Prepared by Sunil Kumar, CORRTECH, Ahmedabad

Contents Project Description Market & Growth Drivers Potential of Bagasse based power generation Bagasse based power plant policies Technology /Processes Suggested project Project cost Funding Returns

Project Description

Market & Growth Drivers

Potential of Bagasse based power generation

Bagasse based power plant policies

Technology /Processes

Suggested project

Project cost

Funding

Returns

Continue… Parties Involved Risk & Risk Mitigation Progress Players in the market

Parties Involved

Risk & Risk Mitigation

Progress

Players in the market

Project Description The proposed project is to set up bagasse based Grid connected Advanced Cogeneration Power Plant at existing sugar mill Private or cooperative sugar plants has accepted the importance of cogeneration power plant for exporting surplus power Gujarat as one of the leading sugar producers has great potential for cogen plant The plant will generate required steam for the plant and electricity for the plant and for exporting to the grid

The proposed project is to set up bagasse based Grid connected Advanced Cogeneration Power Plant at existing sugar mill

Private or cooperative sugar plants has accepted the importance of cogeneration power plant for exporting surplus power

Gujarat as one of the leading sugar producers has great potential for cogen plant

The plant will generate required steam for the plant and electricity for the plant and for exporting to the grid

Market & Growth Drivers Global Warming & depleting petroleum resources is forcing to generate from renewable source of energy Energy deficit in the peak hours is to the tune of 13% 3% Purchase Obligation of State Utility i.e. at least 3% of total power purchased by distribution company must come from Renewable Energy Government policies and subsidies to promote Renewable Energy CDM benefits makes the investment even more attractive

Global Warming & depleting petroleum resources is forcing to generate from renewable source of energy

Energy deficit in the peak hours is to the tune of 13%

3% Purchase Obligation of State Utility i.e. at least 3% of total power purchased by distribution company must come from Renewable Energy

Government policies and subsidies to promote Renewable Energy

CDM benefits makes the investment even more attractive

Potential of Bagasse based Co-Gen Power Plants in Gujarat Gujarat has 17 sugar mills in operation with crushing capability of more than 10 million MT per year Bagasse production is 30% of total crushing of sugarcane which creates a potential of 250-300 MW power generation So far only two sugar plants of all have gone for execution of cogeneration power plant, rest are waiting for capable partners

Gujarat has 17 sugar mills in operation with crushing capability of more than 10 million MT per year

Bagasse production is 30% of total crushing of sugarcane which creates a potential of 250-300 MW power generation

So far only two sugar plants of all have gone for execution of cogeneration power plant, rest are waiting for capable partners

Bagasse based power plant policies Supply of biomass, in principal agreement Subsidy to the tune of Rs. 14 crores for 21 MW Plant Open access to the Grid Flat Tariff of Rs. 3.00 for 20 years Transmission / Wheeling charge of 5% Tax exemption for first 10 years Revenue from Carbon Trading to the tune of Rs. 7.5 crores per annum for 21 years Interest subsidy to the tune of 3% from IREDA

Supply of biomass, in principal agreement

Subsidy to the tune of Rs. 14 crores for 21 MW Plant

Open access to the Grid

Flat Tariff of Rs. 3.00 for 20 years

Transmission / Wheeling charge of 5%

Tax exemption for first 10 years

Revenue from Carbon Trading to the tune of Rs. 7.5 crores per annum for 21 years

Interest subsidy to the tune of 3% from IREDA

Technology/ Processes

Suggested project Mahua Sugar Plant Capacity: 4000 TCD Bagasse generated (28%): 1120 Tons / Day Self consumption of bagasse in the process & for power generation of 6 MW: 1000 Tons/ Day Days of operation: 190 (from Oct. to March) Amount of bagasse required to generate 1 kwh = 2.2 kg Power generation possible from bagasse (during the season): 27.4 MW

Mahua Sugar Plant

Capacity: 4000 TCD

Bagasse generated (28%): 1120 Tons / Day

Self consumption of bagasse in the process & for power generation of 6 MW: 1000 Tons/ Day

Days of operation: 190 (from Oct. to March)

Amount of bagasse required to generate 1 kwh = 2.2 kg

Power generation possible from bagasse (during the season): 27.4 MW

Salient Features of the Project Proposed Power plant Capacity: 21 MW Total energy generation in a year: 156.37 MU Net energy available for export: 94.61 MU Price of Bagasse: Rs. 250 per ton (special rate) Price of Biomass: Rs. 1200 per ton, Mill’s additional benefit from selling bagasse to us at special rate is Rs. 2.87 cr. a year Mills will give us land and water at free of cost and bagasse at special rate Mill we get its Power and Steam requirement for free The cogeneration power plant will be handed over to Sugar Mill after 20 years of it operation at free of cost

