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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, 13 August 21
INDONESIA’S COAL EXPORTS TO JAPAN DECLINED BY -26.3% YOY TO 11.9 MLN TONNES IN THE FIRST 7 MONTHS OF 2021; STILL THE SECOND LARGEST SOURCE FOR JAPAN’S COAL IMPORTS IS INDONESIA - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade. Total global loadings in the 12 months of 2020 were down -12.7% year-on-yea ...
Thursday, 12 August 21
ONLY 3 VLCCS SOLD FOR DEMOLITION IN 2021 AS SECONDHAND PRICES TEMPT - BIMCO
During the first seven months of 2021, only three actively trading Very Large Crude Carriers (VLCCs) have been sold for demolition. The current mar ...
Wednesday, 11 August 21
U.S: EIA EXPECTS COAL EXPORTS TO TOTAL 90 MMST IN 2021, 30% INCREASE FROM 2020
Coal production in EIA's forecast totals 607 million short tons (MMst) in 2021, an increase of 13% over 2020.
EIA is also ...
Wednesday, 11 August 21
MARKET INSIGHT - INTERMODAL
Energy is at the core of the global climate dialogue as the climate challenge is essentially an energy challenge. Policy experts around the world a ...
Tuesday, 10 August 21
34 INDONESIAN COAL COMPANIES TEMPORARILY BANNED FOR COAL EXPORTS
The Ministry of Energy and Mineral Resources (ESDM) has imposed sanctions in the form of a coal export ban for 34 coal companies as reported by CNB ...
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- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Deloitte Consulting - India
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Planning Commission, India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- The University of Queensland
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
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