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Transcript of Powering Rural India by Micro Electrification PRIME Powering Rural India by Micro Electrification...
Powering Rural India by Micro Electrification
PRIMEPRIMEPowering Rural India by Powering Rural India by Micro ElectrificationMicro Electrification
Presented by:Prasoon Agarwal ( [email protected])
Indian Institute of Management , Ahmedabad ( India)
Team PRIME - IIM Ahmedabad
Meet my Team
Koushik MBA 2 Year Experience in Finance
Maruthi MBA 2 Year Experience in Operations
Maurya MBA 2 Year Experience in Marketing
Dr. Chirag Experience in Community Health
Team PRIME - IIM Ahmedabad
Electricity Scenario in India
30% of this is in the villages
Revenue Opportunity (@ 8.25 cents/ KWh)
$ 1.82 Billion
2003-04 2004-05 2005-06 2006-07
(Proj)
100000
200000
300000
400000500000
60000011.2 % 11.7 %
12.3 % 13.9 %
Electricity Consumption vs. Shortage Total Shortage72925 GWh
Team PRIME - IIM Ahmedabad
What lack of Electricity means
No Water for Irrigation
Team PRIME - IIM Ahmedabad
What lack of Electricity means
No electricity for Households
Team PRIME - IIM Ahmedabad
What lack of Electricity means
Poor Health Facilities
Team PRIME - IIM Ahmedabad
What lack of Electricity means
Firewood as main fuelNo industriesEnvironmental Issues
Team PRIME - IIM Ahmedabad
Our Dream
Irrigation Concerns
Development Concerns
Health Concerns
Clean Energy Access
Biomass based Micro Electrification
Team PRIME - IIM Ahmedabad
What Power means for India
Team PRIME - IIM Ahmedabad
What is PRIME
Small power plants in Villages
Run on locally grown Bio Fuels
Community as a stakeholder
Each plant caters to 6-7 Villages
Team PRIME - IIM Ahmedabad
Implementation Plan
Identification of Land
Leasing and Develop the land
Regulatory Approvals & Compliance
Forming Village Cooperative
Cultivation of Crops
Power Plant and T&D Setup
Distribution and Collection
Team PRIME - IIM Ahmedabad
Implementation Plan
Identification of Land
Leasing andDevelop the land
Regulatory Approvals & Compliance
Forming Village Cooperative
Cultivation of Crops
Power Plant and T&D Setup
Distribution and Collection
First Project: PRIME-1 Completed till this Stage
Team PRIME - IIM Ahmedabad
What's in for InvestorsK
ey P
aram
eter
s (p
er
Pla
nt
)
IRR
Cost per unit of electricity
Profit Margin
$ 0.34 Million for a capacity of 1MW
$ 0.165 Million per year
$ 0.8 Million ( over a 30 year horizon)
26% over the Net Cost of Generation (excluding CER)
PAT
Capex (Net of Grants & loan)
5.15 years
6.55 cents/KwH (Rs 2.62/KwH)
29%
Payback Period
NPV
Team PRIME - IIM Ahmedabad
Social Benefits ( SROI)Electricity for Irrigation60 Pumpsets of 7.5 HP rating, per village
Electricity for Household700 Incandescent lamps per village (24 Hours)
EmploymentWill lift 250-270 people per cluster above poverty line
Income for Farmers from WastelandIncome benefits for farmers cultivating Bio Fuels for this plan
Environment BenefitsCarbon Neutral Fuel Used ; CERs gained for every unit
Health/Education BenefitsWill raise the standard of living for the people from these communities
Team PRIME - IIM Ahmedabad
Risks
Feedstock PricesPrice impact on input cost
Technology ObsolescenceEmerging technology might make existing facilities inefficient
Government SupportPolicy reversal on subsidy on electricity
Leasing the land from Villagers
Rural CooperationDifferent villages might lead to different arrangements
BioFuels ( Leased Land Cultivation)What if Plant is not able to generate power
Provision for Upgradation in 3 Years
Community Involvement
“Panchayat” As a stakeholder
Other uses for Casuarina
Powering Rural India by Micro Electrification
We are not just Powering
but EmPowering India !!!
Team PRIME - IIM Ahmedabad
Q & ALoad in Villages
Village Cooperatives
Implementation Flow
Cost Breakup
Pricing
Income Statement
Government Cash Flow
NPV CalculationsPilot- PRIME 1
T & D Costs Labour/Admin Cost
Why BioFuels
Why Casuarina
Gasification Process
Vision
Management
Future Plans
Team PRIME - IIM Ahmedabad
Power Requirement in Village
Assumptions:1. A 10 Hp pump running for 6-8 hrs every alternate day would be sufficient for irrigation purposes. So, the
average number of hours that a pump works for a day works out to be 4.
