Economics of setting up a MW scale solar power plant in India

[michaelclarke14]

Good Post

I think government will continue to support solar energy initiative. There is no need to worry. Investing money in solar energy is good option. I see good future for plugged solar also. Once plugged solar will be popular in India. This can be also good option to invest money in plugged solar.

[russ]

I think government will continue to support solar energy initiative. There is no need to worry. Investing money in solar energy is good option. I see good future for plugged solar also. Once plugged solar will be popular in India. This can be also good option to invest money in plugged solar.

That is total BS - don't chatter about something where you seem to know nothing.

[Valmiki]

Hi,

Here is a recent quote and some background...Might be useful to some of you.

Background:

To encourage development of independent solar projects in India (independent of state/center based solar policies, otherwise known as preferential tariff scheme), Indian government have devised the REC mechanism of setting up solar power projects. Under the “Andhra Pradesh Solar Policy 2012”, AP state encourages developers to set up solar power projects under the REC mechanism, while making it much beneficial to sell power to 3rd parties/open-access consumers, by providing a host of benefits in the form of waivers and other administrative support.

The basics of the REC mechanism are:

(1) Solar Power project can be set up in any part of AP. There is no upper bound on the project size.

(2) Revenue from the project can be generated in 2 ways:

a. Sale of Electricity – The electricity that is generated from this plant can be sold to either the state utility company or a private consumer through a power purchase agreement (PPA) for a period of 25 years (typically). The prevalent rates of selling power with such PPA’s currently is between Rs. 3-5/Unit, depending on the buyer. To sell power to AP State Discom, APPC will be taken as the benchmark to calculate the PPA price.

b. Selling REC’s (Renewable Energy Certificates) – For the projects set up under REC policy, the power developer is awarded One nos. REC per MWh of electricity generated (1000 units of electricity). As per current norms, these REC’s are sold on the power exchanges of India.
Current regulated rates for selling these REC’s is between Rs.9300-Rs12000 per REC on the exchanges. This amounts to an REC sale value of Rs. 9.3/Unit (minimum). This REC selling price is valid for a period of 5 years starting April-2012, beyond which the REC rates will be revised.

(3) Hence, total revenue from power generated from a solar power plant under REC scheme is:

Revenue from Sale of Electricity + Revenue from sale of REC’s


Project Specifics:

Capacity for Sale 1 MW
PPA To be signed with state utility / private consumer. PPA validity for 25 years.
Scheduled Last Completion Date No regulation. It is completely up to the developer to commission the project as early as possible.
PPA Rates We have assumed a PPA with AP Discom regulated as per APPC norms valid for 25 years.
Action Plan for Project Execution A typical 1 MW takes around 4 months to commission. Once the PPA is signed between the investor and buyer, and all legal and administrative clearances are in place, the project execution can commence.


Typical REC Solar Project Related Information from AP:

Energy Production - More than 1.5 Mil Units/MW/Year without the use of tracking system.
CDM Benefits - Solar Projects in India are eligible to claim the CDM benefits.
Income Tax Benefits - MAT applicable for first 10 years of the project operation
AD - REC projects in AP are eligible for availing Accelerated Depreciation


Project Cost:

EPC cost of the Project – Rs. 8.0 Crore/MW
Note – This quote is inclusive of equipment transportation to the site, but exclusive of all applicable government taxes and duties.
Exclusions – Evacuation of Power from the plant to the nearest sub-station.


EPC Cost Details – Major Equipment/Services:

Equipment / Service Cost / MW
Solar PV Panels Rs. 4.30 Crore
Inverters Rs. 0.80 Crore
Mounting Structure Rs. 0.50 Crore
Transformers Rs. 0.30 Crore
Cables Rs. 0.25 Crore
Switchyard/RMU/CB’s Rs. 0.35 Crore
SCADA Systems Rs. 0.10 Crore
Civil Structures/Work Rs. 0.30 Crore
Labor/Manpower Rs. 0.30 Crore
Surveillance Equipment/Lighting Rs. 0.10 Crore
Others Rs. 0.70 Crore

Total EPC Cost/MW Rs. 8.00 Crore
Total EPC Cost – 1 MW Rs. 8.00 Crore

Taxes and Duties: As applicable.

[karishma singh]

100 MW solar plant

Dear All,

MY company is managing the project of 100 MW grid Solar PV in one of the states in India. Yet to begin construction. EPC has been finalized but the PPA can not be signed with the concerned govt since it falls under election code of conduct. So meanwhile to avoid any risk we are looking for selling the concerned power either to private industry clustors , reques someone to kindly confirm the preocedure and policy implication regarding the same. Also, can we apply for REC project as well and does it make sense?
Kindly reply.

[TxSolarPro]

We currently have many MW installed in India and are working on various international projects as well as projects in Texas and Louisiana. I would be interested in networking with some of you, not sure the best way to get connected. I suggest if you're interested send me a private message and we can get together through email or linkedin or something, thanks!

[russ]

Dear All,

MY company is managing the project of 100 MW grid Solar PV in one of the states in India. Yet to begin construction. EPC has been finalized but the PPA can not be signed with the concerned govt since it falls under election code of conduct. So meanwhile to avoid any risk we are looking for selling the concerned power either to private industry clustors , reques someone to kindly confirm the preocedure and policy implication regarding the same. Also, can we apply for REC project as well and does it make sense?
Kindly reply.

The rules in the US are totally different - no one here will be of much help. I worked in Gujarat for many years

The PPA signing can take anywhere from months to years depending on the state officials involved.

Your problem will be finding someone who can use interuptible power - you can supply only when the sun shines.

