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LNG demand in India may taper off-I: Solar tariff falls to a new low
May 12: India’s solar power tariffs fell to a new low of Rs 2.62 per unit during the auction of a 250 megawatt (MW) capacity plant at Bhadla in Rajasthan.
8This price is lower than the average rate of power generated by the coal-fuelled projects of India’s largest power generation utility, NTPC Ltd, at Rs3.20 per unit.
8Interestingly, the winner was chosen from among a list of highly competitive bids, with prices only marginally higher than the winning bid.
8The highly competitive bids were attributed the the tripartite agreements (TPAs) between the Reserve Bank of India, the Union government and the state governments, which provides comfort to power producers against payment defaults by state electricity boards (SEBs).
8This is bad news not just for the coal sector but also for the LNG fired gas based power. The subsidised LNG offtake scheme for gas based power plants has not been extended this year.
8The point now is how will India handle the surge in power demand when renewable power switches off at night?
At such low costs, and with falling electricity storage costs, such as battery cost, renewable power may well entirely replace the need for gas based power.
8Then again, coal based power plants can meet peak demand instead of gas based units.
8LNG suppliers will now have to depend on industrial use, CGD, fertilizers and the petrochemical segments for growth of demand.
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