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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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Wednesday, 28 July 21
IN THE PHILIPPINES, COAL’S DEMISE MAKES WAY FOR A RENEWABLE ENERGY BOOM - IEEFA
Imported gas lock-in could undermine the economic benefits of a clean energy transition
The Philippines’ energy sector is on t ...
Wednesday, 28 July 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during this first half of the year, we continue to come across surprises and new restrictions which are trembling ...
Saturday, 24 July 21
UNDERSTANDING INDIA'S LATEST PEAK POWER DEMAND RECORD - IEEFA
Ramping up solar will be crucial as peak power demand hits during the day
At around noon on 7 July 2021, India’s instantaneous ...
Wednesday, 21 July 21
MARKET INSIGHT - INTERMODAL
Dry Buk Sales and Purchase activity has heated up during 2021, reaching record high levels during the first half of the year. The increased interes ...
Monday, 19 July 21
CHINA'S COAL OUTPUT UP 6.4 PCT IN H1 - XINHUA
China’s raw coal output climbed 6.4 percent year on year to 1.95 billion tonnes in the first six months of the year, official data showed.
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- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Planning Commission, India
- The Treasury - Australian Government
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
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