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Renewable Energy

SoftBank-backed SB Energy Justifies India’s Lowest Solar Power Tariffs

written by saurabh

SoftBank led SB Energy has stated that India’s lowest solar power tariffs are financially viable given the sharp fall in module prices and ample supply of debt finance for energy projects.

Manoj Kohli, executive chairman of SB Energy, recently stated that the company’s tariff bid of ₹2.45/kWh (3.8¢/kWh) for a 300 megawatt solar power project in Rajasthan is aggressive but financially viable. Kohli stated three major reasons for the sharp fall in tariff bids in India’s solar power market over the last few months.

Price of Chinese solar power modules have fallen significantly over the last few months has been a major reason for conjugated fall in tariff bids world over, Kohli said. Chinese exports have increased as the country’s domestic solar power program has slowed down.

Global banks have also increased exposure to renewable energy projects, Kohli added. Several of the cheapest solar power projects across the world have received debt funding at very low rates. These projects include the 200 megawatt phase II of Dubai solar power park and the 750 megawatt Rewa solar power park in Madhya Pradesh, India.

Kohli also stated another global trend in the solar power market. Larger projects are being auctioned and commissioned now than at any time in the history. This results in lower costs due to economics of scale.

The three reasons mentioned by Kohli are applicable to the global solar power market in general but there are India-specific reasons as well for the declining prices. Withdrawal of inter-state transmission charges, increased renewable energy installation and consumption targets and efforts to improve the financial health of power utilities have contributed significantly to the decline in solar tariff bids in India.

05/28/2017 0 comment

Renewable Energy

Indian State Of Uttar Pradesh Plans 750 Megawatts Of Solar Power Project

written by saurabh

The unprecedented success of Rewa and Bhadla solar power auctions has promoted several Indian states to undertake similar auctions.

Now, Uttar Pradesh is planning to acquire 750 megawatts solar power from a project located within the Bhadla solar power park in neighbouring state of Rajasthan.

Officials of the Rajasthan Renewable Energy Corporation, the Solar Energy Corporation of India and the Ministry of New and Renewable Energy will soon chalk out the terms of auction.

The power generated at Bhadla solar power park will be transmitted to power utilities in Uttar Pradesh at no additional charges as the MNRE has exempted solar and wind energy projects from inter-state transmission and wheeling charges.

This off-site model of solar power procurement has been in practice for a while now. The state of Haryana had auctioned projects that would be installed in Rajasthan. Better solar radiation, availability of barren land and existing transmission infrastructure makes Rajasthan an apt location to set up large-scale solar power projects.

Delhi Metro Rail Corporation signed agreement to procure electricity generated at Rewa solar power park in Madhya, nearly 800 kilometres away. A Delhi-based utility also signed an agreement with SunEdison to procure electricity from a 180 megawatts solar power project that was supposed to come up in Madhya Pradesh.

The Indian government’s project of Green Energy Corridors promotes such off-site project development. It encourages states deficient in renewable energy resources to procure electricity through dedicated transmission lines.

05/27/2017 0 comment

Renewable Energy

German Company Plans 1 Gigawatt Solar Panel Factory In Egypt

written by saurabh

A German solar power company is planning to set up a modules manufacturing unit in Egypt using local raw material.

PSE AG recently announced plans to set up a solar modules manufacturing facility with a capacity of 1 gigawatts at an unnamed location in Egypt. The facility shall use Egyptian silica to manufacture solar cells and panels.

The company shall first run a feasibility study to determine if Egyptian silica can be used for manufacturing efficient solar cells and panels. For this study the Kuwait Fund for Arab Economic Development has sanctioned funds worth $594,000.

Upon the positive outcome of the study, the manufacturing unit would be established within 2-3 years. PSE AG is also expected to set a one gigawatt solar power project using the panels manufactured which will be a true test of their efficiency.

Egypt has seen a massive surge in solar power project development of the last few months with several leading companies setting up projects in the Aswan solar power park.

The feed-in tariffs offered for the Aswan solar power park are comparable to tariffs of most solar power projects in the Middle East. However, it will be interesting to see if Egyptian modules can compete with Chinese modules in terms of prices.

