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