Feasibility Analysis of 5MW Osmanabad Solar PV Power Project

Submitted by

Ashwani Singh
Enrollment No. R100107023

External Guide Internal Guide

Shri P. Jayakumar Dr. S.Prabhakarn

Director Asst. Professor
Arbutus Computers & Consultants Pvt.Ltd UPES
Pune NCR Centre
Gurgaon

An Internship report submitted in partial fulfillment of requirements for Masters

of Business Administration (Power Management)

September, 2008

University of Petroleum and Energy Studies, Sector 14,Gurgaon, India

 Feasibility Report

Acknowledgement

This is to acknowledge with sincere thanks for the assistance, guidance and support that I have
received during the Summer Training. I place on record my deep sense of gratitude to the
management of Arbutus Computers & Consultants Pvt. Ltd for giving me an opportunity to
pursue my Summer training in the Energy Department of the organization. My very special thanks to
Mr P. Jayakumar for his constant advice and support .

I must also thank Mr P. Jayakumar and Mr S.Sredhare for their valuable support.

I wish to make a special mention of Dr S. Prabakaran for his deep involvement and continuous
guidance. He has been of immense assistance.

.
Ashwani Singh
595- Radhika Vihar Mathura (UP)

Table of contents

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Chapter 1: Introduction 7

Chapter 2: Brief overview of Organization 8-10

2.1. Mission of organization 8

2.2. Some important clients 9
2.3. Functional areas of performance of organization 9

Chapter 3: Objective of Study 11

3.1.Determine the feasibility of setting a 5MW Solar PV Power 11

Project in Osmanabad District of Maharashtra

Chapter 4: Feasibility Study Plan 12-36

4.1. Relationship between growth of Electricity demand and GDP 12

of India
4.2. Provision in Electrcity Act 2003 for the promotion of renewal 13
energy generation
4.3. MERC’s tariff order declaration for grid interactive SPV 13
Solar Power Plants & proposed renewable capacity addtion plan
for 11th Five Year Plan
4.4. MNRE guidelines for grid interactive Solar Power Plants 15
4.5. Climatic conditions of the proposed site 25
4.6. Annual Average Solar Insolation 26
4.7. Solar Energy Purchase Agreement 28
4.8. CDM Benefits 28
4.9. Location and Land Rights 31
4.10. Project Design 33
4.11. Interconnection Level 35
4.12. Permits and Authorization 35
4.13. Construction 35

Chapter 5: Analysis & Findings 37-46

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5.1. Cost analysis of land & major equipments of 5MW SPV Solar 37
Power Project
5.2. Warranties of major equipments 40
5.3. Cost financials & rate of return 42
5.4. Comparison with other renewable sources of power generation 43
in the proposed region
5.5. Financial Indicators for comparison among renewable alternatives 46
for 5MW Power Generation

Chapter 6: Conclusion & Suggestions 47

Bibliography 48

List of Tables

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Table No. Title Page No.

1 Relationship between per capita expenditure & carbon emission by people 13

of different categories in India

2 MEDA’s RE capacity addition plan from 2007 to 2012 14

3 Billing rate (Rs/Kwh) comparison among different categories of consumers 25

Of Maharashtra

4 Tentative time scheduling of the construction of 5MW Solar Power 36

Project

5.1 Solar 5MW PV Modules costing 37

5.2 Transmission lines & Power Evacuation System costing for 5MW Power 37
Project

5.3 Costing for 5MW Solar Power Project without taxes 37

5.4 Total taxes levied on 5MW Solar Power equipments 38

5.5 Total cost of equipments for 5MW Solar Power Project after taxes 38

5.6 Contingencies provisions 38

5.7 Total annual power generation 39

5.8 Total capital cost for installing 5MW Solar Power Project 39

5.9 Terms of loan & equity 39

5.10 Rate of returns of proposed Solar Power Project with different options 42

5.11 Annual power generation by 5MW Wind farm Project 44

5.12 Cost analysis of 5MW Wind farm Project 44

5.13 Annual power generation by 5MW Biomass Power Project 45

5.14 Costing of 5MW Biomass Power Project 46

List of Figures
Figure No. Title Page No.
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1 Relationship b/w growth of electricity demand & GDP of India 12

2.1 Annual Solar Insolation curve of Osmanabad City 27

2.2 Total and cumulative solar insolation of different months at Katgaon 27

Substation

3 CDM Project Cycle 29

4 Comparison of CERs traded in European & Asian Market 31

5.1 Photograph of the proposed site near Katgaon village of Osmanabad 32

district

5.2 Photograph of the proposed site near Katgaon village of Osmanabad 32

district

6 Schematic line diagram of the proposed 5MW Solar Project 34

Chapter-1

Introduction

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Earth surface receives solar energy approximately 10000 times total demand of power consumed
annually. India on an average receives solar insolation 1600Kwh/m2 annually which is equivalent to
20MW per m2 of area. India has the total potential of 40000MW power generation from solar energy
but the contribution of solar power in the total installed capacity is approximately 50 MW. The
probable reason for such a low usage of solar energy for power generation is the high installation
cost and low efficiency. It is evident that sun will last for 1011 years. So emphasis should be done to
Promote solar power generation.

This study includes the energy supply and demand gap of Osmanabad District of Maharashtra.
Besides the climatic conditions of the region, the study will also include the consumers billing
response in the region. The study will determine the rate of return of the prospective project and also
determine its creditability for getting MNRE incentives.

ReSun Energy Private Ltd. is proposing a 5MWp Grid Interactive Solar PV Power Plant in
technical collaboration with SunEdison – USA which is North America’s largest solar energy
service provider with over 50MW Installations all across USA . The project site is situated at 18.49
N Latitude and 76.162 E Longitude near village Katagaon, Taluka Osmanabad, District Osmanabad.
The Katgoan substation 66KV is the evacuation point and is located 8km from the project site.

The project shall be designed to generate approximately 9125 MWH clean solar energy for
Maharashtra State Electricity Distribution Company Ltd.(MSEDCL) annually. Installation shall be
modular in approximately 2 to 3 MW and will take about 12 months from commencement to
completion. Once the “Tarrif order” is declared by Maharashtra Electricity Regulatory Commission
(MERC). Astonfield SunEdison Renewable Power Pvt.Ltd. will enter into Solar Energy Purchase
Agreement (SEPA) with MSEDCL for Osmanabad district at a fixed price (to be fixed by MERC) for
a period of 10 years.

Chapter-2

Brief about the Organization

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Arbutus Computers & Consultants Pvt. Ltd. is a Private Limited company incorporated under
the companies Act. 1956 (No.1 of 1956) on 12th October 1999 at Delhi . The company aims
to pursue business in diverse areas like Software Development, Energy Conservation, Energy
Audit, Solar Energy Applications and General Management. The company is already
involved in Medical Transcription.

The company has an association with Eco Ltd., in the area of Offshore Software
Development. Eco Ltd. is a Consultant firm based in London that brings together Energy,
Sustainable Development and Information Technology. The company focuses on Project,
Market and Business Development in Central & Eastern Europe and in Developing
Countries. Eco Ltd. sponsors the "HEDON" internet pages focusing on Renewable Energy.

