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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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Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- The University of Queensland
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
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