Team Members: Pulkit Bohra, Pulkit Mathur, Mudit Jain & Tarun Gupta
This presentation was prepared by the above students of IIM Ranchi as a part of Mahindra war room competition. They were the North zone Champions in the competition.
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Mahindra War room Finals 2012
1. Mahindra War Room
2012
Submitted by:
Team Iguana, IIM Ranchi
Mudit Jain 030/02 Mudit.jain11@iimranchi.ac.in 2nd Year
Pulkit Bohra M106/12 Pulkit.bohra12@iimranchi.ac.in 1st Year
Pulkit Mathur M107/12 Pulkit.mathur12@iimranchi.ac.in 1st Year
Tarun Gupta M044/12 Tarun.gupta12@iimranchi.ac.in 1st Year
Team Members
Business Strategy for Cleantech (MEPC)
[8]
2. [8]
Case Study Objectives
What Differentiated Offering can be made by
Mahindra EPC ?
How should Mahindra EPC become the
preferred player for solar power developers?
How should Mahindra EPC scale up the
business ?
Reforming
Mahindra
EPC
2
3. Research Methodology
• Telephonic interview with Company executives from Rays
Power Infra, FirstGreen Consulting, MINDA NexGentech
• Discussion with Professors at IIM Ranchi
• Secondary research from internet and databases (ISI
Emerging, Proquest, EBSCO & Indiastat, CRISIL)
Qualitative
• On field survey (2 MW Solar Plant)
• Technical associates Ltd. , Sandauli, Barabanki, U.P.
• EPC Contractor was Mahindra EPC
Quantitative
• Cost – Benefit analysis for Solar park (300 MW)
• Gujarat case study Analysis
Critical & Action Oriented
[8]3
4. Installed Solar Capacity In India
Source: Bridge to India, as in
October 2012
Sunrise Sector:
Marching in the
Right Direction
About NSM EPC in India Case Objectives Recommendations Appendix
[8]4
5. Targets For Solar Energy Production Under JNNSM
Source: Bridge to India, as in October 2012
Target Fixed and Achievements Made for Development of Solar Energy under Jawaharlal Nehru National Solar Mission
Application
Segment
Target for Phase-I
2010-13
Achievement
2010-11
Achievement
2011-12
Cumulative Target for
Phase-II 2013-17
Cumulative Target
for Phase-III 2017-22
Grid Solar Power
incl. Roof top and
Distributed small
Grid Connected
Plants 1100 MW 802 MW Allotted
1152 MW
Capacity allotted 4000 MW - 10000 MW 20000 MW
Off-Grid Solar
Applications 200 MW
40.6 MW
Sanctioned
118.071 MW
Sanctioned 1000 MW 2000 MW
Solar Collectors 7 million sq. m 4.5 million sq. m 5.5 million sq. m 15 million sq. m 20 million sq. m
0
2
4
6
8
10
12
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
INR/Unit
Conventional Tariff (base) Solar Power cost
Targets For Solar Energy Production Under JNSM
Grid Parity
expected by
2018-19
About NSM EPC in India Case Objectives Recommendations Appendix
[8]5
6. Traversing The Mahindra EPC Value
Chain
EPC in IndiaAbout NSM Case Objectives Recommendations Appendix
[8]6
7. Roles of an EPC
Project Developer Project Consultant
Financing
Institutions/Banks
EPC Company
Vendors for
Procurement
Solar Offerings
(On-Grid + Off-Grid)
Cliental Offering
& Access
Operation &
Maintenance
Consulting Consulting
Data
Accumulate
BoS Suppliers
Utility/PPARegulatory Authority
Module/Equipment
Supplier
EPC in IndiaAbout NSM Case Objectives Recommendations Appendix
[8]7
8. Significant Growth Opportunities For EPC Companies
• Quality assurance and risk
minimization
• A one point contact for developer –
easy coordination and monitoring
• Hedge against price fluctuations
• Availability of post commissioning
services
Project installation – a crucial step in Solar PV
Power
― Plant design & engineering, procurement
and construction at site
― Responsibility of delivery within agreed
cost, time and with desired quality
― Guaranteed plant performance
Why EPC?
