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Financial Feasibility Study of

Solar PV Project in Rajasthan

MENTORS:
PROF. ATMANAND
&
MR. CHAKRADHAR KUNDU, INDIA INFRASTRUCTURE
FINANCE COMPANY

PREPARED BY:
AMIT GOEL (14P006)
VISHAL GARG (14P058)
SELVA KUMAR S (14P104)
UPASNA RAUL (14P115)
ANKIT SAHAY (14P186)
SAMUEL NITIN MANOHAR
(14P191)
SOWMYA H M (14P230)

Power Sector Value Chain

Key Drivers of Solar Market


Attractive government policies and support from nodal agencies
The payback of grid connected solar plants with the tariff offered has been assessed to
be very lucrative
The cost per unit generated by a module is constantly decreasing and the module
efficiencies are steadily increasing due to strong emphasis on Research and
Development initiatives at the global level. This is reducing the capital cost of projects
substantially, since modules amount to substantial cost of the project
Multiple agencies are working towards availability of measured weather data through
installation of new weather stations at required places. Such data proves to be reliable
and forecasts more realistic thereby making future projections much more dependable
Entry of internationally renowned EPC Contractors are building confidence amongst all
the stakeholders of the solar industry. These players have on-ground proven experience
of numerous projects
In a departure to the general trend observed at government departments, special
single window clearance procedure has been adopted for many aspects related to Solar
Power Projects thereby reducing the implementation time of projects and
inconvenience to project proponents

Key Features
Lexicon Vanijya Pvt. Ltd. (part of the Vikram Group), has been awarded by NTPC
Vidyut Vyapar Nigam Limited to set up a 10MW Solar Power Plant in Rajasthan.
The plant will be situated in Jodhpur district of Rajasthan and is expected to be
operational by end of FY 2012-13.
The power produced will be evacuated to 132 Kv BAP GSS.
For the sale of the power generated from the 10MW project, company has signed a
long term Power Purchase Agreement (PPA) with NVVN for 25 years assuring the cash
flows.
The tariff as per the PPA will be Rs. 8.69/Kw.
The project is classified under Clean Development Mechanism (CDM) and will
getbenefits under the Kyoto Protocol.

Solar Power Scenario - Rajasthan


The Government of Rajasthan has taken note of the growing problem of the impacts of
climate change at the local, national and global levels
Rajasthan, the largest state in India receives maximum solar radiation intensity in India.
According to US Department of Energy, Rajasthan receives the second largest amount of
solar radiation in the world
Rajasthan is best suited for solar power generation since average rain fall is minimum
Solar radiation in Rajasthan is similar to California and Nevada in USA
Rajasthan has around 208,110 Sq.km of desert land and has more than 325 sunny days in a
year with solar radiation of about 6-7Kwh/sq-m/day
10 MW Grid Connected Solar PV Plant at Rajasthan
The direct normal insolation over Rajasthan varies from 1800 Kwh/m2 to 2600Kwh/m2.
Mostly the western part of Rajasthan is blessed with abundant solar energy
Jodhpur in Rajasthan is receiving maximum solar radiation which is known as Sun City of
India. Rajasthan is also blessed with abundant land thus an obvious choice for our Project
Development.

Terms & Conditions


Facility Amount

Tranche A: 56 cr ,Tranche B: 25 cr

Purpose of Facility

Takeover of outstanding facilities of existing lender


Creation of DSRA and all other expenses
Advances to Sponsor & Promoter Cos

Interest Rate

Tranche A: 12.25% floating


Tranche B: 12.50% floating

Tenor/ Repayment

Tranche A: 14 years with moratorium 6 months


Tranche B: 17 years with moratorium 6 months

Trust &
(TRA)

Retention

A/c Waterfall mechanism for priority of withdrawals from TRA:


1. Any statutory dues
2. Interest payment
3. Principal Repayment
4. O&M Expenses
5. DSR Buildup/ Replenishment for Faciilty
6. Surplus during year end will be utilized in line with Cash
Sweep Clause
7. Reserves towards extension of warranty for inverters
8. Inestment/ Loans/Advances permittedin Base Case
Business Plan

Financial Covenants

Adjusted DSCR >= 1.15, additional 1% levied for non-

Project at a Glance

Credit Ratings-Vikram Solar


Facilities

Ratings

Long term Credit

CARE BBB+

Short term Credit

CARE A2

Reasons for high rating


Promoter experience
Presence in diverse business segments
Technical Competence resulting in strong execution capabilities
Strong marketing presence
Fiscal incentives due to plant location
Issues:
Working capital intensive projects
High exposure to foreign exchange fluctuation risk
Performance risk of Solar PV modules
Possible Financial commitments due to group and associate companies

EPC Scope of Work


Techno-Commercial Study
Site Survey & Feasibility Report
Basic Design and Project Report with Financial Feasibility Studies
Detailed Design, Engineering of Solar PV Power Plant

Design
Engineering
Civil Works
Supply, Inspection, Installation & Commissioning

Inspections and Tests


Damages and breakages of the equipments/Insurance
Packaging Forwarding and Transportation
Operations & Maintenance
Warranty
Supervision of Project Execution

EPC - Guarantees and Warranties


Liquidated Damages In case of any deviation from the Project
Implementation Schedule without the consent of the Project Developer, the
contractor will be responsible to pay liquidated damages to the developer as
decided in the contract.
Construction Works Guarantee
Performance Guarantee
Guarantee for efficient operation and maintenance of the plant
Security Insurance: The EPC contractor will be responsible for obtaining and
maintaining valid insurance policies during the entire term of the construction
period and the operations and maintenance period.

POWER PURCHASE AGREEMENT


The PPA under
JNNSM has been
made very
systematic by the
NTPC Vidyut
Vyapar Nigam
Ltd., the nodal
agency of MNRE

FINANCIAL ANALYSIS

Detailed Project Cost/ Sources of Fund


Project Cost (Rs. Lacs)

2% 4% 1% 1% 12%

80%

Land/Site
Devpmt
Building/Civic
Work
Plant/Machiner
y
Pre-operative
expenses
IDC
Contingency

Source of Funds (Rs.Lacs)

33%
67%

Equity
Debt

Associated Risks
Risks

Mitigation Steps

Technology risk

Conduct market evaluation, suggest technology


which is hybrid of performance, cost, final output
and past track records

Project completion risk

Evaluate lead time for delivery of various


equipments especially from international vendors.
Also, ensure regular coordination to ensure that the
timelines are met by vendors or EPC contractors.

Regulatory Risk

Payback for the project is ensured for all the 25 yrs.


Also, huge support extended by government
agencies and market reputation of Vikram Group.
The monthly payments by NTPV Vidyut Vyapar
Nigam Limited are backed by Letters of Credit.

Plant performance risk

Selection of experienced EPC Contractor

Operating risk

Ensuring EPC contractors submit data for spares


before handing over plant. Also, ensuring training to
local labor hired for O&M

Financing risk

strong balance sheet, established business 40 years


ensuring an attractive loan package. Create Detailed
Project Report

Thank you

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