PRESENTATION ON SUGAR COGEN

R.K.KAULChief Energy BusinessSaraya Industries LimitedNew Delhirkkaul99@rediffmail.com ,rkkaul99@gmail.com (M) 9810345642,

PUBLIC PRIVATE PARTNERSHIP

SUGAR COGENERATION ON BOOT BASISISSUES , TECHNICAL & FINANCIAL ANALYSIS

``ONLINE ``

CONTENTS

ENERGY RESOURCES & SCENE IN INDIA

COGEN / TRI GEN BASIC DEFINITION / RANKINE CYCLE

PPP MODEL GIVE AND TAKE

BOOT MODEL –PUBLIC PRIVATE PARTNERSHIP

BASIS OF PROJECTS EVALUATIONS- THE MILLS

SUGAR BASE DATA – OPERATIONS-----REAL TIME ANALYSIS

TECHNOLOGY / HEAT MASS BALANCE / POWER BALANCE/STEAM BALANCE

REVENUES / COSTS / PBDIT / RETURNS/CASH FLOWS

SUMMARY / WAY FORWARD

ENERGY RESOURCES

BAGASSE

OTHER BIOMASS

RICE STRAW

WHEAT STRAW

MUSTARD HUSK

SUBABOOL

CANE TRASH

WOOD CHIPS

COCONUT SHELL

COAL INDIAN

COAL IMPORTED

IN SUGAR INDUSTRY

TOTAL RELIANCE ON SUGAR OPERATIONS

NOT POSSIBLE

NATIONAL ENERGY DATA

POWER GENERATION RESOURCES- MW

102,452.75

36,863.00

4,560.00

15521

THERMAL

HYDRO

NUCLEAR

RES

POWER GENERATION RESOURCES- MW

93114

36158

4120

12194

THERMAL

HYDRO

NUCLEAR

RES

NATIONAL ENERGY DATA CONT…..

STATUS ENERGY NEED STANDS AT 2.75-3.00 LAC MW- NEXT 2-4 YRS SUPPLY STANDS AT 1.5 LAC MW GROWTH RATE >7.0 to 8.0 % DEMAND SUPPLY GAP WILL CONTINUE / INCREASE PRESSURE ON SAVING ENVIRONMENT SIZE OF BUSINESS BIG BUSINESSES KEEN TO HAVE A CUT OF THE BIG PIE RENEWABLE POWER – THRUST WORLD OVER HAVES & HAVE NOTS - GOVT/COOP/ PVT SEC OVERALL ENVIRONMENT CONDUCIVE PVT . SECTOR READY TO INVEST

BOOT IS AN

OPTION

SUGAR COGEN

HAS POTENTIAL

SUGAR COGEN STATUS Total Sugar Mills 526 (OP) / 695(INST) Total TCD 2.5 Mn TCD Cogeneration potential – 8000 to 10000 MW Present Power Export - 3500 MW

BALANCE POTENTIAL – 3000 TO 4000 MW INVESTMENT OPPORTUNITY- 15000 CR RS

PP MODEL BASICS……. BOOT – BUILD OWN OPERATE TRANSFER ITS GIVE AND TAKE MODEL CPMPLETE TRANSPARENCY ADMINISTRATIVE / TECHNICAL HELP ACCURATE MEASUREMENTS TIMELY DOCUMENTATION

TRUST & FAITH

COGEN / TRIGEN DEFINED

Cogen is Simultaneous generation and use of electricity and heat

Tri Generation is simultaneous generation and use of electricity ,

heat , and cooling

Both far superior in efficiency as compared to independent generation

Should be used where all forms of energy are required

ITS LIKE CO-EDUCATION –SAME TEACHER ( ENERGY)

PPP - BOOT ISSUES

POLITICAL WILL ADMINISTRATIVE / BEUROCRATIC WILL LOCAL MILL BOARD WILL INVESTORS WILL PROJECT DEVELOPERS WILL PROJECT VIABILITY- FUEL / PRICING

PPP- BOOT MODEL:

Operates its own sugar plant as usual

Invites Project developer to setup cogen project

Give designated land-lease free of cost

Gives Free water Gives Free Bagasse All legal

documents/resolutions

Commits to set up cogen Does technical & legal

deligence Brings all capital at its own

cost and risk Gives power & steam free

for mill operations Provide capital for mill

modernisation/capacity enhancement

Gets all legal clearances

The Mill

The Project developer

PPP- BOOT MODEL:…cont..

