2 MW Power Project- IM (Gujarat)

8/8/2019 2 MW Power Project- IM (Gujarat)

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2 MW Solar Power based

Power Project

1.0 Power Scenario in India

India is one of the fastest growing economies

amongst the emerging markets and has seen adecade with a CAGR of more than 7%. Even

after the global slowdown, India is expected to

record almost 8% growth in the current year

(2009-10) and go back to pre-slowdown levelsof 9%+ from next year.

One of the key ingredients for growth on an

economy is Energy and there is a positive

correlation between per capita income and percapita power consumption. Per capita

consumption of power in India is 700 units per

annum, which is far below the world averageand almost 400 million people in the country

do not yet have access to power. India, thus,

has a peak deficit of over 13% and averagedeficit of over 9% in its energy requirements,

at current levels, without counting the

additional requirements for growth as well as

the needs for sections of society which are stilldeprived of this basic necessity. To meet the

growing demand of energy, Government of

India has worked out a plan for enhancement ofgeneration capacity by 78,000 MW by the end

of 2011-12 and another 100,000 -110,000 MW

by 2017. Some studies have indicated thatIndia would need 950,000 MW against

availability of 450,000 MW by the end of

2030.

1.1 Power Generation

Like everywhere else, India also uses almost allsources of energy, including Thermal Power,

Hydro Power, Fossil fuel based Power, Nuclear

Power and Power from Renewable Sources i.e.Wind, Biogas, Solar. Thermal power, however,

remainsthe core of power generation, though

newer fuels are finding their way into this

industry. The table below shows the sources of

power generation as they stack-up in the total

power generation capacity in India:

1.2 Renewable Sources of Energy

In India, Power from renewable sourcesaccounts only 10% of the total power

generation. Out of 15,225 MW generated from

renewable sources, 10,890 MW is producedfrom Wind Power and only 8 MW is produced

from Solar Power sources as on 31st October,2009.

2.0 Solar Power in India

India is blessed with approximately 300 sunnydays with about 2,3003,200 clear sunshine

hours per year. Indias theoretical power

reception is on the land area is 5,000 trillionkWh/year. The daily average solar energy

incident over India ranges from 4 to 7 kWh/m2,

depending upon geographic location. Withsuch high potential of solar energy,

government of India has taken several

measures to promote the generation & use of

Solar energy. Government announced manyschemes in the 11th five year plan (2007-2011),

out of which NSM, National Solar Mission-

2022, is the most ambitious plan which targets

Prepared By:

Cascade Solar Pvt Ltd

New Delhi, India

Source Power

Generat-

ion (MW)

%

Thermal Power:

- Coal 81,606 52

- Gas 17,056 11

- Oil 1,200 01

Hydro Power 36,885 23

Nuclear Power 4,120 03

Renewable Energy

Source

15,225 10

Total 1,56,092 100


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to make India as a global leader in the solar

energy.

2.1 National Solar Mission

The NSM is a major initiative of theGovernment of India and State Governments to

promote & encourage ecologically sustainable

growth while addressing Indias energy

security challenge. This mission targets toproduce 20,000 MW by 2022 and thus making

India a global leader in Solar Power.

2.1.1 Installed Capacity Targets under

NSM

2.1.2 Key Points of NSM

a) To ramp up capacity of Grid-

Connected Solar Power generation to

1,000 MW by 2013 and an additional3,000 by the 2017 through themandatory use of renewable purchase

obligation by utilities backed with a

preferential tariff. b) To promote programmes for off grid

applications, reaching 1,000 MW by

2017 and 2,000 MW by 2022.c) To achieve 15 million sq. meters solar

thermal collector area by 2017 and 20

million by 2022.

d) To deploy 20 million solar lightingsystems for rural areas by 2022.

e) To create favorable conditions for solar

manufacturing capability, particularlysolar thermal for indigenous production

and market leadership.