The cheapest solar power projects in the Middle East use modules from China. Phase III of Dubai solar power park use Canadian Solar panels while one of the cheapest solar power park in the world – Abu Dhabi solar power park – will likely use Chinese modules manufactured by JinkoSolar.

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05/24/2017 0 comment

Renewable Energy

India’s Tamil Nadu Plans 1.5 Gigawatts Solar Power Tender

written by saurabh

The power utility of India’s Tamil Nadu state will yet again try its luck at auctioning large-scale solar power projects after it failed to draw interest miserably in the last two auctions.

Tamil Nadu Generation and Distribution Corporation (TANGEDCO) it set to auction 1.5 gigawatts solar power capacity. Prospective projects developers can bid for project sizes of one to 500 megawatts.

The maximum tariff bid allowed will be Rs 4.00/kWh. This threshold tariff is 64% higher than the current lowest solar power tariff in India of Rs 2.44/kWh.

The latest auction is not expected to breach this lowest tariff price. TANGEDCO is not among the best buyers of renewable energy and has been known to default on monthly payments to projects developers. Additionally, project developers in Tamil Nadu face frequent issues of non-availability of transmission infrastructure and are thus forced to shutdown their projects which leads to revenue loss.

TANGEDCO had offered 500 megawatts solar power capacity in February 2016 but received bids for just 177 megawatts. The utility put 500 megawatts capacity on the block again in November 2016 but received bids for 300 megawatts only.

Now, TANGEDCO is taking extra measures to ensure bidders are attracted towards the latest tender. The utility is offering 24 months to project developers to commission projects of size exceeding 50 megawatts; this is the longest time ever given to commission solar PV power projects in India. Project developers will also be compensated in case of unavailability of transmission infrastructure.

Tamil Nadu has very ambitious solar power targets but infrastructure support remains an issue.

According to government estimates, an installed capacity base of 2.5 GW will be required to meet the 5% solar RPO target in 2017-18. TANGEDCO, however, expects that only 1.6 GW solar power capacity would be operational by that time, thus leaving a shortfall of 900 MW.

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05/24/2017 0 comment

Renewable Energy

Indian Hydro Power Company Scouts Partner For 500 Megawatt Solar Venture

written by saurabh

SJVN Limited is looking for a partner to set up solar power capacity of 500 megawatts. The state-owned company plans a joint venture which will participate the auctions organised by other public sector companies.

In the proposed joint venture SJVN shall have a minimum of 26% share. Eligible parties to the joint venture must meet certain conditions. In case of project developers, they should have commissioned at least 50 megawatts of cumulative capacity. In case of PV module manufacturers, the production capacity should be at least 100 megawatts.

SJVN is among several public sector companies in India that plan to set up large-scale solar and wind energy projects across the country as part of the government’s ambitious renewable energy targets.

A four gigawatts solar power park is being planned in Rajasthan by various public sector companies, including SJVN and Solar Energy Corporation of India.

The offer for partnership by SJVN offers a unique opportunity for private sector project developers struggling to survive in the extremely competitive Indian solar power market. Being partner to a public sector company could allow project developers access to cheaper debt finance which has proven to be critical for bidding at competitive tariffs.

From the point of view of the buyer as well the presence of a government-owned entity helps boost confidence regarding longevity and proper execution of the project.

05/24/2017 0 comment

Renewable Energy

India Issues Draft Rules For Solar Module Quality

written by saurabh

In an attempt to ensure longevity of solar power projects and, perhaps, take greater control of the equipment used, India has issued draft rules for quality standards of solar modules and inverters.

The Ministry of New and Renewable Energy recently released the draft rules, which have also been communicated to members of the World Trade Organization. The draft outline the obligations of the module and inverter manufacturers and the specific quality standards for various types of modules.

This draft could not have come at a better time. Solar power bids are at record lows with growing concerns over the quality of solar modules being used by project developers who quote record low bids I’m every new tender.

Solar power bids in India collapsed by 26% in a matter of three months in conjugation with the steep fall in module prices. Yet, many are not convinced if falling module prices and cheaper funding justify the never-seen-before bids.

