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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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Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
Wednesday, 13 October 21
FBX INDEX: THE IMPOSSIBILITY OF SHORT-TERM FORECASTING - LARS JENSEN
Will freight rates on Asia-Europe or the Transpacific reach 40.000 USD/FFE in the run-up prior to Chinese New Year 2022? Or will they start droppin ...
Wednesday, 13 October 21
CHINA FLOODS: COAL PRICE HITS FRESH HIGH AS MINES SHUT - BBC
The price of coal used in China’s power plants has surged to a new record high as another of the country’s key mining regions is hit by ...
Tuesday, 12 October 21
BUMA SIGNS CONDITIONAL AGREEMENT FOR AUSTRALIAN ASSET ACQUISITION
PT Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama, through its newly incorporated Australian subsidiary, BUMA International Pty ...
Tuesday, 12 October 21
INDONESIA'S COAL-BASED POWER PLANTS ARE SUBJECT TO CARBON TAX NEXT YEAR, ELECTRICITY COSTS COULD RISE! - CNBC
The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent ...
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- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
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