H2 business plan v- 1st Sept 2011

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© H2 Worldwide Limited, Nigeria
Solar power generation in Nigeria
Business plan
H2 Worldwide Limited, Nigeria
DIRECTORS
PROF DAVID MBA BEng PhD CEng FIMechE FBINDT FISEAM;
MR UZOMA NWAKUCHE LL.B MBA
Table of Contents

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Section 1 Executive Summary
Section 2 Introduction
Section 3 The technology – power generation from solar energy
Section 4 Need for the Project
Section 5 H2 strategic roll-out programme
Section 6 The Technical partner
Section 7 Project Management
Section 8 Project Management and Delivery Arrangements
Section 9 Marketing and Publicity
Section 10 Financial profile
Section 11 Conclusion
Section 12 References

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List of Appendices
Appendix A - CVs of Project Team Members
Appendix B - Support letter from National Energy Commission (NEC)
Appendix C - Technical partner support information
Appendix D - Organisation chart
Appendix E - Solar radiation breakdown at ‘Wudil’
Appendix F - Projects costs and capital expenditure
Appendix G - Operations and Maintenance costs (annual)

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1. Executive Summary
H2 Worldwide Limited (H2), Nigeria, is a newly formed company that aims to
develop power generation plants based solely on solar energy. A ten-year plan
to develop 1GW of solar Photovoltaic (PV) energy across northern Nigeria
forms the basis of H2’s strategic growth programme. The first stage of its
rollout plan involves the development of 50MW PV solar power plants at an
estimated capital cost of $225m. Funding is sought from government grants,
private investors and financial institutions.
H2’s technical partner, Titan Energy Systems, India, has proven expertise in PV
manufacture and turnkey solar PV power generation plants with a
manufacturing capacity of several hundred mega-watts and an installed PV
power generating capacity of several Mega-watts in India.
H2’s strategic aims will contribute to economic, environmental and social
development for the population in northern Nigeria by improving energy
supply, enhancing security of energy supply, reduction of green house gases,
creation of jobs and improvement of social welfare.
H2 Worldwide Limited, Nigeria, (company no: 04135447) was incorporated in
2011 and has two shareholders, Professor David Mba (50%) and Mr Uzoma
Nwakuche (50%).

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2. Introduction
Infrastructure development for power supply is a key factor for poverty reduction and
contributes significantly to economic and social development. In Sub-Sahara Africa
the access rate to electricity is generally very low [1]. This implies consumption levels
far below levels in the developed world with West African consumption known to be
extremely low (155 kWh/habitant/year) [1]. In comparison with other regions such as
Latin America, Middle East, Europe, and North America, Africa has one of the lowest
per capita consumption rates that are very heavily reliant on traditional biomass [2]. It
has also been stated that the key challenge facing Africa is not to increase energy
consumption but to ensure access to cleaner energy services, preferably through
energy efficiency and renewable energy thus promoting sustainable consumption.
Unlike most industrialized countries which progressed from traditional energy to
unsustainable conventional energy consumption patterns and which are now
struggling to move to a sustainable energy path, Africa could, in a number of sectors,
leapfrog directly from current traditional energy consumption patterns to sustainable
energy options [2].
Energy access is a key to poverty alleviation, the astonishing fact is that only 36% of
the African population has electricity and more than 80% of its rural population has
none [4]. This disquieting situation has not been improving, the rate of access to
modern energy in rural areas in some African countries has dropped to as low as 1%.
Reaching the un-electrified rural population is often only possible through
decentralised energy systems, due to low potential electricity demand and economic
development in these areas and sometimes also for political reasons, grid extension
is not a feasible option. This is an exact reflection of the current electricity distribution
in the Federal republic of Nigeria.
The high cost of energy transport and transmission infrastructure, such as high
voltage power lines, oil and gas pipelines, is one of the factors responsible for the low
progress in expanding power generation plants and electricity distribution grids [4].
Under these circumstances, Renewable Energy Technologies (RET’s), offer a cost-
effective alternative solution to the extension of the national grid. Such technologies
include solutions for extracting power from wind, sun (solar), rivers and oceans (tidal
and wave). It is the usage of sunlight to generate electrical power that forms the
basis of the business plan for H2. Indeed, the use of renewable sources of energy for
improving the nations electrical power output will contribute to the realisation of
important economic, environmental, and social objectives by the enhancement of
security of energy supply, the reduction of greenhouse gases and other pollutants
and by the creation of employment, which leads to the improvement of social welfare
and living conditions. These benefits cannot be understated.
The amount of increase in generating capacity required for Nigeria can be
qualitatively assessed by consideration of the current population, typical power

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consumption per habitant and a comparison with other populous nations. Given a
population of approximately 150 million and comparing this population to other
countries of similar populations, an approximate increase in generating power of up
to 100GW is required to match other developing and developed countries, see figure
5 [3]. The need for a large increase in generating capacity for Nigeria is
unquestionable.
An additional 100GW of power is required in Nigeria over the next 20-years to meet
the nation’s economic development milestones, and, the anticipated energy
consumption demands. H2 plans to be part of the growth market and its contribution
will be based fundamentally on utilising the natural solar resource in northern Nigeria.
The market will be targeted to townships, industrial clusters and local off-grid
communities. Income will be guaranteed via a mixture of tools such as long term
Power Purchase Agreements (PPA) and pay-on-demand arrangements with either
the national power generation company (PHCN), a power distribution company, a
state government or individual users (industrial and/or domestic).

