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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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- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
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- Independent Power Producers Association of India
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
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