A Venture of Solar Power Business in Savar :Opportunity and its Future Prospects

A Venture of Solar Power Business in Savar : Opportunity and its Future Prospects

Prepared for Md. Tarikul Islam Lecturer, Dept. of Finance & Banking Jahangirnagar University

Prepared by Asma Ahmed (1251) Md.Masum Billah (1262)

(Md.Shohag Ali (1265 Md. Rassel Hossain (1266) Tariq Aziz (1269) Md. Nazrul Islam (1292)

99999999999999999Date :0000000=--=--785 Group 8 Dept. of Finance & Banking Jahangirnagar Univerasity Savar, Dhaka f&b-1.ju.group-8@gmail.com

August ,2010

Md. Tarikul Islam Lecturer, Dept. of Finance & Banking Jahangirnagar University Dear Mr. Islam
Here is the report on the establishment of a new venture in savar you asked us to conduct last May 19, 2010. We, the members of group-8 think about establishing a venture on solar power system for higher profit and eliminate the sufferings of load-shedding of savar. Then we work together for finding the different aspects of the venture. After completing the report, we strongly recomend that this venture will be the promiosing business in Savar. We are delighted to work under your govermence which has helped us to work effectively and efficiently. If you need any kind of infomation about report please contact us at f&b-1.ju.group8@gmail.com

Sincerely yours

Tariq Aziz Group leader(group-8)

Foreword: Table of contents:

Executive Summary: Electricity shortage is the biggest problem in our country. The country at Present has a shortfall of 2,000 megawatts of electricity and the demand for electricity is rising day by day. Our government is generating electricity through natural resources like gas which can be end up in coming decades. The shortage of electricity is resulting hours of load shedding all over the country. When we were thinking of establishing a joint venture in Savar we consider how we can mitigate this problem. Solar power system can be a great solution to this problem. It is one kind of renewable energy so the user can use it timelessly. The abundance, inexhaustibility and non-polluting nature of solar energy has made it a popular alternative to conventional energy sources, which are rapidly getting exhausted. Our neighboring country India is using this technology to be eco friendly. Bangladesh government has also taken many initiatives to encourage the solar power business. It has exempted income tax for next 5 years from commercial production from renewable energy. A Solar Panel with capacity of 21.2 KW is installed at the Prime Minister's office. Bangladesh Bank set up a 20.3 KW solar power system on the roof top of its head office. Many people living in the remote areas which are not connected to the national grid have installed solar panels which has brought about a marked change in their lifestyles, and even contributed to the improvement of their livelihoods. In this report we have tried to find out the different aspects of establishing a solar power joint venture.

Introduction The Reports background and its relevant aspects : The research on different aspects on solar power system as a new venture is submitted to Md. Tarikul Isalm, Lecturer, Dept. of Finance & Banking, Jahangirnagar University as authorization on 19May, 2010.

Objectives of the Report : The objective of the report is to start a new venture in savar for achieving higher profitablity and meet the demand of the electricity of the target customers. In this report we described the difference aspects of Solar panel system. Scope of the report: Included: 1. Geographic condition of Savar 2. Economic condition of Savar 3. Current condition of electricity of Savar 4. The reasons for introducing solar power system in Savar 5. Target customer 6. Implementation process 7. Pricing system Excluded: 1. Political Changes 2. Natural disaster 3. Other business affected by the solar system power system i.e.(Generator, IPS, Battery) Sources of data: Both primary and secondary have been used to make the report. Primary Data : The sources of primary data are the local people of savar and some manufacturer companies who manufacture the solar power panel. With a view to knowing the possibility of the business in savar, we collect the opinion of the local people. We also take the interview of the officials who manufacture the solar panel like Grameen Shakti, Rahim-Afroz and IDCL. Secondary Data :

The sources of secondary data are Banglapedia, power division of Bangladesh, Bangladesh Bank, BBS(Bangladesh Bureau of Statistics). We also collect information from The Daily Star, The New Age and Financial Express. Data Collection : We collect primary data through informal interview like face to face communication. We also collect secondary from various websites and print media. Data Analysis : Limitation: i. ii. Report preview: Night Large initial capital investment Direct approach is used to describe the report

