VIABILITY OF WIND POWER PROJECTS

Presentation by

D VAIDYANATHAN
SR. GENERAL MANAGER
ITCOT Consultancy and Services Ltd.
Ltd
Chennai

11-12-2009
 KEY ASPECTS
2

z SITE
z MACHINE
z GOVT. POLICIES
z ENERGY GENERATION
z PROJECT COST
z FINANCIAL VIABILITY
z RISKS
z ENVIRONMENTAL FACTORS
C-WET - NATIONAL TRAINING PROGRAMME- 2009
 SITE
3

z SITES ARE CURRENTLY VENDOR DRIVEN

z CAN BE INDEPENDENT FOR LARGE
CAPACITY
z MOST OF THE PRIME SITES HAVE BEEN
USED
z LIMITED DATA ON NEWER SITES
z LARGE CONTIGUOUS SITES NOT
AVAILABLE
z FROM 20-25 ACRES/MW LAND IS AT
2 2 5 ACRES/MW ON POINT BASIS
2-2.5
C-WET - NATIONAL TRAINING PROGRAMME- 2009
 FACTORS ON SITE SELECTION
4

z SITE WIND PERFORMANCE

z LAND AVAILABILITY, TYPE, COST
z TYPE OF TERRAIN, OBSTACLES
z APPROACHABILITY
z GRID AVAILABILITY
CAPACITY, QUALITY, TYPE OF LOAD
z LAND ACQUISITION

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 MACHINE
5

z MACHINE CHARACTERISTICS
z CERTIFICATION FOR THE MODELS
CONSIDERED
z PERFORMANCE OF MACHINES WITHIN THE
COUNTRY AND OTHER PLACES
z O & M , SPARES, PAYMENT TERMS, ETC
z CREDIBILITY OF LOCAL COLLABORATOR
z SELECTION THROUGH TENDERING PROESS

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 MACHINE (Contd
(Contd.))
6

z ANNUAL ENERGY GENERATION AT THE

SITE
GROSS
NET BASED ON
SITE AIR DENSITY
ARRAY EFFICIENCY
MACHINE AVAILABILITY
GRID AVAILABILITY
INTERNAL LOSSES
z COST/KWHR
z WEGs IN THE RANGE OF 225 KW TO 2100 KW
ARE IN THE APPROVED LIST OF C-WET
C WET
C-WET - NATIONAL TRAINING PROGRAMME- 2009
7 POLICY -TNERC

z Renewable energy purchase obligation at minimum

13% for 2009-10 and minimum of 14% for 2010-11.
z Project cost of Rs. 5.35 Cr/MW and power
evacuation charges of Rs.0.25/MW
z 85% as cost of machine, 10% civil works, 5% land
z Life span of 20 years
z Captive and Sale Mode
8 POLICY(contd.)

z Captive Consumption
5% wheeling charges (HT), 5% Banking Charges
Consuming
C i company should
h ld have
h 26% equity
i ini the
h
generating company and 51% of the units generated is
to be consumed
z Sale Mode
TNEB Rs. 3.39/kWhr
Third
Thi d Party
P t To
T be
b arrived
i d att after
ft other
th stipulated
ti l t d
norms
z Energy
gy Generated to reduce by
y 1% everyy year
y after
10 years.
9 POLICY (Contd.)

z Reactive power drawl at Rs. 0.25/ KVARh up to 10% of

net active generated energy, and double after that
z O & M Expenses for machinery at 1.10%
1 10% and 0.22%
0 22% for
civil work from the second year onwards with an annual
escalation of 5%.
z Insurance premium at 0.75% on 85% of capital
investment with annual escalation of 5% from second
y
year.
z 80% accelerated depreciation on total project cost excluding
cost of land
z Equity and Debt ratio at 30:70
 Policy (Contd.)
z Rate of interest of 12 % with a repayment period
of 10 years and a moratorium of 1 year.
z 10% salvage value at the end of 20th year
z Return on Equity of 19.85%
z Sharing of CDM benefits from 10% from second
year and up to 50% from 6th year onwards
z CUF - average of all passes at 27.15%
10 ENERGY GENERATION