2.1.3 Types of Solar Power Projects

under NSM

The mission envisages the setting up of the

following demonstration projects in the Phase

I:

a) 50-100 MW solar thermal Plant with 4-

6 hours storage.

b) A 100 MW capacity parabolic trough

technology based solar thermal plant.c) A 100-150 MW solar hybrid plant with

coal, gas or bio-masses to address

variability and space-constraints.d) 20-50 MW solar plants with or without

storage, based on central receiver

technology with molten salt / steam asthe working fluid and other emerging

technologies.

e) Grid-Connected rooftops PV systems.

f) Solar-based space-cooling and

refrigeration systems to meet day timeand summer season peak load.

2.1.4 Incentives / Subsidies under NSM

To promote private investment in this sector,Government has planned to offer following

incentives for power generation units:

a) Excise duties and custom duties

concessions / exemptions are made

available on specific equipments,critical materials, components and

project imports.b) Capital / interest subsidy.

c) Accelerated Depreciation.

d) Preferential tariff for grid interactive

renewable power (in potential states).e) Financing the project upto 70% of the

total project cost.

f) Loan at low interest rate.

2.1.5 Proposed Time Frame & Process

Prepared By:

Goldbird Advisors Pvt LtdNew Delhi, India

Phase Year Capacity

Target (MW)I Upto 2013 1,100

II Upto 2017 4,000

III Upto 2022 20,000

Particular Date

Invitation of EOI 31/03/2010

Last date of submission of

application with documentsfor registration

30/06/2010

Selection of developers by theCentral Empowered

Committee

15/09/2010

Signing of MOU with SPD 30/09/2010

Readiness for signing of PPA& PSA 31/10/2010


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2.1.6 Proposed Guidelines for

Registration under NSM

I. Expression of Interest (EOI):

a) Invitation of EOI for registration of the new

Solar Power Developers (SPDs) with NVVN.

b) SPDs meeting the eligibility requirements

will be registered with NVVN.

c) The final selection will be made out of

registered SPDs.

II. Eligibility Requirements

a) Net worth of Rs. 3-5 Crore/MW for the pastthree years.

b) Land in possession of at least 1 hectare/MW.

c) Water allocation for Solar Thermal.

d) Confirmation from STU regarding

evacuation of power at 33kv & above.

e) Technical requirement as approved by

MNRE.

f) Undertaking for domestic content to be

submitted as under-

For Solar PV - Use of both Cells &

Modules.

For Solar Thermal 30% local content.

2.1.7 Conditions Precedents for Signing

of MOU

a) Statutory and other clearances as applicable.

b) Complete DPR.

c) Letter of Comfort (LOC) for Equity / Debt

from Promoter(s) / Financial Institution(s).

d) Submission of performance bank guarantee Rs. 50 lakh/MW

Rs. 25 lakh/MW before signing of

MOU.

Rs. 25 lakh/MW before signing of PPA.

e) No change in controlling share holding in

the company permitted from MOU signing till

PPA execution.

2.1.8 Key Elements of PPA

a) PPA will remain valid for 25 years from thedate of commencement of supply from the

solar power project.

b) The solar power tariff will be applicable forthe year of commissioning as determined by

the CERC.

c) Transmission charges, losses, RLDC/SLDC

charges, scheduling charges or any othercharges for supply of solar power beyond

delivery point to be borne by the respective

distribution utility.

d)

Billing & Payment cycle will be as per Energy

Accounts issued by RPC/SLDC.

Prepared By:


Source Power

Generation

(MW)

Thermal Power 9,498

Hydro Power 772

Nuclear Power 825Renewable Energy

Source

1,398

Total 12,493


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e) Scheduling of power will be as per Indian

Electricity Grid Code (IEGC).

f) NVVN will establish irrevocable revolvingletter of credit (LCs) in favour of the Solar

Power Developers prior to commencement of

electricity supply from the proposed Solar

Power Plant.

g) Distribution Utilities will ensure Payment

Security Mechanism (PSM) as per Escrow / Tri

Partite Agreement and open irrevocable

revolving letter of credit.

h) After execution of PPA, controlling share

holding in the company will be maintained

upto 3 years after commencement of supply ofpower.

3.0 Power Scenario in Gujarat

Gujarat is one of the most progressive states in

the country. It has been in the forefront of

industrial development of India and has shownsignificant leadership in other spheres of

economics and social development too.

