1. EVALUATION STUDY ON PROGRAMME FORGRID-CONNECTED BIOMASS POWER, BAGASSECOGENERATION AND NON-BAGASSECOGENERATION IN INDUSTRIES Submitted to Submitted byZenith Energy Services Pvt. Ltd.Hyderabad-500028

2. OUTLINE OF THEPRESENTATION Introduction Central Schemes or CFA Programmes Grid-connected Biomass Power Generation Bagasse Cogeneration Non-bagasse Cogeneration Recommendations to CFA Programmes Conclusion 3. INTRODUCTION Ministry of New and Renewable Energy Programs on GridConnected Biomass Power, Bagasse cogeneration and Non-bagasse Cogeneration Projects from last 13 years The promotional programmes aimed at augmentingtechnological awareness and upgradation in these sectors New policy for biomass power and bagasse cogeneration isformulated in 2006 December and updated in 2010 The policy mainly concentrated on biomass power and bagassecogeneration in cooperative sugar mills Separate program had been announced for non-bagassecogeneration in Industries since 2006 Couldnt achieve better results in biomass power generation andnon-bagasse cogeneration 4. ..As on 31st June 2011, the installed capacity that availed CFAof grid connected biomass power, bagasse cogeneration andtheir respective growth 5. CONTINUED.. The total installed capacity of biomass (21%, 1082.6 MW), bagasse cogeneration (70%, 3613 MW) and non-bagasse cogeneration (9%, 444 MW)Although the growth ofbiomasspowerandbagasse cogenerationover reached their targetof by 100% and 50%respectively, onanoverall view the installedcapacity is very low 6. OBJECTIVE OF THESTUDYThe objective of the study is to evaluate the performance ofthe projects installed under the Central FinancialAssistance(CFA) scheme and assess the suitability ofvarious provisions in the existing scheme and to suggestchanges required, if any. 7. SCOPE OF WORK Impact of existing scheme and recommendations whetherto continue this scheme Identifying barriers and constraints for three sectors Bottlenecks in financing cooperative sugar mills Impact and cost benefit analysis of BOOT/BOLT Modelschemes for bagasse cogeneration in cooperative sugarmills Suitable interventions for accelerated development andpromotion of cooperative sector based bagassecogeneration Amount, pattern, implementation procedure, financialassistance needs any modification or revision Any other modification in the scheme 8. APPROACH ANDMETHODOLOGY Kick-off meeting was held on 21st October 2011 in MNRE Office Methodology of conducting the study was presented, discussed and finalized Sampling framework finalized for biomass, bagasse and non-bagasse cogeneration, Questionnaires prepared were vetted by the officials The study conducted was broadly based on the interviews conductedwith different stakeholdersSl. No.Type of stakeholderNo. of stakeholders visited1 Biomass Power Producers 162 Financial Institutions/ Experts/ State Level07Organizations3 Bagasse Cogeneration Power Plant Promoters104 Financial Institutions/ Experts/ State Level14Organizations5 Non-bagasse Cogeneration Power Plants Promoters 09and experts6 State Nodal Agencies, Utilities 15 Total no. of stakeholders interviewed69 9. State-wise Survey Status of Grid-connected Biomass, Bagasse and Non-Bagasse Cogeneration Power Plants in IndustriesSl. No. StatesSNA UtilitiBiomassBagasseNon-bagasse s esPromoters Expe OrganizatioFPromote Organizatio F Is* Promoters Experts rts nsIs*rs ns1 Chhattisgarh 1 1 3-1- - -- - -2 Karnataka1-2--- 3 2- - -3 Maharashtra1 1 3--- 3 5- - -4 Tamil Nadu 1 1 2-1- 2 2- - -5 West Bengal1- - --- - -- - 16 Haryana1 1- --- - --2-7 Punjab 1-3--- - --2-8 Rajasthan1-2-1- - -- - -9 Utter Pradesh1 1- --- 2 --4-10Andhra 1- - --- - -- - -Pradesh11 --1--- - -- - -12 -- - 1- 3- 23 - -Stakeholders10 5 16 13 3 10 11 381Total Number of Stakeholders 69 10. PROGRAMS National Programme on Biomass Power and BagasseCogenerationNational Programme on Biomass Powerand Bagasse Cogeneration 12 demonstration projects Guidance to states in purchasing power from biomassand bagasse projects awareness campaigns, capacitybuilding