Concept Document on Zero Carbon Initiative for Resort

SUMMER INTERNSHIP REPORT ON
FINANCIAL VIABILITY OF SOLAR PROJECT
DEVELOPMENT PROCESS
AND
CONCEPT DOCUMENT ON ZERO CARBON
INTIATIVE FOR RESORTS
UNDER THE GUIDANCE OF
Ms. PAYAL RASTOGI, MANAGING DIRECTOR
CARBON FIXERS
Mr. ROHIT VERMA, ASSISTANT DIRECTOR, CAMPS
NATIONAL POWER TRAINING INSTITUTE
FARIDABAD
AT
CARON FIXERS
SUBMITTED BY
HARIT PURI
ROLL NO: 32 MBA (POWER MANAGEMENT)
MAHARSHI DAYANAND UNIVERSITY, ROHTAK
DECLARATION
I, Harit Puri, Roll no32 / Semester 3rd / Class of 2012-14 of the MBA (Power
Management) of the National Power Training Institute, Faridabad hereby declare that the
Summer Training Report entitled
1.FINANCIAL VIABILITY OF SOLAR PROJECT DEVELOPMENT PROCESS.
2. CONCEPT DOCUMENT ON ZERO CARBON INTIATIVE FOR RESORTS
is an original work and the same has not been submitted to any other Institute for the award
ofany other degree.
A Seminar presentation of the Training Report was made on ………………….. and
thesuggestions as approved by the faculty were duly incorporated.
Presentation In charge Signature of the Candidate
(Faculty)
Countersigned
Director/Principal of the Institute
2
ACKNOWLEDGEMENT
I express my sincere thanks to Ms. Payal Rastogi (Managing Director), Carbon Fixers for
giving me a great opportunity to work in such an esteem organization. I am solemnly thankful
to Carbon Fixers for his guidance and support.
I feel deep sense of gratitude towards Mr. J.S.S. RAO, Principal Director, Corporate
Planning,NPTI, Mr. S. K. Chaudhary, Principal Director, Dept. of Management Studies, Mrs.
ManjuMam, Director, NPTI and Mrs. InduMaheshwari, Dy. Director, NPTI for arranging
myinternship at Carbon Fixers, Gurgaon and being a constant source of motivation and
guidance throughout the course of my internship.
I am truly indebted to Mr. Rohit Verma (Asst. Director), NPTI for his cooperation and for
sharing his time and knowledge and guiding me throughthe course of my internship.
Harit Puri
3
LIST OF ABBREVIATION
APPC
Average Pooled Purchase Cost
AD
Accelerated Depreciation
CAPEX
Capital Expenditure
CEA
Central Electricity Authority
CERC
Central Electricity Regulatory Authority
CSS
Cross Subsidy Surcharge
CUF
Capacity Utilization Factor
DCR
Domestic Content Requirement
DISCOM
Distribution Company
EIRR
Equity Internal Rate of Return
EPC
Engineering Procurement and Construction
FiT
Feed in Tariffs
IRR
Internal Rate of Return
NLDC
National Load Dispatch center
NSM
National Solar Mission
NTPC
National Thermal Power Cooperation
NVVN
NTPC Vidyut Vyapar Nigam
PPA
Power Purchase Agreement
REC
Renewable Energy Certificate
RPO
Renewable Purchase Obligation
CFC
Chloro fluoro carbon
CFL
Compact fluorescent lamp
LED
Light Emitting Diode
4
GSHPGeothermal heat pump or ground source heat pump
Lts
Litres
MDFMedium Density Fibreboard
Kwh
Kilowatt Hour
MNRE
Ministry of New and Renewable Energy
5
LIST OF TABLES
Table 1: Expected Policy Announcements……………………………………………………………................13
Table 2: Capacity allocations under the NSM………………………………………………………...................14
Table 3: Tariff under Gujarat State Policy……………………………………………………………................14
Table 4: Allocation of capacities under Tamil Nadu Solar Policy…………………………………....................16
Table 5: Rec Price Forecast……………………………………………………………………………………...18
Table 6: State Wise Power Tariff across Consumers Categories………………………………………………..19
Table 7: Sensitivity Studies……………………………………………………………………………………...21
Table 8: Comparison of States by ease of Land Acquisition………………………………………....................25
Table 9: Average radiation and CUF by different States………………………………………………………..25
Table 10: Net Revenue losses………………………………………………………………………....................27
Table 11: Evaluation metric for EPC players………………………………………………………....................28
Table 12: Procedure for allocation of a typical project under a national/state policy…………………………...30
Table 13: Financial preconditions for eligibility……………………………………………………...................31
Table 14: Process timeline for NSM allocation………………………………………………………................32
Table 15: Fees and charges……………………………………………………………………………................34
Table 16: Financial calculations for FiT based projects………………………………………………................36
Table 17: Assumptions…………………………………………………………………………………………..37
Table 18: Financial Analysis of REC projects…………………………………………………………………..37
Table 19: Overview of policies………………………………………………………………………………….39
Table 20: Risk and mitigation strategies……………………………………………………………...................42
6
LIST OF FIGURES
Figure 1: IRR reaction per incremental variable change………………………………………………………...23
Figure 2: Process steps for the REC mechanism………………………………………………………………...33
Figure 3: Solar REC eligibility………………………………………………………………………..................34
Figure 4: Challenges, hurdles and local issues in project execution…………………………………………….41
Figure 5: South Facing Design window…………………………………………………………………............47
7
EXECUTIVE SUMMARY
The report is divided into two parts and covers two projects
Project 1 : Financial Viability of Solar Project Development Process
The markets that led the solar revolution in the world are now approaching maturity. It is the emerging markets
such as India, China and Middle Eastern and North African (MENA) countries that are expected to see high
growth and present expansion opportunities to suppliers in the market. Finally, newer solar markets such as
Chile and South Africa have also recently announced aggressive targets that will provide new opportunities for
global players.
The market is now poised for further growth with the announcements of solar policies from states such as Tamil
Nadu, Andhra Pradesh, Chhattisgarh and draft policies of phase two of the NSM. Meanwhile, the Renewable
Energy Certificate (REC) mechanism provides an alternative to the Feed-in Tariff (FIT) policies. This provides
investors, project developers and EPC players several opportunities. The challenge is that each of the policies
requires different set of permits, clearances and approvals - at different timelines and costs. Navigating through
these procedures and assessing their relative risks and returns can be challenging.
At the same time, an un-structured and ill-informed approach to project development jeopardizes project
timelines and affects the profitability of projects. From a bankability perspective, structured and welldocumented information is key to achieving financial closure. Although information is available, it is often
distributed, haphazard and uncritical. This absence of structured information deters new entrants into the market
and imposes challenges on players that are already in the market.
The Project Development aims to present relevant information in a structured manner to provide a sound
overview of the processes, timelines, costs, challenges and opportunities in project development in India. This
manual shall help in the assessment of projects in terms of profitability and bankability across various take off
options.
Project 2 : Concept Document on Zero Carbon Initiative For Resorts
The Zero Carbon Resorts - Building Energy project aims to address the concerns on the ever-increasing demand
for energy consumption, a large amount of CO2 emission from the tourism industry and the techniques involved
in order to reduce it with the help of cost benefit analysis
.