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3. The technology – power generation from solar energy
It is now widely accepted that for many rural locations an alternative to grid-
connected power is required. Stand-alone Photovoltaic (PV) systems have been
confirmed as an appropriate option for bringing electricity to rural communities and
modern townships. Moreover, this can be achieved with a centralized PV power plant
that may be classed as a mini-grid. A World Bank/UNDP study on rural electrification
programmes placed the average cost of grid extension at between $8,000 – $10,000
per km, rising to around $22,000 in difficult terrains [4]. Whilst there are clear
advantages to off-grid rural communities, the availability of this source of power to
townships and cities cannot be underestimated given today’s need for urgent
increase in power generation in Nigeria. Renewable options are becoming more
popular due to the steady increase of fuel prices, the elevated operating costs and
the high needs of maintenance of diesel generators, and their acoustic and
environmental polluted nature. Although capital costs of renewable energy projects
are much higher than conventional generator-sets, there is a significant reduction in
operation and maintenance costs for PV plants in comparison to other conventional
power producing system. This is in addition to all advantages associated with
‘greener’ powers sources such as no emissions of carbon dioxide (CO2), nitrogen
oxides (NOx) and sulphur dioxide (SO2).
Photovoltaics (PV) are best known as a method for generating electric power by
using solar cells to convert energy from the sun into a flow of electrons. The
photovoltaic effect refers to photons of light exciting electrons into a higher state of
energy, allowing them to act as charge carriers for an electric current. PV solar cells
produce direct current electricity from sun light, which can be used to power
equipment or to recharge a battery. The first practical application of photovoltaics
was to power orbiting satellites and other spacecraft, but today the majority of
photovoltaic modules are used for grid connected power generation.
Two approaches have been developed to capture the sun’s energy and convert it into
electricity – solar thermal and solar PV. H2 have opted for the Solar Photovoltaic
system that converts the sun’s light directly into electricity based on semiconductor
technology. The key components of a PV solar power plant are the solar panels,
trackers, inverters and transformers as illustrated in figure 1. The solar PV plant
model, as presented in figure 1, is that which H2 has adopted for its power
generation scheme in Nigeria.

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Figure 1 Solar plant components
Key components of the proposed PV power plant include:
Solar modules
Module supporting structure
Inverters
Transformers
Control systems (SCADA)
Balance of systems (BoS)

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4. The Need for the Project
The key areas of need for this proposal fall into the following headings:-
The need for sustainable power generation within Nigeria
The need to reduce carbon emissions to combat climate change
The need to progress the development of a portfolio of renewable energy
technologies as a key part of the strategy to reduce carbon emissions
The need to progress the development of a portfolio of local renewable
developments to secure local energy supply.
The need for sustainable power generation in Nigeria
The absence of an adequate electrification policy and weak commitment of
governments to allocate sufficient means for increasing the access to electricity has
been major causes in the past. There is now a clear awareness of the problem and
an aggressive electrification programs have started in Nigeria. Whilst significant
efforts are underway to expand the power generating capacity, all efforts in
increasing the access of electricity to population are useless without adequate
related measures to increase the power distribution that can satisfy the demand. The
current Nigeria government has acknowledged this and an extract from the
‘Roadmap for Power’ [3] reiterates the urgent need for improved electrification in
Nigeria:
Energy access is a key to poverty alleviation, the astonishing fact is that only 36% of
the African population has electricity and more than 80% of its rural population has
none [4]. This disquieting situation has not been improving, the rate of access to
modern energy in rural areas in some African countries has dropped to as low as 1%.
Reaching the un-electrified rural population is often only possible through
decentralised energy systems, due to low potential electricity demand and economic
development in these areas and sometimes also for political reasons, grid extension
is not a feasible option. The high cost of energy transport and transmission
infrastructure, such as high voltage power lines, oil and gas pipelines, is one of the
factors responsible for the low progress in expanding national distribution electricity
grids [4]. A 2000 World Bank/UNDP study on rural electrification programmes placed
the average cost of grid extension at between $8,000 – $10,000 per km, rising to

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around $22,000 in difficult terrains [4]. Under these circumstances, Renewable
Energy Technologies (RET’s), offer a cost-effective alternative solution to the
extension of the grid. It is this philosophy that forms the basis of the business plan for
H2 Ltd. Indeed, the use of renewable source of energy for enhancing the nations
power requirements will contribute to the realisation of important economic,
environmental, and social objectives by the enhancement of security of energy
supply, the reduction of greenhouse gases and other pollutants and by the creation
of employment, which leads to the improvement of social welfare and living
conditions.
Within Nigeria, the current grid generation capacity is put at approximately 3GW
whilst self generated power stands at over 6GW. This implies that twice the current
availability from the grid is self-generated at a cost far in excess of the grid-regulated
tariff which stands at N8.5/kWh [3]. Self-generated electricity costs individuals
approximately:
- N80/kWh for candles and kerosene [3]
- N60/kWh for diesel, petrol or LPFO [3]
A recent government review of tariff charges has recommended a new traffic for grid-
generated power at N22/kWh [3].
It is now widely accepted that for many rural locations an alternative to grid-
connected power is required. Stand-alone Photovoltaic (PV) systems have been
confirmed as an appropriate option for bringing electricity to communities and
townships. Moreover, this can be achieved with a centralized PV power plant that
may be classed as a mini-grid. In addition, when the location is far away from the
grid, grid extension is not an economically viable option and mini-grids are a
competitive alternative. Whilst there are clear advantages to off-grid rural
communities, the availability of this source of power to townships and cities cannot
be underestimated given today’s need for urgent increase in power generation in
Nigeria. Renewable options are becoming more popular due to the steady increase
of fuel prices, the elevated operating costs and the high needs of maintenance of
diesel generators, and their acoustic and environmental polluted nature. Although
capital costs of renewable energy projects are much higher than conventional
generator-sets, there is a significant reduction in operation and maintenance costs for
PV plants in comparison to other conventional power producing system. This is a
significant advantage that PV systems offer over more conventional methods of
power generation.
The Evidence behind Climate Change and the Need to Reduce Carbon
Emissions
Climate change is regarded by many as one of the most serious threats facing the
world's environment, economy and society. While there remain those who argue

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either that climate change is not happening to any significant extent, or who see it as
no more than a natural stage in the cycle of the climatic system of the world, the
consensus of scientific opinion as presented to world governments by the
Intergovernmental Panel on Climate Change (IPPC) is that there is a link between
man's actions and a variety of climate-related issues such as rising sea and air
temperatures, rising sea-levels, melting ice caps and changes in the pattern and
severity of a range of meteorological conditions. The significance of climate change
effects, linked to the fact that man has undoubted control over the way in which he
manages the environment (and in particular emissions of gases such as carbon
dioxide and methane), means that whatever doubts might be raised about the
effectiveness of taking measures to control greenhouse gas emissions, scientists and
policymakers have concluded that these measures must be taken.
Even if the current level of greenhouse gas emissions is stabilised immediately, it
may take hundreds of years to clear the effects of the past 200 years. Climatic
changes will affect the whole planet and as can be seen in the Stern Review, the
effects are most likely to be felt (and are probably already being felt) by those
countries whose populations are least able to help themselves.
The use of renewable sources as an increasing proportion of the total energy
consumption in Nigeria will seen by International community as a key part of
the ultimate sustainable global solution.
The completion of phase-1 of the roll-out plan (50MW), see section 5, will provide
benefits initially consisting of:
Generation of renewable energy (up to 74 GWh/yr)
Contribution towards reduction in GHG emissions (estimated reduction in
emissions of up to 14,000 tCO2 per year)
Increase investment in emerging and innovative technology
Opportunity to maximise the environmental, economic and employment
opportunities of the project’s local community
The opportunity for increased revenue into the local supply chain through use of
local contractors. Secondary tier benefits may be gained through contracting
support service activities such as haulage requirements and overnight stays by
contractors/personnel working on the project.
Knowledge transfer opportunities and enhanced awareness on energy related
issues as well as climate change issues which will inform government policy.
The project will provide national benefit consisting of:-
Enhanced awareness and understanding of climate change related energy issues
Contribution to the Nigerian renewable energy targets

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Contribution to the reduction in Carbon emissions targets
In addition the project will provide a research facility to the National Energy
Commission’s (NEC) centres of excellence for solar research, see letter of support
from NEC in Appendix B. Such centres will be able to have:-
An understanding of the efficiency and reliability of large scale PV units to enable
further optimisation of such PV power plants to regional variation of irradiance.
The opportunity for the national renewable industry, regulators, statutory
consultees and public to better understand how the local environment in Nigeria
can benefit from solar energy.

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5. H2 strategic roll-out programme
H2’s rollout plans are based on developing PV solar power plant units ranging
between 10MW to 100MW, up to a maximum capacity of 1GW, at various locations
throughout the northern part of Nigeria; in regions of good solar irradiation, see
highlighted regions of yellow and red in figure 2. Solar irradiation refers to the total
energy reaching the surface of a PV panel and consists of direct radiation and diffuse
irradiance. Power utility units ranging between 10MW to 100MW will be installed in
regions identified as offering the best balance between solar irradiation levels,
availability of national and local grid networks, and, communities able to purchase
power from H2 limited. Each power plant must be financially viable as a standalone
business unit and with a defined customer base. As such each power plant will be
self contained, secure, and manned by a plant manager and a small support team.
The business plan of H2 involves rolling out its solar power plants in four stages over
a period of 10-years, starting in March 2012, with each stage progression dependent
on the success criteria of the previous stage. The solar PV power plant rollout stages
include:
o Stage 1 - 50MW total capacity Period: Months 1 to 18
o Stage 2 - 250MW additional capacity Period: Months 18 to 48
o Stage 3 – 300MW additional capacity Period: Months 48 to 82
o Stage 4 – 400MW additional capacity Period: Months 82 to 120
Figure 2 Yearly global horizontal irradiation in Nigeria [5]