Allows Connectivity to system Agree on mill modernisation-

work as well as costs Terms if steam/power norms not

followed Pass Board resolutions as per

need Agree on concessation period,

revenue sharing/royalty on cane crush

Complete project development including design, order, erection and commissioning

Procures balance of fuel Share revenue as per

agreement Operate plants to optimum

capacity Hands over the plant to mill

at ZERO COST after concessation period

The Mill

The Project developer

BOOT ISSUES CONT…… GUARANTEE FOR BAGASSE AVAILABILITY-MINIMUM QUANTITY MINIMUM DAYS OF SEASON OPERATION EXCESS POWER / STEAM DRAWN BY SUGAR PLANT REVENUE SHARING v/S CANE CRUSH ROYALTY PRICE FOR EXTRA STEAM / POWER- PSEB /EXCHANGE RATES FUNDING FROM SDF – GOVT. HELP/ POLICY CHANGE SENSITISING BANKING FOR THESE PROJECTS-DEDICATED FUNDS MORTGAGING OF ALLOTED MILL LAND BOOT PERIOD – 15/20/25/40 YEARS MORATORUIM FOR RETURNS TO SUGAR 2-3 YEARS ENHANCED RATE OF POWER TO GRID – some development -CERC TIME FOR IMPLEMENTATION INTEGRATION OF SUGAR / COGEN/ CAPACITY ENHANVEMENT – PAYMENT GUARANTEE BY GRID

BASIS OF EVALUATION

MILL PERFORMANCE OVER LAST 6-8 YEARS ACTUAL CANE CRUSH AND BAGASSE AVAILABILITY NO OF DAYS OF OPERATION IN A YEAR - SEASON & OFF SEASON PRESENT / FUTURE STEAM & POWER CONSUMPTION COGEN & MODERNISATION COST COST OF MONEY, RETURNS TO SUGAR PLANT SELLING POWER COST & CDM / REC BENEFITS TECHNOLOGY / PLANT PARAMETERS / INTEGRATION POWER OFFTAKE / CONNECTIVITY/DISTANCE TO GRID SUB STATION STANDARDISATION OF PLANT CONFIGURATION MILL MODERNISATION POTENTIAL PROJECT DEVELOPERS INVESTMENT PHILOSOPY INVESTORS RISKS INVOLVED

YEARLY CANE CRUSHED

3.34

3.733.41

3.16

1.944

1.22 1.234

2.1822.4

1.802.00

2.80

5.1

4.4 4.3 4.4

3.27

2.482.83

3.417 3.52

2.80

3.50 3.50

2.562.732

3.118

2.7

1.66 1.641.858

2.6 2.72.50

2.80 2.80

0

1

2

3

4

5

6

99-00 00-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

MORINDA

NAWASHAHR

GURDASPUR

AJNALA

BATALA

PROJECTED

AREA UNDER CULTIVATION - HECTARES

1088511679

13446

11584

8280

46895122

6860

8152

6000

75008000

13718 1359614084

13373

10615

5960

7022

8089

9549

1200013000 13000

8364

9825

10902.4 10948

8084.4

5912.4

75208172

1023111000

1200011500

0

2000

4000

6000

8000

10000

12000

14000

16000

99-00 00-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

MORINDA

NAWASHAHR

GURDASPUR

AJNALA

BATALA

PROJECTED

ANNUAL BAGASSE GENERATION

8684096980

8866082160

50544

31720 32515.9

57124.7665016

5040056000

78400

153000

131010 128400 131070

99179.1

68026.4

82098.3

101245.71 102291.2

81200

101500 101500

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

99-00 00-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

MORINDA

NAWASHAHR

GURDASPUR

AJNALA

BATALA

PROJECTED

DAYS OPERATION

130

150

132 127

79

5268

88

107

80

120 120

192

165 166 169

128

98110

145154

122

155 155

128137

161146

91 91100

138152

120

150 150

0

50

100

150

200

250

99-00 00-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

MORINDA

NAWASHAHR

GURDASPUR

AJNALA

BATALA

PROJECTED

ANALYSIS…..