8
Contents
DECLARATION ......................................................................................................................................................................... 2
ACKNOWLEDGEMENT ............................................................................................................................................................. 3
LIST OF TABLES ........................................................................................................................................................................ 6
EXECUTIVE SUMMARY ............................................................................................................................................................ 8
CHAPTER 1 : INTRODUCTION ................................................................................................................................................11
Status of projects ..............................................................................................................................................................11
One of the fastest growing solar markets globally ...........................................................................................................12
CHAPTER 2 : SOLAR PROJECT OPPORTUNITIES IN INDIA ......................................................................................................13
THE NATIONAL SOLAR MISSION .......................................................................................................................................13
POLICY FRAMEWORK ........................................................................................................................................................14
GUJARAT SOLAR POLICY................................................................................................................................................14
KARNATAKA SOLAR POLICY...........................................................................................................................................15
RAJASTHAN SOLAR POLICY ...........................................................................................................................................15
MADHYA PRADESH SOLAR POLICY................................................................................................................................15
ANDHRA PRADESH SOLAR POLICY ................................................................................................................................15
TAMIL NADU SOLAR POLICY .........................................................................................................................................16
CHAPTER 3 : PRODUCT DEVELOPMENT PROCESS ................................................................................................................20
Site Selection.................................................................................................................................................................23
Land Acquisition ............................................................................................................................................................24
Radiation Assessment ...................................................................................................................................................24
Grid connectivity and availability ..................................................................................................................................26
EPC SELECTION ..................................................................................................................................................................27
TECHNOLOGY SELECTION .................................................................................................................................................28
Market share of c-Si and thin-film technologies...............................................................................................................29
PROCESS - PPA, LICENSES, PERMITS .................................................................................................................................29
Allocation process (reverse bidding based) ......................................................................................................................31
Allocation process (fixed FiT) ............................................................................................................................................33
Project finance ..................................................................................................................................................................33
PROFITABILITY ...................................................................................................................................................................35
FiT based projects .........................................................................................................................................................35
Bankability of FiT projects .............................................................................................................................................36
REC based projects........................................................................................................................................................36
Bankability of REC based projects .................................................................................................................................38
OVERVIEW OF POLICIES ....................................................................................................................................................39
CHALLENGES AND RISKS ...................................................................................................................................................41
9
Risk and mitigation strategies .......................................................................................................................................42
ANNEXURE ........................................................................................................................................................................43
CHAPTER 4 : ZERO CARBON INTIATIVE FOR RESORTS ..........................................................................................................45
ITC .....................................................................................................................................................................................45
Sitting & Structure ........................................................................................................................................................45
Design Efficiency ...........................................................................................................................................................45
Energy Efficiency ...........................................................................................................................................................47
Water Efficiency ............................................................................................................................................................49
Materials efficiency .......................................................................................................................................................51
Indoor Environmental quality enhancement ................................................................................................................51
Waste reduction............................................................................................................................................................51
CHAPTER 5 : FOR EXISTING PROJECTS TO REDUCE CARBON EMISSIONS AND INCREASE THEIR EFFICIENCY THERE ARE
CERTAIN WAYS IN WHICH THEY CAN MAKE THE CHANGES. LIKE: .......................................................................................53
Rethink lightening (energy efficient bulb) ........................................................................................................................53
Air conditioners.................................................................................................................................................................53
Solar panels for making use of the sun. ............................................................................................................................53
GENERAL SPECIFICATIONS & TERMS AND CONDITIONS UNDER THE CAPITAL SUBSIDY .................................................55
Solar Heaters .....................................................................................................................................................................55
Solar pumping water.........................................................................................................................................................56
Programmable thermostats ..............................................................................................................................................56
Sink aerators .....................................................................................................................................................................56
Occupancy sensors............................................................................................................................................................57
ANNEXURES ......................................................................................................................................................................58
10
CHAPTER 1 : INTRODUCTION
The announcement of the National Solar Mission (NSM) in early 2010, there has been considerable
development in the Indian solar market. The overall installed capacity has increased from 22 MW in 2010 to
over 1,050 MWtoday. This growth was propelled largely by the NSM and the Gujarat State Solar Policy.
Status of projects
Until 2012, the main drivers for capacity addition in India had been the Gujarat Solar Policy and phase one of
the National Solar Mission (NSM). Projects under these two policies still account for over 70% of India‟s
installed capacity as of May 2013. Capacity additions grew at an impressive pace in the first half of 2012 but
had more or less stalled in the latter half. During the first half of 2013, we have seen the capacity additions pick
up. The new capacity addition is largely backed by the projects under batch two of phase one of the NSM, a
single large 125 MW project in Maharashtra and over 70 MW of projects under the Renewable Energy
Certificate (REC) mechanism. The total installed capacity in India as on May 2013 stands at 1.7 GW.
In the second half of 2012 and in the first quarter of 2013 several states came out with their solar policies and
allocation processes. This includes new policies in states such as Kerala, Uttar Pradesh, Andhra Pradesh and
Tamil Nadu and new allocation processes in Rajasthan and Karnataka. The allocation process for the NSM has
also begun with the release of the draft Request for Selection (RFS) document. The key change in the NSM
allocation process is the introduction of Viability Gap Funding (VGF) and limiting of the domestic content
requirement (DCR) to just 300 MW out of the 750 MW planned allocation capacity.
Other than the NSM and state policies that typically allocate utility scale projects, several states came out with
solar specific policies and allocations. Kerala has announced a policy for 10,000 rooftop installations of 1kW
each. The suppliers for this policy have already been empaneled. Gujarat announced a 25 MW rooftop policy,
under which projects have been allocated in five cities. Phase two of the NSM (2013-2017) also targets a
deployment of 1,000 MW of rooftop solar PV projects. The newly incorporated Solar Energy Corporation of
India (SECI), that will be responsible for the implementation of phase two of the NSM, has already carried out
rooftop allocations for 5.5 MW and announced an additional allocation of 11.1 MW since the beginning of
2013. These projects are to be installed across nine cities in India.
Another major market developing in India is the parity based market. This market is largely driven by the fact
that solar is approaching parity with the commercial tariff being paid by consumers in Delhi, Maharasthra and
Kerala. It is expected that more than 45% of the Indian states will achieve commercial parity by 2016. Some
initial projects have already come up for direct sale of power to commercial and industrial consumers. Such
11
projects depend on additional viability enablers such as the REC mechanism, tax benefits and the subsidy
mechanism. Going forward, these projects are expected to be almost completely driven by parity.
One of the fastest growing solar markets globally
The markets that led the solar revolution in the world are now approaching maturity. These markets are now
cutting incentives and focusing on parity driven demand. It is the emerging markets such as India, China and
Middle Eastern and North African (MENA) countries that are expected to see high growth and present
expansion opportunities to suppliers in the market. Finally, newer solar markets such as Chile and South Africa
have also recently announced aggressive targets that will provide new opportunities for global players.
The market is now poised for further growth with the announcements of solar policies from states such as Tamil
Nadu, Andhra Pradesh, Chhattisgarh and draft policies of phase two of the NSM. Meanwhile, the Renewable
Energy Certificate (REC) mechanism provides an alternative to the Feed-in Tariff (FIT) policies. This provides
investors, project developers and EPC players several opportunities. The challenge is that each of the policies
requires different set of permits, clearances and approvals - at different timelines and costs. Navigating through
these procedures and assessing their relative risks and returns can be challenging.