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Several PV power plants already exist around the world, even in areas of lower
irradiation than in the northern part of Nigeria. This is clear evidence of the
potential of employing such technology for generating electrical power in
northern Nigeria. Individual PV power plants in excess of 100MW are in existence
today across Europe, America and Asia, whilst construction has started on much
larger PV power plants. An example is the 80MW PV plant in Finsterwalde,
Germany.
80MW PV plant in Finsterwalde, Germany
Other examples of PV solar plants across the world include:
1.  Sarnia (Ontario), Canada 97MW
2. Montalto di Castro (Lazio), Italy 85MW
3. Turnow-Preilack, Germany, 72MW
4. Olmedilla, Spain 60MW
5. Boulder City, USA 50MW
6. Gabardan, France 38MW
7. Veprek, Czech Republic 35MW
8. Geermu, China 20MW
9. Seoul, Koera 20MW
10. etc…….
It should be noted that all these sites are operational. In 2010 large scale PV plants
with cumulative power more that 3 GW were connected to the grid worldwide. The
market leader was Germany with more than 1 GW new power capacity installed
closely followed by Italy and the Czech Republic.
H2’s roll-out strategy is based on the following:
A simple and modular design
A staged and logical approach

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Expert and highly experienced team
Robust management and financial processes and controls
Simple and modular design
In order to manage risk and in particular commercial risk the deployment of the PV
technology will be in modular format that can be scaled up as and when required. As
such H2 roll-out will be based on a minimum capacity of 10MW units. This
would imply a 100MW plant would consist of ten 10MW blocks. The start of any
power generation business, particularly in a very competitive market, is extremely
challenging, and as such the development and deployment strategy of H2 has been
focussed to provide a low risk technical solution, to be as simple as possible in
concept and application. The PV technology that forms the basis of the power
generating mechanism is based on proven technology, and the fundamental design
philosophy of the power plant is based on minimum technical risk, and minimal
impact on the environment. Much effort has been concentrated on operational cost,
particularly the challenges faced in installation and deployment, and it is believed that
a cost effective methodology has been developed.
The development, deployment and commissioning of the PV solar power plant
project will be carried out in the following stages:
Selection of site for power plant
Design of power plant including solar panel requirements, mechanical and
civil design and site layout.
Procurement of local services and equipments for undertaking civil and
mechanical works
Application for tax exemption on import goods
Application for power generation licence
Importation of solar panels, transformers, inverters, etc
Civil and mechanical construction
Commissioning and grid connection
Monitoring and assessing the physical and environmental aspects of the
project
Post decommissioning research and analysis with the National Energy
Commission (NEC), Nigeria, to explore and interpret the performance of
the power plant so as to inform government policy on solar renewable
energy. See Appendix B for support letter from NEC.
The objectives associated with H2’s roll-out strategy are achievable because the
delivery of the project is assisted through:
A project philosophy to keep the whole process as simple as possible
Taking advantage of proven technical components for PV solar power
generation systems

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An experienced design and management team in H2 and its technical partner,
TITAN, will oversee the project
Project contractors will be appointed to capitalise on their specialist skills and
areas of expertise in both the technical and environmental domains
In summary, measureable goals for this project are:
Outputs
The primary measurable outcome of the first phase of this project is the
generation of 50MW power.
Results
The project will generate temporary permanent jobs in the local area.
Renewable energy generated – up to 74GWh/year
Reduction in greenhouse gas emissions – up to 14,000 tonnes per year
Impacts
Net reduction in greenhouse gas emissions
Net jobs created

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6. The Technical partner
The construction of a PV solar plant is a relatively simple and straightforward
exercise compared to the scope and complexity of construction arrangements for
conventional thermal power projects. The components of a PV solar plant are usually
prefabricated and their installation is a low complexity, assembly task that does not
require highly skilled or specialist labour. Civil and electrical works for PV solar plants
are also relatively straightforward. Highly modular and repetitive nature of the
construction and installation activities results in low interdependency between these
various activities, which may decrease the risk of delay in completion. Construction
risk for a PV solar plant will typically be mitigated by a fixed-price turnkey contract
and many panel manufacturers provide these services. Should the contractor or the
manufacturer default; there may be replacement manufacturers available in the
market, which could be mobilised to complete the plant.
H2’s technical partner is TITAN Energy Systems, India. TITAN has an extremely
experienced design team that has commissioned numerous solar plants. This world
leading research and development team with a track record of delivering projects of a
similar nature is available to support this project. Given the lack of manufacturing
capability and technical expertise in PV technology H2 limited have signed an
agreement with TITAN, an internationally recognized company. Titan Energy
Systems develops and manufactures high-quality solar photovoltaic modules. Their
state-of-art manufacturing facility in Hyderabad, India is one of the largest production
facilities in India. Titan also undertakes design, construction, operation and
maintenance of grid-connected and off-grid solar systems on ‘turnkey’ basis for end
customers. Titan are developing 1GW of PV power units across India and developed
the first PV power utility in India (3-MW), see figures 3 and 4. TITAN ’s solar modules
for international markets are certified by leading test centres, meeting stringent
international test standards in TÜV Rheinland (Germany), Arsenal Research (Austria)
and JRC (Italy). Appendix C presents further information on TITAN.

