newer fuels are finding their way into this

2 MW Solar Power based industry. The table below shows the sources of
Power Project power generation as they stack-up in the total
power generation capacity in India:
1.0 Power Scenario in India
Source Power %
India is one of the fastest growing economies Generat-
amongst the emerging markets and has seen a ion (MW)
decade with a CAGR of more than 7%. Even Thermal Power:
after the global slowdown, India is expected to - Coal 81,606 52
record almost 8% growth in the current year - Gas 17,056 11
(2009-10) and go back to pre-slowdown levels - Oil 1,200 01
of 9%+ from next year. Hydro Power 36,885 23
Nuclear Power 4,120 03
One of the key ingredients for growth on an Renewable Energy 15,225 10
economy is Energy and there is a positive Source
correlation between per capita income and per Total 1,56,092 100
capita power consumption. Per capita
consumption of power in India is 700 units per
annum, which is far below the world average 1.2 Renewable Sources of Energy
and almost 400 million people in the country
do not yet have access to power. India, thus, In India, Power from renewable sources
has a peak deficit of over 13% and average accounts only 10% of the total power
deficit of over 9% in its energy requirements, generation. Out of 15,225 MW generated from
at current levels, without counting the renewable sources, 10,890 MW is produced
additional requirements for growth as well as from Wind Power and only 8 MW is produced
the needs for sections of society which are still from Solar Power sources as on 31st October,
deprived of this basic necessity. To meet the 2009.
growing demand of energy, Government of
India has worked out a plan for enhancement of 2.0 Solar Power in India
generation capacity by 78,000 MW by the end
of 2011-12 and another 100,000 -110,000 MW India is blessed with approximately 300 sunny
by 2017. Some studies have indicated that days with about 2,300–3,200 clear sunshine
India would need 950,000 MW against hours per year. India’s theoretical power
availability of 450,000 MW by the end of reception is on the land area is 5,000 trillion
2030. kWh/year. The daily average solar energy
incident over India ranges from 4 to 7 kWh/m2,
1.1 Power Generation depending upon geographic location. With
such high potential of solar energy,
Like everywhere else, India also uses almost all government of India has taken several
sources of energy, including Thermal Power, measures to promote the generation & use of
Hydro Power, Fossil fuel based Power, Nuclear Solar energy. Government announced many
Power and Power from Renewable Sources i.e. schemes in the 11th five year plan (2007-2011),
Wind, Biogas, Solar. Thermal power, however, out of which NSM, National Solar Mission-
remains the core of power generation, though 2022, is the most ambitious plan which targets

Prepared By:
Cascade Solar Pvt Ltd
New Delhi, India
to make India as a global leader in the solar
energy.
2.1 National Solar Mission
The ‘NSM’ is a major initiative of the
Government of India and State Governments to
promote & encourage ecologically sustainable
growth while addressing India’s energy
security challenge. This mission targets to
produce 20,000 MW by 2022 and thus making
India a global leader in Solar Power.
2.1.1 Installed Capacity Targets under
NSM
Phase Year Capacity
Target (MW)
I Upto 2013 1,100
II Upto 2017 4,000
III Upto 2022 20,000
2.1.2 Key Points of NSM
a) To ramp up capacity of ‘Grid-
Connected Solar Power’ generation to
1,000 MW by 2013 and an additional
3,000 by the 2017 through the
mandatory use of renewable purchase
obligation by utilities backed with a
preferential tariff.
b) To promote programmes for off grid
applications, reaching 1,000 MW by
2017 and 2,000 MW by 2022.
c) To achieve 15 million sq. meters solar
thermal collector area by 2017 and 20
million by 2022.
d) To deploy 20 million solar lighting
systems for rural areas by 2022.
e) To create favorable conditions for solar
manufacturing capability, particularly
solar thermal for indigenous production
and market leadership.
2.1.3 Types of Solar Power Projects
under NSM
Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India
The mission envisages the setting up of the
following demonstration projects in the Phase
I:
a) 50-100 MW solar thermal Plant with 4-
6 hours’ storage.
b) A 100 MW capacity parabolic trough
technology based solar thermal plant.
c) A 100-150 MW solar hybrid plant with
coal, gas or bio-masses to address
variability and space-constraints.
d) 20-50 MW solar plants with or without
storage, based on central receiver
technology with molten salt / steam as
the working fluid and other emerging
technologies.
e) Grid-Connected rooftops PV systems.
f) Solar-based space-cooling and
refrigeration systems to meet day time
and summer season peak load.
2.1.4 Incentives / Subsidies under NSM
To promote private investment in this sector,
Government has planned to offer following
incentives for power generation units:
a) Excise duties and custom duties
concessions / exemptions are made
available on specific equipments,
critical materials, components and
project imports.
b) Capital / interest subsidy.
c) Accelerated Depreciation.
d) Preferential tariff for grid interactive
renewable power (in potential states).
e) Financing the project upto 70% of the
total project cost.
f) Loan at low interest rate.
Particular Date
2.1.5Invitation
Proposed of Time
EOI Frame31/03/2010
& Process
Last date of submission of 30/06/2010
application with documents
for registration
Selection of developers by the 15/09/2010
Central Empowered
Committee
Signing of MOU with SPD 30/09/2010
Readiness for signing of PPA 31/10/2010
& PSA
 a) Statutory and other clearances as applicable.