At the same time, an un-structured and ill-informed approach to project development jeopardizes project
timelines and affects the profitability of projects. From a bankability perspective, structured and welldocumented information is key to achieving financial closure. Although information is available, it is often
distributed, haphazard and uncritical. This absence of structured information deters new entrants into the market
and imposes challenges on players that are already in the market.
The Project Development Handbook aims to present relevant information in a structured manner to provide a
sound overview of the processes, timelines, costs, challenges and opportunities in project development in India.
This manual shall help in the assessment of projects in terms of profitability and bankability across various take
off options.
12
CHAPTER 2 : SOLAR PROJECT OPPORTUNITIES IN INDIA
Since the announcement of the NSM in 2010, the Indian solar market has expanded. Several states have
meanwhile announced independent solar policies. Furthermore, the REC mechanism provides another off-take
option for developers. The table below shows the different off-take options available for developers and the
expected year-on-year capacity addition until 2017.
THE NATIONAL SOLAR MISSION
The NSM is the only national policy towards solar generation in India. It was announced in 2010 and consists
of three phases. Phase one is complete and consisted of two batches. Projects under both batches of phase one
were allocated through a reverse bidding mechanism. Phase 1 has been concluded and all projects have been
alloted (not all have been commissioned).
The draft policy guidelines of phase two were announced by the Ministry of New and Renewable Energy
(MNRE) on December 3rd 2012. It is expected that 3,000 MW will be available for auction under this phase
until 2017 (see table 1). The draft policy aims at 1,000 MW that would be auctioned under a Viability Gap
Funding (VGF) based allocation method. VGF is a mechanism through which government would provide
upfront capital to bridge the viability gap. Priority would be given to those developers who require the least
support.
Source : MNRE
13
Source : MNRE
POLICY FRAMEWORK
GUJARAT SOLAR POLICY
The state of Gujarat was the first Indian state to launch its own solar policy in 2009 even before the NSM. The
current policy is operative until 2014 but a new policy is expected before it ends. The initial target was to
achieve an installed capacity of 500 MW. Given the interest from a large number of developers and an
assumption that some projects may not be implemented, the government allocated projects worth 958.5 MW of
PV. Unlike the NSM, Gujarat has not opted for reverse bidding as a means to allocate projects, nor does the
policy have a Domestic Content Requirement (DCR). The tariff was fixed as shown in Table 3.
From Table 1, no project allocations are expected from Gujarat since the state‟s RPOs have been fulfilled.
Future project allocations are likely to be through the REC mechanism.
14
KARNATAKA SOLAR POLICY
Karnataka announced its solar policy in July 2011. 80 MW was auctioned through a reverse bidding process
held in November 2011 out of which 70 MW was allocated to PV. These projects are expected to be
commissioned by the end of 2013. The lowest bid received was at ` 7.94 (€0.12)/ kWh while the highest
winning bid received was at ` 8.50 (€0.13)/kWh. Karnataka has abolished all wheeling and transmission
charges in order to promote investment in solar energy. The solar policy does not mandate a DCR. The policy
aims to add another 120 MW over the next five years.
RAJASTHAN SOLAR POLICY
The Rajasthan solar policy was expected to be announced in early 2012. Due to delays, the Request for
Proposal (RfP) of the policy was announced only in November 2012. The policy expects an allocation of 150
MW (100 MW of utility-scale projects and 50 MW of rooftop projects). The policy aims at achieving an
additional 200MW of capacity addition until 2017.
MADHYA PRADESH SOLAR POLICY
The Madhya Pradesh solar policy was approved by the state cabinet in July 2012. It is expected that the state
will allocate 800MW of solar power under the policy. The projects will be divided into four solar parks of
200MW each. However the policy document does not offer any clarity on the total targeted capacity addition,
the time frame for the execution of the policy, eligible entities and the method of allocating projects or the
incentives under the policy. As the policy does not clarify the allocations, Table 1 assumes that one solar park
of capacity 200MW will be available each year between the period 2013 to 2016.
ANDHRA PRADESH SOLAR POLICY
The Andhra Pradesh Solar Policy abstract was announced on September 26th 2012. It is the first solar policy to
be based entirely on the REC mechanism. The policy waives wheeling and transmission charges. The policy
also includes exemption from Cross Subsidy Surcharges (CSS) and Electricity Duty, and a refund on Value
Added Taxes (VAT) on all components of the plant and on stamp duty and registration charges on the purchase
of land. These concessions are against the Central Electricity Regulatory Commission (CERC) ruling, which
15
states that REC based projects cannot avail any other benefits. Clarification is awaited from the Andhra Pradesh
government on this matter. A more detailed policy announcement is expected by early 2013.
TAMIL NADU SOLAR POLICY
The Tamil Nadu solar policy was announced in October 2012 and aims to achieve 3 GW by 2015. The table
below lists the allocation of the policy by segments.
The policy is the first policy to include net-metering, which will allow rooftop connection at the LT distribution
network. The Tamil Nadu policy lays a strong emphasis on the fulfillment of Solar Purchase Obligations
(SPOs). SPOs are mandated on the following entities: Special Economic Zones (SEZs), IT parks, industrial
consumers guaranteed with 24/7 power supply, colleges, telecom towers, residential schools and all buildings
with a built up area of more than 20,000 square meters. For the REC projects, there are no concessions unlike
the Andhra Pradesh solar policy. The guidelines are expected to be in line with the national policy on REC.
There is no Domestic Content Requirement (DCR) under this state policy.
Source : MNRE
MARKET DRIVEN OPPORTUNITIES - REC PROJECTS
RECs are a market mechanism to facilitate the compliance of Renewable Purchase Obligations (RPOs). RPOs
are enforced on three categories of power consumers – distribution licensees, Open Access consumers and
captive consumers. The obligated entities have three options of fulfilling their RPOs in order to avoid paying
penalties:
16
1. Purchase solar power from producers
2. Purchase RECs from the exchange
3. Invest into solar power plants
Accordingly, there can be two specific opportunities for project developers:
1. Sell power directly to obligated entities
2. Sell power to non-obligated entities (for example, commercial and industrial users of power or at APPC)
and avail RECs that can be traded on the exchange.
Option 1: Sell power directly to obligated entities
In this option, the project developer must identify obligated entities across India. There are three entities that
are obligated to fulfill RPOs - Distribution Companies (DISCOMS), Open Access Consumers and Captive
Consumers. The obligations are specified as a percentage of the total energy consumed or distributed by the
entity. The obligations vary according to states and are set by the State Electricity Regulatory Commission
(SERC). Table 5 shows the state wise obligations.
Solar purchase obligation selected states
Source : MNRE
17
The financial attractiveness of such projects for project developers is linked to two factors:
1. Price at which power can be sold to obligated entities
2. Price at which RECs can be traded on the exchange - over the lifetime of the project
The key driver for point 1 will be the solar prices benchmarked by the reverse bidding auctions of the NSM and
other state policies. Obligated entities are likely to demand the lowest available solar power price in the market.
This is currently at ` 7.00(€ 0.10)/kWh from the reverse bidding held in the state of Odisha February 2012.
Alternatively, obligated entities can purchase RECs on the exchange. The prices for solar RECs are fixed by the
Central Electricity Regulatory Commission (CERC) for the years 2012-2017. The floor price is fixed at ` 9,300
(€ 143.08) and the forbearance (ceiling) price at ` 13,400 (€206.15) per REC. However, there is no guarantee
that the RECs are actually sold at the floor price, if there is a lack in demand.
