Energy Production For Finance (1)


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Energy Production For Finance (1)

  2. 3. WHY SOLAR ENERGY? <ul><li>In Pakistan demand of electrical energy is increasing by 8% every year because of increase in population, infrastructure and other related factors. Currently total consumption of electricity is 18,000 MWatt. But Pakistan is unable to produce the required amount of power. Because of shortage of Dams and resources of power generation. </li></ul>
  3. 4. WHY SOLAR ENERGY? <ul><li>Pakistan has 18 gigawatts (GW) of electric generating capacity. Thermal plants using oil, natural gas, and coal account for about 70 percent of this capacity, with hydroelectricity (hydro) making up 28 percent and nuclear 2.5 percent. Pakistan's total power generating capacity has increased rapidly in recent years, due largely to foreign investment, ultimately leading to a partial alleviation of the power shortages Pakistan often faces in peak seasons. Rotating blackouts (&quot;load shedding&quot;) are, however, still necessary in some areas. Transmission losses are about 30 percent, due to poor quality infrastructure and a significant amount of power theft. Periodic droughts affect the availability of hydropower. </li></ul>
  4. 5. REASONS FOR SELECTING PROJECT <ul><li>Grave energy crisis: </li></ul><ul><li>If the current growth trend in the energy supply and demand continues then it is estimated that Pakistan would be facing a shortage of 31% of energy by the year 2010 . </li></ul>
  5. 6. <ul><li>Solar energy potential in Pakistan : </li></ul><ul><li>Pakistan is ideally located in the sun belt to take advantage of solar technologies. Balochistan province is particularly rich in solar energy. It has the highest annual mean sunshine duration in the world. </li></ul>
  6. 7. <ul><li>Fuel-less power generation </li></ul><ul><li>Green aspect of doing business </li></ul><ul><li>Environment friendly </li></ul><ul><li>Production end wastes and emissions are manageable using existing pollution controls. </li></ul>
  7. 8. SERVICES & PRODUCTS OFERRED <ul><li>Solar Water Heaters </li></ul><ul><li>Street Lights </li></ul><ul><li>Working time 8 to </li></ul><ul><li>24hours each day </li></ul><ul><li>Lasting4 to 10 rainy days </li></ul>
  8. 9. <ul><li>Traffic Lights </li></ul><ul><li>24 hours for 4 rainy or cloudy days </li></ul><ul><li>Solar Air Conditioners </li></ul><ul><li>units can be combined or zoned for 2-10 ton applications. </li></ul><ul><li>can be easily operated remotely for up to 12 hours between charges </li></ul>
  9. 10. <ul><li>Garden Lights </li></ul><ul><li>5 rainy days </li></ul>
  10. 11. <ul><li>Solar Water Tank </li></ul>
  11. 12. Solar Home System
  12. 13. GOVERNMENT INCENTIVES <ul><li>No Sales Tax </li></ul><ul><li>No Income Tax </li></ul><ul><li>No Import Duty </li></ul>
  13. 14. ROLE OF OUR GOVERNMENT: <ul><li>Established research and development institutes like: </li></ul><ul><ul><ul><ul><ul><li>Solar Energy Research Centre, (SERC) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Pakistan Council of Scientific and Industrial Research, (PCSIR) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Pakistan Council of Appropriate Technology, (PCAT) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>National Institute of Silicon Technology, (NIST) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Alternate Energy Development Board, (AEDB) </li></ul></ul></ul></ul></ul>
  14. 15. Continued… <ul><li>AEDB has created 100 solar homes in all provinces in order to promote solar energy </li></ul><ul><li>Various national engineering universities have been </li></ul><ul><li>involved in solar thermal technologies </li></ul><ul><li>Country’s 400 villages (300 in Balochistan + 100 in Sindh) to be electrified through solar energy </li></ul><ul><li>(The News) </li></ul><ul><li>Decision to use solar energy-based lights on all important buildings including Prime minister House and secretariat </li></ul><ul><li>(Business Recorder) </li></ul>