z Depends on site, machine and actual wind

conditions
z Sites
Sit ini Tamil
T il Nadu
N d in
i the
th four
f passes namely
l
Muppandal, Shenkottah, Palghat and Kambam
z Annual net
21 Lakh/MW for smaller machines (<800 kW )
25 lakh/MW for larger machines(> 800 kW)
25 lakh/MW of net energy (TN)assumed
for financial working
12 PROJECT COST
z LAND
z SITE DEVELOPMENT
z EQUIPMENT COST
MACHINE, TRANSFORMER, ELECTRICS, FOUNDATION, I
NSURANCE, ERECTION AND COMMISIONING, OTHERS
INTERNAL LINES AND METERING
POWER EVACUAITON
CRITICAL SPARES, TOOLS AND CONSUMABLES
WIND MAST
z TECHNICAL CONSULTANCY

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 PROJECT COST (CONTD
(CONTD..))
13

z PRELIMINARY AND PRE-OPERATIVE

PRE OPERATIVE
EXPENSES
INTEREST DURING CONSTRUCTION
SALARY AND WAGES
TRAVEL AND ADMN.
LAND SURVEY
C A G S TO
CHARGES O UTILITY
MARGIN MONEY ON WORKING CAPITAL
z CON NG NC
CONTINGENCY

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 Project Cost(Contd.)
z TYPICAL PROJECT COST
Rs.
Rs 550 Lakh/MW for <800 kW WEG
Rs 625 Lakh/MW for >800 kW WEG
Rs 625 /MW taken for financial evaluation
 PERCENTILE SPLITUP OF PROJECT COST
15

C-WET - NATIONAL TRAINING PROGRAMME- 2009

16 FINANCIAL VIABILITY

z Energy Generation
z Project Cost
z Terms of Finance
z TNERC Policies
z Project Internal Rate of Return (IRR) and Return on
Equity (ROE), and Payback period
z IRR to be significantly higher than cost of capital
z Project on sale mode

C-WET - NATIONAL TRAINING PROGRAMME- 2009

15 FINANCIAL VIABILITY (CONTD.)

z CDM BENEFITS
13 EUROS/TON
0 931 T OF CO2/MWHR
0.931
CDM BENEFITS SHARED AS PER ERC NORMS
z Validation charges
z Registration charges
z Annual Verification charges
g
z UNFCCC charges
z Annual success fee of CDM annual revenue
 FINANCIAL INDICATORS OF BASE MODEL
18

Paybac
k
No IRR RoE (Month
. Description (%) (%) s)
Sale mode with IT
1 11.75 17.33 79
benefits
Sale mode with IT
2 13 92
13.92 25 75
25.75 67
& CDM Benefits

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 SALE MODE WITH IT BENEFITS
19

N IRR RoE Payback

o Description (%) (%) (Years)
1 Nil 11 75
11.75 17 33
17.33 79
10% decrease in
2 13.76 24.70 69
project cost
10% increase in
3 10.03 11.80 90
project cost
10% increase in
4 13.57 23.92 70
annual generation
10% decrease in
5 9 84
9.84 11 31
11.31 91
annual generation
C-WET - NATIONAL TRAINING PROGRAMME- 2009
 SALE MODE WITH IT & CDM BENEFITS
20