2. The most commonly used pump set is of 5Hp. However one can find quite a few pump sets of 10 Hp and even a few of 15 Hp capacities in a typical village. So, taking an average of 7.5 Hp is a reasonably fair assumption.
3. The consumption of electricity for domestic purposes is small compared to the power consumption for irrigation. So, the total consumption of electricity is kept at 1.5 times that required for irrigation.
4. The final calculation of the Capacity takes into account a cushion of 4% downtime and a transmission efficiency of 90%.
Total number of Pumpsets in the district 56155
Total number of villages 949
Average number of Pumpsets in a village 60 (appx)
Number of hours of running everyday 1 4
Rating of a Pump 2 7.5Hp
Units required for a pump in a day (KWh) 22.5
Units required for the irrigation of the entire village 1350
Total number of Units required 3 2025
Number of hours the powerplant will run in a day 16
Hence, the Required Daily Capacity of Plant 4 164.983
Back
Team PRIME - IIM Ahmedabad
Break-up of Costs
Farm Costs (Rs/KWh)
Raw Material Cost 1.25
Lease Rental for Plantation Land 0.27
Total Costs 1.52
Plant Costs (Rs/KWh)
Operation and Maintenance Cost 0.07
Labour Costs 0.20
Depreciation of Assets 0.20
Total Costs 0.47
Other Costs (Rs/KWh)
Interest Costs 0.36
Collection & Transaction Costs 0.13
Total Costs 0.49
T & D Costs (Rs/KWh)
Operation and Maintenance Cost 0.05
Depreciation of Assets 0.09
Total Costs 0.14
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Team PRIME - IIM Ahmedabad
Labor and Admin Costs
Total number of units delivered = 560000 So, labor cost /KWh = 0.20 Rs
Direct labor No. of Workers Daily Wage Rate Expense /Year
Feed Handling 3 150 157500
Operators 3 150 157500
Ash Handling 2 150 105000
Labour Bill for a shift (2 shifts/day) 420000
Total Labour Bill for the year 840000
Office Administration No. of Workers Expense/Year
Plant Supervisor 2 168000
Plant Manager 1 120000
Total Admin Costs 288000
Total Manpower Cost for running the plant 1128000
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Team PRIME - IIM Ahmedabad
Pricing
Total Costs Rs/KWh
Total variable Cost per KWh 1.38
Total fixed costs per KWh 0.59
Depreciation of assets 0.29
Interest Cost 0.36
Total Cost of Producing 1 KWh of energy 2.62
Mark-up 0.68
Final Price 3.3
Team PRIME - IIM Ahmedabad
Cost Structure
Factory
Farms
Transmission
ConsumersSelling PriceRs. 3.3/KWh
Rs. 1.52/KWh
Rs. 0.49/KWh
Total CostRs. 2.62/KWh
MarkupRs 0.68/KWh
+ CER Rs
0.60/KWh
Others
Rs. 0.14/KWh
Rs. 0.47/KWh
Back
Team PRIME - IIM Ahmedabad
Income Statement
Back
Income
Rs per unit
Tariff 3.3
Carbon Credits 0.6
Total Income 3.9
Costs
Variable Costs
Raw Material Cost 1.25
Collection Costs (3%) 0.1
Transaction costs for CC 0.03
Total variable Cost per KwH 1.38
Fixed Costs
Operation and Maintenance Cost 0.07
Labour for Plant running 0.2
Depreciation of assets 0.29
Lease rental for Plantation land 0.27
Fixed T&D 0.05
Total fixed costs per KwH 0.88
Costs per Kwh Supplied 2.26
PBIT 1.64
PBDIT(Adding back depreciation) 1.93
Less: Interest
Long term Loan 0.36
PBT 1.28
PAT(in millions for whole plant) 6.59272
Team PRIME - IIM Ahmedabad
Cash Flow Statement
Back
Year 0 1 to 5 5 to 10 11 12 to 15 16 to 30
Outflows(in Rs Million)(per plant)
Land Cost Factory and Storage 0.20
Land Lease 1.68 1.68 1.68 1.68 1.68 1.68
Land initial development cost (accumulative) 1.50
P & M 30.00
Technology 1.00
Contingencies 1.00
T&D Network Setup 15.00
O&M Cost 0.40 0.40 0.40 0.40 0.40
Overhauling Costs 6.00
Collection Costs 0.56 0.56 0.56 0.56 0.56
Interest Costs 2.01 2.01 2.01 2.01 2.01
Labor (Plant) 1.12 1.12 1.12 1.12 1.12
Expense on raw material* 7.00 7.00 7.00 7.00 7.00
Fixed T&D Cost 0.30 0.30 0.30 0.30 0.30
Transaction Costs for carbon credits 0.17 0.17 0.17 0.17 0.17
Total Outflows 50.38 13.24 13.24 19.24 13.24 13.24
Inflows
Grant 16.00
Tariff Revenue 18.48 18.48 18.48 18.48 18.48