Developers are looking for reliable EPC partners?
• Vast experience – global experience, national experience of working under different conditions
• Clean record of project completion in given time frame
• In house manufacturing and technical capabilities
• In house ready availability of construction equipment like:-
— Diesel Generator,
— Porta cabins,
— Portable diesel lights,
— Hydra, crane, Fork lift etc.
• Availability of optimization software for regular analysis of production
EPC in IndiaAbout NSM Case Objectives Recommendations Appendix
[8]8
9. The Mahindra Advantage
On-time completion
record is a critical
factor for project
financing
Potential mutual
cost-optimization
Track record of executing successful projects
• Jodhpur – 5MW (completed)
• Lucknow – 2MW (completed)
• Jodhpur – 33MW (under construction)
• Bikaner – 23 MW (under construction)
Synergies with Mahindra sister companies
• Mahindra Construction Equipment:
For construction equipment
• MaCE: Engineering Consulting
• Mahindra Logistics: Logistics support
• Mahindra Finance: Currently, primarily
in rural financing
Mahindra Group’s financial strength to avoid stoppage of work due to
working capital
EPC in IndiaAbout NSM Case Objectives Recommendations Appendix
9
10. [8]
EPC in IndiaAbout NSM Case Objectives Recommendations Appendix
EPC Companies Are Facing Several Challenges
Issues
With
Solar EPC
Companies
Solar technology is not considered for project finance
funding – Substantial fund requirement with limited
banking facility
Competitive bidding drove prices for grid-connected
solar energy to INR7.49 – Race for cost reduction has
led to compromise in quality
New technology – Shortage of skilled manpower
Financial closure, land procurement and
development reduces project execution time –
Compromising quality
Grid connectivity is delayed sometimes by as
long as 12 months in certain cases – losses for
EPC contractor
10
11. [8]
Case Study Objectives
How should Mahindra EPC scale up the
business?
How should Mahindra EPC become the
preferred player for solar power developers?
What Differentiated Offering can be made by
Mahindra EPC?
Reforming
Mahindra
EPC
11
12. Mahindra EPC should consider
backward integration to optimize
cost and be future-ready
Recommendation 1
[8]
Recommendation 1About NSM EPC in India Objective 1 Appendix
12
13. Analyzing the scope of vertical integration for cost optimization
Forward Integration: Already existing in the form of
Mahindra Solar One.
No Scope
Backward Integration
Source: Expert Interviews, Lanco, India Solar Compass, BridgeToIndia, October 2012 edition; Indian solar manufacturers ask for anti-dumping duties of
up to 200%, PV Magazine; Business Today
[8]
Recommendation 1About NSM EPC in India Objective 1 Appendix
Opportunities
• As per an October 2012 report, the Indian Ministry of Commerce have said that the Indian solar
manufactures have called for anti-dumping duties as high as 200%
• The Ministry of New and Renewable Energy is likely to strengthen the current Domestic Content
Requirement in the upcoming phase two of the NSM
• By 2022, India will need INR1.6 trillion worth solar modules at today's prices
Indian Suppliers to EPC
Companies
Mahindra EPC
generating
synergies from
backward
integration
Moser Baer
Solar
Semiconductor
Lanco SolarBHELBEL
Titan Energy
IndoSolar
Topsun Solar
PLG Power
13
14. Analyzing the scope of vertical integration for cost optimization
Backward Integration
Modules
China dominates 70%
of the global module
market
Costs have fallen
down by more than
half in last two years
Looks to be a difficult
solution at this point
in time
Inverters
Inverters used in solar
plants are same as
used in other
conventional power
plants
Existing players have
been in the industry
for decades
Very difficult to
compete with such
existing players in
terms of technology
as well as cost
Balance of Systems
Used to account for only 10-
15% of the total cost
With recent decline in other
cost components BoS
contribution is touching 40%
Does not make much sense in
investing resources in this
activity as components are
diverse (civil
costs, cables, labor
component, steel structures)
and difficult to consolidate
Source: Expert Interviews, Lanco, India Solar Compass, BridgeToIndia, October 2012 edition; Indian solar manufacturers ask for anti-dumping duties of up
to 200%, PV Magazine; Business Today
[8]
Recommendation 1About NSM EPC in India Objective 1 Appendix
Threat from local module manufacturers entering EPC space
• Vikram Solar – Projects pipeline of 40MW for module supply and EPC under batch two of phase
one of the NSM and the Gujarat Solar Policy.
