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