activities and promotional activities carried out Interest subsidies were provided for biomass power,bagasse cogeneration and other gasification technologies1993 2001 New initiatives were made for Industrial cogenerationand megawatt scale gasification plants, along with otherfinancial incentives Cogeneration plants were given subsidy on the basis ofpressure configuration of boilers used. 11. CONTINUED. December 2006 total program bifurcated into twocomponents i. Biomass power / bagasse cogeneration ii. Biomass gasification and non-bagassecogeneration Capital subsidy introduced instead of interest subsidy cooperative/ public/ joint sector sugar mills, 50% of thesubsidy amount is released to the financial Institutionsafter sanction of the loan and the balance subsidyamount after successful commissioning 2010 -- MNRE Program on grid-connected biomass and bagasse cogeneration power plants Program on Biomass (Non-bagasse) Cogeneration in Industries 12. AND BAGASSE COGENERATION POWERPLANTS This scheme is an up-gradation of the scheme that startedin the year 2006, especially encouraging efficientequipment in biomass and bagasse cogeneration powerplants. Main objectives of the program are to promote: setting up of biomass power projects with minimum steampressure configuration of 60 bar cogeneration projects from bagasse in cooperative / publicsector sugar mills with minimum steam pressureconfiguration of 40 bar bagasse cogeneration projects for in cooperative / publicsector sugar mills with minimum stream pressure of 60bar and above, taken up through BOOT / BOLT model byIPPs / State Govt. Undertakings or State GovernmentJoint Venture Company 13. Central Financial Assistance for Biomass and Bagasse Cogeneration PowerProgramPlants Special Category States Other StatesBiomass Power Projects Rs. 25 lakh X (Capacity in MW) ^ 0.646 Rs. 20 lakh X (Capacity in MW) ^ 0.646Biomass Cogeneration Rs. 18 lakh X (Capacity in MW) ^ 0.646 Rs. 15 lakh X (Capacity in MW) ^ 0.646(private sugar mills)Bagasse Cogenerationprojects by Cooperative/ Rs. 40 lakh* Rs. 40 lakh*Public/ Joint Sector40 bar & above60 bar & above Rs. 50 lakh* Rs. 50 lakh*80 bar & above Rs. 60 lakh* Rs. 60 lakh* Per MW (maximum supportPer MW (maximum support Rs. 8.0 crore per project) Rs. 8.0 crore per project)Fiscal Incentives for Biomass and Bagasse Cogeneration Power PlantsItem DescriptionAccelerated Depreciation 80 percent depreciation in the first year can be claimed for the following equipments required for cogeneration systems:(i) Back pressure, pass out, controlled extraction, extraction cum condensingturbine for cogeneration with pressure boilers(ii) Vapour absorption refrigeration systems(iii) Organic rankine cycle power systems(iv) Low inlet pressure steam inlet systemsIncome Tax Holidays10 years income tax holidayCustoms Duty Concessional customs and excise duty exemption for machinery and components for initial setting up of the projectsGeneral Sales TaxExemption is available in certain states 14. PROGRAM ON BIOMASS (NON-BAGASSE) COGENERATION IN INDUSTRIES A common program encouraged biomass cogeneration from 1993 through 2005 along with biomass gasification programs The growth of biomass cogeneration had been negligible over this period of time. In order to encourage the biomass cogeneration in different industries, MNRE launched a program on 25th July 2005, known as Programme on Biomass Energy and Co-generation (non-bagasse) in Industry for implementation in 2005-06 Subsequently the same program has been followed till 2010 and a new scheme with special emphasis on non-bagasse cogeneration in Industries has been introduced 15. CONTINUED.. Objectives of the program are: To encourage the deployment of biomass cogeneration(non-bagasse) systems in industry for meeting thermaland electrical energy requirements. To promote decentralized/ distributed power generationthrough supply of surplus power to the grid. To conserve use of fossil fuels for captive requirements inindustry To bring about reduction