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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, 15 October 21
GLOBAL STEEL DEMAND GROWTH DOWNGRADED FOR 2021 DUE TO CHINA - WORLD STEEL ASSOCIATION
The World Steel Association (worldsteel) today released an update of its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that ste ...
Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten ...
Thursday, 14 October 21
EIA FORECASTS U.S. COAL PRODUCTION TOTALS 588 MMST IN 2021, UP 53 MMST YOY
U.S. coal production in EIA's forecasts totals 588 million short tons (MMst) in 2021, 53 MMst more than in 2020.
According ...
Wednesday, 13 October 21
COAL PRICES ARE ROARING BACK AMID A GLOBAL ENERGY CRUNCH - SYDNEY MORNING HERALD
Soaring coal prices have placed Australia’s mining and energy exports on track to reach a record $349 billion this year evenas the value of t ...
Wednesday, 13 October 21
CHINA ISN'T THE ONLY HUGE ASIAN ECONOMY WITH A COAL SHORTAGE NOW - CNBC
China is not the only Asian giant grappling with an energy crunch — India is also teetering on the edge of a power crisis.
Mos ...
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- VISA Power Limited - India
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- White Energy Company Limited
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- The University of Queensland
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Australian Coal Association
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
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