The key driver for point 2 would be the robustness of the REC market. This is dependent on the demand of
solar RECs from the obligated entities. The current REC prices deter obligated entities from purchasing RECs
to meet their RPO goals.
Table 6 shows that the REC prices are expected to fall by 60% for the control period 2017-2022. REC prices
are expected to be zero after 2022 as grid parity with the APPC is expected to be reached across all states of
India by 2022.
Source : MNRE
Option 2: Sell power to non-obligated entities
In this option, developers can have a Power Purchase Agreement (PPA) with any entity that requires power.
The key driver for these business models is the identification of the power off-taker. Since these entities are not
obligated to purchase power, the only incentive to shift to solar power is the price
Therefore, in this model, the price of solar power must be cost competitive.
18
India‟s power tariff structure is non-uniform. Commercial and industrial consumers of power cross-subsidize
residential and agricultural consumers. From a project developer‟s point-of-view, the most attractive projects
will be the highest paying consumers. The table below shows power prices by state and by categories of
consumers.
The power price structure in India is non-uniform due to cross-subsidies. Domestic and agricultural are crosssubsidized by industrial and commercial consumers of power. In order to meet the rising cost of procuring
power, the DISCOMs have been forced to raise power prices by 20-30% across all consumer categories in
2012.
Addition to the sale of power, RECs can be availed. The REC price projection is discussed under Option 1.
Source : Powerline
19
CHAPTER 3 : PRODUCT DEVELOPMENT PROCESS
The challenge for a project developer is to make the right decision given the myriad of contrasting information
available.
3.1. FEASIBILITY STUDY
The Indian solar market offers many opportunities to develop projects under different policies. Since the
market is still emerging, many regulatory details are not yet clarified. The challenge for a project developer is
to make the right decision given the myriad of contrasting information available. Different policies and power
off-take options create manifold opportunities to develop a project with diverse impact on its profitability and
bankability. Commercial feasibility and bankability do not necessarily go hand in hand. Thus, a detailed
feasibility study helps to assess the project properly with regard to the best suitable option. It saves both time
and money in the long run.
A project always has to be developed from the bank‟s/investor‟s perspective. It has to meet their requirements
in terms of profitability, structure, documentation and bankability. Compromises on quality in favor of better
20
profitability should be avoided. The investor‟s expectation for a reasonable return must be met, but it is the
nature of renewable energy projects that the investment gets paid back over a longer time. Hence, the project
and stakeholder structure (e.g. power off-takers, land owners, O&M contractors, EPC providers) has to be
sustainable in order to pay off lenders and sponsors.
In order to make the right choice, one has to understand the impact of different parameters on the profitability
of the project. A sensitivity analysis helps to prioritize input factors, especially when trade-offs have to be
made under a competitive scenario. The following example shows a sensitivity analysis performed on different
parameters for a typical project under the NSM for an average radiation in India.
Assumption for sensitivity studies
21
Assumptions are for an 'average' project anywhere in India under the NSM. The tariff offered of ` 8.20 (€
0.13)/kWh is the average bid price of batch one of phase two of the NSM.
Wheeling losses and charges are also assumed in the calculation since not all states in India exempt wheeling
charges for solar projects. See Table 11 for a detailed list of these charges.
Figure 1 shows the result of the sensitivity analysis which is a 'radar chart' or a 'spider chart'. This graph shows
the percent change in the IRR of the project with unit changes in variables that affect the IRR. Each iso-line
represents a delta change in the IRR with the orange iso-line serving as the origin (zero-change line).
The 'radar chart' becomes important when conflicting decisions have to be made. Let us assume that a project
developer has to make a decision between two choices based on the base-case sensitivity analysis performed in
Figure 1:
Choice 1 - Set up the plant under NSM policy in a state of CUF 19.00% (+1% from base case)
Choice 2 - Set up the plant in a state/ policy where the tariff offered is higher at ` 9.20 (+ 1 from base case) (€
0.14 + 0.02).
Figure 1 indicates that 1% change in the CUF results in an IRR changes of nearly +3% (outermost iso-line).
On the other hand, for a change of ` 0.5 (€ 0.77 cents) on the tariff offered, the IRR changes by 2%.
Consequently, when the tariff offered is increased by +` 1.0 (€ 0.02) (as in the case of choice 2), an IRR
change of 4% can be expected. This indicates that while the CUF might be a very important trigger on the
IRR, in this specific case, the tariff offered has a greater positive effect on the IRR. Therefore, choice two is
likely to be more profitable. The sensitivity analysis, however does not help in assessing the bankability of
projects.
22
Site Selection
Selecting a site for installing the PV power plant is a very important step during the project development
process. The criteria for selecting a site are the following:
1. Land acquisition
2. Radiation assessment
3. Grid connectivity feasibility
23
Land Acquisition
Land prices and ease of land acquisition are the major drivers in selecting land. For the determination of
benchmark capital cost for PV projects, the CERC considers land costs of ` 3.2 lakh (€ 5,000)/MW for c-Si
technology10. In reality, prices of suitable plots of land in India have increased multifold since the
announcement of the NSM and other state policies. Table 9 gives the average land costs across different states
in India. The ease of land acquisition is a crucial parameter, which can affect project timelines and in turn
profitability of the project. States like Andhra Pradesh and Chhattisgarh in particular experience difficulties in
land acquisition. Ease of land acquisition is largely a function of the type of land.
Land prices tend to have a negligible effect on the profitability of the project (~0.03% change in IRR for an
increment of 1 lakh (€ 1,540) per MW). However, selecting the right parcel of land can have implications to
over-all timelines of the project. Some of the project sites in Gujarat and Rajasthan have experienced flooding
during monsoons, lack of availability of water and delays due to poor access roads to the site.
Radiation Assessment
The success of projects depends primarily on the solar radiation data (direct or indirect). As of now lenders,
are not comfortable with the lack of long-term radiation data. From the lender‟s perspective there are three
requirements:
1. Historical irradiation data for last 10 years
2. Radiation uncertainty scenarios and sensitivities (P50, P75 and P90)
3. Validation of satellite data with on-ground data
In addition to other factors, the lack of such data has been one of the primary reasons why banks have been
hesitant in lending money on a non-recourse basis. In order to improve this situation, The Centre of Wind
Energy Technology (C-WET) with the support of the MNRE has completed the installation of 51 solar
radiation monitoring stations across the nation to assess and quantify the solar radiation availability.14
24
Source:RE
The solar radiation data is one of the biggest triggers for the profitability of a project. Past experience in India
has shown that measured CUF hasoften been significantly below the expected CUF. For every 1.0% change in
the CUF, the IRR of the project can be affected by as high as 3.0% (see sensitivity analysis – figure 1 from
previous chapter).
Table 10 shows the variation of average radiation across different states. These are averaged radiation values
reported from monitoring stations located across the states. The plant output is based on a poly-crystalline cell
of efficiency of 13%.
Source : RE
25
Grid connectivity and availability
The grid connectivity and the charges associated with connecting the plant to the grid play an important role in
determining the profitability of the project. Any site chosen, must be based on the connectivity of the grid at an
appreciable distance from the project site. The additional costs from the land and transmission can increase the
CAPEX by ` 2m (€ 30,000) per MW which can affect the IRR by -2.0% (see Figure 1).