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Figure 3 Model of a 3MW utility plant developed by Titan in India
Figure 4 Titan’s solar modules

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7. Project Management
The Project Team will be comprised of the following:-
A team of highly experienced technical and managerial internal H2 staff
A team of expert contractors with proven record of manufacturing solar panels
and developing solar power generation plants.
A team of local engineers and non-skilled staff
The management team will apply project management practice to monitor and
evaluate project progress. The project plan, project programme, milestone
schedule and income and expenditure schedule (cash flow) will provide
necessary monitoring tools. Project management will include careful integration of
all contractors to ensure equipment supplies and services are delivered in a
holistic approach to the project. Risk management will be a key part of the
process, with continuous risk review using a ‘live’ Risk Register.
Internal Team
The management team at H2 has substantial experience with particular expertise
in technical engineering, commercial management, project management and
development management. CVs of key project team members including a
description of projects, dates, location clients and project size is provided in
Appendix A.
Expert Contractors
H2’s business model for the execution of this project will bring together a team of
contractors who collectively provide vast depths of expertise in their respective
fields. This team has been carefully selected based on proven technical capability
and specific expertise in the fields of PV solar manufacture and deployment.
Supporting information on TITAN Energy systems, India, can be viewed in
Appendix C. Other contractors will be engaged as and when required to support
the project.
The key management and staff functions considered necessary to deliver this
project are illustrated in the Organisation Chart, see Appendix D, and a list of the
key management and staff functions is provided below:-
The Management Team for Phase-1 of the roll-out strategic plan will include:
1. Managing Directors (Mr U Nwakuche & Prof D Mba). To be the figureheads for
H2 and to oversee the development of the company and its clean energy
technology at local, national and international level and be responsible for its
promotion in all spheres of the public and private sector.

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2. Technical and development Director (Prof D Mba). To oversee all key
technical decisions in conjunction with H2’s partners, TITAN. Implement all
conditional requirements of the operating consents for H2 including
addressing issues on environmental impact.
3. Engineering Manager (to be appointed - To oversee all engineering and
technical issues associated with the project and manage the technical
interfaces between the designers, equipment suppliers and contractors. To
ensure full compliance with all appropriate engineering standards adopted in
the design and manufacture of the device.
4. Finance and Contracts Director (Mr U Nwakuche). To manage the contractual,
budgetary and programme related issues with all external designers,
equipment suppliers and contractors.
5. Finance manager – to monitoring and account for all funds paid to contractors,
received from customers, etc. This will be out-sourced to an accredited
accounting firm.
6. Administration manager (to be appointed) – To offer provision of all
administrative support for H2 including IT support together with office facilities,
heating, telephones etc.
Total staff of 22, which includes:
2 Directors
4 Managers
2 Administrative staff
10 Operators and plant maintenance personnel (based on a 50MW plant site)
4 Security personnel

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8. Project Management and Delivery Arrangements
Project plans and schedules are in place for the parallel activity streams associated
with the procurement, manufacture, delivery, installation, testing and retrieval of the
device. Budgets, cash flow profiles and milestone schedules are detailed in section
10.
The H2 management team will apply project management practice to monitor and
evaluate project progress. The project plan, project programme, milestone schedule
and income and expenditure schedule (cash flow) will provide necessary monitoring
tools. A detailed project plan with all key milestones will be completed after the
feasibility and development stages. The team will have the following in place:
Project Management
An organisational structure that clearly defines responsibility for managing and
delivering the project and demonstrates a clear separation of duties between
those responsible for receiving, checking and certifying invoices/other supporting
documentation for eligible expenditure and those who authorise payment.
A Microsoft Project Plan with key project tasks, milestones and critical paths.
A regular (monthly) review meeting led by the project manager to monitor and
review progress against the agreed objectives and targets.
Progress monitoring reports detailing progress against milestones
Financial Management
The financial management will be outsourced to an accredited accountancy firm that
will reported to the directors of H2. They will ensure protocols exist such that:
A finance system which ensures that claims only contain eligible expenditure
which is supported by a full and clear audit trail.
An audit trail runs from figures included in the claim forms through to supporting
invoices, bank statements and organisational ledgers
A spreadsheet giving a complete list of transactions together with supporting
accounting documentation retained behind each copy claim.
An adequate accounting code structure to segregate all transactions relating to
the approved project from other transactions.
A project management system which distinguishes between eligible and ineligible
costs for the project.
For staff costs, there will be an audit trail from figures included in the claim forms
through to supporting /payroll

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Application of project and financial management practices:-
A project plan, which identifies key milestones through the project period that are
related to specific achievements and deliverables, will be developed during the
design phase of the power plant. The milestone payment schedule will therefore
optimise the relationship between costs and outputs, with project management
practices applied accordingly.
Communication and Location Management Requirements
The project will be led and project managed from the H2’s offices in Abuja,
covering all aspects of the site development, technical development, build and
installation of the power plant, and management of the test programme. Direct
operational management of the device during installation, pre-deployment test,
installation, commissioning and trials will be effected from site.
A regular (at least) monthly project review meeting will be held, led by the project
manager to monitor and review projects progress against the agreed objectives
and targets. Such meetings will be supplemented as required depending on
prevailing circumstances and issues arising.
Regular meetings will be held with all contractors to review progress against
agreed objectives and targets.
Throughout the project it will be possible to identify progress of delivery against the
outputs and results specific to the project.