[Guru]

Hi There,

I would like to know how many acers of land is need to setup 1 MW solar power plant?
and also what is the coast for installing 1MW solar plant in India.
Any information is welcome! if any company or consulting company in India is installing project please send your contact info!

Thanks,
GSS

[nkjohri]

Tripartite agreements

Dear All,

MY company is managing the project of 100 MW grid Solar PV in one of the states in India. Yet to begin construction. EPC has been finalized but the PPA can not be signed with the concerned govt since it falls under election code of conduct. So meanwhile to avoid any risk we are looking for selling the concerned power either to private industry clustors , reques someone to kindly confirm the preocedure and policy implication regarding the same. Also, can we apply for REC project as well and does it make sense?
Kindly reply.

@Karishma - We have been mulling over the issues with bankrupt DISCOMs and unpredictable payments by state govt agencies as well. So far our investment remains only in land procurement and we have stalled further development and installations. Have you received any encouraging feedback around working directly with industrial / commercial customers like manufacturing or processing industries? My initial questions are :

- If power production occurs at a separate location, is it possible to provide power over India's govt. grid via a tripartite agreement for revenue sharing with the grid operator?
- Are you aware of any successful tripartite agreements in existence in India where production and consumption of power occurs at geographically distant locations?

Despite all the right 'noise' made by the current administration, the confidence remains low around project feasibility w/ DISCOM sales. As an individual investor and a conservative promoter, I am discounting the long term value of the REC market in India and do not consider it to be a big part of my ROI model.

Looking forward to hearing back from other small, individual investors interested in this space...

-n

[sobhan06]

@Karishma - We have been mulling over the issues with bankrupt DISCOMs and unpredictable payments by state govt agencies as well. So far our investment remains only in land procurement and we have stalled further development and installations. Have you received any encouraging feedback around working directly with industrial / commercial customers like manufacturing or processing industries? My initial questions are :

- If power production occurs at a separate location, is it possible to provide power over India's govt. grid via a tripartite agreement for revenue sharing with the grid operator?
- Are you aware of any successful tripartite agreements in existence in India where production and consumption of power occurs at geographically distant locations?

Despite all the right 'noise' made by the current administration, the confidence remains low around project feasibility w/ DISCOM sales. As an individual investor and a conservative promoter, I am discounting the long term value of the REC market in India and do not consider it to be a big part of my ROI model.

Looking forward to hearing back from other small, individual investors interested in this space...

-n

1) If you are planning to supply power to a 3rd party or a your own company at a different location then you can supply it to grid at the generation location and draw it wherever you want. All charges like transmission charges, operational charges, self generation tax charges are there.

[Vijayendra]

need suggestions

Hello CPS/MSR,

Assuming that you have already set up the solar power plans by now, i need your suggestions on the below questions:

1: Is it feasible to set up a plant in 2-3 acres of land (to generate 0.5 mw energy) or the least expected plant should be 5 acres (generating 1mw)??
2: Is there any advantage to set up the plant close to electricity board / city premises (within 1-2Kms) or has no advantage on location (can be 100 miles off the nearest city)
3: What are the monthly over head expenses??? (ex: labor, security, need of any transportation .. or if any)

Please let me know your thoughts...

-Vijay

[sobhan06]

Hello CPS/MSR,

Assuming that you have already set up the solar power plans by now, i need your suggestions on the below questions:

1: Is it feasible to set up a plant in 2-3 acres of land (to generate 0.5 mw energy) or the least expected plant should be 5 acres (generating 1mw)??
2: Is there any advantage to set up the plant close to electricity board / city premises (within 1-2Kms) or has no advantage on location (can be 100 miles off the nearest city)
3: What are the monthly over head expenses??? (ex: labor, security, need of any transportation .. or if any)

Please let me know your thoughts...

-Vijay

Dear Vijay,

1) Yes 3 acres of plain land is enough for 500 KW.
2) So many advantages are there to set-up solar plant close to electricity Sub-station.
3) For 1 MW, it is around 10-15lakhs depending upon the area. For operation & maintenance including security.

Regards
K. Sobhan

[Vijayendra]

Dear Vijay,

1) Yes 3 acres of plain land is enough for 500 KW.
2) So many advantages are there to set-up solar plant close to electricity Sub-station.
3) For 1 MW, it is around 10-15lakhs depending upon the area. For operation & maintenance including security.

Regards
K. Sobhan

Hello Shoban,

Thanks for the quick response, do we get bank loans / govt entrepreneurship loans for such projects??? can i have ur contact details/mail id to get in touch with ur for some more clarification??

-Vijay

[sobhan06]

Hello Shoban,

Thanks for the quick response, do we get bank loans / govt entrepreneurship loans for such projects??? can i have ur contact details/mail id to get in touch with ur for some more clarification??

-Vijay

Dear Vijay,

yes, you can get loans for solar projects but for that you need bankable project reports (you can get it from EPC parties), & PPA (Power Purchase Agreement).
Please reach me at sobhan06 @ gmail

---Mod Note: Dear sobhan06, thank you for not putting your email address in a crawlable or clickable form.

[himanshu91]

new plant

this question is to all those who have installed solar plant in india
I WANT TO KNOW

1. IS IT A VIABLE OPTION CONSIDERING PROBLEMS WITH SELLING OF ELECRICITY PRODUCED
2.CONSIDERING I TAKE A LOAN OF 5 CRORE WHAT RETURNS CAN I EXPECT IN 2 YEARS
3.WHAT COMPANIES ARE GOOD TO SET UP PLANT

THANS IN ADVANCE AND EXPECTING A RESPONSE FROM U all