in greenhouse gas emissions inindustry To create awareness about the potential and benefits ofalternative modes of energy generation in industry 16. CONTINUED.. Scope of the program Biomass cogeneration for captive use at least 50% of power forcaptive use Other promotional activities -- potential / resource assessment,preparation of DPRs, organization of seminars / workshops /conferences, interactive / business meets, awareness creationactivities, and other professional technical services Central Financial Assistance (CFA) Capital subsidy for Biomass Cogeneration (non-bagasse) projects --Capital subsidy @ Rs.20.00 Lakhs / MWe would be provided topromoters CFA for organizing promotional program -- CFA up to Rs.3.00 lakh /event CFA up to Rs. 5.00 lakhs, on case by case basis for validationstudies etc., 17. BIOMASS POWER GENERATION 18. BIOMASS POWERGENERATION It is estimated that the power potential that could be derived frombiomass sector is 17,000 MW 5% of land use for biomass generation increases the biomass powerpotential to 32,000 MW 19. INSTALLEDCAPACITY Total Installed Capacity is 1082 MW (Ason 31st December 2011)The states selected for field survey(Punjab,Maharashtra, Karnataka,Chattisgarh, Tamil Nadu, and Rajasthan)constitute for 76% of the total biomasspower across India with a installedcapacity of 825 MWBiomass Power Plants Distribution(December 2011)StateInstalled Capacity Chhattisgarh239.9Punjab50.5 Rajasthan83.3 Maharashtra 162.5Tamil Nadu 201.7Karnataka 87.5 Others 257Total Capacity1082 20. FIELD SURVEY OF BIOMASS POWERPLANTS Biomass power plants interviewed / visited across the six states for field study Sl. No.StateName of the power plant visitedCapacity (MW) 1 Malwa Power Plant 8.0 2 PunjabUniversal Biomass Power Plant14.5 3 Dee Developers Pvt Ltd8.0 4 Sri Surya Chambal Power Ltd. 7.5Rajasthan 5 Kalpataru Power Transmission Pvt Ltd8.0 6Eco-fren Power & Projects Pvt. Ltd., 8.0 7 Chattisgarh Sudha Agro Industries Pvt Ltd, Bilaspur. 9.99 8 South Asian Agro Industries Pvt Ltd 10 9 Sri Indra Power Energies Ltd, 6.0Karnataka 10 Ravi Kiran Power Project Pvt Ltd. 7.5. 11 Sriram Non Conventional Energy Ltd,7.5 Tamil Nadu 12MPPL Renewable Energies Pvt Ltd 10 13 A A Energy Limited 10 14Rake Power Ltd10 Maharashtra Indu-bharat Energies Maharashtra 1520Limited 16Gujarat Amreli Power Projects9.99 21. CONTINUEDOther Stakeholders InterviewedFinancial Institutions Sl. Name of the Institution/ No.City Organization1 3rd Floor, August Kranti Bhawan, 110 066. Tel: +91IREDA 11 26717400 267174132Power Finance Corporation Ltd. Urjanidhi, 1, Power Financial Corporation PFC New Delhi.3Asian Development Bank (ADB)Plot 4, San Martin Marg, ChanakyapuriState Level Organizations1 Rajasthan Biomass Power Producers Jaipur Office: C-30, , C Scheme, Jaipur. Association2Plot No 30, Opposite Bank of ,Road No 1, Film Nagar, Biomass Developers AssociationJublee Hills, .3Chhattisgarh Biomass Energy C-33, Third Floor, Ashoka Millennium,. Ring RoadDevelopers AssociationNo.1, Rajendera Nagar Chowk,4IPPAINew Delhi5 Indian Biomass Power DevelopersNew Delhi Association Experts1Dr G C Dutta RoyDalkia Energy Services Ltd 22. WORKING STATUS OF BIOMASS POWER PLANTS Out of 825.4 MW surveyed, 260 MW (32%)power plants are in poor operating conditionor are operating at lower PLF ranges of below25% or in a shut down state There are around 350 MW of registeredbiomass power projects which are stuck dueto lack of finance in the state of Rajasthanand 15 projects of 150 MW are going throughthe same condition in the state ofChhattisgarh 23. EVALUATION OF BIOMASS POWER PLANTS The evaluation of biomass power plants is categorized into thefollowing: Biomass as a fuel Operations and Maintenance Power Purchase Agreement and Tariff Rates Biomass power plants are surveyed for biomass related evaluation andfor operations and maintenance issues While respective SERCs are approached and latest petitions filed bydifferent biomass players are analyzed for biomass power tariffs andpower purchase agreement related