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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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Tuesday, 26 October 21
CHINA'S COAL-RICH SHANXI BEEFS UP COAL PRODUCTION - XINHUA
Major coal producers in north China’s Shanxi Province, a leading coal-producing region of the country, have beefed up production to ensure en ...
Tuesday, 26 October 21
ENERGY CRISIS SHOWS COAL IS AN EXPENSIVE AND UNRELIABLE SOURCE OF ELECTRICITY GENERATION - IEEFA
Any knee-jerk reaction that urges more investment in coal completely misses the point
India is teetering on the brink of joining a growing glo ...
Tuesday, 26 October 21
CHINA TO INVESTIGATE ENERGY INDEX PROVIDERS IN BID TO TAME COAL PRICES - REUTERS
China said on Monday it will investigate energy price index providers as it urged coal industry participants to “strictly” meet contrac ...
Tuesday, 26 October 21
THERE IS PLENTY OF COAL AND GAS IN THE WORLD BUT A VOLATILE MARKET IS NOBODY'S FRIEND - IEEFA
Gas will be winding its way out of the energy system
Gas prices are continuing to surge around the world. The cost of gas is at unpr ...
Tuesday, 26 October 21
AUSTRALIA EXPORTED 51.6 MLN TONNES OF COAL TO INDIA IN FIRST 10 MONTHS, 19% OF ALL AUSTRALIAN COAL EXPORTS; CHINA WAS THE DESTINATION FOR JUST 0.7% - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade. In 2021 things started pretty badly, but we are seeing increasing signs of ...
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- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Planning Commission, India
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
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