b) Complete DPR.

c) Letter of Comfort (LOC) for Equity / Debt

from Promoter(s) / Financial Institution(s).

d) Submission of performance bank guarantee

2.1.6 Proposed Guidelines for
Registration under NSM
I. Expression of Interest (EOI):
a) Invitation of EOI for registration of the new
Solar Power Developers (SPDs) with NVVN.
b) SPDs meeting the eligibility requirements
will be registered with NVVN.
c) The final selection will be made out of
registered SPDs.
II. Eligibility Requirements
– Rs. 50 lakh/MW
♦ Rs. 25 lakh/MW before signing of
MOU.
♦ Rs. 25 lakh/MW before signing of PPA.
e) No change in controlling share holding in
the company permitted from MOU signing till
PPA execution.
2.1.8 Key Elements of PPA
a) PPA will remain valid for 25 years from the
date of commencement of supply from the
solar power project.

a) Net worth of Rs. 3-5 Crore/MW for the past
three years.
b) Land in possession of at least 1 hectare/MW.
c) Water allocation for Solar Thermal.
d) Confirmation from STU regarding
evacuation of power at 33kv & above.
b) The solar power tariff will be applicable for
the year of commissioning as determined by
the CERC.
c) Transmission charges, losses, RLDC/SLDC
charges, scheduling charges or any other
charges for supply of solar power beyond
delivery point to be borne by the respective
distribution utility.

e) Technical requirement as approved by d) Source Power %

MNRE. Generation
(MW)
f) Undertaking for domestic content to be Thermal Power 9,498 76
submitted as under- Hydro Power 772 6
Nuclear Power 825 6.6
♦ For Solar PV - Use of both Cells & Renewable Energy 1,398 11.4
Modules. Source
♦ For Solar Thermal – 30% local content. Total 12,493 100
2.1.7 Conditions Precedents for Signing Billing & Payment cycle will be as per Energy
of MOU Accounts issued by RPC/SLDC.

Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India
e) Scheduling of power will be as per Indian
Electricity Grid Code (IEGC).
f) NVVN will establish irrevocable revolving
letter of credit (LCs) in favour of the Solar
Power Developers prior to commencement of
electricity supply from the proposed Solar
Power Plant.
The graph below shows the government’s
efforts to promote the private players to set up
more and more power plants in the state of
Gujarat. In Gujarat private players produces
more than 34% of the total power generation.

g) Distribution Utilities will ensure Payment Private

Security Mechanism (PSM) as per Escrow / Tri 34%
Partite Agreement and open irrevocable State
revolving letter of credit. 45%

h) After execution of PPA, controlling share

holding in the company will be maintained
upto 3 years after commencement of supply of
power. Central
21%
3.0 Power Scenario in Gujarat

Gujarat is one of the most progressive states in

the country. It has been in the forefront of 3.2 Power Consumption:
industrial development of India and has shown
significant leadership in other spheres of The table and graph below show the peak
economics and social development too. power shortage in the state of Gujarat.

