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