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