issues 24. EVALUATION/ ANALYSIS OF FUEL RELATEDISSUES The biomass related problems are evaluated on two parameters, namely: Assessment, procurement, storage and competition for biomass as fuel Price of biomass The sources of biomass availability are: Farmers Agents Biomass Collection Canters from IPP Sources of fuel are not authenticated and the fuel is stored by the agents for a price rise Procurement and storage losses from biomass storage are around 5% Competition Increasing competition from other sectors like brick kilns, cement plants,thermal power plants, oil mills, and rice mills making biomass unviable for powerproduction alone Price of the biomass fluctuates very highly from Rs.1,500 / ton during season to Rs. 3,000 /ton during off season of crops Rise of fuel prices, assessment, procurement, storage practices are assessed directly byvisiting the biomass power plants 25. OPERATIONS AND MAINTENANCEStation Heat Rate (SHR) and Gross Calorific Value (GCV) Station Heat Rate (SHR) is the measure of amount of energy in terms of kCal required to generate one unit i.e., kWh of electricity It is the product of GCV of the biomass to the specific fuel consumption of the power plant SHR and GCV plays a vital role in understanding the health of a biomass power plant SHR is observed and studied from different petitions from different SERCs Skilled manpower procurement and retention is another problem faced by the biomass power producers There are no skilled workers in the area and as the number of power plants are increasing the need for skilled manpower is increasing day-by-day leading to lower retention rates at different biomass power plants 26. PPAS AND TARIFFS PPAs are being made for about 10 to 13 years with respective DISCOMS Tariff rates are determined by the SERCs and the same are revised fromtime to time Prevailing tariff rates and the payment related issues with respectiveSERCs are discussed with the promoters. The major parameters takeninto consideration are: Tariff rate determination problems are collected from both SERCs andthe IPPs and other stakeholders introduced Problems pertaining to the delayed payments from the DICOMS Tripping of the power lines 27. EXISTING STATE LEVEL POLICIES FOR BIOMASSPOWER GENERATION State of Rajasthan has special policy for biomass power generation The major and important aspects of the policy are: Reservationof Area for Biomass Power Plants Policy for plantationsSl. No. Capacity (MW) Area Reserved (Radius in km)15602 5 - 7.5 7537.5 10 804 10 12.5 855 12.5 15 906 15 20 100 Promotion of development of Prosopis-Juliflora / other energyplantation on Government land for use as supplementary fuel inBiomass Power Plants 28. BARRIERS AND CONSTRAINTS The major barriers and constraints that were identifiedare: Technicalbarriers Institutional / regulatory barriers Financial barriers Technical Barriers Lack of quality biomass assessment study Lack of standardized methodologies and guidance Biomass assessment a low cost service Inadequate fuel collection, distribution and supply mechanism Competition for biomass and price rise Availability, training and retention of skilled manpower Lack of standardized SHR and GCV rates 29. CONTINUED Institutional / Regulatory barriers and constraints PowerPurchase Agreement (PPA) Lack of short term PPAs with Biomass Power Plants Tariff related issues Lack of standard biomass price assessment mechanism fordetermination of the biomass tariffs Zoningof the region Irregular zoning practices and self violating policies Sizing of the power plant Improper sizing of the power plant leading to competition for the sameamount of biomass available Financial barriers and constraints Lack of interest from financing institutions Delayed bill payments by more than six months 30. RECOMMENDATIONS FOR OVERCOMING BARRIERSIDENTIFIED Inline with the above barriers identified, recommendationsare made, they are: Technical aspects Institutional and regulatory aspects Financial Aspects Technical Aspects Biomass Assessment Establishment of standards and single format reporting for biomass surplus across the country Triangulation of data Through secondary sources local agricultural departments Through strong and robust ground level study Through data from a satellite regarding the biomass availability Biomass procurement Efficient fuel collection mechanism through licensed depots and briquettingunits Backedup by the exact biomass assessment reports, traders of biomass shouldbe licensed and regulated sale and purchase of biomass should be ensured. 