PRE-FEASIBILITY REPORT

ON 100 MW SOLAR FARM

IN
TIRUNALVELI DISTRICT
TAMIL NADU
INDIA

September 2010

Inteb Sustainability Ltd

Thursby House
1 Thursby Road
Bromborough
Wirral
CH62 3PW

100 MW Solar Farm Pre-Feasibility

CONTENTS
Page
1.

Executive Summary

2.

Brief Introduction

3.

Assumptions used in the Optioneering study

4.

Lead time for Manufacture

5.

Solar Technology

6.

Future Expansion / Growth

7.

Detailed Optioneering Analysis

8.

Conclusion and Recommendations

Appendix 1 Detailed Analysis for 3 Options

10

100 MW Solar Farm Pre-Feasibility

Executive Summary
The Indian economy is one of the fastest growing economies of the world, registering a growth
of 8.5% -9% for the past 10 years and is projected to continue at this rate till 2020. The Indian
economy is the fourth largest by purchasing power parity (PPP). Economists predict that by
2020, India will be among the top two largest economies of the world.
Accordingly, Industrial growth output has recorded an amazing growth of 17% this year. This has
resulted an enormous demand for energy and energy infrastructure. India currently imports 70%
of its energy requirements in the form of crude oil and is desirous to reduce its imports to
further its economy.
India has been blessed with abundant sunshine with high solar insolation, providing an ideal
combination for solar power in India. India is already a leader in wind power generation.

In July 2009, India unveiled a $19 billion plan, to produce 20 GW of solar power by 2020. The
objective of the Jawaharlal Nehru National Solar Mission (JNNSM) under the brand Solar India is
to establish India as a global leader in solar energy, by creating the policy conditions for its
diffusion across the country as quickly as possible.
The Mission has set a target of 20,000 MW and stipulates implementation and achievement of
the target in 3 phases the first phase upto 2012-13, second phase from 2013 to 2017 and third
phase from 2017 to 2022.
The quota cap till 2013 is only 1000 MW but it is imperative that we allow for future proofing as
this is spread out in 3 phases with the final target till 2022 is 20 gigawatts.
With about 300 clear sunny days in a year, India's theoretical solar power reception, just on its
land area, is about 5 KWh/year would yield around 600 TW. The daily average solar energy
incident over India varies from 4 to 7 kWh/m2 with about 2,3003,200 sunshine hours per year,
depending upon location.
For example, even assuming 10% conversion efficiency for PV modules, it will still be thousand
times greater than the likely electricity demand in India by the year 2015.
As per the Jawaharlal Nehru National Solar Mission (JNNSM), we have been able to establish a
Power Purchase Agreement (PPA) to buy 100% of the electricity being generated by the solar
farm for a period of 25 years with a provision to extend it further by 5-10 years as necessary. It
has a high Internal Rate of Return (IRR) of 6.1%, it has a payback of 6.7 years based on a simple
payback calculation for the base case scenario.
This project presents a strategic inroad into the worlds fastest growing economies in a vital
sector contributing towards growth and sustainable development.

100 MW Solar Farm Pre-Feasibility

1. Brief Introduction
Inteb Sustainability Ltd is a UK based firm providing turnkey solutions for Infrastructure projects
including concept design, detailed engineering, installation and commissioning, Project
Management and procuring project finance.
We provide conception to completion services for companies interested in setting up the
following infrastructure in India.

Wind Energy,
Solar Energy,
Biomass,
Biogas,
Chemicals,
Clean Coal,
CDM Related Services

We provide full range of consulting for power companies.

We have tie ups and relationships with carbon credit buyers.
We can organise financing & funding for infrastructure projects.
We provide the following services as part of the CDM portfolio

Assistance with preparation of Project Design Document (PDD)

Assistance with preparation of Project Idea Note (PIN)
Assisting registration and issuance process
Business plan development
Carbon credit procurement
Carbon credit sales and marketing
Carbon market analysis
Commercial advisory
Contractual arrangements
Due diligence services
Emission Reductions Purchase Agreement negotiations
Feasibility study
Financial services
Legal advisory
Project identification and screening
Project risk analysis and management
Training

100 MW Solar Farm Pre-Feasibility

2. Feasibility Study
Inteb Sustainability Ltd undertook a detailed desktop exercise of the country and identified 5
promising sites across the country, these have further been narrowed down taking into
consideration political, commercial, financial and project risks to come up with the current site
for the solar farm at Tirunelveli District in Tamil Nadu.
The district covers an area of 6,823 km2. It lies between 8.05 and 9.30 of the Northern
latitude and 77.05 and 78.25 of Eastern longitude. The district has diverse geographical and
physical features.
It has a lofty mountains a stretch of Western Ghats
and low plains. It has a perennial river
Tamirabarani and various other small seasonal
rivers. This district is blessed with beautiful water
falls and cascades. Its diverse features include
sandy soil and fertile alluvium, a variety of flora,
fauna and protected wild life. To add its beauty it
has inland and mountainous forests.
The Agasthiyamalai hills cut off Tirunelveli from
the southwest monsoon, creating a rain shadow
region.
This site has higher than national annual solar
insolation values, favourable local laws, cheap land and good access to the national grid. An
additional assessment was made to determine the most promising model for the solar farm in
terms of size. An assessment was made for 15MW, 20MW, 50MW, 100MW and 500MW sizes. It was
found that the 100MW solar farm represented a good business case in an initial foray with scope
for further expansion.

3. Assumptions used in the Optioneering Study

An optioneering study was conducted based on 100% debt ratio with a debt interest rate of 5%
and a debt repayment of 15 years to determine the cumulative year on cash flow analysis. Three
scenarios were considered i.e. Base case, Optimistic case and Pessimistic case.
Area requirement for the solar farm was based on 5 Acres per MW, based on a 100MW solar farm
we would require 500 Acres* of land. A desktop study was conducted to determine the most
feasible solar technology to be used for the solar farm.
Solar technologies like C-Si, a-Si, CIGS and CdTe were assessed and a cost benefit analysis
conducted based on efficiency, reliability, cost, environmental impact on production,
degradation etc. It was found that the most promising technology presently available based on
regional conditions is the C-Si, with conversion efficiencies of 14.8%.

100 MW Solar Farm Pre-Feasibility

All calculations have been based on a conversion efficiency of 14.8%, should solar panels of
greater efficiency be manufactured this would result in greater power production and hence
greater returns.
We have spoken to solar panel manufacturers to ascertain power output guarantees
95% at year 5, 90% at year 12, 85% at year 18, 80% at year 25 have been established.
A provisional sum has been set aside at 0.5% of the total project costs which also includes
routine maintenance, security, insurance, and a sum set aside for additional panels to
overcome efficiency degradation.
A detailed assessment based on $3.05 / Watt for Solar Panels, PCU and interconnecting wiring
based on feedback received was used in the assessment. Other Expenses include allowances for
Land costs, Civil Works, Landscaping, fencing etc, Mounting Structure, Evacuation Cost for
converting from 3Ph 415V to 33KV, allowance for cabling to nearest Substation, Miscellaneous
Expenses including consultancy fees, Registration, CDM, Insurance, contingency etc were
allowed for in the assessment.

Options

100 MW Solar Farm Annual

Income
Total Annual Outgoings Debt
payments, O&M etc
Net Earnings

Base case based

on CERs at 10
Euros per
Tonne

Optimistic case
based on CERs at 15
Euros per Tonne

Pessimistic case
without CERs
Tonne

47,971,122

48,736,726

46,439,914

31,618,794

31,618,794

31,618,794

16,352,328

17,117,932

14,821,120

NOTES: Indian currency uses the term 1Crore = 10 Million and a term 1 Lakh to signify 100,000.
Typical conversion rates around 46 INR=1$ but the assessment was made on 50 INR=1$. The
conversion ratio to a pound is 72 INR = 1GBP. 1 Acre = 4046.8 M2

4. Lead time for manufacture / installation

This assessment is based on a full installation upfront with an installation time of about 1 year.
However this might not be practical from a manufacturing point of view and we would have to
carry out the installation over a period of 2 years at 50MW per year.
5. Solar Technology.
Solar technologies like C-Si, a-Si, CIGS and CdTe were assessed during the desktop assessment
and a cost benefit analysis conducted based on efficiency, reliability, cost, environmental
impact on production, degradation etc.

100 MW Solar Farm Pre-Feasibility

While it was found that the most promising technology presently available based on regional
conditions is the C-Si, with conversion efficiencies of 14.8%. Some trials have solar panels
offering in excess of 20% efficiency. The next generation of solar panels would yield even higher
efficiencies.
6. Future Expansion / Growth
India has ambitious plans to develop solar power as part of its energy strategy and energy
independence and to establish India as a global leader in solar energy, by creating the policy
conditions for its diffusion across the country as quickly as possible.
The Mission has set a target of 20,000 MW by 2022 and stipulates implementation and
achievement of the target in 3 phases the first phase upto 2012-13, second phase from 2013 to
2017 and third phase from 2017 to 2022.
The current proposal is to buy 500 acres of land and allow for a sinking fund for land acquisitions
and MOUs signed for an additional 6,000 acres which in the vicinity of the site. This would allow
for solar electricity generation of an additional 1200 MW and avoid inflation on year on land
prices. We believe that land acquisition is primary as it would allow greater returns on
investment due to future increase in solar panel efficiencies as well as drop in cost of solar
panels.

6. Detailed Optioneering Analysis

Option 1:
This is the basecase option considers selling CERs at a contract rate at 10 Euros per Tonne with
an annual year on escalation rate of 5% based on increasingly stringent regulations in the future,
in addition to 100% of the electricity being generated by the solar farm and the details
considered in section 4. Detailed assessment is provided in the Appendix.
The cumulative cash flow graphs for this option have been included herewith.

100 MW Solar Farm Pre-Feasibility

Option 2:
This is the Optimistic case option considers selling CERs in the open market known as over the
counter selling rate at 15 Euros per Tonne with an annual year on escalation rate of 5% based on
increasingly stringent regulations in the future, in addition to 100% of the electricity being
generated by the solar farm and the details considered in section 4. Detailed assessment is
provided in the Appendix.
The cumulative cash flow graphs for this option have been included herewith.

100 MW Solar Farm Pre-Feasibility

Option 3:
This is the Pessimistic option which does not consider selling CERs but is purely based on selling
100% of the electricity being generated by the solar farm and the details considered in section 4.
Detailed assessment is provided in the Appendix.
The cumulative cash flow graphs for this option have been included herewith.

100 MW Solar Farm Pre-Feasibility

7. Conclusion & Recommendations

This assessment is based on an installation of 100 MW solar farm, labour is cheap in India, a
small sum of money has been allocated for Installation with a small provisional sum. It is evident
that this is a good investment with an IRR on assets of around 6.7% based on basecase scenario.
We have started liaising with the local government collector to acquire land and sign a MOU for
acquiring more land for further expansion.
We are liaising with solicitors and are in the process of getting more details on local taxation,
customs, excise duties etc and shall be updating the feasibility report.

100 MW Solar Farm Pre-Feasibility

APPENDIX
DETAILED ASSESSMENTS: