Business Plan: Biomass Power Plant

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Business Plan: Biomass Power Plant

  1. 1. Prepared by Sunil Kumar Corrtech Energy Ltd., Ahmedabad (India) [email_address]
  2. 2. Contents <ul><li>Project Description </li></ul><ul><li>Market & Growth Drivers </li></ul><ul><li>Potential of Bagasse based power generation </li></ul><ul><li>Bagasse based power plant policies </li></ul><ul><li>Technology /Processes </li></ul><ul><li>Suggested project </li></ul><ul><li>Project cost </li></ul><ul><li>Funding </li></ul><ul><li>Returns </li></ul>
  3. 3. Continue… <ul><li>Parties Involved </li></ul><ul><li>Risk & Risk Mitigation </li></ul><ul><li>Players in the market </li></ul>
  4. 4. Project Description <ul><li>The proposed project is to set up bagasse based Grid connected Advanced Cogeneration Power Plant at existing sugar mill </li></ul><ul><li>Private or cooperative sugar plants has accepted the importance of cogeneration power plant for exporting surplus power </li></ul><ul><li>Gujarat as one of the leading sugar producers has great potential for cogen plant </li></ul><ul><li>The plant will generate required steam for the plant and electricity for the plant and for exporting to the grid </li></ul>
  5. 5. Market & Growth Drivers <ul><li>Global Warming & depleting petroleum resources is forcing to generate from renewable source of energy </li></ul><ul><li>Energy deficit in the peak hours is to the tune of 13% </li></ul><ul><li>3% Purchase Obligation of State Utility i.e. at least 3% of total power purchased by distribution company must come from Renewable Energy </li></ul><ul><li>Government policies and subsidies to promote Renewable Energy </li></ul><ul><li>CDM benefits makes the investment even more attractive </li></ul>
  6. 6. Potential of Bagasse based Co-Gen Power Plants in Gujarat <ul><li>Gujarat has 17 sugar mills in operation with crushing capability of more than 10 million MT per year </li></ul><ul><li>Bagasse production is 30% of total crushing of sugarcane which creates a potential of 250-300 MW power generation </li></ul><ul><li>So far only two sugar plants of all have gone for execution of cogeneration power plant, rest are waiting for capable partners </li></ul>
  7. 7. Bagasse based power plant policies <ul><li>Supply of biomass, in principal agreement </li></ul><ul><li>Subsidy to the tune of Rs. 14 crores for 21 MW Plant </li></ul><ul><li>Open access to the Grid </li></ul><ul><li>Flat Tariff of Rs. 3.00 for 20 years </li></ul><ul><li>Transmission / Wheeling charge of 5% </li></ul><ul><li>Tax exemption for first 10 years </li></ul><ul><li>Revenue from Carbon Trading to the tune of Rs. 7.5 crores per annum for 21 years </li></ul><ul><li>Interest subsidy to the tune of 3% from IREDA </li></ul>
  8. 8. Technology/ Processes
  9. 9. Suggested project <ul><li>Mahua Sugar Plant </li></ul><ul><li>Capacity: 4000 TCD </li></ul><ul><li>Bagasse generated (28%): 1120 Tons / Day </li></ul><ul><li>Self consumption of bagasse in the process & for power generation of 6 MW: 1000 Tons/ Day </li></ul><ul><li>Days of operation: 190 (from Oct. to March) </li></ul><ul><li>Amount of bagasse required to generate 1 kwh = 2.2 kg </li></ul><ul><li>Power generation possible from bagasse (during the season): 27.4 MW </li></ul>
  10. 10. Salient Features of the Project <ul><li>Proposed Power plant Capacity: 21 MW </li></ul><ul><li>Total energy generation in a year: 156.37 MU </li></ul><ul><li>Net energy available for export: 94.61 MU </li></ul><ul><li>Price of Bagasse: Rs. 250 per ton (special rate) </li></ul><ul><li>Price of Biomass: Rs. 1200 per ton, </li></ul><ul><li>Mill’s additional benefit from selling bagasse to us at special rate is Rs. 2.87 cr. a year </li></ul><ul><li>Mills will give us land and water at free of cost and bagasse at special rate </li></ul><ul><li>Mill we get its Power and Steam requirement for free </li></ul><ul><li>The cogeneration power plant will be handed over to Sugar Mill after 20 years of it operation at free of cost </li></ul>