Report body
Geographic Condition of Savar:
Savar Upazila (DHAKA district) with an area of 280.13 sq km, is bounded by KALIAKAIR and GAZIPUR SADAR upazilas on the north, KERANIGANJ upazila on the south, MIRPUR, MOHAMMADPUR, PALLABI and UTTARA thanas of Dhaka City Corporation on the east, DHAMRAI and SINGAIR upazilas on the west. The southern part of the upazila is composed of the alluvium soil of the Bangshi and Dhalashwari rivers. Main rivers are Bangshi, Turag, Buriganga and Karnatali. Savar (Town) consists of 9 wards and 55 mahallas. The area of the town is 24.1 sq km. It has a population of 124885; male 53.03%, female 46.97%; population density per sq 5182.

Population 378034; male 54.67%, female 45.33%; Muslim 88.59%, Hindu 10.41%, Christian 0.93%, Buddhist 0.03% and others 0.04%; ethnic nationals: 319 (Buno, Garo, Sangma and Barman). Economic Condition of Savar : Main occupations Agriculture 24.34%, agricultural labourer 12.84%, wage labourer 4.44%, cattle breeding, forestry and fishing 1.90%, industry 1.37%, commerce 17.35%, service 20.68%, construction 1.66%, transport 3.96% and others 11.46%. Value of land The market value of the land of the first grade is Tk 10000 per 0.01 hectare. Main crops Paddy, Jute, peanut, onion, garlic, chilli and other vegetables. Fisheries, dairies and poultries Dairy 181, hatchery 5, poultry 209, fishery 1319. Communication facilities Roads: pucca 62 km, semi pucca 56 km and mud road 562 km; highway 50 km. Manufactories Ceramic industry, beverage industry, press and publication, garments industry, foot ware, jute mills, textile mills, printing and dying factory, transformer industry, automobile industry, biscuit and bread factory, pharmaceutical industry, soap factory, brick field, cold storage, welding, plant nursery, etc. Bangladesh Export Processing Zone is located in this upazila. Main exports Jackfruit, papaya, flower, sapling, dairy products, meat, transformer, fabrics, dye, medicine, ready made garments, electronics and electric goods, shoe, brick, sweetmeat etc. NGO activities Operationally important NGOs are BRAC, ASA, PROSHIKA, GRAMEEN BANK, Ganasastha Kendra, World Vision, Swanirvor Bangladesh, VERC, Palli Mangal Karmasuchi, CDD, Adesh.

INTRODUCTION: The sun has been used for drying clothes and growing food for thousands of years, but only recently has the sun been used for solar power. Concerns over pollution, environmental degradation, and resource depletion have led to an increasing awareness of the importance of developing solar energy. Just the tiny fraction of the sun's energy that hits the Earth (around a hundredth of a millionth of a percent) is enough to meet all our power needs many times over. In fact, every minute, enough energy arrives at the Earth to meet our demands for a whole year - if only we could harness it properly. What is solar power panel system : A parabolic dish and stirling engine system, which concentrates sunlight to produce useful solar power. Solar energy, radiant light and heat from the sun, has been harnessed by humans since ancient times using a range of ever-evolving technologies. Solar radiation, along with secondary solar-powered resources such as wind and wave power, hydroelectricity and biomass, account for most of the available renewable energy on earth. Only a minuscule fraction of the available solar energy is used. Solar powered electrical generation relies on heat engines and photovoltaics. Solar energy's uses are limited only by human ingenuity. A partial list of solar applications includes space heating and cooling through solar architecture, potable water via distillation and disinfection, daylighting, solar hot water, solar cooking, and high temperature process heat for industrial purposes.To harvest the solar energy, the most common way is to use solar panels. Solar technologies are broadly characterized as either passive solar or active solar depending on the way they capture, convert and distribute solar energy. Active solar techniques include the use of photovoltaic panels and solar thermal collectors to harness the energy. Passive solar techniques include orienting a building to the Sun, selecting materials with favorable thermal mass or light dispersing properties, and designing spaces that naturally circulate air. How it works: Solar panels collect solar radiation from the sun and actively convert that energy to electricity. Solar panels are comprised of several individual solar cells. These solar cells function similarly to large semiconductors and utilize a large-area p-n junction diode. When the solar cells are exposed to sunlight, the p-n junction diodes convert the energy from sunlight into usable electrical energy. The energy generated from photons striking the surface of the solar panel allows electrons to be knocked out of their orbits and released, and electric fields in the solar cells pull these free electrons in a directional current, from which metal contacts in the solar cell can generate electricity. The more solar cells in a solar panel and the higher the quality of the solar cells, the