Carbon Credit Sale 3.38 3.38 3.38 3.38 3.38
Total Inflows 16.00 21.86 21.86 21.86 21.86 21.86
Net cash Flows -34.38 8.62 8.62 2.62 8.62 8.62
Team PRIME - IIM Ahmedabad
T&D Setup Costs: Each village has approx. 160-180 households
A 25 kVA transformer can cater to 60-70 households (at normal load)
Thus a typical 6-7 village cluster would require 18 such transformers
Each transformer costs around Rs.8 lakhs
Thus total costs around Rs.1.5 crores
Back
Team PRIME - IIM Ahmedabad
NPV Calculation
Back
Rs Millions Year 0 Year 1 – 5 Year 5 – 10 Year 11 Year 12 – 15 Year 16 - 30 PBIDT(1-T) 9.90 9.90 7.56 7.56 7.56Plus
Dep. Tax Shield 0.137 0.137 0.722 0.722 0.722Government grant 16Less Capital Expenditure 50.38 6
Change in Working Capital Free Cash Flow -34.38 10.03379 10.03379 2.28620 8.28620 8.28620NPV @ WACC Rs 32 million ( $ 0.8 Million per plant)
Team PRIME - IIM Ahmedabad
Gram Urjaa Samiti
Would comprise of heads of Gram Panchayats, officials from administrative bodies and representative from local NGO’s
Functions:
• Ensure that there is steady flow of the biomass from fields
• Steady collection of revenues, without any default
• Prevention of electricity developments
• Mode of communication between PRIME and the villagers
Team PRIME - IIM Ahmedabad
The Cooperative Model
PRIME
POWER PLANT
GOVERNMENT
GRAM URJA SAMITI
Grants and Exemptions
Subsidies/Financing
Continuous Power
Assured Payments Back
Team PRIME - IIM Ahmedabad
Government /Policies
Regulations (Electricity Act Provisions)
FREE LICENSE: Will come under Universal Service Obligation
Person exempted under eighth provision to Section 14 from licensing would be free from the licensing obligations and purview of the Appropriate Commissions in matters pertaining to determination of tariffs and universal supply obligations applicable to licensees.
TARIFF SETTING: Based on Mutual Agreement The retail tariffs for electricity supply by persons exempt under eighth
provison to Section 14 would be set, based on mutual agreement between such person and the consumers.
Team PRIME - IIM Ahmedabad
Government /Policies
Remote Village Electrification Program
Central Financial Assistance (CFA) upto 90% of the cost of the projects is provided as grant for electrification of remote unelectrified census villages and remote hamlets of electrified census villages under this Programme, with specific benchmarks as applicable in respect of the technologies adopted for electrification.
The balance 10% cost of projects could be financed through sources such as Pradhan Mantri Gramodaya Yojana (PMGY), Minimum Needs Programme (MNP), Rural Infrastructure Development Fund (RIDF), Ministry of Tribal Affairs (MoTA), Member of Parliament Local Area Development Fund (MPLAD) / Member of Legislative Assembly Local Area Development Fund (MLALAD) and the corporate sector. The implementing agencies are free to raise funds from these and other sources, such as Rural Electrification Corporation (REC), Power Finance Corporation (PFC), etc., including users, to meet their share of the cost of project.
Rajiv Gandhi Gramin Vidyutikaran Yojna RGGVY provides for 90% capital subsidy for creating/ augmenting a basic rural
electrification backbone and village electrification infrastructure
Back
Team PRIME - IIM Ahmedabad
Pilot- PRIME 1
0%
5%
10%
15%
20%
25%
AndhraPradesh
Gujarat MadhyaPradesh
Bihar Maharashtra
0%
5%
10%
15%
20%
AndhraPradesh
Gujarat MadhyaPradesh
Bihar Maharashtra
Selection Criteria
Electricity Deficit- higher the deficit, more apt is the location
Proportion of VillagesUn-Electrified- higher the proportion, better is the location
Amount of Wastelands- higher the better
Considering the three criteria, Madhya Pradesh best fits the bill initial plants
0%
20%
40%
60%
80%
100%
AndhraPradesh
Gujarat MadhyaPradesh
Bihar Maharashtra
Team PRIME - IIM Ahmedabad
Pilot – PRIME 1
Where?
How?
Why?