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9. Marketing and Publicity
H2’s Administrative manager will be responsible for marketing the company’s
products and attracting clients from both industrial and private customers. To support
the Administrative manager, H2, will appoint a communications company to oversee
publicity on local and national scales. Timely press releases and media interaction
will be managed, raising awareness of the technology solution and its contribution as
a renewable energy source to the international quest for carbon reduction. Electronic
information (e.g. websites, audio-visual material) will be developed as well as
participation in Information Events such as Conferences, seminars, and/or
exhibitions.
Management of the marketing and publicity will be the responsibility of the
Administration manager.

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10. Financial profile
Within Nigeria, the current grid generation capacity is put at approximately 3GW
whilst self generated power stands at over 6GW. This implies that twice the current
availability from the grid is self-generated at a cost far in excess of the grid-regulated
tariff that stood at N8.5/kWh ($0.057/kWh) early in 2011 [3]. Self-generated electricity
costs individuals approximately:
- NGN80/kWh ($0.53/kWh) for candles and kerosene [3]
- NGN60/kWh ($0.40/kWh) for diesel, petrol or LPFO [3]
H2 has set it unit selling price (tariff) at NGN30/kWh ($0.20/kWh). Target tariff for
H2 is 50% less than the current biomass and diesel rates which are in excess of
NGN60/kWh ($0.40/kWh); offering significant costs savings to companies,
government establishments and individuals in meeting their electricity demand. In
addition, given that solar generation can only be achieved during day light hours, the
power produced by H2’s PV plants will be best suited to meeting peak demands
which occur between the hours of 8am to 5pm.
At present the Nigerian government has set up a committee to ascertain tariffs for
various forms of power generation sources and as such a fixed tariff is yet to be
determined. Newspaper articles and commentators have suggested a fossil fuel
tariffs by January 2012 in the region of NGN22/kWh ($0.146/kWh); national levels for
renewable energy have yet to be set. However, given the anticipated tariff of
NGN22/kWh is 70% of H2’s target tariff, and the fact that tariffs for renewable energy
power sources are higher than that for fossil fuels, it is very likely that the final tariff to
be set by the government will be in the region of NGN30/kWh.
H2’s market will be targeted at townships, industrial clusters and local off-grid
communities. Income will be guaranteed via a mixture of solutions which include:
Long term Power Purchase Agreement (PPA) with either the national
power generation company (PHCN), an electricity distribution company, or
state governments.
Pay-on-demand – targeted at industrial clusters and local communities
Funding for Phase-1 of this project is sought to kick start the strategic objectives of
H2; it is anticipated that costs of PV solar systems will fall over the next few years to
reach prices comparable to conventional fossil fuels making financing for the roll-out
of other stages more attractive to investors. Financing for H2 is to be achieved with
grants from International and National ‘Renewable energy’ programmes; financial
support from commercial banks, and, private and public investors. Approximately
$225m of funding is ought for stage-1 rollout.

H2
Page 25 of 36
Financial analysis
For this business/financial assessment a tariff was set at NGN30/kWh ($0.20/kWh).
The site employed for analysis is located at Wudil (35 km from Kano). H2 will launch
its first power plant in Kano state where there exists a large industrial sector and
customer base. Appendix E details the analysis for a 50MW PV solar plant based in
Wudil, northern Nigeria and includes the amount of power generated annually during
periods of sunlight and takes cognisance of seasonal variations. The output from this
analysis is an export to the grid of 75GWh / yr.
Project capital costs
A summary of the project costs and capital expenditure for developing a 50MW PV
plant is detailed in Appendix F and shows the average installation, capital and
commission costs is approximately $4.5/watt, which is in line with current
international rates for PV solar power plants. A total capitalisation of $225m for
Stage-1 of the rollout plan is required.
The initial capital costs will include a feasibility study, a development phase and an
engineering design phase. The feasibility study includes:
- Site investigation
- Resource assessment
- Environmental assessment
- Preliminary design
- GHG baseline study
- Assessment of solar irradiation levels
- Travel & accommodation for engineers from technical partners
Duration – 8-weeks
The development and engineering phases include:
- Complete detailed engineering design of solar plant (civil and
mechanical)
- Environmental measurements on site for solar radiation, shadow
distribution, etc
- Assessment of grid connection requirements
- Solar panel manufacture program and selection
- Project management programme
- Travel & accommodation for engineers from technical partners
Duration – 12-weeks (concurrently undertaken part way through the
feasibility phase)

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Page 26 of 36
Projected income
Annual income is based on power exported to the grid and the tariff set by H2, see
table 1.
Table 1 Annual income
Electricity exported to grid MWh 75,393
Electricity export rate $/MWh 200.00
Electricity export income $ 15,078,545
Operations and Maintenance (O&M) costs
Annual expenditure to cover salaries of directors, mangers and unskilled staff has
been included in the financial analysis. The total annual cost of O&M is $500K; a
breakdown of individual costs associated is detailed in Appendix G.
Estimation of Net Present Value (NPV), cash flow and Internal Rate of Return
(IRR)
The financial assessment undertaken is based on the following assumptions:
1. Project life of 25yrs
2. Debt ratio of 80%
3. Debt repayment duration of 8yrs
4. Debt interest rate 7%
5. Incentives/grants at $10million
6. Tax free import duties
7. Interest free period of 6-months
8. All generated electricity is sold to customers
9. Income tax 20%
10. No income from ‘Clean generating energy’ incentives
11. Fuel escalation rate 1%
12. Inflation rate (tariff) 2%
A predicted yearly cash flow breakdown for 25yrs operation is presented in table 2
whilst a cumulative plot of the cash flow is presented in figure 5.