more total electrical output the solar panel can produce. The conversion of sunlight to usable electrical energy has been dubbed the Photovoltaic Effect. The photovoltaic effect arises from the properties of the p-n junction diode, as such there are no moving parts in a solar panel. Solar Insulation and Solar Panel Efficiency: Solar insulation is a measure of how much solar radiation a given solar panel or surface receives. The greater the insulation, the more solar energy can be converted to electricity by the solar panel. Click to learn more about solar insulation. Other factors that affect the output of solar panels are weather conditions, shade caused by obstructions to direct sunlight, and the angle and position at which the solar panel is installed. Solar panels functions the best when placed in direct sunlight, away from obstructions that might cast shade, and in areas with high regional solar insulation ratings. Solar panel efficiency can be optimized by using dynamic mounts that follow the position of the sun in the sky and rotate the solar panel to get the maximum amount of direct exposure during the day as possible. For more information on solar panel efficiency through the use of mounts, see our section on solar panel mounts and accessories.
Source: SOLARPANELINFO.com

How it works( with diagrams & picture): As more people become aware of the problems to the global environment with carbon fuel based electricity production clean alternatives such as solar panels are becoming ever more popular. Many people wonder how a solar panel works, so we've answered it the best we can with diagrams and descriptions below. When the suns solar energy rays hit the solar panel's cells, direct current (DC) flows through an inverter, converting the (DC) current to alternating current (AC). AC power can then flow directly into a device or building (if required), or into backup batteries to be used later (if the system has them) or to a utilities company hooked to a grid.(national or local supply).

Graphic Of How solar Panels Work To Convert Sunlight To Electricity The solar cells you would have seen on satellites, calculators etc are photovoltaic cells or modules (modules are a collection of solar cells electrically connected and joined together in one frame). Photovoltaic, (photo = light, voltaic = electricity), convert the energy of sunlight directly into electricity. Originally expensive and only used in space, photovoltaic are now finding many applications on countless devices, buildings etc were ever remote or free and environmentally sustainable produced electricity is required. Photovoltaic (PV) cells are made of special materials called semiconductors like silicon, which is currently the most commonly used. Basically, when light shines on the solar cell a percentage of this solar energy is absorbed into the semiconductor material. This energy now inside the

semiconductor knocks electrons loose allowing them to flow freely. PV cells also all have one or more electric fields that force electrons freed by light absorption to flow in a certain direction. This flow of electrons is an electrical current. Metal contacts on the top and bottom of the PV cell draw that current off to use to power external electrical products such as lights, calculators etc. This current ,combined with the cell's voltage (which is a result of its built-in electric field or fields),determines the power (or wattage) that the solar can produce. Why in Savar: 1. We know though savar is an industrial area but there are a lot of people are also resident there. But the electric situation is not so good in this area. Though the residential people of this area, we know that everybody load-shedding occurs 3-4 times in a day and it takes 40-60minutes to come. As a result the people who accommodate themselves are suffering a lot. On the other hand there are two universities in this area as a result a lot of student are there. So it is a great loss for the students. After all the over all condition is not good because there no alternative resources to fulfill this huge scarcity of electricity. 2. It is known to all that, the total electric condition of our country is not so good and the situation of savar area is so severe. There is no alternative resources to cover the deficit of the electricity. So the business of solar energy plant is to be a great business sector. Because we know though the primary cost of the solar plant is high but it has no another cost. So it is beneficial for the householder. It is also known to us that the residential area of savar is separating day by day. So if we pick the market it will be high profitable business. 3. The target customer of this venture is the people who have owned building but our new target customers are the people who newly want to make houses in various new model town like `Motijhil Model Town