  15. 16. ROLE OF PRIVATE SECTOR <ul><li>Many private businesses in solar energy sector </li></ul><ul><li>Warid Telecom, has deployed a Pakistan’s first ever solar powered BTS site using Huawei’s Solar Powered Macro Base Station (BTS) </li></ul>
  17. 18. EXISTING SERVICE PROVIDERS <ul><li>Nascom : ( wholesale supplier, importer) </li></ul><ul><li>Product types: photovoltaic cells, photovoltaic systems, photovoltaic modules, solar electric power systems </li></ul><ul><li>Haroon Brothers: (exporter, importer ) </li></ul><ul><li>Product types: solar electric power systems, solar air heating systems, solar water pumping systems, photovoltaic cells </li></ul><ul><li>Rockwell Group: (manufacturer, wholesale supplier) </li></ul><ul><li>Product types: photovoltaic cells, photovoltaic modules, solar water pumping systems, solar air cooling system, solar cooler </li></ul>
  18. 19. BASIS OF COMPETITION – OUR TECHNOLOGY <ul><li>efficiency 50% more than conventional panels </li></ul><ul><li>more solar power and less space required. </li></ul><ul><li>panel’s black frame and lack of metal creates a final installed appearance that is integrated and stylish, not obtrusive and unsightly. </li></ul><ul><li>Use of CdTe (Cadmium Telluride) compound semiconductor </li></ul>
  19. 20. Continued… <ul><li>Extensive Testing: </li></ul><ul><ul><li>&quot;light soak&quot; exposure test </li></ul></ul><ul><ul><li>to estimate the stability of energy output </li></ul></ul><ul><ul><li>&quot;hail ball&quot; test </li></ul></ul><ul><ul><li>to ensure modules can withstand golf-ball size </li></ul></ul><ul><ul><li>hail pellets </li></ul></ul><ul><ul><li>exposure to accelerated levels of heat and cold – </li></ul></ul><ul><ul><li>to ensure performance is not affected in extreme </li></ul></ul><ul><ul><li>environment </li></ul></ul>
  20. 21. SUPPLY-DEMAND GAP <ul><li>In 2010, forecasts suggest that supply </li></ul><ul><li>could be twice the demand predicted </li></ul><ul><li>in the global PV market. </li></ul><ul><li>In Pakistan also, there is a vast gap </li></ul><ul><li>between supply and demand of </li></ul><ul><li>solar products due to </li></ul><ul><ul><ul><li>Unawareness </li></ul></ul></ul><ul><ul><ul><li>Technology new to people here </li></ul></ul></ul><ul><ul><ul><li>High installations costs </li></ul></ul></ul>
  21. 22. OUR TARGET MARKET <ul><li>Main target market is the rural areas of Pakistan </li></ul><ul><ul><ul><li>Thar in Sindh </li></ul></ul></ul><ul><ul><ul><li>Entire Balochistan province </li></ul></ul></ul><ul><ul><ul><ul><li>80% of the population lives in </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>the rural areas </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>About 85% of the villages are </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>yet to be electrified </li></ul></ul></ul></ul></ul><ul><li>Reason for this target market: </li></ul><ul><li>Agriculture is still considered the backbone of our economy, the electrification of rural areas will </li></ul><ul><ul><ul><ul><li>stimulate productivity, education </li></ul></ul></ul></ul><ul><ul><ul><ul><li>reverse urbanization trends </li></ul></ul></ul></ul>
  22. 23. QUALITY-SERVICE GAP <ul><li>Solar parts are imported (delayed services ) </li></ul><ul><li>Lack of technical know-how and follow-up </li></ul><ul><li>Lack of trained technicians to design, install </li></ul><ul><li>and maintain solar electric system </li></ul><ul><li>Overall low efficiency of solar cell in general </li></ul><ul><li>Non-availability of household appliances that </li></ul><ul><li>run on low voltages </li></ul><ul><li>Requirement and maintenance of backup </li></ul><ul><li>energy sources e.g. batteries in night </li></ul>
