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Powering Rural India by Micro Electrification PRIME Powering Rural India by Micro Electrification Presented by: Prasoon Agarwal (

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Presentation on theme: "Powering Rural India by Micro Electrification PRIME Powering Rural India by Micro Electrification Presented by: Prasoon Agarwal ("— Presentation transcript:

1 Powering Rural India by Micro Electrification PRIME Powering Rural India by Micro Electrification Presented by: Prasoon Agarwal ( Indian Institute of Management, Ahmedabad ( India)

2 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

3 Team PRIME - IIM Ahmedabad Electricity Scenario in India 30% of this is in the villages Revenue Opportunity (@ 8.25 cents/ KWh) $ 1.82 Billion 2003-042004-052005-06 2006-07 (Proj) 100000 200000 300000 400000 500000 600000 11.2 % 11.7 % 12.3 % 13.9 % Electricity Consumption vs. Shortage Total Shortage 72925 GWh

4 Team PRIME - IIM Ahmedabad What lack of Electricity means No Water for Irrigation

5 Team PRIME - IIM Ahmedabad What lack of Electricity means No electricity for Households

6 Team PRIME - IIM Ahmedabad What lack of Electricity means Poor Health Facilities

7 Team PRIME - IIM Ahmedabad What lack of Electricity means Firewood as main fuel No industries Environmental Issues

8 Team PRIME - IIM Ahmedabad Our Dream Irrigation Concerns Development Concerns Health Concerns Clean Energy Access Biomass based Micro Electrification

9 Team PRIME - IIM Ahmedabad What Power means for India

10 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

11 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

12 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 First Project: PRIME-1 Completed till this Stage

13 Team PRIME - IIM Ahmedabad What's in for Investors Key Parameters (per Plant ) 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

14 Team PRIME - IIM Ahmedabad Social Benefits ( SROI) Electricity for Irrigation 60 Pumpsets of 7.5 HP rating, per village Electricity for Household 700 Incandescent lamps per village (24 Hours) Employment Will lift 250-270 people per cluster above poverty line Income for Farmers from Wasteland Income benefits for farmers cultivating Bio Fuels for this plan Environment Benefits Carbon Neutral Fuel Used ; CERs gained for every unit Health/Education Benefits Will raise the standard of living for the people from these communities

15 Team PRIME - IIM Ahmedabad Risks Feedstock Prices Price impact on input cost Technology Obsolescence Emerging technology might make existing facilities inefficient Government Support Policy reversal on subsidy on electricity Leasing the land from Villagers Rural Cooperation Different 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

16 Powering Rural India by Micro Electrification We are not just P owering but EmPowering India !!!

17 Team PRIME - IIM Ahmedabad Q & A Load in Villages Village Cooperatives Implementation Flow Cost Breakup Pricing Income Statement Government Cash Flow NPV CalculationsPilot- PRIME 1 T & D CostsLabour/Admin Cost Why BioFuels Why Casuarina Gasification Process Vision Management Future Plans

18 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 district56155 Total number of villages949 Average number of Pumpsets in a village60 (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 village1350 Total number of Units required 3 2025 Number of hours the powerplant will run in a day16 Hence, the Required Daily Capacity of Plant 4 164.983 Back

19 Team PRIME - IIM Ahmedabad Break-up of Costs Farm Costs (Rs/KWh) Raw Material Cost1.25 Lease Rental for Plantation Land0.27 Total Costs1.52 Plant Costs (Rs/KWh) Operation and Maintenance Cost0.07 Labour Costs0.20 Depreciation of Assets0.20 Total Costs0.47 Other Costs (Rs/KWh) Interest Costs0.36 Collection & Transaction Costs0.13 Total Costs0.49 T & D Costs (Rs/KWh) Operation and Maintenance Cost0.05 Depreciation of Assets0.09 Total Costs0.14 Back

20 Team PRIME - IIM Ahmedabad Labor and Admin Costs Total number of units delivered = 560000 So, labor cost /KWh = 0.20 Rs Direct laborNo. of WorkersDaily Wage RateExpense /Year Feed Handling3150157500 Operators3150157500 Ash Handling2150105000 Labour Bill for a shift (2 shifts/day) 420000 Total Labour Bill for the year 840000 Office AdministrationNo. of WorkersExpense/Year Plant Supervisor2168000 Plant Manager1120000 Total Admin Costs 288000 Total Manpower Cost for running the plant 1128000 Back

21 Team PRIME - IIM Ahmedabad Pricing Total CostsRs/KWh Total variable Cost per KWh1.38 Total fixed costs per KWh0.59 Depreciation of assets0.29 Interest Cost0.36 Total Cost of Producing 1 KWh of energy2.62 Mark-up0.68 Final Price3.3

22 Team PRIME - IIM Ahmedabad Cost Structure Factory Farms Transmission Consumers Selling Price Rs. 3.3/KWh Rs. 1.52/KWh Rs. 0.49/KWh Total Cost Rs. 2.62/KWh Markup Rs 0.68/KWh + CER Rs 0.60/KWh Others Rs. 0.14/KWh Rs. 0.47/KWh Back

23 Team PRIME - IIM Ahmedabad Income Statement Back

24 Team PRIME - IIM Ahmedabad Cash Flow Statement Back

25 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

26 Team PRIME - IIM Ahmedabad NPV Calculation Back

27 Team PRIME - IIM Ahmedabad Gram Urjaa Samiti Would comprise of heads of Gram Panchayats, officials from administrative bodies and representative from local NGOs 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

28 Team PRIME - IIM Ahmedabad The Cooperative Model PRIME POWER PLANT GOVERNMENT GRAM URJA SAMITI Grants and Exemptions Subsidies/ Financing Continuous Power Assured Payments Back

29 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.

30 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

31 Team PRIME - IIM Ahmedabad Pilot- PRIME 1 Selection Criteria Electricity Deficit - higher the deficit, more apt is the location Proportion of Villages Un-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

32 Team PRIME - IIM Ahmedabad Pilot – PRIME 1 Where? How? Why? From Casuarina equisetifolia using Gasification Technology Khandwa District Biomass Plant

33 Team PRIME - IIM Ahmedabad Location: Khandwa Back

34 Team PRIME - IIM Ahmedabad Process Flow Casaurina stems Collection & Preparation Cutting Drying Introduction into Gasifier Pyrolysis C + ½ O 2 = CO Combustion C + H 2 O = CO + H 2 CO + H 2 O = CO 2 + H 2 Electricity Char Heat Pressure Gasification Cooling & Cleaning Producer Gas Internal Combustion Engine Air Heat Steam Water CO + H 2 + CH 4 Back

35 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 BIOMASSBIOMASS Local availability of raw materials Grows on waste/unused land Back

36 Team PRIME - IIM Ahmedabad Why Casuarina Raw Material Tons / MW Cost of Raw Material / Ton Land reqd (hectares) 10000 Rs 700 1000 250 400 Lease Cost Rs/ KWh 4 X X 1.6X CASUARINA PROSOPIS SUBABUL Back

37 Team PRIME - IIM Ahmedabad Implementation flow Identification of Land Wasteland details Leasing & Land Development Gram Urja Samiti Un-electrified villages cluster Regulatory Compliance 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 of Crops Manpower Training Central Location Latest IISc technology Power Plant and T&D setup Back

38 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

39 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 Back

40 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 Back

41 Team PRIME - IIM Ahmedabad Impact EMPLOYMENT 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

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