firstgreen consulting pvt ltd. b 1202 millennium …...firstgreen consulting pvt ltd. b 1202...

1Firstgreen Consulting Pvt Ltd. B 1202 Millennium Plaza, Sec 27 Gurgaon 122002

Firstgreen Consulting Pvt Ltd. B 1202 Millennium Plaza, Sec 27 Gurgaon 122002

Solar PV Price Trends

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Crystalline(€ / Wp) Thin film CdS/CdTe(€ / Wp)

Thin film a-Si/µ-Si(€ / Wp)

Months & Year

pric

e in

eur

o €

Cost reduced and efficiency increased. Right time for JK Group to take this as a business opportunity

Firstgreen Consulting Pvt Ltd. B 1202 Millennium Plaza, Sec 27 Gurgaon 122002 3

Efficiency Trends vs. Conversion Technology

Efficiency of various conversion technologies has been increasing by 0.3%-1% on annual basis.Source: NREL


PV Prices have been free fall over past couple of years.

Efficiency Increases

Economy of scale

Increased competiti

on

Innovative

technologies

Source: ITRPV, SEMI


PV Material Trends-Silicon wafer price

01020304050607080

2010 2011 2012

Silicon price $/kg

Silicon price $/kg•The PV module cost is function of material price and the efficiency of conversion•The silicon price trends will lead to the module price in the range of $ 0.5/Wp by 2017•Reduction in wafer thickness has also led to reduced module price.•Further there is a trend in glass thickness reduction, larger ingot size, and back contact options.

Source: ITRPV, SEMI, PG Group


Price trends in BoS and Module


Technology Reliability

•25 year life and <1% degradation/year is the industry standard.•PV modules installed after 2000 have been much more reliable in case of thin film.


Annual Cell production by Country

•China has played significant role in global cell production•Economy of scale has led to the recent price reduction


The generation coincides with the daily demand cycle in India. Sale ability ensured.

In view of this location will be

key

Government intervention is minimum

5000 MW under

development

Unfrequented interest in

solar in India

Solar is maturing as technology

Cost is falling

Tax benefits and

Accelerated Depreciation

Solar Investment – Compelling Reasons


FIRSTGREEN CONSULTING PVT LTDB1202, MILLENIUM PLAZA, SEC 27 GURGAON

Thank you

10


Risk Analysis

RISKProbability

of Occurrence

APPLICABILITY TO JK GROUPSEVERIT

Y OF IMPACT

Off-taker riskOff-takers must have the capacityto meet payments. Also theproject developer should be ableto meet the contract conditions ofthe PPA

LOW

JK Group will sign PPA either with the state agencies or to a third party for the proposed solar PV projects . PPA is generally linked with the with the implementable remedial framework for delays.

MEDIUM

Tariff riskThe risks that may arise in thecase of a regulated PPA tariff isprimarily on account of the extentof the tariff revisions by theregulatory commission. And therisks on account of merchant saleof power is predominantly linkedto the variations in the marketprice.

MEDIUM

JK Group will sign PPA at a tariff of APPC (generally in the range of Rs. 2.5-3 Rs/kWh) and will also sale REC certificates which cost minimum of 9.3 Rs/kWh applicable up to 2016-17. There are some states who specify a feed in tariff (FIT), for example in recent installations in Gujarat the FIT was specified as follows:

For year 1 to 12 – Rs. 15/kWhFor year 13 to 25 – Rs. 5/kWh

JK Group will explore both the options for sale of electricity and decide its course of action for project specific opportunity.

LOW

Plant AvailabilityThe failure to maintain adequatelevels of plant availability hassignificant negative implicationsfor power and consequently onrevenue generation.

LOW

Plant availability risk for solar PV power project seems to be low due tothe modular nature of the project. The plant availability is function ofO&M related problems in the solar modules, and the availability ofthe inverter units. Generally the plant availability is guaranteed by theO&M service provider and it ranges between 95-98%. Another riskfor plan availability is due to grid unavailability risk. Currently the gridunavailability risk in solar projects has not been observed.