  23. 24. PRIMARY ACTIVITIES <ul><li>Import of solar products specially solar panels </li></ul><ul><li>Supply of solar products </li></ul><ul><li>Installation </li></ul><ul><li>After-sales services </li></ul><ul><li>SECONDARY ACTIVITIES </li></ul><ul><li>Deliver solar energy solutions to rural households </li></ul><ul><li>Market various solar energy products all over the country </li></ul>
  24. 25. STAGE OF PRODUCT LIFE CYCLE (PLC) <ul><li>Introduction stage of the PLC </li></ul>
  25. 26. SWOT ANALYSIS <ul><li>Strengths: </li></ul><ul><li>Marketing abilities required to market our </li></ul><ul><li>products. </li></ul><ul><li>Research department researchers conduct </li></ul><ul><li>studies as to how our products can be </li></ul><ul><li>improved in terms of size, quality, efficiency </li></ul><ul><li>Weakness: </li></ul><ul><li>Lack of capital As our business is in its </li></ul><ul><li>introductory stage, we often face this </li></ul><ul><li>challenge primarily due to lack of </li></ul><ul><li>investment in this sector. </li></ul>
  26. 27. <ul><li>Opportunity: </li></ul><ul><li>The recent energy crisis in Pakistan </li></ul><ul><li>has provided a suitable environment </li></ul><ul><li>for this industry and our company </li></ul><ul><li>also takes opportunity and wants to </li></ul><ul><li>contribute in solving this crisis. </li></ul><ul><li>Threat: </li></ul><ul><li>The biggest threat that we face is </li></ul><ul><li>the high cost of our products </li></ul><ul><li>compared to our competitors. </li></ul>
  27. 28. STRATEGY/OBJECTIVES TO SUCCEED IN MARKET <ul><li>Objective - </li></ul><ul><li>To produce electricity to fulfill the minimum </li></ul><ul><li>requirement of electrical power after dusk in the </li></ul><ul><li>remote rural areas of Pakistan </li></ul><ul><li>Mission - </li></ul><ul><li>To alleviate poverty and protect the environment </li></ul><ul><li>through applied research and development of </li></ul><ul><li>renewable energy based technologies. </li></ul>
  28. 29. Continued… <ul><li>Strategy – </li></ul><ul><ul><li>Concentrate on potential </li></ul></ul><ul><ul><li>of solar energy </li></ul></ul><ul><ul><li>Strategic alliances with </li></ul></ul><ul><ul><li>the leading players </li></ul></ul><ul><ul><li>(manufacturers / organizations) </li></ul></ul>
  30. 31. Assumptions of Solar Project <ul><li>Economy Assumptions: Utilities Growth Rate 8% Salaries & Wages Growth Rate 10% </li></ul><ul><li>Cash Flow Assumptions: </li></ul><ul><li>Accounts Receivable cycle ( in days) 15 </li></ul><ul><li>Accounts Payables cycle ( in days) 30 </li></ul><ul><li>Material Inventory Period (in days) 30 </li></ul><ul><li>Cash at the start of operation 1,000,000 </li></ul>
  31. 32. <ul><li>Depreciation Assumptions: </li></ul><ul><li>Building 10% (3000000) </li></ul><ul><li>Office Equipment 20%(649600) </li></ul><ul><li>Show Room Infrastructure 10% </li></ul><ul><li>Vehicles 20%(1000000) </li></ul><ul><li>Amortaization Assumption: </li></ul><ul><li>Amortaization Period 5 Years </li></ul>
  32. 33. <ul><li>Revenue Assumptions: </li></ul><ul><li>Sale Price Growth Rate 5% </li></ul><ul><li>Dollar Conversion Rate $1 = Rs. 80 </li></ul><ul><li>Revenues Growth Rate year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 </li></ul><ul><li>9,000,000 ,22%, 15%, 20%, 39%, 10%, 10%, 12% </li></ul>
  33. 34. <ul><li>Inventory Material Assumptions: </li></ul><ul><li>Inventory Cost Growth Rate 20% </li></ul><ul><li>Revenue Growth Rate 22% </li></ul><ul><li>Expense Assumptions: </li></ul><ul><li>L.C. Charges 0.50% of Revenue </li></ul><ul><li>Sales Tax Rate (Local) Exampt of Revenue Income Tax Rate Exampt of Income </li></ul><ul><li>Marketing Expense 3% of Revenue </li></ul><ul><li>Repairs and Maintenance 1.5% of Revenue </li></ul>
  34. 35. <ul><li>Financial Assumptions: </li></ul><ul><li>Project Life ( Years ) 8 </li></ul><ul><li>Equity 60% Debt 40% </li></ul><ul><li>Cost of Debt 18.0% </li></ul><ul><li>Cost of Equity 15.0% </li></ul><ul><li>Debt Re-payment ( Installment per year ) 1 </li></ul><ul><li>Debt Period ( Life ) 8 </li></ul>