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