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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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Sunday, 11 July 21
COAL SHOWS ITS STAYING POWER AS ECONOMIES BOUNCE BACK - THE WALL STREET JOURNAL
Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the challenges to ...
Sunday, 11 July 21
ROBUST CHINA COAL DEMAND AMID AUSTRALIA IMPORT BAN FUELS PRICE RALLY - REUTERS
Seaborne coal has become a quiet winner among energy commodities, lacking the attention of higher-profile crude oil and liquefied natural gas (LNG) ...
Saturday, 10 July 21
OVERESTIMATED LCOES OF COAL-FIRED POWER PLANTS CREATE A FINANCIAL BUBBLE - IEEFA
Massive stranded asset risk detrimentally affects the financial and power distribution
India’s future coal-fired power project pipeline ...
Friday, 09 July 21
EIA FORECASTS COAL’S GENERATION SHARE IN U.S TO RISE FROM 20% IN 2020 TO 24% THIS YEAR BUT TO FALL TO 22% NEXT YEAR
The July Short-Term Energy Outlook (STEO) of EIA remains subject to heightened levels of uncertainty related to the ongoing economic recovery from ...
Friday, 09 July 21
KOREA SOUTH-EAST POWER CO., LTD. INVITES BIDS FOR 1.86 MILLION TONS OF COAL OF 5600 & 4000 NCV COAL FOR THREE YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 280,000 – 300,000 MT of Min. ...
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- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- White Energy Company Limited
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
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