Financial viability of Solar
power plant in Tamil Nadu
Ishan Rohit
PGDM Finance 2009-11
IMT Ghaziabad
Agenda
 Introduction : Solar power
 Potential for Solar power
 Tamil Nadu as a destination
 Capacity Utilization Facto...
Introduction : Solar power
Types :
 Photovoltaic : Converting solar radiation
into direct current electricity using
semic...
Potential for solar power
 India receives solar energy equivalent to
nearly 5,000 trillion kWh/year
 600 GW- far more th...
Tamil Nadu as a destination
 Average annual global solar radiant exposure
in Chennai is 5.37 kWh/m2 / day
 Tamil Nadu is...
Capacity Utilization Factor
 Ratio of actual energy generated by the
Solar PV / Thermal project over the year
to the equi...
Central Electricity Regulatory
Commission Initiatives
 Specified capital cost norms
 Fixed tariff upfront for the whole ...
Elements for cash flow projection
 Capital Cost
 Capacity Utilization Factor
 Debt-equity ratio
 Levelised tariff
 Te...
Capital costs – Solar PV
 Cost of :
 Land
 Civil and general works
 PV modules @ US $2/Watt
 Module structures
 Powe...
Capital costs – Solar thermal
Cost of :
Land
Civil and General works
Solar collection system ($/m^2)
Support structur...
Assumptions
Photovoltaic Thermal
CUF 19% 23%
Life of the plant 25 years 25
Project capital
cost/MW
16.9 Crores 15.3 Crores...
Assumptions
Photovoltaic Thermal
Depreciation 7% for the initial 10
years
and 1.33% for the
remaining years
7% for the ini...
Results
1 MW plant Photovoltaic Thermal
NPV 22294370 43603182
IRR 12.93% 15.46%
Benefit cost ratio .13 .285
3 MW plant Pho...
Future scope
 Cost of photovoltaic cells expected to decrease to around
$1/Watt
 Solar PV plant requires lower auxiliary...
Financial viability of solar power plant in Tamil Nadu
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Transcript of "Financial viability of solar power plant in Tamil Nadu"

  1. 1. Financial viability of Solar power plant in Tamil Nadu Ishan Rohit PGDM Finance 2009-11 IMT Ghaziabad
  2. 2. Agenda  Introduction : Solar power  Potential for Solar power  Tamil Nadu as a destination  Capacity Utilization Factor  CERC Initiatives  Elements for cash flows projection  Capital costs – Solar PV  Capital costs – Solar thermal  Assumptions  Results  Future scope
  3. 3. Introduction : Solar power Types :  Photovoltaic : Converting solar radiation into direct current electricity using semiconductors that exhibit the photovoltaic effect  Thermal : Solar heat is used to generate electricity by heating water to produce steam which drives a turbine connected to an electrical generator.
  4. 4. Potential for solar power  India receives solar energy equivalent to nearly 5,000 trillion kWh/year  600 GW- far more than the country’s total energy consumption today  Solar applications can be broadly divided into grid-connected and off-grid  India receives solar radiation of 4.6 to 6.4 kWh/m²/day for 300 to 330 days in a year
  5. 5. Tamil Nadu as a destination  Average annual global solar radiant exposure in Chennai is 5.37 kWh/m2 / day  Tamil Nadu is blessed with conducive natural meteorological and topographical setting.  Some of the experimental units: o 15 KW unit setup by TEDA, o 100 KW unit setup by M/s NEPC o 2x25 KW unit setup by M/s Udaya Semi conductors  TEDA has initiated moves for the establishment of Grid Interactive Solar Photovoltaic Power Plants of 1MW to 10MW capacity in Tamil Nadu under Build Own Operate basis.
  6. 6. Capacity Utilization Factor  Ratio of actual energy generated by the Solar PV / Thermal project over the year to the equivalent energy output at its rated capacity over the yearly period.  CERC recommends 19% for solar PV  23% for solar thermal PP in Tamil Nadu.
  7. 7. Central Electricity Regulatory Commission Initiatives  Specified capital cost norms  Fixed tariff upfront for the whole tariff period  Tariff period kept as 25 years  In Tamil Nadu :  Levelised tariff for Solar PV = Rs. 17.10 /KWh  Levelised tariff for Solar thermal = Rs. 14.38 /KWh
  8. 8. Elements for cash flow projection  Capital Cost  Capacity Utilization Factor  Debt-equity ratio  Levelised tariff  Term of the loan  Interest rate on loan  Interest on working capital  Return on equity  Life of plant and machinery  Depreciation of plant and machinery  Operation and maintenance expenditure
  9. 9. Capital costs – Solar PV  Cost of :  Land  Civil and general works  PV modules @ US $2/Watt  Module structures  Power conditioning units  Cables and transformers  Preliminary and pre-operative expenses
  10. 10. Capital costs – Solar thermal Cost of : Land Civil and General works Solar collection system ($/m^2) Support structure ($/m^2) Heat collection unit ($/unit) Mirrors ($/m^2) Power block ($/KWe) Thermal storage ($/KWe)
  11. 11. Assumptions Photovoltaic Thermal CUF 19% 23% Life of the plant 25 years 25 Project capital cost/MW 16.9 Crores 15.3 Crores Debt Equity ratio 70:30 70:30 Interest on loan 12% 12% Return on equity 19.85% 19.85% Loan repayment period 10 years with 1 yr moratorium 10 years with 1 yr moratorium O & M charges Rs.9.515 Lakhs per MW with 5.72% escalation per annum Rs.13.74 Lakhs per MW with 5.72% escalation per annum
  12. 12. Assumptions Photovoltaic Thermal Depreciation 7% for the initial 10 years and 1.33% for the remaining years 7% for the initial 10 years and 1.33% for the remaining years Residual Value 10% 10% Interest on working capital (i)Operation and Maintenance expenses for one month; (ii) Maintenance spares 1% of the O&M expenses, (iii)Receivables equivalent to 1 month of energy charges with 12% interest. (i)Operation and Maintenance expenses for one month; (ii)Maintenance spares @ 15% of the O&M expenses, (iii)Receivables equivalent to 1 month of energy charges with 12% interest. Levelised tariff Rs. 17.10 / kWh Rs. 14.38 / kWh
  13. 13. Results 1 MW plant Photovoltaic Thermal NPV 22294370 43603182 IRR 12.93% 15.46% Benefit cost ratio .13 .285 3 MW plant Photovoltaic Thermal NPV 71668402 137809029 IRR 13.07% 15.67% Benefit cost ratio .14 0.3
  14. 14. Future scope  Cost of photovoltaic cells expected to decrease to around $1/Watt  Solar PV plant requires lower auxiliary power consumption as compared to Solar Thermal plant  Scalability reduces total project cost/MW for Solar PV as compared to Solar thermal plant  So Solar PV plant may be an attractive proposition in future

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