N IRR RoE Payback

Description
o (%) (%) (Years)
1 Nil 13 92
13.92 25 75
25.75 67
10% decrease in
2 16.13 35.13 59
project cost
10% increase in
3 12.03 17.73 76
project cost
10% iincrease iin
4 15.93 34.23 59
annual generation
10% decrease in
5 11 28
11.28 16 93
16.93 78
annual generation
C-WET - NATIONAL TRAINING PROGRAMME- 2009
 PROJECT IMPLEMENTATION
21

z SITE SELECTION AND ACQUISITION

z MACHINE SELECTION AND ORDERING
z SOURCE OF FINANCE AND TIE UP
z SITE PREPARATION
z WIND FARM ENGINEERING INCLUDING
MICRO SITING
z ERECTION OF MACHINES
z GRID INTERFACING
z STATUTORY CLEARANCES
C-WET - NATIONAL TRAINING PROGRAMME- 2009
 PROJECT IMPLEMENTATION (CONTD
(CONTD..))
22

z COMMISSIONING OF WIND FARM

z PERFORMANCE MONITORING
z TRAINING OF MANPOWER
z FIXING OVERALL TIME FRAME

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 ENVIRONMENTAL FACTORS
23

z RURAL DEVELOPMENT
z RURAL EMPLOYMENT
z LAND UTILISATION
z ADDING GREEN POWER TO THE GRID/GRID
RELATED ISSUES
z ISSUES NOT SO RELEVANT TO INDIA
BIRD HIT
LANDSCAPE
NOISE
z EFFECT ON RAINFALL
 RISKS
24

INVESTOR
z PROJECT COST
z GENERATION
z WIND PERFORMANCE
z GRID AVAILABILITY
z SUSTAINED MACHINE AVAILABILITY
z TARIFF TERMS AND STATE POLICY
TARIFF,
z PAYMENT FROM SEBS

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 RISKS (CONTD
(CONTD..))
25

CDM REALISATION
GOVT /SEB
z SUB OPTIMAL USE OF LAND
z POWER QUALITY AND GRID RELATED
ISSUES
z NON-PREDICTABILITY OF AVAILABLE
POWER
z SUB OPTIMAL GENERATION

C-WET - NATIONAL TRAINING PROGRAMME- 2009

 OPPORTUNITIES
26

z EFFECTIVE USE OF LAND

z INCREASE WIND POWER DENSITY
THROUGH REPLATING OLD MACHINES
z HYBRID DEVELOPMENT THROUGH
SOLAR, BIOFUEL, OTHERS

C-WET - NATIONAL TRAINING PROGRAMME- 2009

25 ITCOT

z ITCOT Consultancy and Services Ltd. Chennai

z A deemed Govt. company under 619 (B) or Public
Limited Company under CAG audit
z Profit making 30 year old company
z Has over 50 employees
employees, and offices at Mumbai
Mumbai, New
Delhi, Chennai and Satellite Offices in Tamil Nadu
z Clients include Govt. Ministries and Departments (
Central and State), Private and Public Sector
companies, Banks, International Agencies, etc.
26
CONTD.

z Project and management consultancy, market studies,

project appraisal, financial services, project
engineering performance monitoring
engineering, monitoring, training
training, multi
client reports, asset management services,lenders
engineers and such other
z F ll fl d d Energy,
Full-fledged E Environment
E i t andd Infrastructure
I f t t
Division
z Has in-depth domain knowledge related to steel,
engineering,
i i sugar andd allied
lli d chemicals,
h i l power,
paper, cement and other industries;Renewable
energy;Agri;Health and hospitality;Education and
others
27 CONTD.
z Market standing in the areas of (RE)renewable energy (wind,
(wind
biomass, solar, sugar cogen, waste to energy, bio fuels ),
energy audit and conservation, environmental
studies/projects
p j and rural electrification
z Resident mission for UNDP-Ministry of Steel project on Mini
Steel Sector
z IREDA site office
z BDA of IREDA, PFC
z Approved Consultants of Banks for Project Appraisal,
Lenders Engineers
Engineers, Valuers,
Valuers etc
z ITCOT KFW MOU on CDM cooperation
z Approved consultants of MNRE, BEE, PCRA
z H a panell off associates/experts
Has i / ion
i various
i areas
28 CONTD.

z Activities in the RE sector

Resource assessment
Feasibility Report
DPR
Tender Specification, evaluation and selection of
machinery
Detailed Engineering
 Contd.
Project Monitoring
Performance Evaluation
Training
CDM
THANK YOU