31. CONTINUED Storage of biomass Encouragement of briquetting units that would reduce the space required forbiomass storage by making biomass briquettes Competition and pricing Biomassprices should be monitored meticulously and that coupled withascertained tariff revisions would ensure smooth increase in the biomassassessment the supply mechanism should be molded into a shape from the existing rawform, depending upon which the future biomass capacity addition should beassessed accurately Sizingof the project Restriction on the size of the project should be put so as to achieve the fullestpotential Institutional and regulatory aspects Power Purchase Agreement and Tariff Revision When the SERCs delay in paying power bills there should be PPA exit strategy forbiomass power plants Short term PPAs should be encouraged for biomass power plants Tariffs should be revised periodically depending upon the annual reports frombiomass assessment studies 32. CONTINUED.. Plantation backed biomass power plants should beencouraged by Generation Based Incentives (GBIs) No biomass power plants should be licensed without plantationbackup in the states like Chhattisgarh and Rajasthan Efficient Land allocation mechanism should be made for the biomass Financial Aspects Efficientbill payments should be ensured from the SERCs to theirrespective clients Proper biomass potential assessment practices should be establishedso as to identify and invest in the right areaCFARelated Recommendationsacentral policy should be made regarding the biomass channelmanagement as fuel for biomass power plants It is noted that the impact of Central Financial Assistance is very lessor negligible and needs a turnaround towards becoming acomprehensive policy ensuring standardized biomass assessment,channel management, which would be determining the future courseof biomass power plant industry in India 33. BAGASSE COGENERATION 34. Cogeneration is defined as the coincident generation ofuseful thermal energy and electrical power from the samefuel input The sugar manufacturing process requires a largequantum of thermal energy in the form of steam and alsothe bulk of steam required for processing is needed at thelow pressure Conservative estimates suggest a potential of over 5,000MW from cogeneration plants in India The total installed capacity of bagasse plants in India ason 30th July 2011 is 3613 MW 35. HISTORY OF THE BAGASSE COGENERATIONPROJECTS Before 1970s, steam generation pressures / temperatureswere low, boiler / turbine efficiencies were low, steamrequirements for process were high and hence the millswere neither self sufficient in their steam requirements,nor in electricity Over the years, more efficient equipment was adopted andby 1990s, mills started to not only become self sufficient insteam and electricity, but they even had some surplusbagasse Ever since 1993 94, MNRE has been the vanguard of itspromotion Over the last two and a half decades, biomass power hasbecome an industry, attracting annual investments of overRs. 1,000 crore, generating more than 700 Crore units ofelectricity and creates employment opportunities of morethan 10 million man days, all in rural areas 36. TECHNOLOGICAL EVOLUTION Technological evolution of bagasse cogenerationPeriod MillSteamElectricityBagasse Electrical BoilerSpecific Capacity Pressure/ Generation Self SelfEfficiency Steam(TCD)Temp.(MW)Sufficiency SufficiencyConsu-(Bar/oC) (MW)mption19705000105/525 ~35~302011>7000110/525 ~36 18% ~3380% 1.5 Power Generation and steam generation from powerSteam Cycle Steam ProductionPower GenerationBagasse Required ( Bar / OC ) ( Tons ) ( kW ) ( Ton / MWh )21/340 2.50 227.3 4.532/380 2.432863.542/400 2.40 313 3.245/440 2.33 328 3.067/480 2.27 378 2.687/510 2.24 401 2.5110/5352.21 427 2.3 37. PROJECTSo The total installed capacity ofbagassecogenerationpowerplants in India is 3613.25 MWo Out of 3613 MW installed, the totalcapacity that availed subsidy is1802 MW 38. BUSINESS MODELS EVOLVED IN INDIA The success of bagasse cogeneration is not onlydependent on the choice of technology, but also on thesoundness of the business model that ensure steadyrevenue stream This revenue stream helps sugar mills to overcomeinherent fluctuations in the sugar market so much sothat some sugar mills consider themselves to be in thebusiness of producing electricity in which sugar is beingconsidered only as a by-product by them Various investment models evolved are: OwnInvestment Model IPP-BOOT Model Joint Venture (JV) Model SPV Model Joint Venture / IPP Cooperative Mill Models 39. EXISTING SCHEMES ON BAGASSE COGENERATIONPOWER PLANTS Maharashtra Tariff of Rs. 3.05 / kWh and 2% compound escalation Launch of Urjankur Trust scheme As per this scheme, the Cogeneration power plants can avail offinancial assistance as under: Own Investment: 10% Loan from Financial Institutions: 60% Assistance from Sugar Development Fund (SDF): 30% Other FIs supporting bagasse cogeneration are: IREDA SDF NCDC HUDCO 40. FIELD SURVEY OF BAGASSE COGENERATIONPLANTSCategorization of Stakeholders InterviewedSl. No. Type of StakeholderNo.1 Bagasse cogeneration power plant promoters interviewed 102 Financial Institutions/ experts/ state level organizations interviewed 14Total Number of Bagasse Cogeneration Power Plant Stakeholders24 List of Bagasse Cogeneration Power Plants VisitedCapacitySl NoState Name of the Power Plant Visited (MW) 1 Kranti SSK11 2MaharashtraDatta SSK 36 3 Someshwar SSK 18 4 Indian Cane Power Ltd 28 5KarnatakaHiranyakshi SSK 26 6 Renuka Sugars 38 7 Dhampur Sugar Mills 30Uttar Pradesh 8 Mawana Sugar Mill.20 9 Kothari Sugars & Chemicals Ltd11 Tamil Nadu10 Shakti Sugars Ltd 35 41. List of other Stakeholders InterviewedFinancial InstitutionsSl No Name of the Financial InstitutionsCorporate Office 1National Cooperative Development Cooperation (NCDC)New Delhi 2NFCSFNew Delhi 3IFCI Ltd SDF New Delhi State & Central Associations 1The South Indian Sugar Mills AssociationBanglore 2Indian Sugar Mills AssociationNew Delhi 3Sugar Technologies Association of New Delhi 4The Federation of Co-op. Sugar Mills Ltd Chandigarh 5The Federation of Co-op. Sugar Factories Ltd. Banglore 6Co-operative Sugar Factory Federation Mumbai 7Commissioner of Sugar ()Pune 8Cogeneration Association of (COGEN )Pune 9The Sugar Factories AssociationMumbai 10 The Bombay Sugar Merchants Association Ltd. Navi Mumbai 11 Tamilnadu Co-op. Sugar Factories Federation Ltd. (TNCSF) Chennai 42. TECHNICAL AND FINANCIALEVALUATION Technical parameters involved in study are: Boiler and turbine specifications Specific Consumption of Fuel Fuel Linkages Seasonal utilization of bagasse available Off seasonal Fuel Linkages Generation based details Generation during season and off season Financialparameters involved in study are Funding pattern of the project Financial business model adopted Financial performance of the project by financial parameterslike IRR Payback period DSCR 43. IDENTIFIED The major barriers and constraints that were identifiedare: Technicalbarriers Institutional / regulatory barriers Financial barriers Technical Barriers Limited capacity of sugar mills Lack of trained man power Biomass / Bagasse pricing Institutional/ Regulatory Barriers Institutional and political nature of cooperative mills Long gestation period High management risks Irregularities in tariff / payment defaults Financial Barriers Lack of financial strength of the sugar mills Limited access to funds and difficulties in raising equity 44. COOPERATIVE SUGAR MILLS AND COSTBENEFIT ANALYSIS 45. ADVANTAGES OF THE BOOT/ BOLT MODEL Allthe risks are borne by developer who brings fund raising capabilities and project skills Monetary benefits to sugar mill in addition to power and steam supply without any equity participation Sugar mill could be incentivized for improved operational efficiency No difficulty in raising small size of capital Faster project implementation 46. COST BENEFIT ANALYSIS OF BAGASSE COGENERATION Details of the project developer and the host sugar factory Name of the developer of the project Shri Renuka Energy Limited AddressHavelock Road, Cantonement, BelgaumDeshbhakta Ratnappanna Kumbhar Name of the Host Sugar Factory Panchaganga Sahakari SakharKarkhanaA/PGanganagar, Hatkanangle, AddressKolhapur, Maharashtra Power Generation details of Bagasse Cogeneration Power Plant Generation Details Seasonal Off Seasonal Operation of Cogeneration Plant days 180 Days 75 Days Capabilities of cogeneration plant i) Power Generation106105 kW39789 kW ii) Captive power40653 Kw 37 kW iii) Net Exportable power65452 kW 35810 kW iv) Exportable power 65.45 MU*35.81 MU* v) Total power exported 101.26 MU* 47. CONTINUEDDetails of Total Project Cost Rs. In MillionSl. No. DescriptionAmount1 Civil works 74.502 Mechanical equipments603.303 Electrical Equipment 126.804 Sugar Plant Modifications 59.505 Taxes and Duties 18% 155.546 Transportation of Equipment 3%23.69Total plant & machinery1,043.337 Consultancy, and project management 20.878 Contingency @10% 106.429 Interest during construction29.27Total Project Cost 1,199.88 48. ..Revenue for the project and other details Revenueis generated at the rate of Rs. 3.05/ unit with an escalation of 2% per annum Vital Financials of the ProjectRs. In Million Sl. No. Criteria Amount 1 Revenue generated per annum198 2 Cost incurred over the project 1,199 Cost incurred over the project for 312 the first year 4 IRR of the project 12 16 % 5 DSCR of the project1.75 -- 2.5 % 6 Payback Period of the Project6 8 Years 49. RECOMMENDATIONS FOR BAGASSECOGENERATION PROJECTS In accordance with the above evaluation and barriersidentified the recommendations are variegated as: Technologicalaspects Institutional aspects Financial aspects Technological aspects Awareness on Technology Up-gradation Training programs to ensure more manpower Bagasse / biomass pricing Institutional aspects Conducting awareness programs Financial aspects Extending SDF funding Timely payment of bills by SEBs PPA - Provision to exit from PPA with SEB 50. POLICY INTERVENTIONS FOR DEVELOPMENT OFCOGENERATION IN COOPERATIVE SUGAR MILLS Revision on CFA for bagasse industries For private power plant, the existing CFA should be continued Cooperative sugar mills the CFA should be increased at least upto 5% Awareness generation MNREmay seriously consider supporting conduction ofawareness raising events, information dissemination campaignsregarding technologies, potential for cogeneration, benefits ofcogeneration (profitability, environmental & social, etc), Continuation of the scheme Existingscheme for cooperative sugar mills should be continuedin future Encouragement of biomass plantations Reductionof off seasonal coal usage Plantation based services should be encouraged and ModelProjects should be asked for 51. NON-BAGASSE COGENERATION 52. INTRODUCTION Non-bagasse cogeneration has been gaining ground inIndian biomass power production scenario gradually andmost of the times this phenomenon has not been observedand recorded Most of the industries that generate steam for industrialprocesses are using biomass as fuel, at least partially onthe basis of availability of biomass in their boilers 53. GROWTH OF THE NON-BAGASSECOGENERATIONo The total installed capacityof non-bagasse cogenerationpower plants in India is444.23 MW as on 31stDecember 2011 The major state where non- bagasse cogeneration is prevalent is Uttar Pradesh, WestBengal, Punjab, Haryana, andAndhra Pradesh 54. EVALUATION OF NON-BAGASSECOGENERATIONThe biomass (non-bagasse) cogenerationpower plants are evaluated on threemajor areas pertaining to the study; theyare:oTechnical evaluationo Financial evaluationo Institutional/ Regulatory/ PolicyList of non-bagasse cogeneration power plants interviewed in the studySl. Capacity Major observations of the evaluationStateNameNo.(MW) PLF >90% 1 Bharat Starch Industries Ltd 2.0 Haryana 2Sainsons Paper Industries Ltd 3.0Specific Fuel 2.5 to 4.3 kg / 3 Shreyans Industries3.5Consumption kWh 4 ABC Paper Ltd10.0 Payback 5 8 years 5Yash Papers Ltd 6.0 6Uttar Lakshmi Cotton Mills8.0Cost / kWh of Rs. 2 Rs. 3 7 PradeshRama Papers Ltd 6.0power produced 8Mohit Papers Pvt Ltd4.5 IRR 12 16% 9 Verde Renewables Pvt. Ltd - 55. BARRIERS AND CONSTRAINTS The major barriers and constraints that were identifiedare: Technicalbarriers Institutional / regulatory barriers Financial barriers Technical Barriers Biomassassessment for accurate assumptions of biomass usage in Non-bagasse cogeneration Industry A harbinger in understanding the utilization of biomass in a given area Biomass procurement and prices Lackof up-gradation of technology Availability, training and retention of skilled manpower Institutional / regulatory barriers Lackof success stories Lackof state level and industry wide awareness 56. RECOMMENDATIONS FOR NON-BAGASSE COGENERATIONPROJECTS In accordance with the above evaluation and barriersidentified the recommendations are variegated as: Technologicalaspects Institutional aspects Financial aspects Technological aspects Efficient biomass assessment Technical up-gradation Institutional aspects Revision on CFA for non-bagasse industries Suitable awareness campaigns 57. EVALUATION OF CFAPROGRAMSl. Topic Grid connected Biomass Bagasse Cogeneration Non-bagasse cogenerationNo. discussedPower Generation 1Utilization of All the biomass plants availed The private sector bagasse Only half of the promoters availedfiscal the subsidycogeneration power plants subsidy, which due to lack ofsubsidy utilized the subsidy awareness 2Impact of Very low impact because Has very good impact on Impact on the industry isCFAoverCFA schemes concentratethesector andthepoor. Central scheme couldthe sector on technology upgradation, schemes taken up arenot permeate the techno- while the major barrier forsuccessfulcommercialbarriers this sector is arising out of Now the policy mayassociated withindustry fuel pricing uncertainty concentrate onspecific complexity of thiscooperative sugar sectorfactories and low capacitybagasse cogenerationpower plants 3Barriers/ CFA scheme is more beingThere are no major deviations CFA scheme is only catering forconstraints lopsided towards technology inthe designand technological upgradation ratherinthe upgradation implementation of scheme forthanoverall sector levelschemebagasse cogeneration industry assessment 4Needfor Notneededfornon- Needed forbagasse No revision of CFA scheme isrevision ofplantation based bagasse cogeneration power plants requiredthe subsidycogeneration projectsbackedup by theEncouraged for plantationplantations backed biomass power plants 58. RECOMMENDATIONS OF CFA PROGRAMMES Grid connectedSl.TopicBagasse Non-bagasse Biomass PowerNo.discussedCogeneration cogeneration Generation 1Recommended Standardizing the Need for MIPs in Sector specific, statemeasures for distribution and small capacity based specific and clusterincreasing the collection mechanismsbagasse cogeneration specific studies should beeffectivenessofbiomasspower power plants encouragedof the schemeplants Awareness programs Awarenessprograms Encouraging biomassand technology upregarding the updated Plantationsgradation oriented technologies should be continuing the existingfinancialincentive encouraged scheme for schemes for bagasse technological up-cogenerationin gradationcooperativesugar Controlled licenses of mills new power plants Encouraging biomass GBIs for plantationPlantations for off backed power plantsseasonal fuel linkages Existingscheme should be continued for the new power plants with careful biomass assessment studies