The company has an association with M/S. Kanwar Krishen Associates P. Ltd. (KKAPL),
Delhi, in the area of Consultancy in Engineering. KKAPL was established in 1969. For more
than three decades they have been providing consulting services covering the study, Analysis
and Design of Systems Preparation of Design Tender and Procurement Documentation,
Assessment and Evaluation of Equipment and Site Supervision.

Arbutus Computers & Consultants Pvt. Ltd. is an offshore software services solution provider
that accelerates, simplify and enrich business processes to give its customers an edge over
competition. Since inception in 2006, our success has been built on a remarkable record of
quality, consistency and outstanding technological prowess.

2.1. Mission of the organization

To build a world-class, ethical and value based, global organization leading in the fields of
Energy, Information Technology and Management

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2.2. Some Important Clients

 Maharashtra Energy Development Agency, Pune

 Maharshtra Industrial and Technical Consultancy Services, Pune
 World Institute of Sustainable Energy, Pune
 West Bengal Renewable Energy Development Agency, Kolkata
 Ladakh Ecological Development Group, Ladakh
 India-Canada Environment Facility, Delhi
 ReSun Energy Private Limited , Bombay
 SunEdison Energy Private Limited , USA

2.3. Functional areas of performance of the organization

2.3.1.Energy Audit

 Network of Energy Auditors to undertake energy audit in Chemical, Fertilizer,

Cement, Minerals and Metals and other Engineering Industries.
 Walk-thru audit for initial report followed up by detailed audits.
 Recommendation of Energy Conservation measures including application of cost
affective Renewable Energy Systems as part of the energy audit recommendations.

2.3.2.Solar Energy

 Design
 Energy Planning
 Support in Business Development
 Strategic Planning
 Development of Export Markets for Solar PV Cells, Modules and Systems

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2.3.3.Electrical Engineering

Design, Engineering and Preparation of detailed technical specifications for Electrical, Air
conditioning and Instrumentation infrastructure for commercial complexes and
manufacturing firms.

2.3.4.Solar Photo-voltaic

System design and documentation for Stand-alone Solar Photo-voltaic system, Solar Photo-
voltaic – Mains/DG/Wind hybrid systems.

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Chapter-3
Objective of Study

3.1 Determine the feasibility of setting a 5MW Solar PV Power Project in Osmanabad District
of Maharashtra

Increasing pressure of population and increasing use of energy in different sectors of the economy is
an area of concern for India. With a targeted GDP growth rate of 9% during the Eleventh Five-year
Plan, the energy demand is expected to grow at 8.2% per annum.

According to the International Energy Outlook 2008 (EIA 2008b) projects India’s gas consumption is
growing at an average annual rate of 6.1%, thereby reaching 2.8 trillion cubic feet by 2025 and in which
the share of electric power sector will be approximately 71% by that time. Coal consumption is expected
to increase to 315 MT over the forecast period. In India, slightly less than 60% of the projected growth
in coal consumption is attributed to the increased demand of coal in the electricity sector while the
industrial sector accounts for most of the remaining increase. In order to meet the rising demand of
power 60000 MW of additional coal-fired capacity is to be installed during 2002-25.This will result in
increasing the use of coal for electricity generation in India by 3.2% per annum during 2002–25. Oil
demand in India is expected to increase by 3.5% per annum during the same time.

It is quite apparent that coal will continue to be the predominant form of energy in future. However,
imports of petroleum and gas would continue to increase substantially in absolute terms, involving a
large energy import bill. There is, therefore, an urgent need to conserve energy and reduce energy
requirements by demand-side management and by adopting more efficient technologies such as
switching over to renewable sources of power generation from conventional sources.

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Maharashtra is the highest power consuming state with the total annual average demand of 14000
MW in which the total contrbution of Osmanabad district is 3200 MW . It has high potential for
renewable power generation from wind. solar ,biomass. In Maharashtra more than 50% of the total
wind potential equaled to 1860 MW has been exhausted. It is the solar whose potential has been
exhausted less than 1%. Since average solar insolation in Maharashtra is approximately 4.6 Kwh/m2
per day which is best suitable for solar power generation.

Chapter 4
Feasibility Study Plan
4.1. Relationship between growth of electricity demand and GDP of India

India’s electricity consumption has grown at a rate higher than the GDP in the past 2 decades.
A positive correlation is observed between increase in electricity demand and growth of the economy of
the country.

Fig 1: Relationship between growth of electricity demand and GDP of India

Source: Energy Outlook 2008

It can be observed from the figure above that the electricity demand, growing at about 8.7% per annum
during the last decade had outstripped the economic growth rate of 6.8%. According to CEA, the annual
average energy shortage during 2007-08 was around 9.9% and peak power shortage was around 16.6%.
As per CEA the target capacity addition for 11th Five Year plan is 78,700MW in order to meet the
increasing demand of power. This will result in increasing Greenhouse Gases Emissions due to

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generation of power through conventional sources to a large extent. The increased emission of
Greenhouse Gases will have adverse effect on the climatic conditions of different regions of our country.
So there is an essential need to decrease the GHG emissions by adopting renewable sources of power
generation. The effect of power generation through conventional sources on the population is shown in
the table given below :-

Table 2: Relationship between per capita expenditure and carbon emissions by people of different
categories in India
Source: Energy Efficiency Bureau

4.2. Provisions in Electricity Act 2003 for the promotion of renewable energy generation

In order to promote the power generation through renewable sources, Under para 6.4 of Electricity Act
2003 “86. The State Commission shall discharge following functions, namely -“(e) promote cogeneration
and generation of electricity from renewable sources of energy by providing suitable measures for
connectivity with grid and sale of electricity to any person, and also specify, for purchase of electricity from
such sources, a percentage of total consumption of electricity in the area of distribution licensee”.

4.3. MERC’s tariff order declaration for grid interactive SPV Solar Power Plants & proposed
renewable capacity addition plan for 11th Five Year Plan

In order to ensure balanced growth of all types of renewable energy sources, Maharashtra Electricity
Regulatory Commission has evaluated following options under RPS regime:

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Option-1: Minimum contribution for particular RE resource

Option -2: Maximum contribution limit for particular RE resource
Option-3: Tiers or resource bands within RPS
Option-4: No specific limit for each RE resource
Minimum contribution limit for particular RE resource (Option-1): Under this Option, the minimum
percentage may be specified for high cost renewable technologies or technology classes (e.g.,
Licensees and Eligible Persons must purchase at least 0.5% of the renewable requirement from solar
technologies).

Maximum contribution limit for particular RE resource (Option-2): Under this Option, the maximum
percentage may be specified for certain technologies whose potential has been significantly exploited
(e.g., wind energy must not contribute more than say 50 % of target RPS percentage).

Tiers or resource bands within RPS (Option-3): Under this Option, the percentage of eligible
renewable energy could be from specific technologies or resource specific tiers There could be a
separate tier corresponding to each RE resource based on proportion of available potential of that RE
resource within the State. Alternatively, there could be two tiers within overall RPS percentage, where
one tier could include existing renewable resources and could be set at a higher percentage than the
second, smaller tier may include a set of new/commercially unviable technologies that have
significant long-term development potential, e.g., solar power, wave and tidal energy. This could be
set at a low percentage, which increases gradually.

The Commission rules that Option-4 (i.e., no specific limit for each RE resource within overall RPS
percentage) will be applicable.

Renewable Energy Capacity Addition Plan of MEDA

The proposed plan of MEDA for RE capacity addition envisages capacity addition of around 1000 MW
each year from various types of renewable energy sources

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Table 2: MEDA’s RE capacity addition plan from 2007 to 2012

Source: MERC Order for long term development of RE sources and
Associated regulatory (RPS) framework dated 2006

4.4. MERC guidelines for grid interactive SPV Solar Power Projects

Ministry of New and Renewable Energy (MNRE) is the nodal Ministry of the Government of India
for all matters relating to new and renewable energy.
One of the major functions identified for MNRE is “Grid interactive renewable electricity to
supplement fossil fuel based electricity generation”
As per MNRE, solar PV potential in India is assessed as about 20 MW per square kilometer. One of
the major programs, viz, “Solar Grid Power Program” has its main component as the photovoltaic
technology. The solar photovoltaic power program (grid-tied) aims at providing voltage support in the
remote sections and for peak load shaving. Nearly 5 MW of grid interactive SPV power projects have
been implemented by MNRE. The approach paper for Eleventh Plan has identified grid interactive
and distributed renewable power as one of the major components of the “Deployment” activity.

Out of target of 15000 MW proposed for this component for the Eleventh Plan, a share of solar power
is kept as 50 MW. It may be noted that promotion of grid-tied solar PV systems go a long way for
voltage support system, for peak shaving and augmenting the grid for facilitating grid extension
especially for rural electrification for which a target of year 2009 had been fixed.

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The following are the broad guidelines for submission of proposals by the interested project
developers, details of incentives and other related guidelines.

4.4.1. Eligible Organizations

4.4.1. All existing registered companies, central and state power generation companies and
public/private sector PV power project developers who have set up or propose to set up a registered
company in India will be eligible for consideration of generation based incentive. Individuals, NGOs,
financial institutions, societies and other unorganized investors are not eligible to participate directly.

4.4.2. Eligible Projects & Eligibility Criterion

4.4.2.1 Grid interactive solar PV Power Generation plants of a minimum installed capacity of one
MWp per plant at a single location will be eligible for generation based incentive. However, one
mega-watt capacity may be set-up through modular units to make one megawatt at a single location.

4.4.2.2. A maximum cumulative capacity of 10 MWp of Grid interactive solar PV power generation
projects can be set up in a State.

4.4.2.3. Any project developer, who fulfills the procedural requirements and the guidelines specified
by the Ministry, will be eligible for consideration of generation based incentive. Any project
developer can set up grid interactive PV power generation projects up to a maximum of 5 MWp
capacity in the country, either through a single project or multiple projects of a minimum capacity of
one MWp each.

4.4.2.4. The gird interactive solar PV power generation projects will be undertaken on Build Own and
Operate basis.

4.4.2.5. Setting up of captive grid interactive solar PV power plant or captive utilization of solar PV
power is not covered under the generation-based incentive scheme of the Ministry.

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4.4.2.6. In case any project developer is desirous of availing the accelerated depreciation benefit for
the project under section 32 of the Income Tax Act 1961, they would not be eligible for generation-
based incentive.

4.4.3.0. Procedures to be followed by Project developers for availing Generation base

Incentive

4.4.3.1. The grid interactive solar PV power projects will be considered for generation based incentive
on first come first served basis, in accordance with the guidelines of the Ministry and compliance of
the procedural requirements for filing the applications/requests for incentive. Mere information to the
Ministry and/or IREDA about the intention of the company/project developer to set up a grid
interactive PV power plant will not be sufficient basis for this purpose.

4.4.3.2. Before submission of application, the interested solar power project developers are required
to ensure compliance of all legal and procedural requirements and obtain all necessary clearances
from the concerned State Government/State Utility/State Nodal Agency/local bodies and other
organizations, as specified by the concerned State Government and/or Central Government.

4.4.3.3. The state agencies and utilities will provide all assistance and support to the project
developers for evacuation of power from the project site, as done in case of other renewable energy
based projects, unless specific guidelines for solar power projects are approved by the respective
regulatory commissions, which are different from the existing guidelines for other renewable energy
projects.

4.4.3.4. The interested project developers are required to submit complete applications in duplicate to
the Ministry with two copies to IREDA. The project developer will also submit copies of the DPR for
the project.

4.4.3.5. For each project submitted to IREDA and the Ministry for generation based incentive in the
prescribed formats, among other details information on technical and performance features, technical
specifications, requirement and availability of land, title of the land, capital cost, estimated life of the

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PV power plant, quantum of electricity expected to be generated and fed to the grid, proposed sale
price of electricity from PV power plant, duration of power purchase agreement and power purchase
rate (s), arrangements for power evacuation and the time frame for installation / commissioning of the
grid PV power plant etc. are required to be furnished.

4.4.3.6. On receipt of application, which is complete in all respect, the eligibility for generation-based
incentive will be examined in accordance with the guidelines of the Ministry.

4.4.3.7. Applications which are incomplete or do not provide firm and clear information will not be
considered on first come first served basis. The concerned project developer will be informed
accordingly and the complete application will be treated as a fresh application.

4.4.3.8. On examination by the Ministry, if a proposal is found to be eligible, the prospective

developer will be informed whether the proposal falls within the approved limit of installed capacity
allowed for the concerned state. The applicant will also be informed of the timeframe for installation
and commissioning of the plant, which will normally be as stated by the project developer, but not
later than 31st December 2009. This communication will not automatically entitle the project
developer to claim the generation-based incentive for any project, unless commissioned within the
specified timeframe.

4.4.3.9 .The project developers will be required to install and commission the grid connected PV
power projects, within the time frame communicated at the time of acknowledging the eligibility of
the project. The first progress report must be submitted to the Ministry with a copy to IREDA not
later than six months from this date. In case there is no progress on procurement and installation of
the plant is noticed in the first six months after the eligibility has been communicated, the Ministry
may consider cancellation of the project. In case of progress in the first six months and subsequent
delays in completion of project work beyond the specified completion date communicated to the
project developer, Ministry will impose penalty by reducing the incentive by 1% for each month of
delay, subject to a maximum of 5%. In all cases even the delayed project should be completed by 31st
December, 2009, failing which the Ministry will review the decision to provide incentive for that
project.

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4.4.3.10. Considering the possibility that the full capacity of maximum one MWp be commissioned in
phases by modular commissioning, incentive would be calculated on the commissioning of a
minimum of 250 kWp and above and sale to the grid, but the disbursement of the incentive would
begin only when a minimum capacity of one MWp is commissioned and power sold to the grid.

4.4.3.11. All eligible projects will be inspected by a team consisting of officials from the Ministry,
concerned state nodal agency, utility and IREDA before the project starts feeding power into the grid
and only after the satisfaction of the team regarding compliance to the requirements, the project will
be approved for generation based incentive. The generation-based incentive will be approved only
after demonstration of satisfactory commissioning of the plant at the project site and its interfacing
with the grid of the utility.

4.4.3.12. While the generation based incentive scheme is applicable to the entire country,
preference/priority would be given to those projects, which are proposed in the States that have
approved and/or notified tariff for solar power.

