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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, 30 June 21
MARKET INSIGHT - INTERMODAL
The strong freight performance since the beginning of year has continued for the dry bulk market with earnings being at the highest level in over a ...
Monday, 28 June 21
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA THREATENS TO REVOKE 2,350 MINING BUSINESS PERMITS
The Ministry of Energy and Mineral Resources said that the revocation of mining business permits was in accordance with President Jokowi's inst ...
Sunday, 27 June 21
INDONESIA'S STATE-OWNED UTILITY PLN'S 2060 NET ZERO AMBITION NOT WITHOUT FLAWS AND GAPS - IEEFA
Indonesia on the right emissions reduction pathway but same old coal stories persist
Recent announcements by Indonesia’s state-owned uti ...
Saturday, 26 June 21
COAL PRICES HIT DECADE HIGH DESPITE EFFORTS TO WEAN THE WORLD OFF CARBON - WSJ
Rebounding electricity usage and scanty rainfall in China have added fuel to the rally
Coal prices have climbed to their highest lev ...
Saturday, 26 June 21
KOSPO INVITED BIDS FOR 480,000 MT OF COAL PER ANNUM
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 480,000 MT of NCV 1 Min. 5,600 (Spec 1) /Min. 5,0 ...
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- Planning Commission, India
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
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