1.
Financial viability of Solar
power plant in Tamil Nadu
Ishan Rohit
PGDM Finance 2009-11
IMT Ghaziabad
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.
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.
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.
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.
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.
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.
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.
Capital costs – Solar PV
Cost of :
Land
Civil and general works
PV modules @ US $2/Watt
Module structures
Power conditioning units
Cables and transformers
Preliminary and pre-operative expenses
10.
Capital costs – Solar thermal
Cost of :
Land
Civil and General works
Solar collection system ($/m^2)
Support structure ($/m^2)
Heat collection unit ($/unit)
Mirrors ($/m^2)
Power block ($/KWe)
Thermal storage ($/KWe)
11.
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.
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
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