The per capita consumption of power in

Gujarat is more than 1,300 units, which is the

second highest in the country. The totalgeneration is expected to be about 10,984 MW(installed capacity is expected to be increased

to 14,645 MW and T&D losses around 25%)

against the expected peak demand of more than14,031 MW by the end of 2011-12.

3.1 Power Generation in Gujarat

The Gujarat state is pre-dominantly dependent

on thermal power. The table below shows thebreak up of various source of power generation

in the state of Gujarat.

With the sole aim of making Gujarat a power

leader in future, the provincial Government has

been taking many steps to promote &encourage the private players to set up power

plants in the state.

The graph below shows the governments

efforts to promote the private players to set upmore and more power plants in the state of

Gujarat. In Gujarat private players produces

more than 34% of the total power generation.

3.2 Power Consumption:

The table and graph below show the peak

power shortage in the state of Gujarat.

(In MW)

06-07 07-08 08-09

Availability 8,110 8,885 9,830

Requirements 11,619 12,119 12975

Shortage 30% 27% 24%

Prepared By:


3,509

3,234

3,145

2,900

3,000

3,100

3,200

3,300

3,400

3,500

3,600

2006-07 2007-08 2008-09

State

45%

Central

21%

Private

34%


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4.0Solar Power Policy of Gujarat State

Gujarat state government has introduced the

Solar Power Policy-2009 on 6th January, 2009

with the following resolution.

1. Operative Period: This policy will remainin operation up to 31st March, 2014. SolarPower Generators (SPGS) installed and

commissioned during the operative period will

become eligible for the incentives declared

under this policy, for the period of 25 yearsfrom the date of commissioning or for the life

span of the SPGS, whichever is earlier.

2. Installed Capacity: A maximum of 500

MW will be allowed for installation during theoperative period of the policy.

3. Capacity Cap: The minimum project

capacity of a SPG, in case of SPV and SolarThermal will be 5 MW each.

4. Eligible Unit: any company or bodycorporate or association or body of individuals,

whether incorporated or not, or artificial

juridical person will be eligible for setting up

of SPGS, either for the purpose of captive useand / or for selling of electricity, in accordance

with the amended Electricity Act-2003. The

entity will submit a proposal, with requisitedetails, as may be specified to the Nodal

Agency, for qualifying for setting up of the

project.

5. Exemption from Payment of Electricity

Duty: Electricity generated from the SPGS and

used for the self consumption / sale to the third

party / sale to licensees will be exempted formpayment of Electricity Duty.

6. Exemption from Demand Cut: Exemption

from demand cut to the extent of 50% of the

installed capacity of SPGs, assigned for captiveuse purpose, will be allowed.

7. Security Deposit: The developer will be

required to provide Bank Guarantee (BG) of

Rs. 50 Lacs / MW at the time of signing ofPPA with GUVNL and / or distribution

licensee.

If the developer fails to achieve commercialoperation within time period mentioned in

PPA, the BG will be forfeited. BG will berefunded, if the developer achieves commercialoperation within time period as per PPA.

8. Open Access (OA) for third party sale: If

any developer or beneficiary is granted OA,they will have to pay the applicable OA

charges and losses as approved by GERC from

time to time. The Cross Subsidy Surchargewill not be applicable for OA obtained for third

party sale within the state.

9. Sale of Energy: The energy generated from

a solar power project, will be sold to the

distribution licensees in the state at levelised

fixed tariff per unit as mentioned in the tablebelow for the period of 25 years, under a PPA,

to be specified by the GUVNL and / or

distribution licensee.

Benefits of this policy will not be available to projects set up under the MNRE incentivescheme for solar power generation. Further,

any subsidy / incentive received by SPG

developer from any source will be reducedfrom above mentioned rate for purchase of

power from SPG developers except the benefit

of Accelerated Depreciation under income taxact.

