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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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Friday, 22 October 21
CHINA WANTS TO COOL COAL PRICES. SIMILAR MOVES FOR METALS, CRUDE FAILED - REUTERS
China’s latest attempt to lower runaway commodity prices, this time for thermal coal, is likely to follow a familiar pattern of initial succe ...
Friday, 22 October 21
HARD COAL REMAINS AN IMPORTANT FACTOR FOR SECURITY OF SUPPLY - COAL IMPORTERS ASSOCIATION, GERMANY
- Hard coal remains an important factor for security of supply
- Increase of around 35% in hard-coal-fired power generation in the first three ...
Wednesday, 20 October 21
CHINA'S COAL SHORTAGE TO EASE IN COMING MONTHS, INDUSTRY BODY SAYS - REUTERS
China’s coal shortage will likely ease in coming months, with domestic production and imports already showing signs of picking up, a coal ind ...
Wednesday, 20 October 21
CHINA'S RAW COAL OUTPUT DROPS IN SEPTEMBER - XINHUA
China’s raw coal output dropped 0.9 percent year on year to 330 million tonnes last month, data from the National Bureau of Statistics (NBS) ...
Wednesday, 20 October 21
OVER-RELIANCE ON COAL IN OUR POWER MIX HURTING INDIA - LIVEMINT
In spite of the renewables push, coal still accounts for about 50% of India’s installed power capacity. That means a simultaneous demand and ...
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- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Parliament of New Zealand
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- The University of Queensland
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
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