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Financial analysis of 1 MW Solar PV plant

1. MW Scale Solar PV Power Plant

2. Background Solar energy is free source of energy Solar radiation on earth surface per hour is equal to
total power consumption of earth for whole year. Grid power in India is polluting, unreliable and
inefficient Solar energy is a renewable, clean alternative to fossil fuels. solar energy is converted into
electricity by using either photo- voltaic or solar thermal

3. A modest 2.5kw solar power system can have over its lifetime equivalent to 300 barrels of oil not
produced 270,000 miles not driven 1,100 lbs of acid rain emissions not discharged 550 lbs of smog
emissions not produced 220,000 lbs of greenhouse gases not emitted equivalent to planting 500
trees. Solar Energy vs Convectional Energy

4. •Jawaharlal Nehru National Solar Mission (MNRE, Govt of India) launched in, 2010 by the Prime
Minister, a target of deploying 20,000 MW of grid connected solar power by 2022. It is enhanced by new
government to 100,000 MW. Target by 2022 Old Revised •Solar power 20,000 MW 100,000 MW •Wind
Energy 38500 MW 60,000 MW • Others 13500 MW 15,000 MW •Total 72,000 MW 175,000 MW

5. Incentives to Solar power plant • Various incentives offered by central and state government, few of
them are • Benefit in land registration for solar power plant • 15-30 % subsidy for sanctioned project for
equipments. • Support in grid connectivity • Depreciation benefits

6. 1MW SPV Power Plant : Initial casting Sr No Item Unit @ rate Cost (lac) 1Land 6 Acre 600000 36
2Modules 1100000Watt 33 363 3Civil Structure 60,500Kg 66 44 4Inverter 1100000VA 11 121
5Transformer 1 27,00,000 27 6Protective devices 1 10 7Wires, Cables 10 8SCADA/RMS 10 9Installation
10 10Legal & official work 24 11Grid Evacuation 10 12Execution & commisioning 30 Total 695

7. 1MW SPV Power Plant : Financial Plant Capacity 1000 KW Plant Cost (in lacs) 0.695 lac/KW 695 Equity
30% 208.5 Debt 70% 486.5 Interst rate 12% 1.01 Payment Period (yrs) 9 108 EMI 7.3871 Maintenance &
Manpower 3% P V of Inverter Cost 132 Price reduction rate of Inverter 2% • Area Shade free 3 Acre Only
80% of the input area is considered to adjust for potential shaded areas • Maintenance & Manpower 4%
of project cost, with annual escalation of 5% • Inverter lifespan is 10 years, with 2.00% annual cost
reduction (110 % of capacity, @Rs 11/W) • Accelerated depreciation is at 80.00%. It is assumed that the
entire benefit of accelerated depreciation can be claimed • Corporate tax rate 35% • Plant generation
4.7 kWh per KW per day, with 1% annual panel degradation and 10% losses10% • Debt service
calculation assumes 70.00% debt; 2.00% interest rate; 9-year loan term with no moratorium; repayable
monthly through EMI • Tariff 7.5 /KWH through PPA for 12 years • Annual inflation 7%

8. 1MW SPV Power Plant : Financial in lacs Year Plant Expenditure Net Yearly Expend Generation return
by power selling REC Return @ 3000/ MWH Net Return Present value of Net return Equity/ Inverter
replaceme nt Mainten ance Debt Int Debt Prin Power Unit (MWH) Tariff Rs per KWH earning 0 208.50 -
208.50 -208.50 -208.50 -208.50 1 20.85 56.66 31.99 -109.50 1478 7.50 110.85 1.35 1.35 1.27 2 21.89
52.60 36.04 -110.54 1463 7.50 109.73 -0.81 44.00 43.19 37.72 3 22.99 48.03 40.61 -111.63 1449 7.50
108.68 -2.96 43.00 40.04 32.69 4 24.14 42.88 45.77 -112.78 1434 7.50 107.55 -5.23 43.00 37.77 28.81 5
25.34 37.08 51.57 -113.99 1420 7.50 106.50 -7.49 43.00 35.51 25.32 6 26.61 30.54 58.11 -115.26 1406
7.50 105.45 -9.81 42.00 32.19 21.45 7 27.94 23.17 65.48 -116.59 1392 7.50 104.40 -12.19 42.00 29.81
18.57 8 29.34 14.86 73.78 -117.98 1378 7.50 103.35 -14.63 41.00 26.37 15.35 9 30.80 5.50 83.14 -119.45
1364 7.50 102.30 -17.15 41.00 23.85 12.97 10 108.29 32.35 0.00 0.00 -140.63 1350 7.50 101.25 -39.38
41.00 1.62 0.82 11 33.96 -33.96 1337 7.50 100.28 66.31 40.00 106.31 50.51 12 35.66 -35.66 1324 7.50
99.30 63.64 40.00 103.64 46.02

9. 1MW SPV Power Plant : Financial in lacs Year Plant Expenditure Net Yearly Expen Generation return
by power selling REC Return @ 3000/ MWH Net Return Present value of Net return Equity/ Inverter
replacem ent Mainten ece Debt Int Debt Prin Power Unit (MWH) Tariff Rs per KWH earning 13 37.44 -
37.44 1310 10.00 131.00 93.56 39.00 132.56 55.01 14 39.32 -39.32 1297 10.00 129.70 90.38 39.00
129.38 50.18 15 41.28 -41.28 1284 10.00 128.40 87.12 39.00 126.12 45.71 16 43.35 -43.35 1271 10.00
127.10 83.75 38.00 121.75 41.24 17 45.51 -45.51 1259 10.00 125.90 80.39 38.00 118.39 37.48 18 47.79 -
47.79 1246 10.00 124.60 76.81 37.00 113.81 33.67 19 50.18 -50.18 1234 10.00 123.40 73.22 37.00
110.22 30.48 20 88.83 52.69 -141.52 1221 10.00 122.10 -19.42 37.00 17.58 4.54 21 55.32 -55.32 1209
10.00 120.90 65.58 36.00 101.58 24.53 22 58.09 -58.09 1197 10.00 119.70 61.61 36.00 97.61 22.03 23
60.99 -60.99 1185 10.00 118.50 57.51 36.00 93.51 19.73 24 64.04 -64.04 1173 10.00 117.30 53.26 35.00
88.26 17.40 25 67.24 -67.24 1161 10.00 116.10 48.86 35.00 83.86 15.45 405.62 995.11 311.31 486.50 -
2198.54 32842.00 220.00 2864.33 665.79 942.00 1607.79 480.44

10. 1MW SPV Power Plant : Financial • Initial Investment : 6.950 crore Equity : 2.085 crore Debt : 4.865
crore • Present Value of Investment : 12.56 crore • Present Value of earning (PPA & REC) : 17.36 crore •
Present Value of Profit before tax :4.80 crore • Payback period : 6 years • Levelized cost of power : Rs
3.28/unit • After payback period capacity enhancement of another 1 MW in same land can be done with
maintenance covered by first project (conservative estimate of earning is made. No incentive by
government is considered in investment)