Financial Model of 400 MW ISTS-CONNECTED WIND POWER PROJECTS (TRANCHE-III) with aggregate capacity of 2000 MW

Refer the article 2000 MW ISTS-CONNECTED WIND POWER PROJECTS (TRANCHE-III):Is low tariff of Rs 2.44/kWhr a surprise?Is such low Tariff Sustainable?Low tariff's factors?

Key highlights of Project: 2000 MW ISTS-CONNECTED WIND POWER PROJECTS (TRANCHE-III) with aggregate capacity of 2000 MW

(A) The bidders will be free to avail fiscal incentives like Accelerated Depreciation, Concessional Custom Duties, Tax Holidays, etc. available for such projects as per prevailing conditions.

(B) Eligible bid capacity for bidding will be minimum 50 MW and maximum 500 MW by a Bidder.

(C) RPO / PSA / PPA / Pooled Price:-

• (1) Discoms of non-Windy States which require wind power to fulfill their non-solar Renewable Purchase obligation (RPO) under respective RPO regulations will be eligible to buy wind power under this scheme.
• (2) SECI shall sign PPAs with the Wind Power Developerss at the respective tariffs discovered after e-reverse auction and back-to-back Power Sale Agreements (PSAs) with the Buying Entities at a pooled price of the total capacity allotted. The duration of the PPAs and PSAs shall be 25 years from the date of commercial operation of the Projects.

(D) Transmission network / Inter-connection / Injection / Delivery point/ Metering point:-

• (1) Wind Power Projects are required to be designed for inter-connection with transmission network of (Central Transmission Utility) CTU at voltage level of 220 kV or above.
• (2) 220 kV or above power from the project will be injected into the ISTS at the Inter-connection/Injection/Delivery/Metering point.
• (3) Transmission network cost up to the Delivery Point and Cost of bay construction at CTU substation will be in the scope of the WPD.
• (4) Metering shall be done at this interconnection point where the power will be injected into the ISTS i.e. the Delivery point.
• (5) For interconnection with grid and metering, the WPDs shall abide by the relevant CERC Regulations, Grid Code, and Central Electricity Authority Regulations as amended from time to time;

(E) Pooling Substation /Pooling Point / Metering / Sub-meters / Losses in the common transmission system:-

• (1) Multiple projects can be connected to pooling substation / pooling point from where common transmission system shall be constructed and maintained by the WPDs to get connected to the ISTS substation.
• (2) The voltage level for such common line shall be 220 kV and above. Further, the metering of the pooled power shall be done at the injection point, i.e. the ISTS substation.
• (3) However, the voltage level of transmission system of individual projects up to the pooling substation may be at 33 kV and above.
• (4) Sub-meters shall be installed at the pooling substation for metering and forecasting and scheduling of individual projects.
• (5) The losses in the common transmission system up to the injection point shall be apportioned to the individual projects for the purpose of billing.

(F) Regulations & CAPEX / OPEX by Wind Power Developers related to Connectivity with the Grid having impact on energy accounting if any - 

(F.1) CapEx /QpEx associated with ISTS connectivity / Long Term Access / Bringing Power at ISTS using InSTS:-

• (1) The project should be designed for interconnection with the ISTS in accordance with prevailing CERC regulations in this regard.
• (2) The responsibility of getting the ISTS connectivity and Long Term Access (LTA) shall entirely be the Wind Power Developers. Such availability of transmission system being dynamic in nature, the Bidder has to ensure actual availability of power injection / evacuation capacity at an ISTS substation.
• (3) The transmission of power up to the point of interconnection where metering is done for energy accounting, shall be the responsibility of the Wind Power Developers at his own cost.
• (4) In case a Wind Power Developers is required to use InSTS (Intra-State Transmission System) to bring wind power at ISTS (Inter-State Transmission System) point, he may do so per rule and regulations prescribed by the respective SERC in this regard.
• (5) The maintenance of Transmission system up to the interconnection point shall be responsibility of the Wind Power Developers.

(F.2) Wheeling charges, SLDC / Scheduling charges / SOC / MOC:-

• (1) The arrangement of connectivity can be made by the Wind Power Developers through a dedicated transmission line which the Wind Power Developers may construct himself or get constructed by PGCIL/State Transmission Company or any other agency.
• (2) The entire cost of transmission including cost of construction of line, wheeling charges, State Load Dispatch Centre (SLDC) / Scheduling charges, System Operation Charges (SOC), Market Operation Charges (MOC), maintenance, losses etc. and any other charges from the project up to the interconnection point will be borne by the Wind Power Developers.

(F.3) Deemed generation and compliance to various regulations:-

• (1) The Wind Power Developers shall not be entitled to deemed generation in case of any delay in grant of connectivity or non-availability of LTA to the Project.
• (2) The Wind Power Developers shall comply with Central Electricity Regulatory Commission (CERC) / State Electricity Regulatory Commissions (SERC) regulations on Forecasting, Scheduling and Deviation Settlement, as applicable and are responsible for all liabilities related to LTA and Connectivity.
• (3) The Buying Entity will be responsible for all transmission charges and losses and any other charges as applicable under the respective regulations beyond Delivery Point and up to the Drawl Point.

(G) Power Purchase Agreement / Financial Closure / Project Commissioning:-

• (1) The PPA shall be signed within 03 months from the date of issue of Letter of Award (LoA)
• (2) The Financial Closure (FC) shall be within 07 months from the date of signing of Power Purchase Agreement (PPA)
• (3) The Project Commissiong shall be within 18 months from the date of signing of Power Purchase Agreeement (PPA)
• (4) The PPAs shall be valid for a period of 25 years from the date of COD as per provisions of PPA.
• (5) SECI will be obliged to buy the entire power as per generation schedule, to be provided by the WPDs subject to limitations stipulated in "Excess generation", required under grid regulations. However, the WPDs are required to achieve a minimum and maximum CUF as stipulated in "Criteria for generation"

Outcome of Reverse auction:-

Financial Model: Assumptions and Inputs:-

What will be the LCOE in Rs/KWHr if CapEx is INR 520 per MW:-

What will be the LCOE in Rs/KWHr if CapEx is INR 575 per MW:-

What will be the LCOE in Rs/KWHr if PLF is 30% instead of original assumption of 35%:-

Balance sheet

Cash Flow Statement:-

P&L Statement:-

Interest Payment and Interest on Working Capital:-

Interest payment:-

Interest on working capital:-

Tariff (In Rs per KWHr) Calculation:-

Capacity:-

Generation parameters calculation:-

Net Generation or saleable generation:-

Marginal cost of electricity and Grid Parity:-

Components of Levelised tariff (LCOE):-

Normative Capital Cost breakup:-

Actual Wind Power discounted revenue yield:-

Actual Wind Power discounted Total Expenditure:-

Actual Wind Power discounted Margin:-

Levelised Cost of Electricity (LCOE):-

Per Unit Wind Tariff component Calculation:-

Per Unit Wind Tariff component Calculation after Discounting using WACC:-

Internal Rate of Return, Project IRR and Equity IRR:-

Disclaimer: The author contributed to this article in his personal capacity out of the passion of writing as a hobby and also by doing judicious utilization of available free time. The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views or the official policy or position of the any entity, institution and organization. Assumptions made within the analysis are not reflective of the position of any entity, institution and organization. The author disclaim any liability in connection with the use of this information. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products as they are based only on very limited and dated open source information.