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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, 06 October 21
EUROPEAN COAL FUTURES CLIMB TO 13-YEAR PEAK - REUTERS
European coal futures rose to a 13-year high and physical thermal coal prices were at record highs as rallying gas prices and strong Asian demand f ...
Tuesday, 05 October 21
CAPESIZE MARKET WAS IN A STEEP CLIMB FOR MOST OF THIS WEEK - BALTIC EXCHANGE
Capesize
The Capesize market was in a steep climb for most of this week as it reached a pinnacle of $74,786 Wednesday before stalling, regather ...
Wednesday, 29 September 21
THE WRITING IS ON THE WALL: AUSTRALIA’S COAL ERA IS OVER - YAHOO!FINANCE
As the fringe of Australian politics strives to pump up the coal industry, facts show that coal production has started its long run decline.
&n ...
Wednesday, 29 September 21
SURGING COAL PRICES SPLIT ASIAN BUYERS INTO RICH AND POOR - REUTERS
As seaborne coal in Asia trades at, or near, record highs, there are early signs of demand destruction, especially among price-sensitive buyers suc ...
Wednesday, 29 September 21
MARKET INSIGHT - INTERMODAL
Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to the ...
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- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
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- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
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- Ministry of Mines - Canada
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- Energy Development Corp, Philippines
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- Directorate General of MIneral and Coal - Indonesia
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- Deloitte Consulting - India
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- Planning Commission, India
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- Chamber of Mines of South Africa
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- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
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- Electricity Authority, New Zealand
- India Bulls Power Limited - India
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- Toyota Tsusho Corporation, Japan
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- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
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- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
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- PNOC Exploration Corporation - Philippines
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- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
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- Posco Energy - South Korea
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
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- Coal and Oil Company - UAE
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- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
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- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
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- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- The University of Queensland
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Australian Coal Association
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
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