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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, 28 July 21
IN THE PHILIPPINES, COAL’S DEMISE MAKES WAY FOR A RENEWABLE ENERGY BOOM - IEEFA
Imported gas lock-in could undermine the economic benefits of a clean energy transition
The Philippines’ energy sector is on t ...
Wednesday, 28 July 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during this first half of the year, we continue to come across surprises and new restrictions which are trembling ...
Saturday, 24 July 21
UNDERSTANDING INDIA'S LATEST PEAK POWER DEMAND RECORD - IEEFA
Ramping up solar will be crucial as peak power demand hits during the day
At around noon on 7 July 2021, India’s instantaneous ...
Wednesday, 21 July 21
MARKET INSIGHT - INTERMODAL
Dry Buk Sales and Purchase activity has heated up during 2021, reaching record high levels during the first half of the year. The increased interes ...
Monday, 19 July 21
CHINA'S COAL OUTPUT UP 6.4 PCT IN H1 - XINHUA
China’s raw coal output climbed 6.4 percent year on year to 1.95 billion tonnes in the first six months of the year, official data showed.
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- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
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- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
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- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
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- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
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