Additionally, grid availability data pertaining to the down-time of the 11kV/33kv grid must be considered. The
project developer must bear all costs listed in Table 11. This includes wheeling charges, transmission charges,
wheeling losses, transmission losses, loss due to grid down-time and cross subsidy charges. Table 11 also lists
grid connectivity which is a metric that determines the availability of the grid in all districts on the state.The
charges mentioned in Table 11 are highly dependent on the business model of the project location, policy and
off-taker. Some states like Andhra Pradesh and Karnataka have provided waivers to solar projects. However,
these exemptions are provided on a case-to-case basis. For example: REC projects in Karnataka that have a
third party sale of power are likely to be levied with wheeling charges and CSS charges although the state
policy grants an exemption for such projects.
These charges are important considerations during the financial evaluation of projects (see Chapter 4). Table
12 describes how they play-out for a project in Tamil Nadu that sells power to a third party via the open access
mechanism. These charges represent the “worst-case” scenario where the developer pays all the charges to the
DISCOM.
The net revenue losses are payable to the DISCOM by the project developer and must be subtracted from the
net revenues through the sale of power. The net generation losses are also borne by the developer. In this case
the losses amount to 4.69% which means that only 95.31% of energy generated will be metered as “useful
energy” by the DISCOM.
The grid availability reflects the up-time of the grid. Most 11 kV and higher voltage feeders are relatively
stable. However, there are instances when the grid shuts down. The DISCOM will not be responsible for the
losses incurred during this period. This is a loss in revenue for the project developer and must be factored in
the financial calculation.
26
NET REVENUE LOSSES (by Developer)
EPC SELECTION
Lack of adequate track record of EPC players remains one of the foremost concerns of banks. Banks are
concerned about the larger package of risks that include the lack of performance data and the inadequate trackrecord of developers. However, developers that are partnering with established EPC companies and module
manufacturers are now being considered very seriously by banks for project financing. Performance
guarantees that guarantee plant output for a given irradiation from EPC companies and output guarantees by
the module manufacturers are a necessity as well. To further cover the risks, banks are incorporating strict
default clauses in the contracts. In the case of nonrecourse financing, these could for example, allow them to
automatically convert debt into project equity if the actual electricity generation does not match the originally
projected numbers.
27
Selecting an EPC player must not be based entirely on price. Few measures should be taken
Evaluation Metric for EPC Players
TECHNOLOGY SELECTION
Globally, crystalline silicon (c-si) technology is the most mature and dominant PV technology. The Indian
market however has seen a 56% share of thin film technology.
A significant driver for thin-film technology in India has been the performance of thin-film technology under
Indian climatic conditions. Additionally, low-cost EXIM bank financing has shifted developers towards
American technology which is primarily thin-film. Thirdly, the cost advantage of thin films has tilted the
market in its favor (see figure 1).
The absence of the Domestic Content Requirement (DCR) for thin-film technology under the National Solar
Mission does not seem to have played a part in tilting the market towards thin-film. Under the Gujarat solar
policy which does not mandate any DCR, developers have preferred thin-film technology on account of their
performance and the availability of low cost finance primarily from America. There is no comprehensive study
of on-ground long-term performance of both technologies that has been systematically carried out.
While thin film technology has been the preferred technology in the Indian market so far, questions with
regards to its long-term performance remain. The technology does not have long-term performance data in
India, which can be a crucial for bankability.
Bankability is the key criterion for selecting the right technology. Banks use the most stringent quality
standards verified by a third party as such as SGS, TÜV RHEINLAND, and TÜV SÜD.
28
Most common standards for PV modules performance are:
1. IEC 61215:2005 Crystalline silicon module type qualification
2. IEC 61646:2008 Thin film modules type qualification
Market share of c-Si and thin-film technologies
PROCESS - PPA, LICENSES, PERMITS
FiT based projects
FiT projects in India are allocated by central and state authorities. For the National Solar Mission (NSM) phase
one and phase two, projects are allocated by NTPC Vidyut Vyapar Nigam (NVVN). For state allocations, the
state renewable energy department or the power distribution company allocates projects. The PPAs are signed
with the power distribution companies. Each allocation process can have its own timeline but most states
follow an allocation process similar to that of the NSM.
29
A step-by-step pre-allocation procedure for projects in Rajasthan under the NSM is shown in table 14 (the
procedure for other states is also similar, although specifics may vary with each state).
Table 14: Procedure for allocation of a typical project under a national/state policy
Source : MNRE
30
Allocation process (reverse bidding based)
The allocating authority (central or state) comes out with a Request for Selection (RfS) to invite allocation
intent. At this stage, the project developer is required to submit the participant company‟s financial
documentation and preliminary technical details of the project. The allocating authority scrutinizes the
documents to check if the developer meets the minimum technical and financial (net worth) criteria. Financial
criteria are listed Table 15.
After a short-list of all eligible bidders is prepared, a Request for Proposal (RfP) is released for inviting bids.
Each developer needs to submit a discount on tariff along with the bank guarantees based on the discount
provided. A letter of intent is then given to the most competetive bids. The developer can then accept the intent
and sign the PPA. For an international project developer, an Indian Special Purpose Vehicle (SPV) needs to be
created for signing the PPA.
For typical timelines of the project development process in a Gantt-Chart please refer to Annexure 1.
Table 15: Financial preconditions for eligibility
Source : MNRE
31
Table 16: Process timeline for NSM allocation (Most other allocations timelines are similar to the NSM
timeline but specifics on dates vary in each Request for Selection (RfS) document)
32
Allocation process (fixed FiT)
The state of Gujarat is the only state in India that has adopted fixed tariff allocations. There is no bidding
process in Gujarat. A state level selection committee scrutinizes the developer‟s proposal and financial
strength and allocates capacity. The process usually favors financially strong companies.
Project finance
Allocating authorities usually set a deadline for financial closure at the time of PPA signing. This deadline is
typically 6-8 months from the date of signing of the PPA. The time required for project financing will depend
on the source of finance. International non-recourse financing can take as much as 4-5 months. A balance sheet
based recourse financing may take as little as 25 days. Typically, the equity to debt ratio is 30:70.
REC based projects
Projects under the REC mechanism need to follow a process that involves accreditation and registration.
Government agencies involved in the process are the State Load Dispatch Centre (SLDC), the National Load
Dispatch Centre (NLDC) as well as the state renewable agency and local distribution company. The
accreditation and registration process takes 45 days.
To be eligible to sell solar RECs, project developer or solar power „generator‟ needs to follow the accreditation
and registration process. Only after the project is registered, solar RECs are issued. The process of
accreditation and registration is as shown in Figure 4.
Figure 4: Process steps for the REC mechanism
33
Table 17: Fees and charges
Source: MNRE
Figure 5: Solar REC eligibility
In order for any of the three categories of projects to be eligible, the following pre-requisites must be fulfilled:
1. The project does NOT have a power purchase agreement to sell the electricity at a preferential tariff
(no FiT)
2. The project sells the electricity generated to either:
34
3. The distribution licensee of that area at a price NOT greater than the pooled cost of power purchase of
such a distribution license
4. To any other licensee, an open access consumer or any other consumer at a mutually agreed price or
through a power exchange
5. The project must be a minimum of 250 kW in capacity.
6. The project must be grid connected.
The solar RECs are traded once, on the last Wednesday of every month. The RECs are traded on two
exchanges – the Power Exchange of India (PXIL) and the Indian Energy Exchange (IEX). IEX has a market
share of 91%. The trade price is discovered based on the demand and supply.