H2
Page 27 of 36
Table 2 Projected cash flow over 25yrs for 50MW plant
Yearly cash flows
Year Pre-tax After-tax Cumulative
# $ $ $
0 -35,040,000 -35,040,000 -35,040,000
1 -15,451,662 -15,451,662 -50,491,662
2 -15,309,568 -15,309,568 -65,801,230
3 -15,166,156 -15,166,156 -80,967,386
4 -15,021,414 -15,021,414 -95,988,800
5 -14,875,330 -14,875,330 -110,864,130
6 -14,727,894 -14,727,894 -125,592,024
7 -14,579,094 -14,579,094 -140,171,118
8 -14,428,918 -14,428,918 -154,600,036
9 15,893,636 15,893,636 -138,706,400
10 16,046,597 16,046,597 -122,659,803
11 16,200,968 16,200,968 -106,458,835
12 16,356,761 16,356,761 -90,102,074
13 16,513,987 16,513,987 -73,588,086
14 16,672,659 16,672,659 -56,915,427
15 16,832,788 16,832,788 -40,082,639
16 16,994,387 16,994,387 -23,088,252
17 17,157,467 17,157,467 -5,930,785
18 17,322,040 15,613,352 9,682,567
19 17,488,120 14,864,902 24,547,469
20 17,655,717 15,007,359 39,554,828
21 17,824,844 15,151,117 54,705,945
22 17,995,514 15,296,187 70,002,132
23 18,167,739 15,442,579 85,444,711
24 18,341,532 15,590,302 101,035,013
25 18,516,905 15,739,370 116,774,383
26 0 0 116,774,383

H2
Page 28 of 36
Figure 5 Cumulative cash flow (Cumulative cash flow Vs number of yrs)
Investment output
A financial viability assessment is presented in table 3:
Table 3 Financial viability
Pre-tax IRR - equity % 4.9%
After-tax IRR - equity % 4.4%
Simple payback yr 14.8
Equity payback yr 17.4
Net Present Value (NPV) $ 116,774,383
Annual life cycle savings $/yr 4,670,975
This assessment shows a positive IRR of 4.9% before tax and a NPV of $117m;
this implies a discount rate of 4.4% after tax. At detailed look at the sensitivity
analysis of the 50MW plant shows that an increase in the IRR and NPV could be
achieved by any of the following: an increase in tariff, a reduction in debt interest
and/or a reduction in capital costs; see tables 5 and 6.

H2
Page 29 of 36
Table 5 Sensitivity financial analysis for Net Present Value (NPV)
Perform analysis on Net Present Value (NPV)
Initial costs $
Electricity export rate 112,600,000 168,900,000 225,200,000 281,500,000 337,800,000
$/MWh -50% -25% 0% 25% 50%
100.00 -50% 55,694,624 -6,078,897 -77,680,881 -149,282,865 -220,884,850
150.00 -25% 147,096,190 86,234,504 25,372,817 -41,751,611 -113,353,595
200.00 0% 238,497,756 177,636,070 116,774,383 55,912,696 -5,822,341
250.00 25% 329,899,322 269,037,636 208,175,949 147,314,263 86,452,576
300.00 50% 421,300,888 360,439,202 299,577,515 238,715,829 177,854,142
Electricity export rate $/MWh
Debt interest rate 100.00 150.00 200.00 250.00 300.00
% -50% -25% 0% 25% 50%
3.50% -50% -45,985,526 52,313,869 143,715,435 235,117,001 326,518,567
5.25% -25% -61,569,410 39,067,568 130,469,134 221,870,700 313,272,266
7.00% 0% -77,680,881 25,372,817 116,774,383 208,175,949 299,577,515
8.75% 25% -94,300,705 11,245,967 102,647,533 194,049,099 285,450,665
10.50% 50% -111,409,015 -3,877,761 88,105,469 179,507,035 270,908,601
Table 6 Sensitivity financial analysis for Internal Rate of Return (IRR)
Perform analysis on After-tax IRR - equity
Initial costs $
Electricity export rate 112,600,000 168,900,000 225,200,000 281,500,000 337,800,000
$/MWh -50% -25% 0% 25% 50%
100.00 -50% 4.5% -0.3% -3.2% -5.1% -6.5%
150.00 -25% 12.2% 4.4% 1.0% -1.3% -3.0%
200.00 0% 22.2% 9.2% 4.4% 1.7% -0.1%
250.00 25% 37.9% 14.4% 7.8% 4.4% 2.1%
300.00 50% 61.5% 20.6% 11.4% 7.1% 4.4%
Electricity export rate $/MWh
Debt interest rate 100.00 150.00 200.00 250.00 300.00
% -50% -25% 0% 25% 50%
3.50% -50% -2.0% 2.2% 6.0% 9.9% 14.1%
5.25% -25% -2.6% 1.6% 5.2% 8.8% 12.7%
7.00% 0% -3.2% 1.0% 4.4% 7.8% 11.4%
8.75% 25% -3.7% 0.4% 3.7% 6.9% 10.3%
10.50% 50% -4.2% -0.1% 3.0% 6.1% 9.2%