Business process

Initial Investment: As we are going to establish new venture, we need two types of capital to establish this project. Therefore : A. Allowed Capital (50,00,000) B. Paid Capital (15,00,000) A. Allowed Capital : Though we started limited amount capital, we decided to keep it at 50,00,000 (fifty lakh Tk) B. Paid Capital : As a new venture, we are going to have a paid capital of 15,00,000 (Fifteen lakh Tk.) to establish and to run this business. Financing: As govt. has come forward to appreciate the alternative sources of electricity, the banks are also very keen to lend money with a normal condition and less interest rate than the loans. For example, Agrani Bank is giving to the user of solar energy and also for the organizations. So, we can take loan from the banks. As well as many investors are also interested to invest in this sector as it is a possible sector or promising sector. So, we can collect this money from the following sources : C. Banks D. Investors E. Relatives F. Own sources Our budget will be Tk. 10 million. The allocation of the money in different sectors will be : Expenses Land Lease (10 years) Constraction Establishment Purchase solar panel Operational Cost Percentage 20% 10% 5% 35% 15%

Marketing Cost Others Totol Expenses

10% 5% 100%

2. 40% of the budgeted money will be collected from bank and as owners, we are going to invest 60% Supply Chain: There are two types of company according to the activities. These are : A. Manufacturing B. Marchandising As we are willing to start a merchandising company so we need to collect or purchase solar panels from some other companies at whole selling price. There are many manufacturing companies in abroad such as: Florida in California. But at first we want to collect or purchase the solar panels from domestic company. So we can collect the solar panels from : A. Grameen Shakti Foundation Ltd. B. Rahim-Afrooz Company Ltd. Marketing: Solar power system is a new concept in our country. So we need to build up a good communication process so that people can understand our message properly. Different kind of advertising policy has to be implemented. We can have billboards and posters at the important points of Savar. We can give leaflets of our product at mosques and business areas. We can arrange concert of local singers to attract people to advertise our product. A team of people can be hired to communicate with the people by going to their house. Their job will be to send the message to the customer and encourage them to buy our product. In the business world organizations are following two types of marketing system. There are: A. Traditional system B. MLM system For running our business, we will follow traditional business system. In traditional business system there is a supply chain like this : Consumer

Marketing

Wholeseller

Retailer

So, our marketing strategy will like this : Grameen Shakti Foundation Our Company

Consumer Advertising:

Now-a-days there are many medium of advertising. We will use the most popular and attracted medium for our advertising. It is very important because our product is a new product. We will use the Dish Antenna, print media, posturing etc.

Target Customer: Our Target Customer will be classified in three categories with different facilities. They are: Industry & Organizations : Garments industry, Food industry, Electric industry, pharmaceutical industry, Bangladesh Export Processing Zone and other industries. Different banks and their branches, Savar has Korea Bangladesh Friendship Hospital, 7 family planning centers, 2 satellite clinics, 21 private clinics. Shop: Thousands of small shops in this area Houses: Millions of houses in this area. Pricing system: To determine pricing system is an important criteria of business. To price the product we need to know the economic condition of the particular place. As we want to start and doing the business at savar, Regarding the pricing system from we consider about three kind of customer. They are1. Industry & Organizations 2. Shop 3. Home If we think about the office they need much more electricity for light and fan for their daily operation. So we will offer them much powerful solar panel at big cost. The price of some package are given bellowFor Industry & Organizations :
SL. No. 1 2 3 Load 4 Nos. CFL Lamp- 20 watt, 4 Nos. Ceiling Fan & 1 No. 21 Color TV point 5 Nos. CFL Lamp-20 watt, 5 Nos. Ceiling Fan & 1 No. 21 Color TV point 4 Nos. CFL Lamp- 20 watt & 4 Nos. Ceiling Fan Package Included 4 Nos. 85 Wp Solar Module, 2 Nos. 80 Ah Industrial Battery, 1 No. 1000 pv-Inverter. 8 Nos. 50 Wp Solar Module, 4 Nos. 100 Ah Industrial Battery, 1 No. 1000VA pv-Inverter. 2 Nos. 130/135 Wp Solar Module, 2 Nos. 130 Ah Industrial Battery, 1 No. 800VA pv-Inverter. Using Time per Day 4 hours 4 hours 4 hours Package Price 1,64,000 1,99,000 1,39,000