From Casuarina equisetifolia using Gasification Technology
Khandwa District
Biomass Plant
Team PRIME - IIM Ahmedabad
Location: Khandwa
Raisen 1349 94.4 80 5.60
Vidisha 1471 96.65 51 3.35
Sehore 1008 99.7 3 0.30
Hosangabad 873 94.58 50 5.42
Harda 444 89.34 53 10.66
Betol 1314 98.95 14 1.05Sub Total 6459 251 3.74
Morena 753 99.08 7 0.92
Shoepupr 476 89.31 57 10.69
Shivpuri 1298 97.89 28 2.11
Guna 2028 98.49 31 1.51Sub Total 4555 123 2.63
Khandwa 826 87.04 123 12.96
J abalpur 1335 97.23 38 2.77
katni 839 94.91 45 5.09
Mandla 946 95.08 49 4.92
Dindori 1035 93.16 76 6.84
Seoni 1539 97.1 46 2.90Sub Total 5694 254 4.27
Sagar 1776 95.07 92 4.93
Chhatarpur 1062 98.7 14 1.30
Damoh 1108 91.95 97 8.05
Panna 921 98.08 18 1.92Sub Total 4867 221 4.34
Rewa 2148 91.33 204 8.67
Satna 1655 92.77 129 7.23
Sidhi 1803 98.96 19 1.04
Shahdol 1298 93.52 90 6.48
Umariya @ 554 94.06 35 5.94Sub Total 7458 477 6.01G.Total 33900 97.3 1547 3.70
Rewa Region
Percent villages
unelectrified
I ndore Region
J abalpur Region
Sagar Region
Bhopal Region
Gwalior Region
District
Number of
villages
Percent villages
electrified
Number of villages
unelectrifi
Back
Team PRIME - IIM Ahmedabad
Process FlowCasaurina stems
Collection &Preparation
Cutting
Drying
Introductioninto Gasifier
Pyrolysis
C + ½ O2 = CO
Combustion
C + H2O = CO + H2CO + H2O = CO2 + H2
Electricity
Char Heat
Pressure
GasificationCooling &Cleaning
ProducerGas
InternalCombustion
Engine
Air
Heat
Steam
Water
CO + H2 + CH4
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Team PRIME - IIM Ahmedabad
Why BioFuels
High calorific value: 3000-4000 kCal
Minimal amount of carbon emission
Widely available throughout country
Various sources: Casaurina, Eucalyptus, Prosopis
B
I
O
M
A
S
S
Local availability of raw materials
Grows on waste/unused land
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Team PRIME - IIM Ahmedabad
Why CasuarinaRaw Material Tons / MW
Cost of Raw Material / Ton
Land reqd(hectares)
10000
10000
10000
Rs 700
Rs 700
Rs 700 1000
250
400
Lease CostRs/ KWh
4 X
X
1.6X
CASUARINA
PROSOPIS
SUBABUL
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Team PRIME - IIM Ahmedabad
Implementation flow
Identification of Land
Wasteland details
Leasing & LandDevelopment
Gram UrjaSamiti
Un-electrified villages cluster
RegulatoryCompliance
State Electricity Regulatory
Commission
Min. of Rural Development
State Wasteland Development Dept
Ensuring regular
supply of Crops
Gram Panchayat, Admin Bodies
and NGOs
Min. of Non Conventional
Energy Resources
Provision of latest techniques
Cultivation ofCrops
Manpower TrainingCentral Location
Latest IISc technology
Power Plantand T&D setup
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Team PRIME - IIM Ahmedabad
Vision
“To integrate the vast rural populace into the mainstream by electrification, augmentation of their annual incomes and enhancement of
employment opportunities; leading to the holistic development of rural India”
Back
Team PRIME - IIM Ahmedabad
Director
Geo Technology
Management
Director
Technology
Director
Operations
Director
Liasoning
Director
Finance
Director
Public Relations
Director
East Zone
Director
Central Zone
Chairman
Dr. R L Sawhney Mr. M Gowda Dr. C M Adatia Mr. M Pattanayak
Mr. K Bhattacharyya Mr. R Balaji
Mr. S P Singh
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Team PRIME - IIM Ahmedabad
Jamui
Banka
Shoepur
Harda
1
2 3
4
Geographical Expansion
Target Market
1
Local Expansion
Harda
Shoepur
Banka
Jamui
More plants in Khandwa region
Maximising output of each plant
2
3
4
Future Expansion
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Team PRIME - IIM Ahmedabad
ImpactEMPLOYMENT
Direct employment at the factory and T&D centers
Driving out hidden employment by Casuarina farming . on wastelands and auxiliary jobs
Development of rural based small scale industries
COMMUNITY
Regular supply of electricity would lead to :
Improved quality of life
Provision of adequate health care facilities & clean . drinking water and improved education facilities
Improved connectivity with mainstream and increased . . access to information
ENVIRONMENT
Carbon Neutral source of energy, leading to reduction . . in pollution and conservation of fossil fuels