The per capita consumption of power in

Gujarat is more than 1,300 units, which is the (In MW)
second highest in the country. The total 06-07 07-08 08-09
generation is expected to be about 10,984 MW Availability 8,110 8,885 9,830
(installed capacity is expected to be increased Requirements 11,619 12,119 12975
to 14,645 MW and T&D losses around 25%) Shortage 30% 27% 24%
against the expected peak demand of more than
14,031 MW by the end of 2011-12.
3,600

3.1 Power Generation in Gujarat 3,500

3,509

3,400
The Gujarat state is pre-dominantly dependent
on thermal power. The table below shows the 3,300
3,234

break up of various source of power generation 3,200 3,145

in the state of Gujarat. 3,100

With the sole aim of making Gujarat a power 3,000

leader in future, the provincial Government has 2,900

been taking many steps to promote & 2006-07 2007-08 2008-09

encourage the private players to set up power

plants in the state.

Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India
 7. Security Deposit: The developer will be
4.0 Solar Power Policy of Gujarat State required to provide Bank Guarantee (BG) of
Rs. 50 Lacs / MW at the time of signing of
Gujarat state government has introduced the PPA with GUVNL and / or distribution
‘Solar Power Policy-2009’ on 6th January, 2009 licensee.
with the following resolution. If the developer fails to achieve commercial
operation within time period mentioned in
1. Operative Period: This policy will remain PPA, the BG will be forfeited. BG will be
in operation up to 31st March, 2014. Solar refunded, if the developer achieves commercial
Power Generators (SPGS) installed and operation within time period as per PPA.
commissioned during the operative period will
become eligible for the incentives declared 8. Open Access (OA) for third party sale: If
under this policy, for the period of 25 years any developer or beneficiary is granted OA,
from the date of commissioning or for the life they will have to pay the applicable OA
span of the SPGS, whichever is earlier. charges and losses as approved by GERC from
time to time. The ‘Cross Subsidy Surcharge’
2. Installed Capacity: A maximum of 500 will not be applicable for OA obtained for third
MW will be allowed for installation during the party sale within the state.
operative period of the policy.
9. Sale of Energy: The energy generated from
a solar power project, will be sold to the
3. Capacity Cap: The minimum project
distribution licensees in the state at levelised
capacity of a SPG, in case of SPV and Solar
fixed tariff per unit as mentioned in the table
Thermal will be 5 MW each.
below for the period of 25 years, under a PPA,
to be specified by the GUVNL and / or
4. Eligible Unit: any company or body
distribution licensee.
corporate or association or body of individuals,
whether incorporated or not, or artificial Particulars Tariff for Tariff for
juridical person will be eligible for setting up Photovoltaic Thermal
of SPGS, either for the purpose of captive use (Rs./KWh) (Rs./KWh)
and / or for selling of electricity, in accordance Projects a) 13.00 for a) 10.00 for
with the amended Electricity Act-2003. The Commissio- first 12 years first 12 years
entity will submit a proposal, with requisite ned before b) 3.00 for b) 3.00 for
details, as may be specified to the Nodal 31/12/2010 next 13 years next 13 years
Agency, for qualifying for setting up of the Projects a) 12.00 for a) 9.00 for
project. Commissio- first 12 years first 12 years
ned before b) 3.00 for b) 3.00 for
5. Exemption from Payment of Electricity 31/03/2014 next 13 years next 13 years
Duty: Electricity generated from the SPGS and
used for the self consumption / sale to the third
party / sale to licensees will be exempted form Benefits of this policy will not be available to
payment of Electricity Duty. projects set up under the MNRE incentive
scheme for solar power generation. Further,
6. Exemption from Demand Cut: Exemption any subsidy / incentive received by SPG
from demand cut to the extent of 50% of the developer from any source will be reduced
installed capacity of SPGs, assigned for captive from above mentioned rate for purchase of
use purpose, will be allowed. power from SPG developers except the benefit
of Accelerated Depreciation under income tax
act.

Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India

10. Plant & Machinery: Only new Plant &
Machinery will be eligible for installation
under this policy.
11. Sharing of CDM benefit: The developer
will pass on 50% of the gross CDM benefits to
the distribution licensee with whom PPA is
signed.
12. Reactive Power Charges: The drawl of
reactive power will be charged as per the
GERC order, as amended from time to time.
13. State Government Facilitation and Nodal
Agency: GEDA & GPCL will be the state
government nodal agencies for facilitation and
implementation of the solar power policy –
2009.
14. Forecasting & Scheduling: The SPG
based generation will not be covered under
scheduling procedure for intra state ABT.
However, the actual energy injected in the grid
during particular time block of 15 minutes will
be post-facto considered in drawl schedule for
sale of power to licensee / third party for giving
set-off against the consumption of recipient
unit in case of wheeling.
15. Metering of Electricity: The electricity
generated from the SPGs, will be metered on a
monthly basis jointly by GEDA and GETCO at
the sending sub-station of 66 KV or above
located at site.
16. Grid Connectivity & Evacuation facility
up to GETCO sub-station: The evacuation
facility form the solar sub-station/switch yard
to the GETCO sub-station will be initially
approved by GETCO after carrying out the
system study. The power by the SPG will be
injected at 66 KV. The transmission line from
the switch yard of the solar sub-station to the
GETCO sub-station will be laid by GETCO.
17. Renewable Purchase Obligation: The
quantum of power that can be injected in the
Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India
grid from all renewable resources i.e. purchase
by distribution licensees plus captive
consumption plus third party sale should be
restricted to 10% of the total consumption. This
will be subject to the further detailed
regulations pronounced by GERC from time to
time.
18. Restriction for use of fossil fuel: fossil
fuel will not be used in a Solar Thermal Power
Project.
19. Wheeling Charges: The wheeling of
electricity generated form the SPGs, to the
desired locations/s for self use within the state,
will be allowed at a wheeling charges of 2% of
the energy fed to the grid, till the wheeling
charge is decided by the GERC and thereafter
at the wheeling charge as per GERC, as
amended from time to time.
20. Penalty for non fulfilling power purchase
obligation: Distribution licensee failing to
meet the minimum solar power purchase as
specified by the commission is liable to pay
penalty at a rate of Rs. 12/KWh to GEDA,
which will be passed on the to the distribution
licensee who procure in the ratio of their solar
power purchase during the year.
21. Mid Term Review: State government may
undertake a mid term review of this policy after
a period of 3 years or as and when need arises
in view of technological breakthrough or to
remove any inconsistency with Electricity Act
2003, rules and regulations made there under or
any government of Indian policy.
22. Power to remove difficulties: If any
difficulty arises in giving effect to this policy,
the Project Approval Committee is authorized
to issue clarification as well as interpretation to
such provisions, as may appear to be necessary
for removing the difficulties.
4.1 Eligibility Criteria as per Solar
Power Policy of Gujarat State:
The entity desiring to set up the solar power
plant for selling electricity to distribution
licensee in the state of Gujarat is required to
fulfill the below following financial and
technical eligibility criteria.
I. Financial Criteria
a) Internal Resource Generation (IRG):
Rs. 1.2 Crore/MW of the capacity,
computed as five times the maximum
internal resources generated during any
of the last five years business
operations.
IRG = PAT + Depreciation &
Amortization+ Decrease in net CA
(excluding cash) + Non-Cash
expenditure (including deferred tax) –
Scheduled Loan repayment –
Increase in net CA (excluding cash)
b) Net Worth (NW): Rs. 2 Crore/MW of
the capacity which will be derived from
any of the past three years annual
accounts.
NW = Equity Share Capital +
Reserves – Revaluation Reserves –
Intangible Assets – Miscellaneous
expenditures to the extent not written
off and carry forward losses
c) Annual Turnover (AT): Rs. 4.8
Crore/MW of the capacity which will
be derived from any of the past three
years annual accounts.
AT = Annual Gross Revenue Earned
II. Technical Criteria
a) Any entity in order to qualify will
essentially be required to have
collaboration with proven technology
supplier of solar power projects.
b) The entity mush have experience of
developing any projects in the last 10
Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India
years whose aggregate capital costs
must not be less than the amount
equivalent to Rs. 3 Crore/MW of the
capacity. Out of these projects, the
capital cost of at least one project
should be equivalent or more than Rs.
50 Lacs/MW of the capacity. For this
purpose, capital expenditure on projects
that have been completed at least 7 days
before the submission date of proposal
will be considered.
c) Developing Projects means successful
commissioning of a project in which
entity has not less than 26% equity
stake at the time of commissioning the
project.
d) Entity will furnish documentary
evidence duly certified by qualified
auditors in support of their technical
experience.
e) The entity will submit the proposal for
obtaining approval for setting up Solar
Power Project for selling electricity to
distribution licensee in the state of
Gujarat to the Technical Committee.
5.0 The Project
It is proposed to set up a 2 MW solar power
plant in the state of Gujarat. The project would
be set up by the Cascade Solar Pvt. Ltd. The
project will sell power to the grid.
5.1 Location
Gujarat (complete location need to know)
5.2 Project Execution & Management
Cascade Solar / Belliss, (complete
information need to know)
5.3 Cost of Project & its Financing
Sr. Description Unit of
Cost of
No.the project is estimated as under: Measurement
Sr. 1.Particulars
Installed Capacity USD/ KW 2,000.00
No. Millions
1. 2. Land -Total Cost of the Project 0.88 USD Millions 7.51
2. 3. Operating Hours in a Year 0.33
Civil Works Hour 2,100.00
3. 4. Plant &Annual Generation
Machinery 5.70 Million KwH 4.20
4. 5. Auxiliary
Total Works CostPower Requirement 6.91 % of Total 0.025%
5. Detailed Design Engineering 0.29 Generation
6. Auxiliary
& Project Consumption
Management Million KwH 0.001
6. 7. InterestNet
during
Unitsconstruction
Available for Sale 0.31 Million KwH 4.19
and pre-operatives
8. Fixed Charges:
7. TOTAL PROJECT COST 7.51
a) - O & M Charges (1% of Total Capital Expenditure) USD Millions 0.06
b) - Employee Cost USD Millions 0.07
c) - Interest @ 10% P.A. USD Millions 0.51
It is proposed to finance the project through
d)
equity (30%) -and
Miscellaneous
debt (70%).Expenses
A number of USD Millions 0.05
e) lending
specialized - Depreciation (on exist
institutions WDV)in India USD Millions 0.34
which focusSub-Total
on the power
(a +b +csector
+d +e)and offer USD Millions 1.03
concessional debt financing at around 10% for
9.
the sector. Fixedcan
Debt Charges Per KwH
be sourced from overseas USD/KwH 0.25
10. Saleprovide
if cheaper, Price To hedging
Grid costs are USD/KwH 0.39
reasonable.
11. Savings Per Unit USD/KwH 0.14
12. Annual Savings USD Millions 0.59
5.4 Project Economics
13. Annual Savings + Depreciation USD Millions 0.93
14. CDM
In addition Benefits
to the (Carbonowned
Government Credits)grid USD Millions 0.059
which15.offers a lower
Pay-Back Periodrealization, power
with CDM Benefits Years 6.04
produced by private projects can also be
traded / sold through power trading
corporations set up in the public and the private
sector. Long-
term agreements can be signed with such
trading corporation at a per unit realization of
INR 18 (USD 0.39), while actual realization,
incase pre-contracted can be higher. Our
calculations are based on assured realization as
stated above and the viability and payback
should improve with better realization through
the auction process.

Indicative calculation of pay-back for the

project is as under:

Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India
Prepared By:
Goldbird Advisors Pvt Ltd
New Delhi, India