LOW

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Risk Analysis

RISKPROBABILIT

Y OF OCCURENCE

APPLICABILITY TO JK GROUPSEVERITY OF

IMPACT

Technical riskConsistenttechnicalperformance iscritical tosuccessful plantoperations.

LOW

JK Group will procure the solar panel sand inverters/ BoS from reputedmanufacturers and will ensure the guarantees and warrantees for thetechnical stability and will ensure the selection of proven technologies. MEDIUM

AdequateprocurementstructureAn efficientprocurementmechanism isessential to procurethe different projectitems at acompetitive rates

LOW

There are international reputed suppliers for solar PV and BoS available inIndia. Most of these suppliers have already installed their Panels, inverters andother BoS in different locations and selection of equipments will be based onthe proven track record of actual performance in India as well as in theinternational level.

MEDIUM

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Returns: Cost 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22Project IRR

Outflow: (2,000.00)Inflow:

PAT 191.90 250.02 267.90 285.69 132.32 152.43 172.80 193.43 213.91 Depreciation 75.01 75.01 75.01 75.01 75.01 75.01 75.01 75.01 75.01 Interest 180.86 166.08 147.88 129.68 111.48 93.28 75.08 56.88 38.68 Salvage Value

Total (2,000.00)447.77 491.10 490.78 490.37 318.80 320.71 322.88 325.31 327.59

Project IRR 18.72%

Equity IRR

Outflow: (600.00)Inflow:

PAT 191.90 250.02 267.90 285.69 132.32 152.43 172.80 193.43 213.91Depreciation 75.01 75.01 75.01 75.01 75.01 75.01 75.01 75.01 75.01Loan Repayment 70.00 140.00 140.00 140.00 140.00 140.00 140.00 140.00 140.00Salvage Value

Total (600.00) 196.91 185.03 202.91 220.70 67.32 87.43 107.81 128.43 148.91

Equity IRR 28.16%


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Appendixes

14


State wise Solar Power Requirement As per NSM Target: 22,000 MW

Solar RPO

Installed Capacity (MW)

State 2011-12 as on 31.05.2011 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22Andhra Pradesh 0.25% 14268 143 294 454 622 799 984 1179 1381 1592 1812 2226Arunachal Pradesh 0.25% 135 1 3 4 6 8 9 11 13 15 17 21Assam 0.25% 951 10 20 30 41 53 66 79 92 106 121 148Bihar 0.25% 1854 19 38 59 81 104 128 153 179 207 235 289Chhattisgarh 0.25% 4632 46 95 147 202 259 320 383 448 517 588 723Delhi 0.25% 5800 58 119 184 253 325 400 479 561 647 737 905Goa & UT 0.25% 822 8 17 26 36 46 57 68 80 92 104 128Gujarat 0.25% 13722 137 283 436 598 768 947 1133 1328 1531 1743 2141Haryana 0.25% 5880 59 121 187 256 329 406 486 569 656 747 917Himachal Pradesh 0.25% 2201 22 45 70 96 123 152 182 213 246 280 343Jammu & Kashmir 0.25% 2167 22 45 69 94 121 150 179 210 242 275 338Jharkhand 0.25% 1979 20 41 63 86 111 137 163 192 221 251 309Karnataka 0.25% 9530 95 196 303 416 534 658 787 923 1064 1210 1487Kerala 0.25% 3573 36 74 114 156 200 247 295 346 399 454 557Madhya Pradesh 0.25% 8114 81 167 258 354 454 560 670 785 906 1030 1266Maharashtra 0.25% 20271 203 418 645 884 1135 1399 1674 1962 2262 2574 3162Manipur 0.25% 152 2 3 5 7 9 10 13 15 17 19 24Meghalaya 0.25% 258 3 5 8 11 14 18 21 25 29 33 40Mizoram 0.25% 102 1 2 3 4 6 7 8 10 11 13 16Nagaland 0.25% 75 1 2 2 3 4 5 6 7 8 10 12Orissa 0.25% 5299 53 109 169 231 297 366 438 513 591 673 827Punjab 0.25% 6690 67 138 213 292 375 462 553 648 747 850 1044Rajasthan 0.25% 7508 75 155 239 327 420 518 620 727 838 954 1171Sikkim 0.25% 154 2 3 5 7 9 11 13 15 17 20 24Tamil Nadu 0.25% 9803 98 202 312 427 549 676 810 949 1094 1245 1529Tripura 0.25% 249 2 5 8 11 14 17 21 24 28 32 39Uttar Pradesh 0.25% 9848 98 203 313 429 551 680 813 953 1099 1251 1536Uttarakhand 0.25% 2309 23 48 73 101 129 159 191 224 258 293 360West Bengal 0.25% 8155 82 168 259 356 457 563 674 789 910 1036 1272Total 146501 1465 3018 4659 6387 8204 10109 12101 14181 16350 18606 22854

Solar Power Required (MW)

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1. The solar insolation data results in geography good for generation at all time, now and forever.2. The Business Model and State policies results in strategic plan for a visible future. It is assumed that the

business model shall be so devised as to cap the returns at ROE of 16% on a long term basis.3. Hence, for location with high insolation, markets will be competitive and locations with low insolation, the

models shall be liberal to encourage investment resulting in continuity of REC mechanism and preferentialfeed-in tariffs.

4. The idea of Energy Security builds the road map for today and tomorrow.5. The 100 MW road map can be taken as overall investment in the range of Rs 800 – 900 Crs in next 5 yrs.

Say Rs 200 Crs in a year with time overrun possibility of 1 yr.6. The road map also defines execution on the basis of certainty and uncertainty. To say what is within the

plant boundary and what is outside the boundary. This defines things in JK’s control and outside itscontrol.

7. The convergence of point 1, 2 and 6 shall define the phase-wise implementation schedule.8. The key assumption here is that the per unit cost of generation from solar will become equivalent to per

unit cost of energy generation from fossil fuel in next 5 yrs.9. Hence the implementation schedule has to ride parallel to the declining cost of solar PV installation that

we have witnessed in the last 3 – 4 yrs. If not, the phasing should be deferred to become co-terminus toenergy equivalence (irrespective of source of generation) to have solar energy generation sustain withoutsubsidy, incentives or REC mechanism sale.

10. The pecking order of choices is: Location Impending State Policies for initial Phase Creating aposition in future market Energy security at JK Footprint Sustainability and re-powering in future

Arriving at Road Map


Economic Assessment

17

Assumptions Supporting Financial Projections Input value Data Source

Installed Capacity MW 25.00 ProposedAvg Working days / Annum Days 365.00 Industry norms

Plant Load Factor % 19.00% As per the current experience

Average Capital Cost/MW Rs Mn 80.00 As per the current experience

O&M Expenses (on Project Cost) 0.50% CERC Tariff regulations 2009 (reference)

Escalation in O&M 5.72% CERC Tariff regulations 2009 (reference)

Interest on Term Loan 13.00% AssumedLoan repayment Period / years years 10 AssumedMoritorium From COD/Years years 0.5 AssumedInterest on Working capital 13.00% AssumedIncome Tax ( Regular) 32.45% As per latest Budget 2011Minimum Alternate Tax (MAT) 18.50% As per latest Budget 2011Incentives

Tax holiday / years 10 As per Sec. 80IA of Income Tax Act,1961

Clean Development Mechanism (CDM) RevenueCarbon Emission Remittence (CER) price Euro / ton 4 AssumedExchange rate Rs / Euro 69 AssumedOutputsGeneration GWh 41.61


Project cost break-up of a typical 25 MW plant

18

Particulars Rs. Mn

Land 25.00

Civil Works 160.00

PV Modules 1120.00

Module mounting Structures 200.00

BOS ( Balance of System ) including Combiner Box, Invertors, data logging System etc. 340.00