For Shop:
SL. No. Load Package Included Using Time per Day Package Price

11 Nos. 7 Watt Lamp & 17''-20'' B/W TV point 10 Nos. 7 Watt Lamp & 17''-20'' B/W TV point 8 Nos. 7 Watt Lamp & 17'' B/W TV point

1 No. 130 Wp Solar Module, 2 Nos. 100 Ah Industrial Battery (Tabular Plate), 1 No. 15 Amps Charge Controller, 1 No. Structure, 11 Nos. 7 Watt Lamp, Switch, Switch Board, Installation & Other Accessories. 1 No. 120 Wp Solar Module, 2 Nos. 100 Ah Industrial Battery (Tabular Plate), 1 No. 15 Amps Charge Controller, 1 No. Structure, 10 Nos. 7 Watt Lamp, Switch, Switch Board, Installation & Other Accessories. 1 No. 85 Wp Solar Module, 1 No. 130 Ah Industrial Battery (Tabular Plate), 1 No. 10 Amps Charge Controller, 1 No. Structure, 8 Nos. 7 Watt Lamp, Switch, Switch Board, Installation & Other Accessories.

4 hours

65,400

4 hours

62,900

4 Hours

40,800

For Home:
SL. No. 1 3 Nos. 7 Watt Lamp & 1 No. 14 B/W TV point 2 2 Nos. 5 Watt CFL Lamp or 1 No. 7 Watt Lamp & 1 No. 3 Watt CFL 3 1 No. 5 Watt CFL Lamp or 2 Nos. LED Lamp (18,36) Load Package Included 1 No. 40 Wp Solar Module, 1 No. 55/60 Ah Industrial Battery (Tabular Plate), 1No. 5 or 10 Amps Charge Controller, 1 No. Structure, 3 Nos. 7 Watt Lamp, Switch, Switch Board, Installation & Other Accessories. 1 No. 20/21 Wp Solar Module, 1 No. 30 Ah Industrial Battery (Tabular Plate), 1 No. 5 or 10 Amps Charge Controller, 1 No. Structure, 2 Nos.5 Watt CFL or 1 No. 7 Watt Lamp & 1 No. 3 Watt CFL, Switch, Switch Board, Installation & Other Accessories 1 No. 10 Wp Solar Module, 1 No. 18 Ah Industrial Battery (Tabular Plate), 1 No. 5 or 10 Amps Charge Controller, 1 No. Structure, 1 No. 5 Watt CFL or 2 Nos. LED Lamp, Switch, Switch Board, Installation & Other Accessories Using Time per Day Package Price

4 hours

21,400

4 hours

11,700

4 Hours

8,800

Payment schemes: Mode of Repayment Option-1 Option-2 Down Payment 25 % 15 % Installment 24 Month 36 month Service Charge (Flat Rate) 4% 6%

Option-3

100% Cash payment with 4% discount.

Source: Grameen Shokti

Profit strategy : If we are able to manufacture solar panels, we can earn amount of profit. Florida in Califiornia, the manufacturing companies earn about : 3*Manufacture price For example : with 1800 materials, they sells it $9000. But as a merchandising company & purchasing from domestic country we cant earn this amount of profit. So, our expected rate of profit would be of least 30% (deducting all expenses). This may be like : Purchasing rate Transportation Salary & Wages Advertisement Other expenses Expected Profit Percentage 60% 2% 2% 5% 1% Total Expenses 70% 30% Price for the panels 100%

Ending
1.Summary with the analysis:

Reference: Bibliography: