Financial Performance and Analysis of 100KWp Rooftop Grid Connected Solar PV plant in Surat Municipal Corporation

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1 Available online at International Journal of Innovative and Emerging Research in Engineering e-issn: p-issn: Financial Performance and Analysis of 100KWp Rooftop Grid Connected Solar PV plant in Surat Municipal Corporation Bhavin Ahir a, Aditi Hajari b, Jinesh Patel c a P.G. Student, Department of EE, S.C.E.T. College, Surat, Gujarat, bhavinahir139@yahoo.com b Asso. Prof., Department of EE, S.C.E.T.College, Surat, Gujarat, aditi.hajari@scet.ac.in c Asst. Engg. (Ele.) in Energy Efficiency Cell of Surat Municipal Corporation, Surat, Gujarat,jinesh1912@gmail.com ABSTRACT: The objective of this study is to present the financial feasibility of 100kw rooftop grid connected solar PV power plant in surat municipal corporation. Financial analysis has been performed with present system cost based on life cycle cost of energy. Standard financial procedures have been used and sensitivity parameter study and work of GERC data with Real practical project work, main focus on various factor, NPV, IRR, bill of Material, the financial interest rates, operational and maintenance cost and Payback period. here feasibility analysis results were discussed and presented in conclusion. Keywords: Photovoltaic, Financial feasibility, Financial Analysis, GERC, NPV, IRR and Payback period. Basic Introduction of Financial in Solar PV Project: I. INTORDUCTION Need for financial analysis. Financial analysis is an integrated part of financial planning, It used the past data to estimation the financial requirements, The model makes it easy for the financial managers to prepare financials forecasts. Assumption of financial modeling 1. Useful life 2 Discount Factor 4 Interest rate 5 Depreciation 6 Interest on working capital 7 Operation and Maintenance expenses 8 Capacity utilization factor Component of financial modeling: 1The profit and loss account 2 Tax sheet 3 Cash flow statement 4 Balance sheet Common economic parameter 1 Internal rate of return (IRR): 2 Net present value (NPV): 3 The discount rate 4 Debt service coverage ratio (DSCR): 5 Weighted average cost of capital (WACC): 121

2 Key factor affecting IRR/NPV: For project IRR/NPV: While calculating project IRR/NPV, following factors are considered: Capital cost O&M cost Sale of energy/energy output PPA rate PPA escalation rate O&M escalation rate For equity IRR/NPV: While calculating equity IRR/NPV, following factors are considered: Equity O&M cost Sale of energy/energy output Debt-Equity ratio Loan term [1] II. FINANCIAL PERFORMANCE PARAMETER OF SOLAR PHOTOVOLTAIC POWER PLANT SUMMARY OF PARAMETER FOR DETERMINE THE TARIFF FOR SOLAR PHOTOVOLTAIC POWER PROJECT as per the GERC. PARAMETER VALUE: PLANT COST: Capital cost 1000 Lacs per MW for MW scale system 1.2 Lacs per kw for kw scale system O&M Cost 0.75% Of capital cost Escalation in O&M cost 5.72% Annually Inverter Replacement year 13 th year Inverter cost during replacement 3.81% Of capital cost. PARFORMANCE PARAMETER: C.U.F 18% Performance Degradation 1% Annually Auxiliary consumption 0.25% For energy generation Useful life 25 Years FINANCIAL PARAMETER Debt Equity : Ratio 70:30 Loan Tenure 10 year Interest rate on loan 13.00% Insurance cost 0.35% Annually Interest on working capital 12.00% Annually Working Capital 1 Month s O&M Expense 1 Month s Energy charge at normative CUF Rate of Depreciation 6% Annually for the first 10 Years 2% Annual for The next 15 Years Minimum alternate % Annually for the first tax rate 10 Years Corporate tax rate % Annually Return of equity 14% Annually Discount Factor 10.74% Annually Base on technical and financial parameters, the level of technical levelized tariff including return on equity for MW scale solar pv plant availing A.D value calculate to be 9.28 per KWh while tariff on not A.D is calculated to be per KWh. 122

3 The commission has also decide to determine the tariff for two sub period. For KW scale project availing A.D, the 12 years shall be 9.98 per KWh and for the subsequent 13 years shall be 7 per KWh. Similarly. For MW scale project availing A.D is not availing the 12 years shall be per KWh and for the subsequent 13 years shall be 7.50 per KWh. Similarly. Similar the levelized tariff including return on equity for KW scale solar pv projects availing A.D is calculate and financial at per KWh, while the tariff for similar project not A.D is financial Calculate to be per KWh. The commission has decide that there shall be a flat levelized tariff for 25 years for KW scale solar pv power project.[2] III. FINANCIAL ALALYSIS DATA OF 100KWp CAPACITY GRID CONNECTED ROOFTOP SOLAR PHOTOVOLTAIC POWER PLANT BILL OF MATERIAL.[3] Sr. No. Description 100kWp Total Qty. as per site requirements Unit Rate (1) Solar module (Make, Type, Wattage) 400 Nos (2) Module mounting structure(s) 1 Set (3) Inverter (Make, Model, Capacity etc.) 4 Nos (4) Sensor Box with Temperature sensors and pyranometer 1 Lot (5) Web Box with RS 485 Communication Cable or as required 1 Set (6) AC Distribution Board as required for the 100 KWp SPP with sufficient safety factor 1 Set (7) 1 x 4 or. sq mm PVC insulated Cu cable (Array to AJB) 900 Lot (8) 4 x 10 or. sq mm PVC insulated Cu cable (PCU to ACDB input) 210 Lot (9) Multi-contact Male Cable Coupler 20 Set (10) Multi-contact Female Cable Coupler 20 Set (11) Earthing kit as required 1 Set (12) GI Strip of 25 x 5 mm size 1 Lot (13) Vertical Air terminal 1 Set 5, (14) Installation kit 1 Lot (15) Energy meter (if required) 1 Set 8870 (16) Any other component (1) 1 Set (17) Any other component (2) 0 Lot 0 Total VALUE 87,49, DETAILS OF ESTIMATED ENERGY GENERATION OF PROPOSED PROJECT 100KWp [3] Energy Generation = [Capacity Utilization Factor (CUF) * Plant Capacity (KWp)* 24(No. of Days)] Note: CUF= 16%, Plant Capacity= 100 KWp. Following Table see the yearly energy generation without deducting 3% grid availability losses as per the above equation. Project Details Quoted by Party Total Capacity 100KWp Estimated Net Energy Generation: 1 st Year {KWH} 141,134 2 nd Year {KWH} 139,709 3 rd Year {KWH} 138,283 4 th Year {KWH} 136,858 5 th Year {KWH} 135,434 6 th Year {KWH} 134,006 7 th Year {KWH} 132,581 8 th Year {KWH} 131,155 9 th Year {KWH} 129, th Year {KWH} 128, th Year {KWH} 127, th Year {KWH} 126, th Year {KWH} 125,

4 14 th Year {KWH} 124, th Year {KWH} 123, th Year {KWH} 122, th Year {KWH} 121, th Year {KWH} 120, th Year {KWH} 119, th Year {KWH} 118,795 Total 2,577,958 Income From Solar Plant: Energy rate: Rs Income(Rs) = Energy Rate * Estimated Energy Generation in KWh(Deducing 3% Grid availability losses ) 1 st Yrs = * 1,36,899 = Rs. 15,83, Auxiliary Consumption: Small scale inverter (string inverter) auxiliary consumption is zero. = 0% Large scale inverter (central inverter) auxiliary consumption taken as per GERC s 0.25% of Generation(KWh). KVARH Charges (Rs.): As per the hon ble GERC tariff order 1 of 2012 KVARH Charges Rs / KVARH. 1 St Year, as per the above Generatin: Rs.1, Maintenance Cost: Maintenance cost 0.75% of total cost, 1 st will be zero. Sr. No. Description Quoted (1) 1st Year 0.00 (2) 2nd Year 67, (3) 3rd Year 70, (4) 4th Year 73, (5) 5th Year 77, (6) 6th Year 81, (7) 7th Year 85, (8) 8th Year 89, (9) 9th Year 94, (10) 10th Year 99, Total 7,38, Total Maintenance cost up to 10yrs. = Rs. 7,38, AFTER 10 YEARS UPTO 25 YEARS, THERE WILL BE 5.72 % ESCALATION ANNUALLY TAKEN AS PER GERC S TARIFF ORDER FOR SOLAR POWER. Insurance cost: Insurance cost 0.35% of total cost, = Rs. 30, /Annually Corporate Tax: Corporate tax %, but here the Plant of self Corporate so corporate tax is zero. = Rs. 0 Alternative Tax: Alternative tax approximately minimum % of annually for the first 10 years. 124

5 Other Charges: Other charges like, GPRS, Modem,, etc. = Rs. 20,000 International Journal of Innovative and Emerging Research in Engineering Net Present Value (NPV): The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield. With Capital subsidy from MNRE & 8% interest: NPV: Rs. 39,15, Without Capital subsidy from MNRE & 8% interest: NPV: Rs. 14,84, Internal Rate of Return: The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as "economic rate of return (ERR)". With Capital subsidy from MNRE & 8% interest: IRR: 20.33% Without Capital subsidy from MNRE & 8% interest: IRR: 11.48% Total project cost: Rs. 87,49, [3] FINANCIAL CALCULATION SUMMARY UPTO 20 YEARS OF 100KWp ROOFTOP GRID CONNECTED SPV POWER PLANT WITH or WITHOUT CAPITAL SUBSIDY FROM MNRE & 8% INTEREST.[3] 125

6 IV. CONCLUSIIONS Conclusions as per the Real Project work study on the 100KWp Rooftop grid connected solar photovoltaic power plant at the surat municipal corporation main office building, like financial parameter NPV, IRR, Capital cost, Subsidy of Government of India, Accelerate Depreciation and Other Financial factor should be most important for solar Photovoltaic power plant, Here following financial conclusion of 100KWp real project work. Total project investment 89 lacs for 100kW roof top grid tie solar PV power plant without battery backup. The acceptable NPV is with Capital subsidy from MNRE & 8% interest Rs 39,15, & without Rs. 14,84, The acceptable IRR is with Capital subsidy from MNRE & 8% interest_20.33% & Without 11.48%. Pay Back Period is with Capital subsidy from MNRE & 8% interest_ 5.42 Years & Without 9.01Years. 30 % Subsidy available on total capital cost from GOI. REFERENCES: [1] Renewable energy sector in india and financialmodeling of solar pv power plant in Chhattisgarh A project report by Samratkundu under NTPI (National Training Power Institute ) -MaharsihiDayanand University-Haryana, August, [2] GERC Order No. 1 of 2012: Determination of tariff for Procurement by the Distribution Licensees and others from Solar Energy Projects; 27 Jan [3] 100KWp Grid connected rooftop SPV at Surat Municipal Corporation (SMC), Surat. 126

7 AUTHOR PROFILE 1. BhavinAhir PG (ME/M.Tech) final year Student in Electrical Engineering from Sarvajanik College of Engineering and Technology, surat. Still IDP Project work on Design Simulation Analysis and Financial Model of Rooftop Grid Connected Solar Photovoltaic System in Surat Municipal Corporation,Surat, Have research interests are Renewable Energy System and Power system. 2. Aditi Hajari Associate Professor of EED Sarvajanik College of Engineering and Technology, surat,qualification: M.S. (Control System), Area of Interest:Control Systems, Power Electronics, Elements of Electric. 3. Jinesh Patel Working as are Asst. Engineer (Ele.) in the Energy Efficiency Cell of Surat Municipal Corporation, He is looking for various Renewable Energy projects like Solar, Wind, etc. and Energy Auditing Works of various HT Service of SMC. ` 127