PROFITABILITY
Selecting the off-take option has one of the largest impacts on the financial viability of projects. The following
analysis looks at the financial viability for:
1. FiT based Projects under the National Solar Mission (NSM) and various state policies
2. Projects under the Renewable Energy Certificate (REC) mechanism in different states
FiT based projects
Most state policies and the National Solar Mission (NSM) use a reverse bidding process to allocate projects.
There are concerns that reverse bidding has reduced project profits. This is mainly because certain players are
willing to take a hit on profits in order to build up a track record in India. On the other hand, the FiT driven
space remains a much more bankable option when compared to REC based projects. The financial viability for
FiT based projects is given in the table below.
The expected PPA price in each state is an estimate based on assumptions given in the table. This price is
significantly affected by the precise radiation at site and debt interest rate.
35
Bankability of FiT projects
The financial health of the off-taker is one of the most crucial aspects for bankability. Any possibility of a
payment delay or default can jeopardize the bankability of the project. In most policy based preferential FiT
projects, a government entity is usually the off-taker. For example, NVVN can be considered a credible offtaker as it is an AAA rated company with a healthy balance sheet. On the other hand, power distribution
companies of both Rajasthan and Tamil Nadu have poor balance sheets and hence the credibility of the PPA
signed by these entities is significantly inferior to the one signed by NVVN.
The terms of a PPA are crucial for the bankability of the project. Most states have a similar PPA structure.
Lenders are usually comfortable with the standard structure but there can be points of contention in PPAs that
need to be addressed. For example, the PPA in Gujarat does not explicitly guarantee that all the power
produced will be bought by the off-taker. In such cases, lenders need to be convinced about the intent of the
off-taker or other alternatives to off-take the power.
Table 18: Financial calculations for FiT based projects [All other assumptions are maintained constant (refer to
Table 1)]
Source : RE
REC based projects
The REC mechanism provides a profitable alternative to project developers that are looking at alternatives to
FiT based projects under reverse bidding. Developers that are willing to take on the REC risk, find that REC
36
projects possibly offer higher returns. There are three possible business models around the REC –
APPC+REC, Captive+REC and Third-party sale+REC.
Viability of solar projects in India' for more details on each of these business models.
The profitability of REC based projects are linked to the REC prices over the lifetime of the project. In
addition, the PPA price also has a significant impact. One of the important differences between FiT based
projects and REC based projects is the payment of open access charges to the DISCOM. Out of the three
possible business models, the captive+REC and third-party sale+REC models have to bear the open access
charges. The APPC+REC model which involves a PPA with the local DISCOM, does not attract open access
charges. The open access charges vary from state to state and are significant triggers to project profitability.
Table 19 below shows the open access charges that must be borne by the developer for the third-party
sale+REC model in the state of Tamil Nadu.
Assumptions
Table 21: Financial Analysis of REC projects
Source : MNRE
37
Bankability of REC based projects
The bankability of REC based projects depend on the PPA strength and the risks associated with the REC
mechanism. PPAs for REC based projects are either with the state DISCOM or with a third-party off-taker. In
both cases, PPAs with AAA rated companies are preferred by banks. Alternative off-take opportunities must
be presented to the banks in case of a severance of the PPA. One option is the open-access mechanism wherein
the power producer uses the transmission network of the DISCOM to wheel the power to any third-party
within or outside the state.
The risks surrounding the REC mechanism are twofold:
1. REC price uncertainty – Although the CERC has defined benchmarks within which RECs trade (see
Section 2 - Solar Project Opportunities), a long-term price visibility is lacking. Analysis shows that
benchmark (and therefore prices) can be fairly accurately predicted.
2. Demand for RECs -The demand for RECs is linked to the enforcement of RPO. As on date, there have
been no penalties enforced on obligated entities that have not met their RPOs. DISCOMs who contribute
nearly 75% of the demand for RECs, have not been meeting their RPO targets. This remains the biggest risk in
the entire REC mechanism.
38
OVERVIEW OF POLICIES
Table 22: Overview of policies
39
40
CHALLENGES AND RISKS
Challenges
The Indian solar market is still emerging and is faced with specific challenges on several fronts. Challenges
like debt financing, land acquisition, plant connectivity and grid infrastructure are risks to successful project
execution in India. Learning effects from past projects have minimized these risks to some extent. Several
project developers are using innovative strategies to mitigate such risks. Example: the agreement between
Kiran Energy and the Government of Gujarat. Kiran Energy secured a guarantee by the government against
possible penalties for delays in executing their project due to non-availability of transmission lines from
Gujarat Energy Transmission Corporation Limited (GETCO).
Figure 7 shows challenges, hurdles and local issues in project execution.
41
Risk and mitigation strategies
42
ANNEXURE
Timelines of a typical FIT based project in India
43
44
CHAPTER 4 : ZERO CARBON INTIATIVE FOR RESORTS
For the construction of new projects with the aim of (Zero Carbon emissions) ITC GREEN CENTRE can be
made a benchmark for the purpose. The techniques they are using for zero carbon emission are ample and the
most suitable ones.
ITC
Sitting & Structure
1. No drinking water used for construction.
Only 1% of the Earth‟s water is fresh-water from rivers and lakes. Another 2% can be located at the Poles.
A staggering 97% is in the salt-waterseas and oceans, and that water is not potable by any means. It is vital
that our use of water is not wasteful or unwarranted.
2. Material used for construction should not be brought more than8ookms.
This technique is not only cost effective but also offers the chance of easy renewal. Even materials used to
make work stations, cabinets, door frames, conference tables and wall panels can be refurbished from other
building sites.
Design Efficiency
1. Roof structure: high albedo roof used (reduces temp by 30 c)
The high albedo roof coating reduces the amount of heat absorbed by reflecting over 90% of visible
and infra red radiations away from the building. This reduces the roof surface temperature by 30
degrees and brings down the use of energy for air conditioning in the top floor by 10-15%.
2. Walls: 250 mm thick walls
The 250mm thickness of the building‟s walls act as a guard as they do not allow the heat to pass into
the building.
3. Double gazed windows
The double gazed windows help to reduce the heat from the infrared radiations from the sun.
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4. High performance glass
The walls, double gazed windows and the high performance glass reduces the amount of solar heat
entering the building by 65%.
5. Insulating roof garden to office lights with sensors, daylight inside maximum and cooling more.
The roof garden maintains the air quality and in summers most of the heat Is absorbed by the plants
thus keeping the temperature low of the building and also reducing the effect of air conditioners and in
winters most of the heat is retained in the building thus keeping the building warm.
Temperature beneath membrane of normal roof 32C
Temperature beneath membrane of green roof 17.1C
6. Thermal insulation
With the help of green roofs, the space can be utilized for ecological benefit as well. Creating lowmaintenance, terrestrial, naturalistic green spaces in the urban core is not popular; green roofs may
provide one solution. Green roofs can provide both visually accessible and physically accessible green
space. Roofs are largely visually 'dead' and unappealing and their appearance to those overlooking
them can be softened by vegetation. It helps to make proper use of the roof space.
7. Passive solar design techniques “south facing window”.
Based on the movements of the sun, passive solar buildings typically have windows (glazing) on the
southern facing side* of the building in order to absorb the sun‟s heat energy to warm a building during
the winter. In order to stay cool in the summer, passive solar houses rely on a system of shading (or an
overhang) to keep the building cool.
Fig : South Facing Design window
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8. Separate smoking zones
There are designated smoking zones in convenient locations with their own exhaust fans. This helps to
keep the environmental clean.
Energy Efficiency
1. Sun for hot water system and solar PV for emergency lightening (saves 30,000kw per year)
The solar heaters for the hot water and the solar PV for the emergency lightening are the useful
investment techniques as it can save upto lots of energy, cut down electricity bills and reduce the
carbon footprints by 20%.
2. Cloro fluro carbon AC (consumption of 11,47828 KW against 2,33,51,333 kw & around 51% on
total budget.
Chloro Fluro Carbon (CFC) free, making the cooling system within the building not merely efficient or
cost-effective, but more importantly responsible and helps to reduce the carbon footprints. The gases
used in the air conditioners are eco friendly and do not deplete the ozone layer.
47
3. Rethink lightening (energy efficient bubs used).
Rethink lightening can be useful technique to cut down bills and save energy. There are energy
efficient bulbs (CFL, LED) in the market which can cut the cost to a very low level. The carbon
footprints are reduced and these bulbs can be recycled again.
4. External heat minimization in summer and maximization in winters.
The techniques used should be such that it helps to reduce the external heat minimization in summers
and maximizations in summers.
5. Occupancy sensors
Using a motion detector to control your lights can save a lot of energy. While leaving your lights on by
mistake for a short period might not seem like it uses much electricity, it is important to realize that
small amounts of power can add up to big amounts over time. Even if you rarely leave your lights on
by mistake, you are still using energy needlessly when you do so. Of course, if you have ever left the
lights on while you went out, this is a much more serious problem that a occupancy sensor would also
have been able to solve. It helps to save energy, save money and is also convenient as it save you on
time and effort.
6. Techniques with Solar energy
a). Adsorption heat pump
b). Adsorption refrigerator
c). Solar air conditioners
d). Geothermal heat pump
a). Adsorption heat pump
Absorption heat pump is essentially an air-source heat pump driven not by electricity, but by a heat source
such as solar-heated water, or geothermal-heated water. There are also absorption coolers available that work
on the same principle, but are not reversible and cannot serve as a heat source.
b). Adsorption refrigerator
An absorption refrigerator is a refrigerator that uses a heat source (e.g., solar, kerosene-fueled flame, waste
heat from factories or district heating systems) to provide the energy needed to drive the cooling system.
48
c). Geothermal heat pump
A geothermal heat pump or ground source heat pump (GSHP) is a central heating and/or cooling system that
pumps heat to or from the ground.
d). Solar air conditioners
Solar air conditioning refers to any air conditioning (cooling) system that uses solar power. This can be done
through passive solar, solar thermal energy conversion and photovoltaic conversion (sunlight to electricity).
Solar air conditioning will play an increasing role in zero-energy and energy-plus buildings design. The
calculations of solar air conditioners with respect to normal air conditioners has been shown.
7. Avoid leaks
To maximize the impact of air whether in a summer season or a winter season, the design should make sure
that there are no leaks in it.
Water Efficiency
1. Rain water harvesting
It is water efficient technique in the most holistic way possible. We should harvest 100% of the rain that
falls on the building and we should recycle 100% of all the water used in the building including waste
water to tertiary standards through our sewage treatment plant. Along with the rainwater harvesting, there
49
are interlocking tiles placed across the landscape of our building to harvest rain water through the grass
that grows between the tiles while ensuring 0% surface run-off.
2. Low flow showers (1.5lts for liquid waste & 7lts for solid waste)
There should be low floor showers in the washrooms and the kitchens where water is extensively used.
It can save upto many lts of water on a whole.
3. Drip irrigation system in the garden
It is useful as the water application efficiency is high. Recycled non-potable water can be safely used.
Water distribution is highly uniform, controlled by output of each nozzle. Labour cost is less than other
irrigation methods.Usually operated at lower pressure than other types of pressurised irrigation,
reducing energy costs.
4. Kitchen water must be harvested
The water used in the kitchen area can be harvested again by cleaning it. As the amount of water used
is more than enough for utilizing it elsewhere.
5.Treated water can be used for garden, toilets and washing car.
The water which is harvested can be used for various purposes like in gardening purposes, in toilets and
even in washing cars. This helps in water efficiency and complete drain off.
6. Sewage treatment plant
50
Sewage treatment plant helps in saving of extra water,recycling of water,ground water,surface water source
is safe from pollution due to treatment of waste water. It is treated water is used for vegetation. Cost of
transportation of polluted water is saved. Air pollution is limited to treatment plant.
Materials efficiency
1. Low levels of volatile organic compounds used in the materials (sealants for carpets, composite
wood & paints)
The low levels of Volatile Organic Compounds in the materials used in the construction of ITC Green
Centre, in adhesives, sealants used for carpets, composite woods and paints ensures that there aren‟t
any known harmful substances in the air that might affect inhabitants of the building, and the
comfortable distance between floor and ceiling allows us to ventilate naturally.
2. Cements (55% fly ash), bricks ,glass, ceramic tiles, steel & aluminium, carpet (100%recycled
yarn)
These bricks are manufactured in a way that saves energy, reduces mercury pollution, and costs 20%
less than traditional clay brick manufacturing, not to mention the fact that they last over 100 freezethaw cycles. Over 10% of our construction material, such as glass, ceramic tiles, steel and aluminium,
used in the building are recycled.
3. MPF( Medium density fibrehead) from rapidly renewable Eucalyptus
The wood in the building is either FSC certified or Medium Density Fibreboard (MDF). FSC certified
Steam Beach wood comprises 64.49% of our wood usage and MDF is composed mostly of rapidlyrenewable eucalyptus wood (85%)
Indoor Environmental quality enhancement
1. External air economizer (draws 100% fresh air from outside when the weather is nice)
The main purpose of external air economizer is that it allows the fresh air from outside to enter into the
building and helps in savings energy and even keeps the environment fresh.
2. Storage bins for materials like paper, glass, cardboard, metals etc.
Waste reduction
1. Maximization of usage of renewable products and reusing them again
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For the waste reduction, there should be maximum utilization of renewable products for the
construction to make it a green place to live in.
**In this way ITC Green Centre has reduced 30% smaller carbon footprint and building design usually uses
6,20,000 Kwh annum but ITC Green Centre uses 1,30,000 Kwh annum.**
Mathematically,
If 1 unit of electricity costs Rs. 4, then
6,20,000 * 4 = 31,00,000
1,30,000 * 4 = 6,50,000
So the person can save to = 31,00,000 – 6,50,000 = 24,50,000
In addition to ITC, there is a hotel as LE GREEN HOTEL & RESORTS is using materials like bamboo and
cane for making houses.
Bamboo because:
1. Sustainable
2. Rapid growth
3. Purify air
They are also focusing on Organic farming and the manure used is Coco-peat. The products used are also
green such as in soaps, gifts and recycled thing. In this way they are making themselves part of green world.
