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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, 08 September 21
MARKET INSIGHT - INTERMODAL
Last August was extremely hot in the dry bulk market with rates rising at levels that we have years to witness. The dry bulk index exceeded the 4,0 ...
Wednesday, 01 September 21
KOMIPO TO BUY 1.56 MILLION TONS OF 5600 NAR COAL OF AUSTRALIA OR SOUTH AFRICAN ORIGIN FOR 2022 - 2024
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
Wednesday, 01 September 21
MARKET INSIGHT - INTERMODAL
As the summer season is coming to an end, the dry bulk market continues to rally. The confidence that the outstanding freight market performance ha ...
Monday, 30 August 21
68% OF U.S. COAL FLEET RETIREMENTS SINCE 2011 WERE PLANTS FUELED BY BITUMINOUS COAL - EIA
In 2011, the United States had 317.6 gigawatts (GW) of coal-fired electric generation capacity. About 88.7 GW of that capacity was retired in the d ...
Friday, 27 August 21
ALL YOU NEED TO KNOW ABOUT COAL'S MASSIVE RALLY AND NEAR-TERM OUTLOOK - CNBCTV18
Australia’s thermal coal at Newcastle Port, the benchmark for the vast Asian market, has surged over 100 percent this year to trade above $16 ...
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- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
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- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Economic Council, Georgia
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
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