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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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Tuesday, 28 September 21
THE MAIDEN EDITION OF DIVE TECHNOLOGY SUMMIT 2021 CONCLUDES SUCCESSFULLY
Press Release: DIVE TECHNOLOGY SUMMIT 2021, a one-day conference on the recent technological advancements in the Industrial Diving industry conclud ...
Monday, 27 September 21
CHINESE COAL FIRMS MEET TO ADDRESS WINTER SUPPLY CHALLENGES - CNBC
Major Chinese coal producers are trying to resolve supply shortages and curb price rises as the country’s winter consumption peak approaches, ...
Saturday, 25 September 21
HIGH STAKES FOR ASIAN DEVELOPMENT BANK’S AMBITIOUS COAL POWER RETIREMENT PLAN - IEEFA
Implementation challenges could block funding for other equally important high impact clean energy funding strategies
In the lead up ...
Thursday, 23 September 21
LONGER COAL CONTRACTS MAY REIN IN PRICES - ECNS
In China’s coal sector that has been marred recently by price surges, regional authorities and related enterprises should ensure the fuel con ...
Thursday, 23 September 21
BALTIC INDEX HITS 12-YEAR PEAK ON FIRMER VESSELS RATES - REUTERS
The Baltic Exchange’s main dry bulk sea freight index rose for a fourth straight session on Wednesday to a 12-year high, buoyed by higher rat ...
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- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- White Energy Company Limited
- MS Steel International - UAE
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
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