H2
Page 30 of 36
11. Conclusion
o There is a huge requirement to increase the power generation capacity in
Nigeria to sustain and impact on economic and social development, in addition
to reducing its emissions footprint.
o H2 propose a 10-yr program to install 1GW of PV solar power plants across
the north of Nigeria. The use of solar also ensures energy security and no
emissions.
o Roll-out phase-1 involves the development of a 50MW plant in Kano state,
Nigeria.
o An agreement between H2 and its technical partner, Titan, India, has been
signed.
o A 50MW PV solar plant would need 200 hectares of land – discussions are on
going with Kano state government.
o Financing is sought from commercial banks, private investors and national
governments for stage 1 rollout; capitalization is estimated at $225m for
50MW.
o Income will be guaranteed by a long term Power Purchase Agreement and
pay-on-demand schemes.
o Annual income from sale of power from a 50MW power plant, at NGN30/kWh,
is $15m.
o The financial analysis shows a NPV of in excess of $115million and an IRR of
4.9% before tax and 4.4% after tax.
o Grants from institutional bodies supportive of ‘Green technology’ would be
sought for up to a minimum $10m. Support financial support will be confirmed
by Dec 2011.
o Project start date – March 2012

H2
Page 31 of 36
12. References
1. UPDEA (Union of Producer, Transporters and Distributors of Electricity in
Africa) data of 2006.
2. African Energy Policy Research Network (AFREPREN/FWD).Nairobi,
Kenya (Mr. Stephen Karakesi, Ms. Jennifer Wangeci and Mr.Ezekiel
Manyara in consultancy for the Division for Sustainable Development ,
UNDESA
3. Roadmap for the power section, The Presidency, Federal Republic of
Nigeria.
4. A New Scheme for the Promotion of Renewable Energies in Developing
Countries:The Renewable Energy Regulated Purchase Tariff. European
Commission Joint Research Centre Institute for Environment and
Sustainability, ISBN 978-92-79-08705-9 ISSN 1018-5593 DOI
10.2790/11999; 2008
5. http://www.soda-is.com/eng/map/maps_for_free.html

H2
Page 32 of 36
APPENDIX A CV’s
To be included
APPENDIX B SUPPORT LETTER FROM NATIONAL ENERGY
COMMISSION (NEC)
To be included
APPENDIX C (1/4) TECHNICAL PARTNER – TITAN
To be included

H2
Page 33 of 36
APPENDIX D
ORGANISATION CHART
Total staff of 22, which includes:
2 Directors
4 Managers
2 Administrative staff
10 Operators and plant maintenance personnel (based on a 50MW plant site)
4 Security staff

H2
Page 34 of 36
APPENDIX F
Capital costs for 50MW solar PV plant
Feasibility study $750,000.00
Development $750,000.00
Engineering $1,500,000.00
Sub-total $3,000,000.00
Power system
PV modules $114,600,000.00
Inverters $16,000,000.00
Sub-stations $11,500,000.00
SCADA system $400,000.00
Sub-total $142,500,000.00
Balance of system & misc.
BOS $13,500,000.00
Auxiliary power $2,000,000.00
Sub-total $15,500,000.00
Transportation costs
Ship freight $2,000,000.00
Land movement $1,500,000.00
Sub-total $3,500,000.00
Construction costs
Module mounting $18,500,000.00
Land leveling $1,250,000.00
Module location dig $1,250,000.00
Civil materials $9,500,000.00
Civil construction $5,000,000.00
Installation $5,000,000.00
Commissioning $2,500,000.00
Sub-total $43,000,000.00
Others
Insurance $2,500,000.00

H2
Page 35 of 36
Contingencies $11,250,000.00
Temp storage $1,000,000.00
Road construction $0.00
Marketing $0.00
Spare parts $1,250,000.00
Accommodation $1,000,000.00
Training $500,000.00
Sub-total $17,500,000.00
Total capital cost $225,000,000.00
Average installation, capital and commission costs is $4.5/watt

H2
Page 36 of 36
APPENDIX G
Operations & Maintenance costs (annual)
Annual income ($)
Directors
Mr Nwakuche $75,000.00
Prof Mba $75,000.00
Managers
Administration $40,000.00
Engineering $40,000.00
Operations $40,000.00
Staff
Administrators (2 off) $30,000.00
Plant operators (10 off) $100,000.00
Security (4 off) $10,000.00
Office rent / equipment $35,000.00
Pensions & medical
insurance $15,000.00
Contingency $20,000.00
Total $500,000.00

H2 business plan v- 1st Sept 2011

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