India doubles down on renewables
At a time when Berkshire Hathaway’s Nevada Power is setting new record low US$24/MWh solar tariffs in the US, India continues to see the benefits of record low renewable energy tariffs. In the last two months India has seen 2.5 gigawatts (GW) of wind tenders completed at record low US$36-37/MWh tariffs (zero indexation for 25 years, like Nevada above). On the back of this, the Indian Energy Minister R.K. Singh has lifted India’s renewable plan from 175 GW to a new mission of 227 GW by 2022. It is no co-incidence the largest import coal plant in India, Adani’s relatively modern 4.6GW Mundra facility, is idle, unable to compete. Our conclusion is clear – stranded asset risks rise every time new record low renewables tariffs are announced. While solar tariffs in India have bounced 10-20% up from the Rs2.43/kWh record low set in early 2017, China’s decision to dramatically slow solar installs with immediate effect is likely to see Indian module import prices re-testing 2017 lows below US30c/W, particularly now the High Court has cancelled the proposed 70% module import tariff. While interest rates in India have edged up since their mid-2017 lows, the scale of renewable deployments plus ongoing technology improvements should more than offset this.
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