  11. 11. Project Snapshot <ul><li>Project cost: Rs. 88 Crore @ Rs. 4 crore / MW </li></ul><ul><li>Long Term Loan (70 % of the project) at 13%: Rs. 58.8 cr. </li></ul><ul><li>Subsidy: Rs. 14.2 crores (directly credited to lender) </li></ul><ul><li>Equity Required: Rs. 26.56 cr. </li></ul><ul><li>Project Completion Time: 18 months </li></ul><ul><li>Debt Service Coverage Ratio: Avg. 2.05, Min. 1.72 </li></ul><ul><li>IRR on equity: 23.7 – 56% </li></ul>
  12. 12. Financials (without CDM benefit) Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Energy available for sale 94.61 MU 94.61 MU 94.61 MU 94.61 MU 94.61 MU Revenue @ Rs. 3 per unit 2838.2 lacs 2838.2 lacs 2838.2 lacs 2838.2 lacs 2838.2 lacs Fuel, O&M, Insurance, Interest, Depr. 2309.7 lacs 2224.7 lacs 2229.5 lacs 2205.7 lacs 2184.9 lacs PAT 528.5 lacs 613.5 lacs 608.7 lacs 632.5 lacs 653.3 lacs
  13. 13. Financials (with CDM benefit) Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Energy available for sale 94.61 MU 94.61 MU 94.61 MU 94.61 MU 94.61 MU Revenue @ Rs. 3 per unit 3595.9 lacs 3595.9 lacs 3595.9 lacs 3595.9 lacs 3595.9 lacs Fuel, O&M, Insurance, Interest, Depr. 2309.7 lacs 2224.7 lacs 2229.5 lacs 2205.7 lacs 2184.9 lacs PAT 1286.2 lacs 1371.2 lacs 1366.4 lacs 1390.2 lacs 1411.0 lacs
  14. 14. Financial Ratios <ul><li>Without considering CDM benefit: </li></ul><ul><li>Return on Capital Employed: 12.4% </li></ul><ul><li>Average Return on Equity: 24.2 % (10 years’ average) </li></ul><ul><li>IRR on Equity: 23.7 % </li></ul><ul><li>Payback Period: Less than 4 years </li></ul><ul><li>Considering CDM benefit: </li></ul><ul><li>Return on Capital Employed: 23.3 % </li></ul><ul><li>Average Return on Equity: 52.8 % (10 years’ average) </li></ul><ul><li>IRR on Equity: 56.0 % </li></ul><ul><li>Payback Period: Less than 2 years </li></ul>
  15. 15. Parties Involved <ul><li>Ministry of New & Renewable Energy </li></ul><ul><li>Gujarat Energy Development Agency (GEDA) </li></ul><ul><li>Gujarat Electricity Regulatory Commission </li></ul><ul><li>Sugar Factory – Co-operative society </li></ul><ul><li>Biomass suppliers </li></ul><ul><li>Lenders: IREDA, PFC, Banks </li></ul><ul><li>Equity partners </li></ul><ul><li>Equipment Suppliers: </li></ul><ul><li>Thermax, Triveni, BHEL, SS Engineers, etc. </li></ul>
  16. 16. Risk & Risk Mitigation <ul><li>Funding: Presently liquidity crunch is there </li></ul><ul><li>Fuel Supply & Prices fluctuation </li></ul><ul><li>Location disadvantages: </li></ul><ul><li>CDM Process takes long time </li></ul>
  17. 17. Players in the market <ul><li>Kalpataru Power Transmission Ltd. </li></ul><ul><li>Surya Chamble Power Ltd. </li></ul><ul><li>Amrit Envi. Tech Pvt. Ltd. </li></ul><ul><li>Birla Corporation Ltd. </li></ul><ul><li>Transend Green Power Ltd. </li></ul><ul><li>Sambhav Energy Ltd. </li></ul><ul><li>J K Laxmi Cement Ltd. </li></ul><ul><li>Sathyam Power Ltd. </li></ul><ul><li>Star Biomass Power Pvt. Ltd. </li></ul>
  18. 18. Success Stories <ul><li>As of December, 2004 cumulate to 432.53 MW from 56 projects. Additional capacity of about 322.97 MW from 36 projects in various stages of construction. </li></ul><ul><li>Devenagere Sugar Co. Ltd., Karnatka </li></ul><ul><li>SCM Sugar Ltd., Hyderabad </li></ul><ul><li>Shree Doodhganga Krishna Sahakari Sakkare Karkhane Niyamit, Karnatka </li></ul><ul><li>Ref: MITCON, Pune </li></ul>
  19. 19. Thanks <ul><li>Sunil Kumar </li></ul><ul><li>Business Development </li></ul><ul><li>Corrtech Energy Ltd. </li></ul><ul><li>Shed No. 7, Survey No. 407, SP-3 </li></ul><ul><li>New Ahmedabad Industrial Estate </li></ul><ul><li>Sarkhej Bavla Highway, Changodar </li></ul><ul><li>Ahmedabad – 382213, Gujarat (India) </li></ul><ul><li>Tel: +91 2717 304100 </li></ul><ul><li>Email: sunilzon@gmail.com </li></ul>

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