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