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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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Thursday, 01 July 21
END TO COAL POWER BROUGHT FORWARD TO OCTOBER 2024
Press Release: The deadline to phase out coal from Great Britain's energy system has been brought forward by a whole year, highlighting the UK& ...
Thursday, 01 July 21
WHY BUILD 600 NEW UNPROFITABLE COAL PLANTS? - DEUTSCHE WELLE
Governments in Asia are planning 600 new coal plants that could lose investors $150 billion and derail efforts to limit temperature rise in line wi ...
Thursday, 01 July 21
FIVE ASIAN COUNTRIES ACCOUNT FOR 80% OF NEW COAL POWER INVESTMENT - THE GUARDIAN
Five Asian countries are jeopardising global climate ambitions by investing in 80% of the world’s planned new coal plants, according to a rep ...
Wednesday, 30 June 21
DELTA DUNIA MAKMUR RECORDED AN IMPROVED REVENUE IN Q1 2021; REVENUE INCREASED BY 49% QOQ TO US$160 MILLION ON THE BACK OF COAL PRICE RECOVERY
PT Delta Dunia Makmur Tbk. (“DOID”) released its consolidated financial and operating results that include its primary and wholly-owned ...
Wednesday, 30 June 21
BUMA SIGNED MINING AGREEMENT WITH ADARO
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into an agreement for the p ...
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- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
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- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
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- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
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- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
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- Agrawal Coal Company - India
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- Australian Coal Association
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- South Luzon Thermal Energy Corporation
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- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
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- Interocean Group of Companies - India
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- Eastern Coal Council - USA
- Videocon Industries ltd - India
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- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
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- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
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- Bharathi Cement Corporation - India
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- Bulk Trading Sa - Switzerland
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- Metalloyd Limited - United Kingdom
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- White Energy Company Limited
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
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- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
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- Energy Link Ltd, New Zealand
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- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
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- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
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- Binh Thuan Hamico - Vietnam
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- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Wilmar Investment Holdings
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- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
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- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
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