Proposed Power plant Capacity: 21 MW

Total energy generation in a year: 156.37 MU

Net energy available for export: 94.61 MU

Price of Bagasse: Rs. 250 per ton (special rate)

Price of Biomass: Rs. 1200 per ton,

Mill’s additional benefit from selling bagasse to us at special rate is Rs. 2.87 cr. a year

Mills will give us land and water at free of cost and bagasse at special rate

Mill we get its Power and Steam requirement for free

The cogeneration power plant will be handed over to Sugar Mill after 20 years of it operation at free of cost

Project Snapshot Project cost: Rs. 88 Crore @ Rs. 4 crore / MW Long Term Loan (70 % of the project) at 13%: Rs. 58.8 cr. Subsidy: Rs. 14.2 crores (directly credited to lender) Equity Required: Rs. 26.56 cr. Project Completion Time: 18 months Debt Service Coverage Ratio: Avg. 2.05, Min. 1.72 Project IRR:

Project cost: Rs. 88 Crore @ Rs. 4 crore / MW

Long Term Loan (70 % of the project) at 13%: Rs. 58.8 cr.

Subsidy: Rs. 14.2 crores (directly credited to lender)

Equity Required: Rs. 26.56 cr.

Project Completion Time: 18 months

Debt Service Coverage Ratio: Avg. 2.05, Min. 1.72

Project IRR:

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

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

Financial Ratios Without considering CDM: Return on Capital Employed: 12.4% Average Return on Equity: 24.2 % (10 years’ average) IRR on Equity: 23.7 % Payback Period: Less than 4 years Without considering CDM: Return on Capital Employed: 23.3 % Average Return on Equity: 52.8 % (10 years’ average) IRR on Equity: 56.0 % Payback Period: Less than 2 years

Without considering CDM:

Return on Capital Employed: 12.4%

Average Return on Equity: 24.2 % (10 years’ average)

IRR on Equity: 23.7 %

Payback Period: Less than 4 years

Without considering CDM:

Return on Capital Employed: 23.3 %

Average Return on Equity: 52.8 % (10 years’ average)

IRR on Equity: 56.0 %

Payback Period: Less than 2 years

Parties Involved Ministry of New & Renewable Energy Gujarat Energy Development Agency (GEDA) Gujarat Electricity Regulatory Commission Sugar Factory – Co-operative society Biomass suppliers Lenders: IREDA, PFC, Banks Equity partners Equipment Suppliers: Thermax, Triveni, BHEL SS Engineers, etc.

Ministry of New & Renewable Energy

Gujarat Energy Development Agency (GEDA)

Gujarat Electricity Regulatory Commission

Sugar Factory – Co-operative society

Biomass suppliers

Lenders: IREDA, PFC, Banks

Equity partners

Equipment Suppliers: Thermax, Triveni, BHEL SS Engineers, etc.

Risk & Risk Mitigation Funding: Presently liquidity crunch is there Fuel Supply & Prices fluctuation Location disadvantages: CDM Process takes long time

Funding: Presently liquidity crunch is there

Fuel Supply & Prices fluctuation

Location disadvantages:

CDM Process takes long time

Progress so far Meetings with Sugar Factories Meetings with regulatory bodies Discussion with equipment suppliers

Meetings with Sugar Factories

Meetings with regulatory bodies

Discussion with equipment suppliers

Players in the market Kalpataru Power Transmission Ltd. Surya Chamble Power Ltd. Amrit Envi. Tech Pvt. Ltd. Birla Corporation Ltd. Transend Green Power Ltd. Sambhav Energy Ltd. J K Laxmi Cement Ltd. Sathyam Power Ltd. Star Biomass Power Pvt. Ltd.

Kalpataru Power Transmission Ltd.

Surya Chamble Power Ltd.

Amrit Envi. Tech Pvt. Ltd.

Birla Corporation Ltd.

Transend Green Power Ltd.

Sambhav Energy Ltd.

J K Laxmi Cement Ltd.

Sathyam Power Ltd.

Star Biomass Power Pvt. Ltd.

Success Stories 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. Devenagere Sugar Co. Ltd., Karnatka SCM Sugar Ltd., Hyderabad Shree Doodhganga Krishna Sahakari Sakkare Karkhane Niyamit, Karnatka Ref: MITCON, Pune

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.

Devenagere Sugar Co. Ltd., Karnatka

SCM Sugar Ltd., Hyderabad

Shree Doodhganga Krishna Sahakari Sakkare Karkhane Niyamit, Karnatka

Ref: MITCON, Pune