quarter's installations. The top five states together contributed over 84% of total open-access additions, reflecting persistent geographic concentration in a market where state-level policy, land availability, and solar irradiation remain unevenly distributed. Karnataka held its position as the leader in cumulative installed capacity, with a 23% share of India's 32.9 GW total. Maharashtra and Rajasthan ranked second and third at 16% each.
The concentration of activity in a handful of states points to a structural challenge the Q1 headline number obscures: open-access solar growth in India is not a national phenomenon. It remains dependent on a small set of states with supportive regulatory frameworks, competitive cross-subsidy surcharge structures, and functioning open-access approval processes.
The Question for Q2 and Beyond
The commissioning rush that produced the Q1 figure will almost certainly not repeat in Q2. The ALMM List-II deadline lands on 1 June. The ISTS charge waiver stepped down again in July 2025. The pipeline of projects that were specifically front-loaded to beat these deadlines has largely been absorbed.
Raj Prabhu, CEO of Mercom Capital Group, framed the dynamic directly after the broader Q1 solar report: while project execution and commissioning activity remain strong, transmission readiness and evacuation infrastructure are struggling to keep pace with rapid capacity growth. Curtailment risks, grid flexibility constraints, and limited storage integration are now the structural limits on how much of the pipeline can actually come online at pace.
For C&I energy buyers, the Q1 data signals a market that is growing in scale and sophistication but repricing itself. Projects signed in Q2 and beyond will carry higher cell procurement costs, stepped-up transmission charges, and potentially longer procurement timelines as the ALMM approval registry for domestic cell manufacturers continues to be built out. The competitive advantage of locking in pre-June open-access solar PPAs has passed.
What to Watch
- Whether domestic solar cell manufacturing capacity scales fast enough under ALMM List-II to keep open-access module prices stable in H2 2026, or whether constrained supply drives tariff creep in new C&I deals
- State-level regulatory divergence: how quickly laggard states update open-access frameworks to capture demand from C&I buyers priced out of leading markets by surcharge structures
- Q2 2026 commissioning data from Mercom, expected in August, which will be the first clean read on market pace after both policy deadlines have landed