Detailed Project Report for Installation of Grid-Connected Solar Rooftop Power generating plants for GHMC Properties

Table 8: Assumptions for financial analysis

PARAMETER UNIT VALUE REMARKS
Project Specifications
Cumulative project size kW 941 As per Helioscope system design
(design capacity)
per-W capital cost Rs./W 52 Based on Consultant's experience
Project Capital Cost Rs. 48,932,000
Government incentive % 25% As per MNRE guidelines
Realized Project Capital Cost Rs. 36,699,000
Useful life years 25 General market assumption
Degradation % 0.60% General market assumption ; generation values
sourced from Helioscope analysis
Grid availability % 100% General market assumption
Inverter cost Rs./W 6 Based on Consultant's experience
Inverter life years 10 Based on Consultant's experience
Escalation in inverter prices % 3.00% Based on Consultant's experience
due to inflation
Debt
Debt component % 70% General market assumption
Debt amount Rs. 25,689,300
Cost of debt % 12.00% Based on Consultant’s experience
Debt tenor years 14 General market assumption
Moratorium period years 0 General market assumption
Equity
Equity component % 30% General market assumption
Equity amount Rs. 11,009,700
Cost of equity % 20% General market assumption
Operating parameters
O&M Expenses % 1.30% Based on Consultant's experience
O&M Expenses Escalation rate % 3.00% Based on Consultant's experience
(p.a.)
Working Capital
O&M Charges months 1 As per CERC norms
Maintenance Spare % 15% As per CERC norms
Receivables from Debtors months 1 General market assumption
Interest on Working Capital % 12.00% General market assumption
Depreciation
Book SLM Depreciation % 5.28% As per Companies Act 2013
Useful Life years 19 As per Companies Act 2013
WDV Depreciation (per % 15.00% As per Income Tax Act 1961
Income Tax Act)
Max. Depreciation extent (as % % 90% As per Income Tax Act 1961
of asset value)
Salvage Value % 10% As per Income Tax Act 1961
(for LCOE) SLM Depreciation % 5.83% As per CERC norms
for years 1-12
(for LCOE) SLM Depreciation % 1.54% As per CERC norms
for year 12 onwards
Other Financial Assumptions

30
Detailed Project Report for Installation of Grid-Connected Solar Rooftop Power generating plants for GHMC Properties

PARAMETER UNIT VALUE REMARKS

Income Tax rate % 34.61% General market assumption
MAT rate % 18.50% General market assumption
Discount Rate % 11.49% As per WACC formula
Inflation rate % 5.00% General market assumption
Revenue model for RESCO
Project tariff Rs./ kWh 5.50
GHMC electricity costs
Avg. grid electricity cost for Rs./ kWh 9.70 Based on GHMC electricity consumption and
GHMC bill details
Escalation in grid electricity % 2.00% General market assumption
tariff

5.4 Results and Discussion

The financial analysis revealed that the project would be financially viable and satisfy the
major criterions of return on equity, profitability and cash flow at a levelized tariff of ~ Rs.
5.50 /kWh.
However, it is important to note that this levelized tariff is based on a number of
assumptions, and is therefore sensitive to changes in the values of some of the input
parameters.
The following graphs depict the sensitivity of the levelized tariff to the major input
parameters:

LCOE - Sensitivity to Capital Cost LCOE - Sensitivity to Grid

6.4 Availability

6.2 6.4
6.25 6.2
LCOE (Rs./kWh)

6.0
LCOE (Rs./kWh)

6.06 6.0
5.8 6.08
5.86 5.8 5.95
5.6 5.82
5.67 5.6
5.70
5.4 5.4 5.58
5.47 5.47
5.2 5.2
5.0 5.0
52 54 56 58 60 90% 92% 94% 96% 98% 100%
Capital Cost (Rs./W) Grid Availability

LCOE - Sensitivity to Interest on LCOE - Sensitivity to O&M Expenses

Loan 6.4
6.4 6.2
6.2
LCOE (Rs./kWh)

6.0
LCOE (Rs./kWh)

6.0
5.8
5.8
5.6
5.6
5.63
5.4 5.60 5.4 5.51 5.55 5.59
5.47 5.53 5.43 5.47
5.2 5.41 5.2
5.0 5.0
31
11.5% 12.0% 12.5% 13.0% 1.2% 1.3% 1.4% 1.5% 1.6% 1.7%
Interest on Loan O&M Expenses (as % of Capital Cost)
Detailed Project Report for Installation of Grid-Connected Solar Rooftop Power generating plants for GHMC Properties

The results of financial analysis are given in Table 9.

Table 9: Results of financial analysis

Parameter Unit Result
System capacity kWp 941
Capital Cost Rs. (lakhs) 489.32
LCOE Rs./kWh 5.47
Pre-tax Project IRR % 16.0%
Post-tax Project IRR % 14.9%
Equity IRR % 16.2%
DSCR (min.) % 1.30
1st year cost savings to GHMC Rs. (crore) 1.24
Cumulative cost savings to
Rs. (crore) 12.37
GHMC (Present Value)

5.3.2 On CAPEX Model

With a view to ascertain the commercial viability of a 941 kWp grid-connected rooftop solar
PV project distributed over a number of premises in Hyderabad, a detailed financial analysis
was carried out which comprised of the determination of the following major financial
indicators
 Payback Period
 Project IRR
For the feasibility assessment, certain assumptions were taken in carrying out the financial
analysis. These assumptions are as per table 10

Table 10: Assumptions for financial analysis

PARAMETER UNIT VALUE REMARKS
Project Specifications
Cumulative project size kW 941 As per Helioscope system design
(design capacity)
per-W capital cost Rs./W 65 Based on Consultant's experience
Project Capital Cost Rs. 611,65,000
Government incentive % 25% As per MNRE guidelines
Realized Project Capital Cost Rs. 458,73,750
Useful life years 25 General market assumption
Degradation % 0.60% General market assumption ; generation values
sourced from Helioscope analysis
Grid availability % 100% General market assumption
Inverter cost Rs./W 6 Based on Consultant's experience
Inverter life years 10 Based on Consultant's experience
Equity
Equity component % 100% General market assumption
Equity amount Rs. 458,73,750
Cost of equity % 8% General market assumption
Operating parameters
O&M Expenses % 1.30% Based on Consultant's experience
O&M Expenses Escalation rate % 3.00% Based on Consultant's experience
(p.a.)

32
Detailed Project Report for Installation of Grid-Connected Solar Rooftop Power generating plants for GHMC Properties

PARAMETER UNIT VALUE REMARKS

Working Capital
O&M Charges months 1 As per CERC norms
Maintenance Spare % 15% As per CERC norms
GHMC electricity costs
Avg. grid electricity cost for Rs./ kWh 9.70 Based on GHMC electricity consumption and
GHMC bill details
Escalation in grid electricity % 2.00% General market assumption
tariff

5.5 Results and Discussion

The financial analysis revealed that the project would be financially viable and provide a
payback in 11 Years at an IRR of 15.94%.However, it is important to note that this Payback
period is based on a number of assumptions as mentioned in the previous table.
The following graph depicts the sensitivity of the Payback Period to cost per watt of solar PV
modules.
If we do not consider the interest on the loan amount (we consider 0% interest on debt), we
would obtain a payback period of 7 years with an IRR of 20%. While a simple payback
period for this project would be 6 years. The results are as per table 12

Table 11: Sensitivity of the Payback Period to cost per watt of solar PV modules

Payback Period
12
11
Payback Period in Years

10
9
8 8
7
6

4 Payback Period

0
0 20 40 60 80
Rs/W

The results of the financial analysis is as per the following table

33
Detailed Project Report for Installation of Grid-Connected Solar Rooftop Power generating plants for GHMC Properties

Table 12: Results of financial analysis

Result
As per Without Simple
Parameter Unit Assumption considering payback
sheet the cost of
capital
System kWp 941 941 941
capacity
Capital Cost Rs. 458.73 458.73 458.73
(lakhs)
Project IRR % 15.94% 20.08% 20.08%
Payback Years 11 7 6
Period

6. Reduction of CO2 emissions

According to the CEA report on CO2 Baseline Database for the Indian Power Sector, the
emission factor that was considered was 0.82 tCO2 /MWh. Considering the total size of the
system installed to be 869 kWp and generating roughly around 1.009 MU. The reduction in
CO2 emissions would be as per the following table
Total Allowed Annual Energy Avoided CO2
system size in generation in emissions in
kWp kWh (kg/kWh
869 1009427.052 827730.1829

7. Power plant operation planning

7.1 Man-power planning
The following personnel will be sufficient for the overall operation and maintenance of the
Solar PV plant of 60 kWp capacity;
 One person as a plant manager
 One trained technician having experience in operation and maintenance of solar PV
power plant
 One person for cleaning of PV panels

7.2 Operation and maintenance

In the solar PV power plant, there is little maintenance involved, which is one of the biggest
advantages. This is so because of no mechanically moving parts involved. The only
maintenance required is janitorial work such as cleaning of the solar panels periodically. The
annual O&M cost could be around 1% of the capital cost.
Duties involving the operation and maintenance of the PV generating plant will be provided
in greater detail by the technology provider based on the selected technology. There shall be

34