Prepared By:


Particulars Tariff for

Photovoltaic

(Rs./KWh)

Tariff for

Thermal

(Rs./KWh)ProjectsCommissio-

ned before

31/12/2010

a) 13.00 forfirst 12 years

b) 3.00 for

next 13 years

a) 10.00 forfirst 12 years

b) 3.00 for

next 13 years

Projects

Commissio-

ned before31/03/2014

a) 12.00 for

first 12 years

b) 3.00 for next 13 years

a) 9.00 for

first 12 years

b) 3.00 for next 13 years


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10. Plant & Machinery: Only new Plant &

Machinery will be eligible for installationunder this policy.

11. Sharing of CDM benefit: The developerwill pass on 50% of the gross CDM benefits to

the distribution licensee with whom PPA issigned.

12. Reactive Power Charges: The drawl of

reactive power will be charged as per the

GERC order, as amended from time to time.

13. State Government Facilitation and Nodal

Agency: GEDA & GPCL will be the stategovernment nodal agencies for facilitation and

implementation of the solar power policy

2009.

14. Forecasting & Scheduling: The SPG

based generation will not be covered under

scheduling procedure for intra state ABT.However, the actual energy injected in the grid

during particular time block of 15 minutes will

be post-facto considered in drawl schedule forsale of power to licensee / third party for giving

set-off against the consumption of recipient

unit in case of wheeling.

15. Metering of Electricity: The electricity

generated from the SPGs, will be metered on amonthly basis jointly by GEDA and GETCO at

the sending sub-station of 66 KV or above

located at site.

16. Grid Connectivity & Evacuation facility

up to GETCO sub-station: The evacuation

facility form the solar sub-station/switch yardto the GETCO sub-station will be initially

approved by GETCO after carrying out thesystem study. The power by the SPG will beinjected at 66 KV. The transmission line from

the switch yard of the solar sub-station to the

GETCO sub-station will be laid by GETCO.

17. Renewable Purchase Obligation: The

quantum of power that can be injected in the

grid from all renewable resources i.e. purchase

by distribution licensees plus captive

consumption plus third party sale should berestricted to 10% of the total consumption. This

will be subject to the further detailed

regulations pronounced by GERC from time totime.

18. Restriction for use of fossil fuel: fossilfuel will not be used in a Solar Thermal Power

Project.

19. Wheeling Charges: The wheeling ofelectricity generated form the SPGs, to the

desired locations/s for self use within the state,

will be allowed at a wheeling charges of 2% ofthe energy fed to the grid, till the wheeling

charge is decided by the GERC and thereafter

at the wheeling charge as per GERC, asamended from time to time.

20. Penalty for non fulfilling power purchase

obligation: Distribution licensee failing tomeet the minimum solar power purchase as

specified by the commission is liable to pay

penalty at a rate of Rs. 12/KWh to GEDA,which will be passed on the to the distribution

licensee who procure in the ratio of their solar

power purchase during the year.

21. Mid Term Review: State government may

undertake a mid term review of this policy aftera period of 3 years or as and when need arises

in view of technological breakthrough or to

remove any inconsistency with Electricity Act

2003, rules and regulations made there under orany government of Indian policy.

22. Power to remove difficulties: If anydifficulty arises in giving effect to this policy,

the Project Approval Committee is authorizedto issue clarification as well as interpretation tosuch provisions, as may appear to be necessary

for removing the difficulties.

4.1 Eligibility Criteria as per Solar

Power Policy of Gujarat State:

Prepared By:



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The entity desiring to set up the solar power

plant for selling electricity to distribution

licensee in the state of Gujarat is required tofulfill the below following financial and

technical eligibility criteria.

I. Financial Criteria

a) Internal Resource Generation (IRG):

Rs. 1.2 Crore/MW of the capacity,computed as five times the maximum

internal resources generated during any

of the last five years businessoperations.

b) Net Worth (NW): Rs. 2 Crore/MW of

the capacity which will be derived from

any of the past three years annualaccounts.

c) Annual Turnover (AT): Rs. 4.8

Crore/MW of the capacity which willbe derived from any of the past three

years annual accounts.

AT = Annual Gross Revenue Earned

II. Technical Criteria

a) Any entity in order to qualify will

essentially be required to have

collaboration with proven technologysupplier of solar power projects.

b) The entity mush have experience of

developing any projects in the last 10

years whose aggregate capital costs

must not be less than the amount

equivalent to Rs. 3 Crore/MW of thecapacity. Out of these projects, the

capital cost of at least one project

should be equivalent or more than Rs.50 Lacs/MW of the capacity. For this

purpose, capital expenditure on projectsthat have been completed at least 7 daysbefore the submission date of proposal

will be considered.

c) Developing Projects means successful

commissioning of a project in whichentity has not less than 26% equity

stake at the time of commissioning the

project.d) Entity will furnish documentary

evidence duly certified by qualified

auditors in support of their technicalexperience.

e) The entity will submit the proposal for

obtaining approval for setting up Solar

Power Project for selling electricity todistribution licensee in the state of

Gujarat to the Technical Committee.

5.0 The Project

It is proposed to set up a 2 MW solar power

plant in the state of Gujarat. The project wouldbe set up by the Cascade Solar Pvt. Ltd. The

project will sell power to the grid.

5.1 Location

Gujarat (complete location need to know)

5.2 Project Execution & Management

Cascade Solar / Belliss, (complete

information need to know)

Prepared By:


IRG = PAT + Depreciation &

Amortization+ Decrease in net CA

(excluding cash) + Non-Cash

expenditure (including deferred tax) Scheduled Loan repayment

Increase in net CA (excluding cash)

NW = Equity Share Capital +

Reserves Revaluation Reserves Intangible Assets Miscellaneous

expenditures to the extent not written

off and carry forward losses


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5.3 Cost of Project & its Financing

Cost of the project is estimated as under:

It is proposed to finance the project through

equity (30%) and debt (70%). A number ofspecialized lending institutions exist in India

which focus on the power sector and offer

concessional debt financing at around 10% forthe sector. Debt can be sourced from overseas

if cheaper, provide hedging costs are

reasonable.

5.4 Project Economics

In addition to the Government owned gridwhich offers a lower realization, power

produced by private projects can also be

traded / sold through power tradingcorporations set up in the public and the private

sector. Long-

term agreements can be signed with suchtrading corporation at a per unit realization of

INR 18 (USD 0.39), while actual realization,incase pre-contracted can be higher. Our

calculations are based on assured realization asstated above and the viability and payback

should improve with better realization through

the auction process.

Indicative calculation of pay-back for the

project is as under:

Prepared By:


Sr.

No.

Particulars USD/

Millions1. Land - 0.88

2. Civil Works 0.33

3. Plant & Machinery 5.70

4. Total Works Cost 6.91

5. Detailed Design Engineering

& Project Management

0.29

6. Interest during construction

and pre-operatives

0.31

7. TOTAL PROJECT COST 7.51

Sr.

No.

Description Unit of

Measurement

1. Installed Capacity KW 2,000.00

2. Total Cost of the Project USD Millions 7.51

3. Operating Hours in a Year Hour 2,100.00

4. Annual Generation Million KwH 4.20

5. Auxiliary Power Requirement % of Total

Generation

0.025%

6. Auxiliary Consumption Million KwH 0.001

7. Net Units Available for Sale Million KwH 4.19

8. Fixed Charges:

a) - O & M Charges (1% of Total Capital Expenditure) USD Millions 0.06b) - Employee Cost USD Millions 0.07

c) - Interest @ 10% P.A. USD Millions 0.51

d) - Miscellaneous Expenses USD Millions 0.05

e) - Depreciation (on WDV) USD Millions 0.34

Sub-Total (a +b +c +d +e) USD Millions 1.03

9. Fixed Charges Per KwH USD/KwH 0.25

10. Sale Price To Grid USD/KwH 0.39

11. Savings Per Unit USD/KwH 0.14

12. Annual Savings USD Millions 0.5913. Annual Savings + Depreciation USD Millions 0.93

14. CDM Benefits (Carbon Credits) USD Millions 0.059

15. Pay-Back Period with CDM Benefits Years 6.04


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Prepared By:

Goldbird Advisors Pvt LtdNew Delhi India

2 MW Power Project- IM (Gujarat)

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