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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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Monday, 25 October 21
A QUESTION OF POSSESSION - THE BALTIC EXCHANGE
Possession and tangibility are closely related concepts long established under English law. Yet a change to these concepts is around the corner. Th ...
Monday, 25 October 21
CHINA VOWS TO SEVERELY PUNISH MARKET VIOLATIONS AMID LOW COAL FUTURES PRICES - GLOBAL TIMES
Domestic coal futures had plunged for three consecutive trading days after the government vowed to crack down on soaring prices, and China’s ...
Monday, 25 October 21
FARMERS MAY JOIN THE COAL COMMODITY MARKET TO REDUCE RISKS - GLOBAL TIMES
A recent trip to by the Global Times to East China’s Shandong Province to get a glimpse of China’s coal supply chain revealed a surpris ...
Monday, 25 October 21
CHINA COAL PRICES MARK WORST WEEK SINCE MAY ON GOVERNMENT INTERVENTION - REUTERS
China’s thermal coal futures plunged on Friday and turned in their worst week in five months, following Beijing’s strongest interventio ...
Friday, 22 October 21
THE BIG PICTURE: ENERGY MARKETS - BREAK WAVE ADVISORS
The shipping markets have been pulled further into wild markets of coal and other energy sources. Given how nebulous this sector is, it’s alw ...
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- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- PTC India Limited - India
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Economic Council, Georgia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
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