A big reason for the collapse in bid prices, according to industry sources is the jump in imports from China. In addition to modules, inverters and other equipment are being imported from China in massive volumes. The thermal power equipment manufacturers in India have voiced their concerns about the predatory prices and poor quality of Chinese imports on several occasions. Same concerns are now being raised about solar imports.

Setting standards for solar power equipment could also help Indian manufacturers expand their presence in the Indian market. Indian module manufacturers have been left behind in the race to low solar power bids as they are unable to match the Chinese prices. Perhaps, through the introduction of quality standards the Indian government would be able to provide an indirect support to these companies.

India decided not to levy import duties on imported modules, a common practice in Europe, the US and China. It, instead, pushed for mandatory use of Indian-made modules for some projects. This strategy took a hit when the US secured a judgement from the WTO against it last year.

05/23/2017 0 comment

Renewable Energy

EBRD Offers $458 Million Debt For 750 Megawatts Solar Power Projects In Egypt

written by saurabh

The European Bank for Reconstruction and Development (EBRD) has offered more than $450 million to various project developers planning to set up utility-scale solar power projects in Egypt.

The Bank has offered loans worth $458 million to a total of 16 project developers that represent 750 megawatts capacity. The projects were allocated to these developers through a tendering process. Some of the major project developers planning to set up projects are ACWA Power, Scatec Solar and EDF.

ACWA Power plans to set up a total of 120 megawatt capacity for which it has been offered debt funding worth $28.7 million. Scatec Solar will set up six project of 50 megawatts each and will be eligible for $243 million of debt funding from EBRD. European energy major EDF could get $29 million to set up a 50 megawatt project.

Scatec Solar had signed an agreement with the Egyptian authorities to set up 400 megawatt solar power capacity in the Ben Ban region. The company will pour $50-70 million in these projects itself as equity investment.

More than three dozen project developers had signed agreements with the Egyptian government to set up 1.8 gigawatts of solar power projects in the Ben Ban region, Aswan. The total investment for this solar power park is expected to be around $3 billion.

05/23/2017 0 comment

Renewable Energy

12 Renewable Energy Policy Initiatives Implemented By India (Part 2)

written by saurabh

This is the second part, in a series of four articles, of briefly analysing the renewable energy initiatives announced or implemented by the Indian government over the last three years. In this part we shall look at the initiatives undertaken to ease the transmission and end-consumption of renewable energy.

The first part (macro-level directional policy initiatives) is available here.

Green Energy Corridors

The Indian government announced that a dedicated transmission network for renewable energy projects will be developed in order to a) avoid stress on the existing transmission grid and b) ease inter-state transmission to enable achievement of renewable purchase obligation. Work on a number of transmission projects under this program has already started. This program shall be highly beneficial for the several solar and wind energy parks planned by the central and state governments.

Abolishment of inter-state transmission charges

In order enable states with low solar resources the Ministry of New & Renewable Energy waived off the inter-state transmission charges for wind and solar power projects. This incentive shall be applicable to all solar power projects commissioned by 30 June 2017 and all wind energy projects commissioned by 31 March 2019. This initiative will allow several states to sign power purchase agreements with large-scale renewable energy projects. The direct result was Delhi Metro Rail Corporation signing a PPA with Rewa solar power park located 800 kilometres away. Several states signed PPAs worth 1,050 megawatts with wind energy projects located in different parts of the country.

Renewable Energy Forecast Regulations

In order to better integrate the large amount of renewable energy expected to enter the Indian power mix the Indian regulatory bodies have issued regulations for project operators to forecast, with a certain accuracy, and schedule the renewable energy they plan to inject into the grid. This brings renewable energy projects much closer to being at par with all other power projects in India which face similar scheduling regulations and penalties.

05/22/2017 0 comment

Renewable Energy

Tunisia to tender 210 megawatts solar & wind power capacity this year

written by saurabh

Tunisia will join an increasing number of countries to allocate renewable energy projects through competitive auctions when tenders for wind and solar power projects are open later this year.

According to media reports, the Tunisian government will put on the block 70 megawatts solar and 140 megawatts wind energy projects in an auction set for November 2017. The auction will mark the first major expansion by the African country in its nascent renewable energy sector.

