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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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- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Romanian Commodities Exchange
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- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
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- Indonesian Coal Mining Association
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- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
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- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
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- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
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- Tamil Nadu electricity Board
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- Formosa Plastics Group - Taiwan
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- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
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- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
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- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
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- New Zealand Coal & Carbon
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- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
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