52
CHAPTER 5 : FOR EXISTING PROJECTS TO REDUCE CARBON EMISSIONS AND
INCREASE THEIR EFFICIENCY THERE ARE CERTAIN WAYS IN WHICH THEY CAN
MAKE THE CHANGES. LIKE:
Rethink lightening (energy efficient bulb)
It is an efficient way to cut down the electricity bills. The installation of bulbs, CFL and LED is
compared. The payback period is determined in the sheet.
Air conditioners
With the increase in usage of air conditioners in the present scenario which almost contribute around
45% in the electricity bills, there is a need to cut down the cost. The comparison is shown in the sheet
and the payback period is determined.
Another useful technique can be installation of Solar Air Conditioners.
Solar air conditioning refers to any air conditioning (cooling) system that uses solar power. This can be done
through passive solar, solar thermal energy conversion and photovoltaic conversion (sunlight to
electricity).Solar air conditioning will play an increasing role in zero-energy and energy-plus buildings design.
The calculations of solar air conditioners with respect to normal air conditioners has been shown.
Solar panels for making use of the sun.
The emergency lightening can be supported by solar PV panels. They are reliable back up as the sun
radiations are made use of for the generation of electricity. Calculations are shown for the installation
of solar PV panels.
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SOLAR PLANT CALCULATIONS
If a resort decides to set up a solar plant looking to work on its investment purpose is another reliable
saving technique. Consider a 50 room’s resort which needs a solar panel of following specifications.
Solar panels ( 10kw )
Add: VAT@4% on cost
Add: transportation &
--------- 28,00,000/---------- 1,12,000/----------- 28,000/-
Erection charges
Total cost
------------- 29,40,000/-
Subsidy by MNRE
------------ 30% so 8,22,000/-
Power savings (monthly)
----- 1500 units
Savings ( annum)
------ 1,17,000/-
Clear sky -- 320 days
LIFE
Solar modules --- 25 years
Battery
--- 5 years
Inverter
--- 5 years
In Kerala
Subsidy of 825/- per sq. metre for commercial purpose
Hotel of 50 rooms – 37 sq. metre
Subsidy around -- 37 * 825 = 30,000/So
The total savings = 1,47,000/- annum
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GENERAL SPECIFICATIONS & TERMS AND CONDITIONS UNDER THE CAPITAL SUBSIDY
1. The models could be home lighting systems or inverter based
systems capable of handling general AC loads.
2. Manufacturers to provide Compact Fluorescent lamps (CFLs) of 9
W/11 W for home lighting systems.
3. The battery will be lead-acid of flooded electrolyte type, positive
Tubular plate and low maintenance.
4. Inverter should be of quasi sine wave/sine wave type.
5. PV module (s) shall contain crystalline silicon solar cells
6. PV modules must be warranted for their output peak watt capacity, which should not be less than 90% at the
end of 10 years
and 80% at the end of 25 years.
7. The balance of systems provided must be warranted against any
manufacturing/ design/ installation defects for a minimum period
of 5 years.
1. Solar water heaters
Solar water heaters make use of the sun‟s radiation to make use of the heat for the heating purposes.
Energy is saved and helps in reduction of carbon emissions. Calculations for the Solar water heaters are
shown in the sheet.
Solar Heaters
100 lpd – 1 ton reduction in emission
2000 lpd – 30 ton reduction in emission
55
For 50 rooms
Cost of solar heater system = 4,00,000/Savings per month = 6000 units
Monthly savings = 6000*5= 30,000/Annum savings = 3,60,000/-
So
Payback period = 14 months
Thus the cost of the system can be recovered within 14 months from the date of installation period.
Solar pumping water
Solar powered pump is a pump running on electricity generated by photovoltaics or the heat from collected
sunlight. The operation of solar powered pumps is more economical and has less environmental impact
than pumps powered by an internal combustion engine (ICE). Solar pumps are useful where grid electricity
is unavailable and wind powered pumps do not provide adequate performance. Solar pump system
comparatively cost effective because of the free availability of Solar energy.
Programmable thermostats
Heating and cooling losses from a building (or any other container) become greater as the difference in
temperature increases. A programmable thermostat allows reduction of these losses by allowing the
temperature difference to be reduced at times when the reduced amount of heating or cooling would
not be objectionable.
Sink aerators
Installing faucet aerators can reduce the water use at a faucet by as much as 60 percent. A flow rate of
2.5 gallons per minute is standard for a faucet aerator (compared to as much as 5 or 6 gallons per
minute for a faucet without an aerator), but faucet aerators with a flow of as little as .5 gallons per
minute are available. Using faucet aerators to conserve water used in the home lowers the cost of
heating water for washing dishes and other activities.
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Occupancy sensors
Occupancy sensors can provide local control for private spaces, while scheduling panels can provide
global control for the building depending on its operating schedule and public spaces where the lights
must remain on even when the space is unoccupied. Calculations are shown in the sheet.
OCCUPANCY SENSORS
For 50 rooms
Cost of installation (fixtures, doorways , rest rooms) = 1,30,000/Savings on the total bill = 30%
So if bill is around (monthly) = 2,50,000/Around = 30%
So saving around = 75,000/Payback period = 20 months
9. Encourage the guests to follow all the suits with reducing energy use.
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ANNEXURES
58
59
60
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BIBLIOGRAPHY
[1]Guidelines and Operating Rules for Monitoring Institution(s), ABPS Infrastructure Advisory Private Limited,
IREDA
[2]Economics, Regulation, and Implementation Strategy for Renewable Energy Certificates
in India, Anoop Singh
[3] Wiser, Wendell H. (2000). Energy resources: occurrence, production, conversion, use. Birkhäuser. p. 190. ISBN
978-0-387-98744-6
[4] H F G Gwyther (1988), Electrical Power and Power Electronics p85, ISBN 0-582-2864-1
[5] Solar Radiation Hand Book-2008 of Indian metrology department
[6] Review of international experience with renewable energy obligation support mechanisms by N.H. van der
Linden, M.A. Uyterlinde, C. Vrolijk, L.J. Nilsson,J. Khan, K. Åstrand, K. Ericsson, R. Wiser Mei 2005 ECN-C-05-025
[7] All India region wise generating installed capacity (mw) of Power utilities including c allocated shares in joint
and central Sector utilities (as on 30-06-2012) by CEA
[8] Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable
Energy Certificate for Renewable Energy Generation) Regulations, 2010.
[9] Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable
Energy Certificate for Renewable Energy Generation) Regulations, 2010,
Statements of objects and Reasons.
[10]Cumulative achievement report of renewable www.mnre.gov.in/achevments
[11]National Action Plan on Climate Change –INDIA http://pmindia.nic.in/climate_change.htm
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[12]Electricity Act 2003 http://www.powermin.nic.in/JSP_SERVLETS/internal.jsp
[13]NEP-2005 http://www.powermin.nic.in/whats_new/national_electricity_policy.htm
[14] Installation and Operation of meters regulation 2006 [NOTIFICATION No. 502/70/CEA/DP&D]
https://www.recregistryindia.in/
[15] CERC (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable
Energy Generation) Regulations, 2010
[16] http://www.climate-connect.co.uk
[17] www.mnre.gov.in
[18] www.ireda.in
[19] www.dgft.gov.in
[20] www.envfor.nic.in
[21] www.planningcommission.nic.in
[22] www.orer.gov.au
[23] www.ofgem.gov.uk
[24]www.reconnect.com
[25]www.wikipedia.org
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