The government shall auction small-scale as well as utility-scale solar power projects. Ten megawatts capacity is reserved for projects of up to one megawatt capacity each while the balance 60 megawatts would be spread over projects of up to 10 megawatts each.

The wind energy capacity on offer shall also be distributed into small and large-scale. A total of 20 megawatts capacity shall be offered in the size of up to 5 megawatts each while 120 megawatts capacity shall be auctioned in project size of up to 30 megawatts each.

All projects will sell electricity to state-owned power utility through long-term power purchase agreements.

The auction will be the first in what is expected to be several renewable energy auctions over the next few years. Tunisia plans to auction 1 gigawatts renewable energy capacity between 2017 and 2020 in a major push to increase the share of clean energy in its power mix. By 2030, Tunisia plans to achieve 4.7 gigawatts of renewable energy installed.

Tunisia adds to the long list of countries in the Middle East and North Africa region that have large capacities of renewable energy projects in the pipeline. According to the Middle East Solar Industry Association (MESIA), more than 4 gigawatts of solar power capacity is currently at various stages of development in the region.

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05/21/2017 0 comment

Renewable Energy

12 Renewable Energy Policy Initiatives Implemented By India (Part 1)

written by saurabh

Since the National Democratic Alliance government took to power in May 2014 several landmark policy initiatives have been undertaken in the renewable energy sector. The result of these initiatives has been that India now stands to become the third-largest solar power market in the world and remains one of the largest wind energy markets in the world.

In this four part series of the articles we will briefly analyse the various initiatives of the Indian government and what impact they have on the renewable energy market. In this part we will look at the macro-level directional policy initiatives.

5x Increase In Renewable Energy Targets

When the National Solar Mission was launched in late 2010 the installed capacity target for March 2022 was 20 gigawatts of utility-scale projects and 2 gigawatts of rooftop solar power projects. In May 2014, this target was increased to 100 gigawatts installed capacity by March 2022. The government set a target to set up 20 gigawatts through solar power parks, which was subsequently increased to 40 gigawatts. The target for rooftop solar power projects was increased to 40 gigawatts by March 2022.

Wind energy capacity target was set as 60 gigawatts and the overall renewable energy target was set at 175 gigawatts by March 2022. The Renewable Purchase Obligation for solar power was increased from 3% by March 2022 to 8%.

Renewable Generation Obligation

The Renewable Generation Obligation is an extension of the Renewable Purchase Obligation and was actually implemented following the disastrous outcome of the latter. According to an amendment in the National Tariff Policy, any project developer looking to develop a thermal power plant will have to set up renewable energy projects equivalent to at least 10% of the planned thermal power project. This also paves way for integrated supply of thermal power as well as renewable energy through the same power purchase agreement.

Renewable Energy Targets For Government Entities

After increasing the renewable energy targets by five times the Indian government allocated capacity addition targets amongst its own entities. Government-owned companies and entities were given individual capacity addition targets. NTPC, NHPC, Coal India, Indian Railways and several other companies pledged to add wind and solar power capacity during the first-ever renewable energy investors summit in 2015. Public sector companies pledged to add more than 19 gigawatts in renewable energy capacity in that summit. Shipping ports, airports and even the Indian armed forces also announced plans to set up large-scale renewable energy projects.

05/20/2017 0 comment

Renewable Energy

Indian Government Pushes For Guaranteed Grid Connectivity For Renewable Energy Projects

written by saurabh

In another possible boost for the renewable energy project developers, the Indian government is pushing for guaranteed grid connectivity for large-scale renewable projects.

The concept originated following the mega success of Rewa solar power park auction where 750 megawatts capacity was allocated to three developers at then lowest-ever tariffs of Rs 3.30/kWh (5.1¢/kWh), levelised for a period of 25 years.

The Rewa solar power park auction in Madhya Pradesh was unique in that it allowed developers to sell electricity through open access route even when the power utilities refused to purchase electricity. This, among several other industry-first features, led to the lowest-ever tariff bids of that time.

Now, the central government has asked other states to replicate the Rewa solar power park model in order to further push renewable energy investments. Such a step will offer more options to the project developers to sell electricity even when the host state or PPA parties are unwilling to acquire electricity as per signed agreements.

Unwillingness to accept electricity has been a major issue with Indian power utilities. Intermittent power supply, higher tariffs compared to some thermal power projects and poor financial condition has forced Indian power utilities to refuse electricity from renewable energy projects in the past. This leads to no generation at power plants and loss of confidence in renewable energy investors.

While the Ministry of New & Renewable Energy has issued an advisory to all state governments stating that renewable energy projects will have must-run status, its implementation remains in question as it is just an advisory and not binding on states.

The government is also working to implement dedicated transmission lines for renewable energy projects to help states implement the advisory. The Green Energy Corridors project, being implemented by Power Grid Corporation of India, will supply renewable energy from resource-rich states to resource-deficient states.

Such guarantees would not only result in further lowering of tariffs but also help avoid the situation being faced by grid operators in China – where massive wind energy capacity in remote areas remains under-utilised due to lack of transmission network – and Chile – where solar power developers were forced to sell electricity for free due to lack of transmission infrastructure.

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05/19/2017 0 comment

Renewable Energy

New Indian Solar Power Projects Are Cheaper Than 92% Of All Thermal Power Plants In The Country

written by saurabh

Media outlets are abuzz with the collapse in solar power tariff bids in India last week when 750 megawatts was allocated at the cheapest tariffs ever. The tariffs range between Rs 2.44/kWh (3.8¢/kWh) and Rs 2.62/kWh (4.1¢/kWh).

India’s minister for coal, power and renewable energy has repeatedly tweeted that the solar power tariffs are now lower than the cost of thermal power. Media reports have also noted that these new bids are much lower than the average tariff of India’s largest power generation company NTPC Limited.

The government-owned NTPC Limited owns more than 42.7 gigawatts of thermal power capacity based on coal and gas. According to reports, the average tariff for these projects is Rs 3.20/kWh (5.6¢/kWh), about 24% higher than the lowest solar power tariffs.

We decided to check exactly how cheap are the new tariffs. The Central Electricity Authority is a rich source of data on power generation costs of every conventional power plant in India. Although the latest data reported by this government body is for 2014-15, it is still worth taking a look at.

According to the data for 2014-15, there are 248 thermal power plants in India based on a variety of fuels including coal, lignite, imported coal, diesel and different forms of petroleum-based fuels. The new low of solar power tariffs – Rs 2.44/kWh – is less than the tariff of 227 of the 248 thermal power plants.

Most of the cheaper 21 thermal power plants are based on domestic coal while a few are based on lignite and one uses imported coal. Another thermal power plant that is not listed among the 248 is India’s largest thermal power plant, Sasan Ultra Mega Power Plant which has an installed capacity of 3,960 megawatts. This is also among the cheapest thermal power plants in India.

Solar power tariffs in India have reached a level where many are questioning the financial viability of new projects. India’s installed solar power capacity stood at 12.3 gigawatts at the end of 2016-17 with a target capacity of 100 gigawatts by the end of 2021-22. Thus, a huge potential for further decline in tariffs remains over the next few years.

05/16/2017 0 comment

Renewable Energy

SoftBank JV Wins 400 Megawatts Solar At Record Low Tariffs In India

written by saurabh

A joint venture between SoftBank, Foxconn Technologies and Bharti Enterprises has received a huge boost in its standing in the rapidly growing Indian solar power market.

SB Cleantech secured 400 megawatts solar power capacity in two auctions that offered a total of 750 megawatts capacity at the Bhadla solar power park in Rajasthan, India. The company bid the lowest-ever tariffs for solar power projects in India in both the auctions.

The company secured rights to develop 100 megawatts capacity out of the 250 megawatts offered by Adani Enterprises at the Bhadla solar power park. The capacity was allocated to SB Cleantech at Rs 2.63/kWh (4.1¢/kWh), one of the lowest tariffs in India at the time. Two days later, the company also won 300 megawatts capacity offered by IL&FS, an infrastructure company at the same solar power park at Rs 2.45/kWh (3.8¢/kWh) another record low in India.

