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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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Monday, 09 August 21
AIIB MAY OFFICIALLY END COAL FINANCING IN 2022 - CHINA DAILY
The Asian Infrastructure Investment Bank may officially rule out coal projects if it updates its energy strategy next year, after shunning funding ...
Monday, 09 August 21
CHINA COAL INVENTORY THINS AMID PEAK POWER DEMAND- STATE MEDIA : REUTERS
China’s coal inventories have dropped to near historic lows since August due to peak summer electricity demand and transportation bottlenecks ...
Wednesday, 04 August 21
THE INDONESIAN COAL PRICE REFERENCE SURGED TO A FRESH RECORD HIGH OF USD 130.99 A TON IN AUGUST 2021
COALspot.com: The Indonesian Coal Price Reference ( HBA) surged to a fresh record high of USD 130.99 a ton in August 2021.
The ...
Wednesday, 04 August 21
MARKET INSIGHT - INTERMODAL
Unlike the Dry Bulk and Container sectors where freight rates have surged into 2021, the tankers market continues to experience lackluster earnings ...
Sunday, 01 August 21
SEABORNE HARD COAL TRADE IN 2020 DECREASED BY 149 MILLION MT, OR 12.1%, TO 1,083 MILLION MT - GERMAN COAL IMPORTERS ASSOCIATION
- Reduced coal-fired power plant fleet secures Germany’s power supply in severe winter of 2020/2021; little wind availability and hence stron ...
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- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- The University of Queensland
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
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