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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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Monday, 11 October 21
COAL ABANDONMENT IN POWER GENERATION PROMOTED GAS DEMAND GROWTH IN EUROPE - TOP MANAGER: TASS
Accelerated abandonment of coal in power generation and the overall recovery of economic activity facilitated gas demand growth in Europe and led t ...
Saturday, 09 October 21
CHINA POWER CUTS: COAL MINERS ORDERED TO BOOST OUTPUT, SAY REPORTS - BBC
Beijing has reportedly ordered China’s coal mines to boost output as an energy shortage across the country has seen millions of homes and bus ...
Friday, 08 October 21
SEPTEMBER CRUDE OIL TANKER DEMOLISHING HITS 39-MONTHS HIGH AT 1.9M DWT - PETER SAND
Has the lid finally come off for crude oil tanker demolition in 2021? If judged by the 1.9m DWT of capacity that was removed in September, the answ ...
Friday, 08 October 21
COAL SHORTAGE MAY LEAD TO RISE IN STEEL PRICES IN COMING MONTHS: JSPL MD - PTI
Steel prices are expected to increase in the coming months as companies are buying coal at three times the rates a month ago, said a top industry e ...
Wednesday, 06 October 21
INDONESIA COAL PRICE REFERENCE: ANOTHER MONTH, ANOTHER RALLY
COALspot.com: Indonesian Coal Price Reference in a steep climb for most of second and third quarters of 2021 as it reached a pinnacle of $161.63 Oc ...
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- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Planning Commission, India
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
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