SoftBank has been bullish on the Indian solar power market and has pledged to invest $20 billion in developing solar power projects. The company had secured its first solar power project in India in Late 2015. The project was auctioned in the southern state of Andhra Pradesh. The company recently commissioned this project which, at 350 megawatts, is one of the largest solar power projects in India developed by a single company.

SoftBank is among several foreign companies that are looking to grab a large chunk of the Indian solar power market which is expected to become the third largest in the world this year. Perhaps one of the factors that favours foreign developers is that they may find it easier to secure debt finance at much cheaper rates.

Indian banks continue to provide funding at interest rate that would render new solar power projects in the country financially unviable. Foreign development banks and multi-national banks like the Asian Development Bank and the International Finance Corporation offer loans at very cheap rates.

Thus, foreign developers could lead the Indian solar power market to even lower tariff bids in the near future.

05/15/2017 1 comment

Renewable Energy

Solar Power Tariff Bids In India Crash 26% In Just 3 Months

written by saurabh

Participants in the Indian solar power market seem to have been embroiled in a mad race to the lowest possible tariff, the recent competitive auctions for large-scale projects has shown.

Since February this year four major solar power auctions have taken place in India with the lowest tariff bids falling by as much as 26% between the first and the latest auction. The race to lower tariff bids has been fuelled primarily by the crash in solar module prices, regulatory support from the government and, perhaps, the promise and hope of cheap debt finance.

In February, a total of 750 megawatt capacity was auctioned at first year tariff of Rs 2.97/kWh (4.6¢/kWh) which translates into levelised tariff of Rs 3.30/kWh (5.1¢/kWh) over a period of 25 years. The auction was historic in terms of the bids, mode of sale and dirt-cheap debt finance on offer from the International Finance Corporation. The winners in this auction were Acme Cleantech Solutions, Mahindra Renewables and Solenergi.

In April, India’s largest power generation company NTPC Limited offered 250 megawatts at the Kadapa solar power park in the state of Andhra Pradesh. The winner was Solairedirect, a subsidiary of French utility Engie. It secured the entire capacity at Rs 3.15/kWh (4.9¢/kWh) with the highest tariff bid going as high as Rs 4.68/kWh (7.2¢/kWh).

In May, two auctions were held back-to-back over a span of two days. The capacity on offer was 750 megawatts – 250 megawatts by Adani Enterprises and 500 megawatts by IL&FS – at the Bhadla solar power park in the state of Rajasthan.

At least 14 developers placed the final bids with ranged between Rs 2.62/kWh (4.1¢/kWh) and Rs 3.59/kWh (5.6¢/kWh). Only three of these 14 bids were higher than the previous lowest bid of Rs 3.15/kWh (4.9¢/kWh) discovered in the Kadapa solar park auction; and nine bids were lower than Rs 3.00/kWh (4.7¢/kWh).

Phelan Energy (50 megawatts), Avaada Energy (100 megawatts) and SB Cleantech (100 megawatts) were the winners in this auction.

The second auction in May for Bhadla solar power park witnessed increased competition among the project developers. Only one bid was greater than the winning bid of Kadapa solar power park; and five bids were lower than the winning bid of Bhadla solar power park two days back.

Acme Cleantech Solution (200 megawatts) and SB Cleantech (300 megawatts) were the winners in this auction at a tariff of Rs 2.44/kWh and Rs 2.45/kWh (3.8¢/kWh), respectively. The massive jump in competition within two days is evident from the fact that Acme Cleantech Solutions reduced its bid from a losing one of Rs 3.36/kWh (5.2¢/kWh) in the 250 megawatts Bhadla auction to just Rs 2.44/kWh (3.8¢/kWh) for the 500 megawatts auction – decline of 27.4% in a matter of two days.

SB Cleantech also reduced its tariff bid from Rs 2.63/kWh (4.1¢/kWh) to Rs 2.45/kWh (3.8¢/kWh), a drop of 6.8%. ReNew Power Ventures also dropped its bid from Rs 2.74/kWh (4.3¢/kWh) to Rs 2.47/kWh (3.8¢/kWh) between the two auctions but failed to score any win.

05/15/2017 0 comment

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