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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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- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
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- Ministry of Transport, Egypt
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- Commonwealth Bank - Australia
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- Australian Commodity Traders Exchange
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- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
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- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
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- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
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- Eastern Energy - Thailand
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- Samtan Co., Ltd - South Korea
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- Directorate General of MIneral and Coal - Indonesia
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- The University of Queensland
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- Indian Energy Exchange, India
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- Pipit Mutiara Jaya. PT, Indonesia
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- Siam City Cement PLC, Thailand
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- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
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- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
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- LBH Netherlands Bv - Netherlands
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- Indonesian Coal Mining Association
- Eastern Coal Council - USA
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- Parliament of New Zealand
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- Interocean Group of Companies - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Australian Coal Association
- Electricity Authority, New Zealand
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- Sojitz Corporation - Japan
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- Coalindo Energy - Indonesia
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- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
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- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
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- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
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- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
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- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
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- Cement Manufacturers Association - India
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- IHS Mccloskey Coal Group - USA
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- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
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