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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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Saturday, 17 July 21
COAL PRICES TRADE AT DECADE HIGH OF $140 PER TONNE, HERE ARE SOME FACTORS AT PLAY: CNBC-TV18
Coal prices are trading at $140 per tonne. In the last one week, coal has seen more than 8 percent gains; the last one month has seen 24 percent ju ...
Thursday, 15 July 21
U.S. FOSSIL FUEL CONSUMPTION FELL BY 9% IN 2020, THE LOWEST LEVEL IN NEARLY 30 YEARS - EIA
U.S. fossil fuel consumption fell by 9% in 2020, the lowest level in nearly 30 years
In 2020, total consumption of fossil fuels in t ...
Thursday, 15 July 21
IN 2020, U.S. COAL PRODUCTION FELL TO ITS LOWEST LEVEL SINCE 1965 - EIA
U.S. coal production totaled 535 million short tons (MMst) in 2020, a 24% decrease from the 706 MMst mined in 2019 and the lowest level of coal pro ...
Wednesday, 14 July 21
MARKET INSIGHT - INTERMODAL
In its latest Global Economic Prospects report, the world bank recorded the strongest post-recession global growth in 80 years, but emerging and de ...
Tuesday, 13 July 21
JAPAN STILL SEEKING TO EXPLOIT COAL POWER LOOPHOLES - IEEFA
JBIC wants to continue burdening developing nations with its expensive coal-fired power technology
Japan is continuing to push its expensive c ...
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- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
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- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Planning Commission, India
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- Eastern Energy - Thailand
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- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
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- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
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- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
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- Singapore Mercantile Exchange
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- Global Coal Blending Company Limited - Australia
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- Mintek Dendrill Indonesia
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- PTC India Limited - India
- The University of Queensland
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- Toyota Tsusho Corporation, Japan
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- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
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- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
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