55

2

4

3

54

5

3

3

3

012345

TOTAL CULTIVATABLE AREACONSISTENANCY OF CANE

CRUSH

BAGASSE GENERATION

CANE YIELD

AGE OF PLANT

PLANT AVAILABILITYINFRASTRUCTURE

CAPACITY COMFORT

TECHNICAL BACKUP ATSITE

SPACE AVAILABILITY

FARMER CONTROL

Series1

GURDASPUR SCORE

02468

101

2

3

4

5

6

78

9

10

11

12

13

14

GURDASPUR SCORE

MORINDA SCORE7.5

6.57

7.5

7

7.57

8

67

6

10

0

2

4

6

8

101

2

3

4

5

6

7

8

9

10

11

12

13

14

MORINDA SCORE

7.088.32 8.45

7.38 7.196.50

8.50

MORINDA NAWANSHAHRGURDASPUR AJNALA BATALA

S1

MILLS COMPARITIVE RATING

Series1

NAWANSHAHR SCORE

0

2

4

6

8

101

2

3

4

5

6

7

8

9

10

11

12

13

14

NAWANSHAHR SCORE

AJNALA SCORE

76

7

7

8.5

7.5

8.588

9

50

2

4

6

8

101

2

3

4

5

6

7

8

9

10

11

12

13

14

AJNALA SCORE

BATALA SCORE

02468

101

2

3

4

5

6

78

9

10

11

12

13

BATALA SCORE

DECISION MAKING PROCESS

Prefeasibility / DPR/Financial Closure

Pre Feasibility AnalysisPre Feasibility Analysis•Establish Mill capacities/operating parametersEstablish Mill capacities/operating parameters•Establish Fuel availability-season & Off seasonEstablish Fuel availability-season & Off season•Establishing Capacity viabilityEstablishing Capacity viability•Technology choicesTechnology choices•Basic Flow ChartBasic Flow Chart•Fuel flexibility and mixFuel flexibility and mix•Water quality and availabilityWater quality and availability•Ash handling and DisposalAsh handling and Disposal•Environmental concernsEnvironmental concerns•Capital cost estimatesCapital cost estimates•Cash Flow requirementsCash Flow requirements•Financial analysis-Loan Financial analysis-Loan repayments,IRR,DSCR,Taxes,Balance sheet,P&l statements repayments,IRR,DSCR,Taxes,Balance sheet,P&l statements etcetc•Sensitivity analysiscSensitivity analysisc

Detailed Project ReportDetailed Project ReportPower Purchase AgreementPower Purchase AgreementInformation MemorandumInformation MemorandumDebt Syndication/Financial Closure/Cash FlowsDebt Syndication/Financial Closure/Cash Flows

REAL TIME INTEGRATED ANALYSIS

Sugar Operations data Heat & Mass Balance Diagram Power & Steam Balance- Exports Capital Cost Estimation Revenue Generation & Sharing

mechanism Expenses Depriciation calculation, Taxation,Loan

repayments IRR & DSCR Calculations Balance Sheet,Cash Flows Break Even point Sensitivity Analysis Project Summary ……………

ON LINE ANALYSIS SUGAR OPERATION PARAMETERS COGEN CAPACITIES / PARAMETERS HEAT & MASS BALANCE PROJECT COSTS FINANCIAL ANALYSIS

………..FOLLOWS

BASIC SUGAR PLANT DATA

BASIC RANKINE CYCLE

There are four processes in the Rankine cycle, each changing the state of the working fluid. These states are identified by number in the diagram to the right. Process 1-2: The working fluid is pumped from low to high pressure, as the fluid is a liquid at this stage the pump requires little input energy. Process 2-3: The high pressure liquid enters a boiler where it is heated at constant pressure by an external heat source to become a dry saturated vapor. Process 3-4: The dry saturated vapor expands through a turbine, generating power. This decreases the temperature and pressure of the vapor, and some condensation may occur. Process 4-1: The wet vapor then enters a condenser where it is cooled at a constant pressure and temperature to become a saturated liquid. The pressure and temperature of the condenser is fixed by the temperature of the cooling coils as the fluid is undergoing a phase-change.

COGEN HEAT MASS BALANCE- OFF SEASON

BALANCE OF POWER

Balance Of Bagasse

Balance Of Steam

PROJECTED CAPITAL COST

KEY PROJECT PARAMETERS….cont

PROJECT REVENUES / CASH FLOWS

PROJECT RETURNS

IDC

ADVANTAGES TO SUGAR PLANT

1. The Cooperative Mill gets complete power plant at ZERO cost

2. Mill gets modernized in terms of power & Steam consumption

3. Plant gets reliable power steam –Improved quality and better efficiency

4. Improvement in crushing capacity –improved revenues5. Additional revenue by way of sharing/Royalty on cane

crush6. Improved Pollution Control with ESP7. Employment to Local people 8. Better returns to cooperative members9. Other biomasses used- revenue to farmers10.Environment protection – as crop residue may not be

burnt

SUMMARY WAY FORWARD

NEED FOR MORE CLEAN POWER IN THE COUNTRY RENEWABLE ENERGY FOCUS POLITICAL/ADMINISTRATIVE /LOCAL ``WILL`` REQD BOOT A WIN WIN PROPOSITION IF IMPLEMENTED

PROPERLY ..TRANSPARENCY …UNDERSTANDING BOOT PROCESS TO BE STANDARDISED FEASIBILITY ANALYSIS UTMOST IMPORTANT

ALL ISSUES PRE DOCUMENTED & AGREED GO FOR IT WITHOUT LOOSING TIME

GO FOR IT WITHOUT LOOSING TIME

THANK YOU