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