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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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Thursday, 01 July 21
END TO COAL POWER BROUGHT FORWARD TO OCTOBER 2024
Press Release: The deadline to phase out coal from Great Britain's energy system has been brought forward by a whole year, highlighting the UK& ...
Thursday, 01 July 21
WHY BUILD 600 NEW UNPROFITABLE COAL PLANTS? - DEUTSCHE WELLE
Governments in Asia are planning 600 new coal plants that could lose investors $150 billion and derail efforts to limit temperature rise in line wi ...
Thursday, 01 July 21
FIVE ASIAN COUNTRIES ACCOUNT FOR 80% OF NEW COAL POWER INVESTMENT - THE GUARDIAN
Five Asian countries are jeopardising global climate ambitions by investing in 80% of the world’s planned new coal plants, according to a rep ...
Wednesday, 30 June 21
DELTA DUNIA MAKMUR RECORDED AN IMPROVED REVENUE IN Q1 2021; REVENUE INCREASED BY 49% QOQ TO US$160 MILLION ON THE BACK OF COAL PRICE RECOVERY
PT Delta Dunia Makmur Tbk. (“DOID”) released its consolidated financial and operating results that include its primary and wholly-owned ...
Wednesday, 30 June 21
BUMA SIGNED MINING AGREEMENT WITH ADARO
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into an agreement for the p ...
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- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- GVK Power & Infra Limited - India
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
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