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Thursday, 01 July 21
WHY INDIA’S SOLAR POWER TARIFFS ARE CLIMBING AFTER HITTING RECORD LOWS LAST YEAR - IEEFA
What’s behind the recent increase?
Solar tariffs are deflationary. Prices have fallen by 75% in seven years in India, and in 2020 solar tariffs hit record lows.
From 2019 to the first quarter of 2020, most of India’s newly-auctioned solar projects saw tariffs in the range of Rs2.5-2.87/kilowatt hour (kWh). Then in February 2020, the Ministry of New and Renewable Energy (MNRE) removed ceiling tariffs for all new solar and wind tenders to hasten tender activity and capacity allocation. From Quarter 2 of 2020, prices were in the range of Rs1.99-2.97/kWh, with bids thereby hitting the new record low tariff.
The reasons for such low tariffs were access to low cost financing (cheaper interest rates) by international developers based out of Saudi Arabia (Aljomaih Energy and Water Co.) and Singapore (Sembcorp) as well as government entities like NTPC which can secure debt at a rate of 7-7.5%. And since they can source funds at lower rates, their return on equity expectation is also lower. Also, these tenders are likely to be exempted from the Safeguard Duty (SGD) and Basic Customs Duty (BCD) on solar cell and module imports. Another key factor was power purchase assurance for the developers, for example, the power sale agreement (PSA) between the intermediary procurer, Solar Energy Corporation of India (SECI), and the buying entity, Rajasthan power distribution company (Discom) Rajasthan Urja Vikas Nigam Ltd. (RUVNL). The other tender was issued by Gujarat Discom, Gujarat Urja Vikas Nigam Ltd. (GUVNL).
In 2021, however, solar tariffs saw an upward trend. In January and February, the lowest tariffs discovered in auctions were Rs2.22/kWh and Rs2.25/kWh, by Torrent Power Ltd. (TPL) and NTPC Ltd. The tariff increases could be attributed to lack of participation by international developers like Aljomaih Energy and Water Co. and Sembcorp. Moreover, module prices increased from US$0.20/Wp in July 2020 to US$0.22-0.23/Wp in January 2021, causing solar prices to increase. Further, module suppliers are now selling modules at FOB (free on Board) prices instead of CIF (cost, insurance, and freight) prices, which is also impacting solar prices in India.
Then in March, the Government of India announced it will impose a 40% basic customs duty (BCD) on solar modules and 25% on solar cells from 1 April 2022 in a move to promote domestic manufacturing. The imposition of BCD is likely to increase solar tariffs by approximately 25%. The lowest tariff delivered in the first solar auction result after the BCD announcement – GUVNL’s 500MW auction in Gujarat – was Rs2.22/kWh, a 21 paisa (12%) increase per kWh from the previous GUVNL tender under the same conditions.
Lower prices are favourable for renewable energy growth. However, aggressive tariffs come with risks, and developers need to properly factor these risks into their bids. With improved module technology, generation will increase. Another factor that will pull down solar prices is access to low cost financing. On the other hand, a rise in module costs due to various global demand and supply factors and floating interest rates that change in line with Reserve Bank of India (RBI) guidelines could push prices upwards.
Vibhuti Garg is an Energy Economist and Lead India at IEEFA
This article was first published in SolarQuarter India
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Friday, 27 August 21
THE ECONOMICS OF INDONESIA’S DIESEL POWER PLANT TO GAS CONVERSION PLAN ARE PROBLEMATIC - IEEFA
Deploying new small-scale LNG is an uphill battle for PGN
Indonesian gas is currently in a precarious position, where the government needs to ...
Thursday, 26 August 21
INDIA IMPORTED 17.06 MLN TONNES OF LPG IN 2020; UP 11.5% Y-O-Y
Global LPG trade remained fairly positive in 2020, despite the global economic impact from COVID-19, and surged strongly in the first half of 2021. ...
Thursday, 26 August 21
MARKET INSIGHT - INTERMODAL
24th of August 2021, the Baltic Dry Index reached 4,201, a YTD high and the highest since May 2010.
Cape 5TC daily average @ 51,472
...
Tuesday, 24 August 21
COAL PRICE RALLY TO PRESSURE CHINESE POWER GENCOS’ MARGINS FITCH RATINGS
Fitch Ratings expects the pressure on Chinese power generation companies’ (gencos) profit from the recent coal price surge to weaken their cr ...
Tuesday, 24 August 21
TIGHT POWER SUPPLY IN CHINA AMID STRONG DEMAND, HIGH COAL PRICES - FITCH RATINGS
China experienced tight power supply in 1H21 on stronger than expected power demand as economic activity continued to recover, Fitch Ratings says i ...
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- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Planning Commission, India
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
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