Transmission Line. 12 KM Length 36.00

Terminal equipments at evacuation point 24.00

Prel. & Pre Operative Expenses 15.00

Interest During Construction (IDC)60.00

Working Capital Margin (WCM)20.00

TOTAL 2000.00


Expected Tariff under REC Route

19

Year Avg. Pool Cost in INR REC Cost in INR Total Tariff per Unit in INR2012-13 2.50 9.30 11.802013-14 2.50 9.30 11.802014-15 2.63 9.30 11.932015-16 2.76 9.30 12.062016-17 2.89 9.30 12.192017-18 3.04 5.00 8.042018-19 3.19 5.00 8.192019-20 3.35 5.00 8.352020-21 3.52 5.00 8.522021-22 3.69 5.00 8.692022-23 3.88 3.00 6.882023-24 4.07 3.00 7.072024-25 4.28 3.00 7.282025-26 4.49 3.00 7.492026-27 4.71 3.00 7.712027-28 4.95 3.00 7.952028-29 5.20 3.00 8.202029-30 5.46 3.00 8.462030-31 5.73 3.00 8.732031-32 6.02 3.00 9.022032-33 6.32 3.00 9.322033-34 6.63 3.00 9.632034-35 6.96 3.00 9.962035-36 7.31 3.00 10.312036-37 7.68 3.00 10.682037-38 8.06 3.00 11.06

The total tariff is sum of APPC and REC rates. The current REC rates are clear until 2017, beyond which the REC rates has been assumed on a conservative basis.


StateProjected Demand

(MU)Solar RPO Target

(2012-13)

Solar RPO Target (2012-

13)

Capacity required for

meeting Solar RPO

Total Capacity

Tied Up as on

18.08.2012

Installed capacity as

on 18.08.2012

Gap to be fulfilled in 2012-13

2012-13 % (MU) (MW) (MW) MW (MW)Andhra Pradesh 98,956 0.25% 247.39 148.6 75.5 24.75 73.14Arunachal Pradesh 631 0.00% - - 0.025 0.03 -0.03

Assam 6,810 0.15% 10.21 6.1 5 - 1.14Bihar 15,272 0.75% 114.54 68.8 0 - 68.82Chhattisgarh 15,889 0.50% 79.45 47.7 29 4.00 18.73Delhi 28,598 0.15% 42.90 25.8 2.552 2.55 23.22JERC (Goa & UT) 12,860 0.40% 51.44 30.9 1.7 1.70 29.21Gujarat 79,919 1.00% 799.19 480.2 968.5 689.81 -488.33Haryana 40,167 0.10% 40.17 24.1 8.8 7.80 15.33Himachal Pradesh 8,647 0.25% 21.62 13.0 0 - 12.99Jammu and Kashmir 14,573 0.25% 36.43 21.9 0 - 21.89

Jharkhand 6,696 1.00% 66.96 40.2 36 16.00 4.23Karnataka 65,152 0.25% 162.88 97.9 169 19.00 -71.14Kerala 21,060 0.25% 52.65 31.6 0.025 0.03 31.61Madhya Pradesh 53,358 0.60% 320.15 192.3 213.205 7.96 -20.86Maharashtra 150,987 0.25% 377.47 226.8 75.5 21.00 151.29Manipur 608 0.25% 1.52 0.9 0 - 0.91Mizoram 418 0.25% 1.04 0.6 0 - 0.63Meghalaya 2,154 0.40% 8.62 5.2 0 - 5.18Nagaland 596 0.25% 1.49 0.9 0 - 0.90Orissa 24,284 0.15% 36.43 21.9 54 13.00 -32.11Punjab 48,089 0.07% 33.66 20.2 46.825 9.33 -26.60Rajasthan 55,057 0.75% 412.93 248.1 329.9 201.65 -81.80Sikkim 436 0.00% - - 0 - 0.00Tamil Nadu 91,441 0.05% 45.72 27.5 18.055 10.00 9.41Tripura 1,010 0.10% 1.01 0.6 0 - 0.61Uttarakhand 11,541 0.05% 5.77 3.5 5.05 5.05 -1.58Uttar Pradesh 85,902 1.00% 859.02 516.1 95.375 14.38 420.74West Bengal 41,896 0.25% 104.74 62.9 52.05 2.05 10.88

Total 2,364.5 2,186.06 1,050.07 178.39

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