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TECHNO-ECONOMIC MODEL FOR MINI-GRIDS IN RURAL KARNATAKA

Rushil Zutshi

22nd August, 2016

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Model FlowchartData from Homer Legacy Software

System Configuration:1. Panel Size2. Storage Requirement3. Inverter Size

Central Electricity Regulatory Commission Document

Solar PV Benchmark Costs

Financial Model1. Annual Cost of

Generation2. Profitability3. Term Loan Interest

and ROE4. Tax, Depreciation and

PAT5. Subsidy

Output1. LCOE2. IRR3. PAT

Main Insights

1. Tariff Design2. Hybrid

Subsidy Design

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Project Parameter AssumptionsProject Lifetime 25 yearsCapacity Factor 20%

Village Population 698Number of households 233

Daily Total Demand 102 kWh, 9.9 kWp

Case Study: Bedaguli

System Configuration

Assumptions

Solar PV 38 kWConverter 10kWBattery 48 units (2 strings or

288 kWh)Capacity Shortage 1.9%Excess Electricity 20.4%

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Financial ModelAssumptions

Debt to Equity Ratio 0.7:0.3Pre Tax Discount Rate 14%WACC 11%Debt Moratorium Period 0 yearsDebt Repayment Period 12 yearsDebt Interest Rate 13%Return on Equity for first 10 years

15%

Return on Equity for 11th year onwards

16%

Weighted average return on equity

16%

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Financial Model Results

Depreciation

Interest on Term

Loan

Return on

Equity

Interest on WC

LCOE = = ₹ 25.76 (for base case)

Total Incom

eEBITDA

Income Tax and

MAT

Profit Before

Tax

Total Interes

t

Determining LCOE

Determining IRR

When NPV = 0, IRR = 11.29%

NPV =

O&M

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Current Subsidy Model• 30% Capital SubsidyProposed Subsidy Models• Hybrid Subsidy Model – Operational Subsidy • Hybrid Subsidy Model – Interest Rate SubsidyProposed Tariff Model• Two-part tariff: One tariff for domestic consumption and a different tariff for

commercial consumption

Subsidy & Tariff Model and Cost Charts

20%

2%

2%

3%

2%

3%61%

8%

Capital Cost Break-Up

PV ModuleCivil CostMounting StructuresEvacuation CostPrelim, Preop and IDCInverter CostBattery CostSystem Capital Cost

6%

35%

37%

2%

21%

Fixed Cost Break-Up

Operations and Main-tenanceDepreciationInterest on Term LoanInterest on Working Capi-talReturn on Equity

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Sensitivity AnalysisLCOE (base case: 30% subsidy – split equally)

-50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% 350.0% ₹2.00

₹4.00

₹6.00

₹8.00

₹10.00

₹12.00

₹14.00

₹16.00

₹18.00

₹20.00

₹22.00

₹24.00

₹26.00

Subsidy Pecentage Term Loan Interest Rate Subsidy Percentage as Capital SubsidyMAT Tax

Input Value as % of Base Case

LCO

E

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Sensitivity AnalysisIRR (base case: 30% subsidy – split equally)

-50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% 350.0%10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%

17.00%

18.00%

19.00%

20.00%

21.00%

22.00%

23.00%

24.00%

25.00%

Subsidy Pecentage Subsidy Percentage as Capital Subsidy Term Loan Interest RateTax MAT

Input Value as % of Base Case

IRR

THANK YOU