4.4.3.13. A dedicated electronic meter or any other meter (s) as specified and approved by the utility
will be installed at the point of power evacuation and/or any other point as specified by the utility.
This will be used to monitor the quantum of net electricity being fed to the grid from that project.

4.4.3.14. The PV power project developers are not allowed to use any other source of power
generation along with the solar PV power project. No other power generating source will be
connected to the same meter which is used to monitor quantum of PV power fed to the grid from the
grid connected PV power plant. At any time after the PV power plant is connected to the grid, if it is
found that any other source of power generation is in use or have been used to feed power to the grid
through the same meter at that project site, that project will not be eligible to receive generation based
incentive. Inhouse consumption of PV power generated from the grid interactive PV power project
shall not be eligible for incentive. In other words only sale of power to the grid is eligible.

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4.4.3.15. The grid interactive solar PV power plants, which receive generation based incentive will
not be transferable to a new management or sold to any other company without prior written approval
from Ministry. In the event of transfer without prior approval from the Ministry, generation based
incentive will not be continued for that PV power generation project. However, the Ministry may
review the project afresh and decide about new quantum of incentive for that project, if any, for the
remaining period.

4.4.3.16. PV power project developers shall not avail accelerated depreciation benefit under Section
32 of the Income Tax Act 1961. The PV power project developers who submit their applications to
the Ministry with a copy to IREDA and required to submit a declaration to this effect. On approval of
the project, IREDA will enter into an agreement with the project developer, among other matters, in
this regard. If any violation of this condition is found, IREDA will immediately stop release of
generation-based incentive to that project and refer the matter to the Ministry.

4.4.3.17. Third party sale, banking and wheeling of power is not permitted while availing generation-
based incentive.

4.4.3.18. The project developers will maintain a record of power generation, incident solar radiation
on the PV array surface and other technical features of the power plant for the entire period during
which they will receive incentives. A copy of the data should also be available in electronic form.
This record will also be made available readily for verification / audit purposes, if required.

4.4.4.0 Generation based Incentives

4.4.4.1. Wherever the state electricity regulatory commissions have fixed a separate tariff for solar
power or they fix the tariff for solar power during the period for which the Ministry is providing
incentive, the utilities will offer a minimum of that tariff to the solar PV grid interactive power
projects in their respective states. In absence of such tariff orders, the utilities will offer the highest
tariff for purchase of power to the PV power project developers, that is being offered by the utilities
for purchasing power in their respective states on medium term or the highest tariff being provided
for purchase of power from any other energy source for which orders/guidelines are already issued for

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that State. The PPA would draw reference to the orders of the State Electricity Regulatory
Commission’s order in this regard and enclose copies of the same. The Ministry will not consider
proposals, which do not follow these guidelines on power purchase agreements.

4.4.4.2. The Ministry may provide, through IREDA, a generation-based incentive of a maximum of
Rs. 12 per kWh to the eligible projects which are commissioned by 31st December, 2009, after taking
in account the power purchase rate (per kWh) provided by the State Electricity Regulatory
Commission or utility for that project.

4.4.4.3. The maximum amount of generation based incentive applicable for a project will be
determined after deducting the power purchase rate for which PPA has been signed by the utility with
a project developer, from a notional amount of Rs. 15 per kWh. In all cases the maximum amount of
generation-based incentive shall not exceed Rs. 12 per kWh. In case the project developer has
submitted to the state electricity regulatory commission or the utility or to the Ministry an application,
where a lower power purchase price or sale price of power from the proposed grid connected PV
power plant has been sought, in that case the generation based incentive will be determined with that
amount as the base and a lower rate of incentive will be approved by the Ministry The project
developers will be required to submit documentary proof and give an undertaking about correctness
of this information.

4.4.4.4. Any project that is commissioned after 31st December, 2009 would be eligible for a
maximum incentive with a 5% reduction and ceiling of Rs. 11.40 per kWh.

4.4.4.5. The generation-based incentive will continue to decrease, as and when the utility sign a PPA
for power purchase at a higher rate. The proposed annual escalations agreed with the utility, as in
force, should be reflected in the PPA.

4.4.4.6. The generation based incentive approved for a grid interactive PV power generation project
may be available for a maximum period of ten years from the date of approval and regular power
generation from that project, provided the utility continues to purchase power from that grid
interactive PV power plant.

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4.4.4.7. The Ministry may, at any given time, even before 31st March, 2010, announce a new
generation based incentive and guidelines, which will be applicable to all such proposals / projects
that have not been approved by that time.

4.4.4.8. The incentive will be released by IREDA to the eligible PV power project developer on
quarterly basis, on receipt of certified information about the net electricity fed to the grid from the PV
power project during the period of claim. The concerned utility will provide such information to the
project developer on periodic basis. The PV power project developers will be required to produce a
certificate from the concerned utility about the solar PV power purchase rate granted by the utility for
eligible projects, each time they seek funds from IREDA towards generation-based incentive.

4.4.5.0 Technical Performance Optimization

4.4.5.1. With a view to encourage technology development and reduction in the cost of the PV power
plant projects, the PV power project developers are expected to utilize the state of the art technology
to set up the plants. They are expected to use large capacity and higher power output PV modules
available for the specific technology used in setting up the power plant.

4.4.5.2 .Qualification of PV modules, to be used in grid interactive power plants, in accordance the
standards issued by BIS or IEC 61215 certification or other international certification on qualification
of PV modules will be necessary. The interested project developer will give an undertaking in the
application to use such modules and provide to Ministry and IREDA copies of such certificates either
at the time of application or latest at the time of the first progress report. Non-compliance of this
requirement will result in withdrawal of approval for generation based incentive.

4.4.5.3. The electronics, cables, controls, structures etc. must qualify to latest BIS or international
standards which are acceptable to utilities and which fulfill all safety norms for grid power projects.
The PV power project developers will provide a copy of the test certificate(s)/ report(s) latest with the
first progress report.

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4.4.5.4. The PV power project developers are required to optimize generation of electricity in terms of
kWh generated per MWp of PV capacity installed vis-à-vis available solar radiation at the site (may
be obtained through use of efficient electronics, lower cable losses, maximization of power transfer
from PV modules to electronics and the grid, maximization of power generation by enhancing
incident radiation by optional methods like seasonally changing tilt angles etc).

4.4.5.5. The gird interactive solar PV plant may be connected to preferably 33 KV grid line to
minimize power transfer losses. However, the choice of grid voltage may be determined in
consultation with the concerned state utility.

4.4.5.6. PV power project developers will be required to maintain and provide to IREDA technical
information on daily solar radiation availability, hours of sunshine, duration of plant operation and the
quantum of power fed to the grid. The project developer will install suitable instruments, meters and
data loggers for this purpose. This information will be provided at the time of seeking reimbursement
from IREDA. This will help in estimation of generation in kWh per MWp PV array capacity installed
at the site.

4.4.6.0 Monitoring

4.4.6.1. The PV power project developers will install suitable instruments and make adequate
arrangements to monitor the performance and ensure satisfactory operation of the grid connected PV
power plants.

4.4.6.2. IREDA will make suitable arrangements to monitor the progress and performance of the grid
interactive solar PV power generation projects.

4.4.6.3. The concerned state nodal agency may also visit the project site and provide their feed back
and recommendation to IREDA.

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 Feasibility Report

4.4.6.4. All PV power plant projects will be open to inspection by the officials from Ministry, IREDA,
concerned state nodal agency and any independent organization appointed by the Ministry/IREDA for
performance monitoring.

4.4.6.5. The Ministry may also undertake field evaluation studies for any of the grid interactive solar
PV plants through professional and independent organizations.

4.4.7.0 Progress Report

4.4.7.1 The project developers of all approved projects will be required to submit annual progress
report about the project and the annual report of the company, which has set up and own the grid
interactive PV power plant.

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 Feasibility Report

4.5. Proposed Location

Osmanabad district is the proposed location whish is an administrative district of the state of
Maharashtra in India The district headquarters are located at Osmanabad. Temple of goddess
Tuljabhavani at Tulajapur is famous in India. The district occupies an area of 7512.4 Km2 of which
241.4 Km2 is urban area and has a population of 1,486,586 of which 15.69% were urban (as of 2001).

4.5.1. Location: Osmanabad district lies in the southern part of state. It lies on the Deccan plateau,
about 600 m above sea level. Parts of the Majra and Terna flow through the district. The district is
located on east side of Marathwada region within the range latitude 17.35 to 18.40 degrees north, and
latitude 75.16 to 76.40 degrees east

4.5.2. Climate: The rainy season starts from mid of June and continues till the end of September.
From October to November the climate is humid. From mid November to January it is dry and cool.
From February to June the climate is dry and increasingly hot. During summer the temperature of
Osmanabad district is low compared to other districts of Marathwada region. The average rainfall of
this district is 730 mm.

Osmanabad is a city and a municipal council in Osmanabad district in the Indian state of Maharashtra.
Osmanabad is located at 18.17° N 76.05° E. It has an average elevation of 647 m (2122 feet). As of
2001 India census, Osmanabad had a population of 80,612. Males constitute 52% of the population
and females 48%.

4.5.3. Billing Rate (Rs/Kwh) Comparison among different categories of consumers

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 Feasibility Report

Table 3: Billing Rate (Rs/Kwh) Comparison among different categories of consumers of

Maharashtra
Source: MERC

On an average Maharashtra receives 1800 kWh/m2 of Solar energy per year. The climatic data of
Maharashtra:
Average number of Sunny days in a year : 250 days
Number of partial Sunny days in a year : 60 days
Total overcast days in a year : 55 days
Highest ambient Temperature in Summer : 400 C
Highest ambient Temperature in winter : 270 C
Lowest Temperature in winter : 130 C

The average solar insolation for Osmanabad is 5.05 Kwh/m2/day which is best suitable for clean solar
power generation.

4. 6. Annual Average Solar Insolation

In Maharashtra the rainy season starts from mid of June and continues till the end of September. From
October to November the climate is humid. From mid November to January it is dry and cool. From
February to June the climate is dry and increasingly hot. The average rainfall of this district is 730
mm. The project is expected to generate 9125 MWH of electricity in the first year of operation. The
energy performance study conducted for the Katgaon – Osmanabad site is given in Annexure-1. The
performance study concludes that 5MW Solar PV array installed will generate a mean of 9125MWH
in the first year’s operation with natural solar module degradation of 0.5 % annually. Losses for DC to

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 Feasibility Report

AC conversion , dust and shading contributes to the total 20% with 2% annual standard deviation in
generation of solar power from solar PV array.

The average solar insolation for Osmanabad is 5.05 Kwh/m2/ day. The average temperature for
summer is 30oC and 22oC for winters which is best suitable for clean Solar Power generation. The
monthly solar insolation of the proposed project site is shown in annexure-I(A) & I(B)

Annexure-1(A)

Solar Production Curve

1,000,000
900,000

800,000

700,000

600,000
500,000

400,000

300,000

200,000
100,000

0
Aug
May

Dec
Nov
Feb

Sept
Mar

Jun
Apr
Jan

Oct
Jul

Total

Fig 2.1: Annual Solar Insolation Curve of Osmanabad City

Annexure –I (B)

Energy Profile (a broad estimate) – Month-wise at the proposed location

(Katgaon S/S):

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 Feasibility Report

9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0

Ju

O
n

M
Ja

n
Ju
M
A

D
A
b

p
e

g
u
F

N
a

e
p
S
a

e
y

c
r

o
t

v
r

t
Total Cumulative

Fig 2.2 : Total and cumulative solar insolation of different months at Katgaon Substation
Source: NASA

4.7. Solar Energy Purchase Agreement

The company will discuss the solar energy purchase agreement with MSEDCL for a period of 10
years at a fixed contract price as provided by the tarrif order for a period of 10 years by MERC. The
company will be obliged to deliver a minimum of 85% of the projected solar energy generation as
adjusted for various factors including actual annual irradiation. The SEPA will contain the customary
provisions concerning metering, billing and payments, termination, cooperation, curtailment, dispute
resolution, limitation on liability, confidentiality, assignment and certain other miscellaneous terms.

4.8. CDM Benefits

CDM allows Annex I (industrialised) countries to meet their emission reduction targets by paying for
green house gas emission reduction in non-Annex1 (developing) countries . It came into force on 15 th
Feb 2005. According to CDM Executive Board for every 1 ton carbon dioxide certified emission
reduction 1 CER is allotted to the concerned agency.

According to version 6 of CDM Charts. the following small-scale CDM project activities can apply
for CDM approval:

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 Feasibility Report

 Renewable energy project activities with a maximum output capacity equivalent of up to 15

megawatts (or an appropriate equivalent)
 Energy efficiency improvement project activities which reduce energy usage by up to 60
gigawatthours per year
 Project activities that both reduce anthropogenic emissions by sources and directly emit less
than 60 kilotonnes of carbon dioxide equivalent annually.

If a proposed small-scale CDM project activity does not fall into any of the above categories, the
project participants can request to the CDM Executive Board for approval of a new simplified
baseline and/or monitoring plan developed.

4.8.1.Methodology for CDM credits approval

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 Feasibility Report

Fig 3: CDM Project cycle

4.8.2. Registration fee of the CDM project activity

PPs shall pay registration fee at registration stage. The revised registration fee shall be the share of
proceeds to cover administrative expenses (SOP-Admin) applied to the expected average annual
emission reduction for the project activity over its crediting period. SOP-Admin is USD 0.10/CER
issued for the first 15,000 t-CO2 and USD 0.20/CER issued for any amount in excess of 15,000 t-CO2,
for which issuance is requested in a given calendar year .The maximum registration fee shall be USD

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 Feasibility Report

350,000.No registration fee has to be paid for CDM project activities with expected average annual
emission reduction over the crediting period below 15,000 t-CO2.No registration fee and share of
proceeds at issuance have to be paid for CDM project activities hosted in least developed countries
The CERs earn by the project developer will be approximately 5800. So registration fee for the
proposed 5 MW SPV Solar Power Project will be USD 580 annually.

4.8.3. Crediting Period

CERs shall only be issued for a crediting period starting after the date of registration of a CDM
project activity. PPs select a crediting period for a proposed project activity from one of the following
alternative approaches: A maximum of 7 years which may be renewed at most 2 times. For each
renewal, a DOE determines and informs the EB that the original project baseline is still valid or has
been updated taking account of new data where applicable .A maximum of 10 years with no option of
renewal.GHG emission reductions since 2000 may be eligible to claim CERs.

4.8.4. Baseline Emission Factor

The baseline emission factor for Western Region Grid in India is taken as 0.76tCO2/MWH .The gross
generation of power in the proposed solar power plant comes out to be 9125MWh annually,

4.8.5. Net Energy Available For CDM Credits

The net generation of the proposed 5MWgrid interactive solar power plant after the losses comes out
to be 7393 Mwh. The energy supplied to the grid is 7393 Mwh. The project developer will earn 5800
CERs on an average annually. These CERs can be traded at 16 to 18 Euros per CER in India and at
22 to 25 Euros in the European Markets.

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 Feasibility Report

Fig 4: Comparison of CERs traded in European & Asian Market

Source: Energy Efficiency Bureau

The 5 MW DC solar PV system proposed will prevent the following types of

pollution from being released into the atmosphere:

 Equivalent of 138,637,866 pounds of carbon dioxide pollution

 Equivalent of removing 13510 cars from the road for one year

4.9. Location and Land Rights

The project will be located near village Katgaon, Taluka Osmanabad, district Osmanabad. The site is
approximately 25 acres of land at the western part of the Katgaon 66/11 KV substation which is 8Km
from the project site. The property is roughly rectangular. The land is barren with guide changes
across the site which will include solar module mountings and underground/overhead collection lines
connected to the substation. Although is not finalized and the preference will be given to the
substation which is nearest from the project site and of 33KV as it will reduce the cost of transmission
lines and the power evacuation systems . The power evacuation system includes two power
transformers of 2.5MVA each, switch gears ,circuit breakers isolators etc. Some photographs of the
proposed site are given at Annexure-II.

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 Feasibility Report

Annexure –II

Some photographs of the proposed site:

Fig 5.1: Photographs of proposed site near the Katgaon village

Fig 5.2: Photographs of proposed site near the Katgaon village

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 Feasibility Report

4.10. Project Design

The project will be a solar electric power plant using photovoltaic technology. Most of the project will
be constructed with standard silicon photovoltaic. The project shall be designed to meet the
requirements for providing solar energy as per international standards.

The project’s name plate capacity will be approximately 9125 MWH DC initially in the first year of
operation. The modules will be fixed on ground mounted structures. The array will be supported by
steel racking structures that are anchored in the ground. Racks will be laid out in parallel matrices
allowing individuals to access the area between the racks for cleaning and other maintenance needs.
The schematic diagram is given in Annexure-III.

Direct current power output from the solar panels shall be conducted through power invertors that
meet the requirements of the SEPA and meet the criteria of local statutes. Such power from the
invertors shall be utility grid quality and be capable of parallel and interconnected operation with the
electric grid. The project will approximately consists of 41630 solar modules of 120 WP each which
will generate 400 to 450 Volt dc. The dc power generated by solar panels is then pass through Power
Conditioning Unit which will invert dc power into ac .The output of 250 KW PCU will be 415 V
three phase ac supply .The frequency of ac supply will be 50 Hz with +/- 1.5 Hz variation. For 5 MW
dc to ac conversion 20 PCUs of 250 KW will be used. The output of 20 PCUs is step up to 33KV or
66 KV and then synchronize to grid frequency.

The project shall be interconnected, metered and deliver electricity at the Katgaon sub station (66 KV
side) as the Point of Delivery. The project shall incorporate safety and protection devices as needed to
comply with Good Utility Practices for an interconnected generator and as specified in the
Interconnection Agreement with MSEDCL. Solapur DISCOM will distribute the power in
Osmanabad district.
The project will be designed to operate automatically with minimal human intervention. Built - in
telemetry shall be incorporated to allow remote monitoring, control and problem diagnosis, thereby
maximizing system availability and output of the project during its expected life.

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 Feasibility Report

Fig 6: Schematic line diagram of the proposed 5MW Solar Power Project

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 Feasibility Report

4.11. Interconnection Level

4.11.1. Sub Station Voltage and Current Level

The project will interconnect with the utilities Katgaon sub station, which is 11 KV on the low side of
the transformer and 66 KV on the high side. The actual interconnection will occur at 66 KV incoming
bus on the high side of the transformer. Synchronization and metering is done before the transmission
lines from solar power project are connected to the grid. The approximate fault current at katgaon
substation is 340 KA project shall incorporate safety and protection devices as required. The Solapur
DISCOM will distribute the power through 66KV Bus which is named as Sola6.

4.11.2. Number of 1MVA Transformers used

Ideally, 1MVA Transformer is used for 1 MW So for 5MW, two 2.5 MVA Transformers are used.
The power factor of the transformers is taken as 0.9

4.12. Permits and Authorization

Detailed investigation will be carried out and action will be initiated for securing necessary permits
and authorization.
Appropriate environmental impact study will be carried out and action initiated to mitigate impacts if
any.

4.13. Construction

ReSun will ensure that the installation of the solar field and related infrastructure will meet
international standards for the power industry. SunEdison is the technology partner of ReSun and is
the largest commercial photovoltaic installer in the United States. With operations in 6 states,
California, Colorado, Connecticut, Hawaii, Nevada and New Jersey, SunEdison’s cumulative
installations exceed 51 MW giving it the largest portfolio in the US.
The plant will commence generating power in 12 months and attain full capacity energy generation in
24 to 36 months.

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 Feasibility Report

The construction of 5MW Grid Interactive Solar Power Project include the following processes along
with their appropriate tentative time scheduling

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 Feasibility Report

Task Name
Duration

PPA signature
0 days

Design & Engineering

87 days

Design Mobilization / Site Visit

10 days

Land / Topographical Survey

15 days

Soil Sample Survey

15 days

Geotechnical Engineering
15 days

Structural Engineering
15 days

Initial Design Development

45 days

Host Design Review & Approval

10 days

Design Revisions
10 days

Host Final Design Approval

5 days

Final Plan Set Completion

(Stamped)
5 days

Design Plan Set Complete

0 days

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 Feasibility Report

Table 4: Tentative time scheduling of the construction of 5MW Solar Power Project

Components Rate Per Unit Estimated Amount (Rs)

(Rs) Requirement

1 Solar PV 98000 5000 490000000

Modules(Per KW)
2 PCU (250 KW) 4500000 20 90000000
3 Others (lump sum) 160000000
4 Sub Total 740000000

Chapter-5

Analysis & Findings

5.1. Cost Analysis of land & major equipments of 5 MW SPV Solar Power Project

5 MW SPV Solar Power Project includes all costs such as 5MW Solar PV Modules cost, Power Conditioning
Units cost, Transmission lines cost, Power Evacuation System cost, Land & Site development cost and other
miscellaneous expenses.

5.1.1. Costing For 5 MW Solar PV Modules

Table 5.1: Solar 5MW PV Modules costing

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 Feasibility Report

5.1.2. Costing For 5 MW Transmission & Power Evacuation System

Table 5.2: Transmission Lines & Power Evacuation System costing for 5MW Power Project

5.1.3. Net Sub Total (Without Taxes)

Solar PV Module Sub Transmission Lines & Power Amount(Rs)

Total Evacuation System
740000000 21748981.4 761748981.4

.Table 5.3: Costing for 5MW Solar Power Project without taxes

5.1.4. Taxes
5.1.4.1. Freight: It is taken as 3% and calculated on 80 % of Net Sub-Total
5.1.4.2. VAT: It is taken as 4% and calculated on 80% of Net Sub-Total
5.1.4.3. Service Tax: It is taken as 12.36% and calculated on 20% of Net Sub-Total
Components Amount (Rs)
1 TransmissionRate
Taxes 1305571.4 Amount(Rs)
lines(1Km) 3 % of 80% Sub Total
Freight 18281975.55
2
VAT Power Evacuation
4 % of 80% 17291833
Sub Total 24375967.4
System
Service Tax 12.36 % of 20% Sub 18830434.82
3 Switch gear inside 2056589
sub-station Total
TotalOther
4 Freight
Items 1094988 61488377.77
5 Sub Total
& Taxes 21748981.4

Table 5.4: Total taxes levied on 5MW solar power equipments

5.1.4.4. Total: It is equal to sum of Net Sub Total and Taxes

Net Sub Total Total Freight &Taxes Amount(Rs)

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 Feasibility Report

Generation
761748981.4 Rate of Losses
61488377.77 Capacity823237358.77
Installed Capacity 5 MW
Gross Power 9125 Mwh
Generation Table 5.5:
System Losses 20% of Gross 1825 Mwh Total cost of
Generation
Internal 26 Mwh equipments
Consumption for 5MW
Net Generation 7274 Mwh
Plant Load Factor
Total Provision Total 20.83% Grand Total
(PLF)
24697120.7 823237358.77 847934479.4
Solar Power Project

5.1.5. Provisions

5.1.5.1. Provision for Contingencies: It is taken as 3% of Total

Table 5.6: Contingencies Provisions

5.1.6. Annual Solar Power Generation by 5MW Solar Power Plant

Table 5.7: Total annual power generation

5.1.7. Cost Financials

The cost financials are shown in a table given below:-

S.No. Expenses Amount(Rs in million)

1 Land Site Development 12.05

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 Feasibility Report

2 Civil Works 12.75

3 Plant & Machinery 847.93
4 Miscellaneous Fixed Assets 2.075
5 Preliminary Expenses 0.75
6 Pre-operating Expenses 9.55
7 Margin for Working Capital 7.2
8 Total Capital Cost 892.30

Table 5.8: Total Capital cost for installing 5MW Solar Power Plant

5.1.8. Means of Finance

5.1.8.1. Debt: It is taken as 70% of the Total Project Cost

5.1.8.2. Equity: It is taken as 30% of the Total Project Cost

Means of Finance Rate % of Total Project Amount (Rs in million)

Debt 70 624.61
Equity 30 267.69

Table 5.9: Terms of loan & equity

5.1.9. Assumptions

Following assumptions are taken while preparing the document:-

1. Loan repayment in 10 years.
2. Tariff rate per unit is taken as Rs 15
3. Depreciation Period is 10 years.
4 .Operating & Maintenance Expenses is 2.5 % of expected revenue annually

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 Feasibility Report

5.2. Warranties of the major equipments

5.2.1. 5 Year Turnkey System Warranty

The firm warrants that the Project assets will be free from defects in materials and workmanship for a
period of five (5) years following the date of commissioning (the “System Warranty Period”).
Subject to certain exceptions, if the Project assets fail to perform in accordance with the firm
specifications during the System Warranty Period, then the firm will, at its own expense and at no

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 Feasibility Report

cost to the Company, have the Project assets repaired. If repair is not feasible, then the firm will, at
its sole expense and at no cost to the Company, either replace the Project assets with another system
of like kind and quality or refund the cost of the Project assets.

5.2.2. 25 Year Limited Module Warranty

The firm will pass through manufacturer’s warranties on the photovoltaic (PV) modules for a period
of twenty-five (25) years from the date of purchase against power degradation in excess of twenty
percent (20%) of the minimum power output measured at an optimum voltage under the firm’s
standard test conditions of 1000 watts per square meter at a cell temperature of twenty-five (25)
degrees Celsius. The firm will, at its sole expense and at no cost to the Company, repair, replace, or
add modules as necessary to restore lost power to the minimum rated power output, provided that
such degradation is determined to be due to faulty workmanship or materials and the module is
installed and used under normal conditions.

5.2.3. 5 Year Limited Inverter Warranty

The firm will pass through manufacturer’s warranties on the inverter for a period of five years from
the date of purchase against defects in materials and workmanship. The manufacturer warrants
that the inverter will substantially in accordance with product specifications when given normal,
proper maintenance.

5.3. Cost Financials & Rate of Return

5.3.1. Project Summary

5.3.1.1 Proposed Solar PV Power Plant Capacity - 5 MWp.DC

5.3.1.2 Plant load factor - 20.83 %
5.3.1.3 Gross generation - 9.1 Million Units
5.3.1.4 Net generation for export to grid - 7.2 Million Units
5.3.1.5 Total Project Cost - Rs 89.3 crores

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 Feasibility Report

5.3.1.6 Depreciation period - 10 years

5.3.1.7 O&M Expenses - 2.5 %

5.3.2. Financial Assumptions

12.2.1 Debt: Equity Ratio - 70:30

12.2.2 Own Contribution - 30 %
12.2.3 ROI on Equity - 21.5 %
12.2.4 Center Tax - 10 %
12.2.5 State Tax - 5%
12.2.6 Tax Holiday - 10 years
12.2.7 Rupee- US Dollar parity - Rs.42/ US $

5.3.3. Rate of Return

The rate of returns of the proposed 5MW Solar Power Project is shown in the
table given below:

Options Tariff Rate Debt-Equity Rate of 1RR

Ratio interest of
loan
I 13 70:30 7% 7%
II 14 70:30 7% 8%
III 15 60:40 6% 9%

Table 5.10: Rate of return of proposed solar power project with different options

Calculation of Cost analysis of Solar Power Project with 3 different options is

shown in Annexure-IV(A),
IV(B) & IV(C).

5.4.Comparison with other renewable sources of power generation in the

proposed region

5.4.1. Wind
The total wind installed capacity in Mahashtra is approximately 1760 MW as on 31/04/08 which is
more 50% of the total wind potential of Maharashtra. As per MERC any renewable sources should

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 Feasibility Report

not be exhausted more than 50%.So more emphasis should be given to the power generation from
other renewable sources like solar , biomass which is exhausted less than 5%.

5.4.1.1. Transmission Losses

The transmission losses from wind farm energy by MSEB for first three years of the farm’s operation
is taken zero, From the fourth year onward , MSEB would charge 1% of energy in transmission
losses.

5.4.1.2. Wheeling Charges

MSEB would charge 2% as wheeling charge for the energy wheeled from wind farm projects.

5.4.1.3. Power Evacuation

The expenses for creation of evacuation facilities at extra high voltage (EHV) & high voltage (HV)
level would be borne by MSEB.MEDA would called 50% of these expenses from wind farm
developer and pay them to MSEB. The expenses for the evacuation facilities from the substation to
the project switchyard would be borne by developers.

5.4.1.4. Sales tax benefits

Sales tax deferred for 1/6th of the qualifying amount for a period of 6 year would be permitted for the
industry and its subsidiaries that have developed wind farm projects.

5.4.1.5. Income tax benefits

 Net tax saving in income tax were in fact, not at the prevailing 35% corporate tax rate as
minimum alternate tax (MAT) at 7.5 % had to be paid irrespective of the size of the tax
savings. The actual tax saving was therefore (35-7.5) and with the 5% surcharge over this
equaled 28.87%
 Full tax benefit in the first year could be availed only if the project was commissioned before
September of that year, otherwise, only 50% of it could be claimed in the first year.

5.4.1.6. Summary of 5MW Wind farm Project

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 Feasibility Report

S.No. Particulars Amount

1 Installed Capacity 5 MW
2 Plant Capacity Factor 20%
3 Annual Power Generation for sale 8700 MWH
4 Tariff Rate with escalation of Rs 0.15 per unit escalation Rs 3.5
for the first 13 years of project
5 Degradation rate after 10 years of operations 5%
6 O&M of project cost with 5% escalation 1.5%
7 Debt-Equity Ratio 70:30
8 Loan repayment 12.5 Years
9 ROI(30% Equity) 10.5
10 IRR 5%

Table 5.11: Annual power generation by 5MW Wind farm Project

5.4.1.7. Costing of 5MW Wind farm Project

S.No. Expenses Amount(Rs in million)

1 Land Site Development 18.05
2 Civil Works 12
3 Plant & Machinery 300
4 Miscellaneous Fixed Assets 2.75
5 Preliminary Expenses 1.1
6 Transmission & Power System Evacuation Expenses 20.55
7 Margin for Working Capital 8.5
8 Total Capital Cost 362.95

Table 5.12: Cost analysis of 5MW Wind farm Project

The cost analysis and rate of return calculations for 5MW Wind farm Project is shown in Annexure-V

5.4.2. Biomass

The total installed biomass capacity in Maharashtra is approximately 45MW. The investment
required for a typical 1 MW biomass based power plant varies from Rs. 4 to 4.5 Crores.So
for 5MW installed capacity the costing comes out to be Rs 22 crores excluding the cost of

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 Feasibility Report

transmission lines & power evacuation system. With transmission lines & power evacuation
system, the total costing will be approximately Rs 31.5 crores . A 5MW biomass based power
plant installed at the proposed site consumes about 160 Tons of biomass per day to generate
about 1 lakh units of electricity. Annually the project will require 57600 tons of biomass fuel to
generate 26MU units with PLF of 75%. The cost of 1M Ton of biomass fuel is Rs1100. So for
24.6MU generation Rs6.3 crores required for fuel annually. The fuel used comprises of Cane trash,
Coconut fronds, Rice husk, Saw mill wastes and Firewood (eucalyptus).

The Plant will require big margin for working capital and large fuel inventory which will require large
number of employees for the operation of the proposed project.

5.4.2.1. Summary of 5MW Biomass Power Project

S.No. Particulars Amount

1 Installed Capacity 5 MW
2 Plant Capacity Factor 75%
3 Annual Power Generation for sale 25630 MWH
4 Tariff Rate Per Unit with 5% escalation Rs 3.2/Kwh
5 Annual average revenue collection Rs 76.3 million
6 Loan repayment 7 Years
7 Debt-Equity Ratio 70:30
8 ROI(30% Equity) 31.01%
9 IRR 14%

Table 5.13: Annual power generation by 5MW Biomass Power Project

5.4.2.2.Cost of 5MW Biomass Plant & Machinery

S.No Plant Equipments Amount (Rs million)

1 Wood handling 8148000

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 Feasibility Report

2 Wood drying 10214400

3 Gasification 78645000
4 Gas cleanup 10124100
5 Gas turbine 49350000
6 HRSG 8278200
7 Steam cycle 11747400
8 Boost compressor 2211300
9 Char combustion system 4554900
10 Project contingencies 36298500
11 Engineering Design Fee 2548000
12 Prepaid loyalties 3285000
13 IT based SCADA system 24560000
14 Total cost 249964800

5.4.2.3.Financials of 5MW Biomass Power Project

S.No. Expenses Amount(Rs in million)

1 Land Site Development 21.5
2 Civil Works 34
3 Plant & Machinery 250
4 Miscellaneous Fixed Assets 3.75
5 Preliminary Expenses 2.75
6 Transmission & Power Evacuation System Expenses 20.55
7 Margin for Working Capital 15
8 Total Capital Cost 347.55

Table 5.14: Costing of 5MW Biomass Power Project

The cost analysis and rate of return calculations of 5MW Biomass Power Project is shown in
Annexure-VI

5.5.Financial Indicators for comparison among the renewable alternatives for 5MW power
generation
 NPV: It is the difference between the present value of the benefits and the costs resulting from
an investment
• A positive NPV means a positive surplus indicating that the financial position of the
investor will be improved by undertaking the project.
• A negative NPV would indicate a financial loss.

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 Feasibility Report

• An NPV of zero would mean that the present value of all benefits over the useful
lifetime are equal to the present value of all the costs.
• In mathematical terms

n
Bj- Cj
NPV = ∑ (1 + i )
j
j=0

Bj = benefits at the end of period j

Cj = costs at the end of period j
n = useful life of the project
i = interest rate
 IRR : It is the maximum rate of return at which Net Present Value of an asset becomes zero

Chapter-6

6.1.Conclusions

The feasibility study draws the following conclusions:-

(1) The proposed site is best suitable for Solar Power Project as the strength of
soil is low to withstand the pressure of installations of wind & biomass power
projects.
(2) The IRR for solar power project is 9% as compared to wind farm project &
biomass power project calculated as 3% & 14% respectively.
(2) The ROI (30%Equity) for solar power project is 15.4% as compare to wind
farm & biomass calculated as 10.5% & 31.01% respectively.
(3) The solar power project will require very few employees for operation while
biomass & wind power projects will require large workforce for handling &
operation.
(4) The project developer through solar power project will repay back the loan
with 7% rate of interest within 10 years while through wind power project it will
be 13.5 years at 8% rate of interest.
(5) Besides solar ,biomass is also a good option but its gestation period is high as
compared to solar.

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6.2.Suggestions

Following suggestions will improve the performance of Solar Power project:-

(1) Use of monocrystaline silicon solar panels in place of thin layer amorphous silicon solar panels
will increase the efficiency by 80% while the cost of installation is increased by 20%.
(2) The project developer should complete the project before 31st December 2009 in order to get the
maximum MNRE incentives of Rs 12 per Kwh. Any project that is commissioned after 31st
December, 2009 would be eligible for a maximum incentive with a 5% reduction and ceiling of Rs.
11.40 per kWh.

Bibliography
Books

 Electricity India Vision 2027,V.K Sharma ,Galgotia Publication Pvt Ltd

 Electricity Reforms & Green Power Development, Pramod Deo & Shrikant Modi, Tata
Mcgraw Hill
 Principles of Power System, V.K.Mehta & Rohit Mehta , Sultan Publications

Documents

 ABB 5MVA Transformer & Transmission lines quotations

 SunEdison 120Wp quotations,USA
 SAM Inverters 250KW Power Conditioning Unit quotations

Websites
 www.merc.co.in

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 www.solarpower.co.in
 www.cea.co.in

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