• Lanco Solar – Providing EPC for Gas Authority of India Ltd. (GAIL), is expected to use its own
modules.
• Enfield Infra-structure is developing a 10MW project under the batch two of phase one of the
NSM and is expected to use its own modules that are being manufactured under the name of
Sonthalia Group.
14
15. Poly Silicon Ingot & Wafer Cells Module
Margins ~ 50% ~20% >10% ~7-10%
Investments US $ 0.75
million/MW
US $ 0.5 to 0.75
million /MW
~ US $ 1
million/MW
~US $
100k/MW
Optimum Scale of
Investment
700 – 1000 MW
($560 - $800
million)
80 – 100 MW
($45 - $60
million)
30 – 50 MW
($30 - $ 50 million)
10 – 20 MW
($1 - $2
million)
Project timeline 2.5-3 years 1-2 years ~ 1 year 4-6 months
Cost Drivers Electricity,
CAPEX
CAPEX, Raw
materials &
Consumables
Raw materials,
R&D
Raw
materials
Backward Integration in Phased Manner starting with Module and Cells
Decent margins, provides entry
point for future expansion, low
CAPEX, smaller project
timelines
Source: Solar PV Manufacturing, EAI
[8]
Recommendation 1About NSM EPC in India Objective 1 Appendix
15
16. [8]
Case Study Objectives
How should Mahindra EPC scale up the
business?
How should Mahindra EPC become the
preferred player for solar power developers?
What Differentiated Offering can be made by
Mahindra EPC?
Reforming
Mahindra
EPC
16
17. OFF-GRID & ON-GRID
A Franchise Model
Recommendation 2
[8]
Recommendation 2About NSM EPC in India Objective 2 Appendix
17
18. 50
50
45
3530
20
110
Mahindra Welspun Juwi Azure Vikram L&T Others
Current Allocation under Phase 1 – Batch 2
Total capacity: 340 MW
CurrentStateOfMahindra’sMarketShareinContractsAcquired
• As Per JNNSM, Batch II - Phase I
data, The major EPC contracts were
raked up by the Local EPC Players.
• Mahindra acquired only 14.7% of the
total contracts.
Lack Of Local Presence Of
Mahindra EPC
Perceived Stringent
Processes Affects
Approachability
Perceived loss of
bargaining power by
developers
Reasons Quoted By Clients For Low Turnover Of Contracts
For Mahindra EPC
Recommendation 2About NSM EPC in India Objective 2 Appendix
[8]18
19. OFF-GRID ADVANTAGE
OFFSETTING
ON-GRID
DISADVANTAGE
Leveraging Mahindra’s Off grid for On-grid Solution
OFF-GRID ADVANTAGE ON-GRID ISSUES
• More penetration Available to the Off-
Grid unit of Mahindra Solar One.
• “Lack Of Local Presence” causing losing
the contracts to local EPC players.
• High Overhead Cost for Big Firms as
against that for Local EPC players
Recommendation 2About NSM EPC in India Objective 2 Appendix
[8]19
20. ScalinguptheOffGridSolutions
20
[8]
Recommendation 2About NSM EPC in India Objective 2 Appendix
• Mahindra EPC should set up Regional Sales Offices which would serve
as common outlet for Off-Grid & On-Grid Sales Support.
• Develop a three level Hierarchical Network on the model Of Amul
Cooperative to put in place an efficient delivery system, thus bringing
down the turnaround time for EPC project.
TheFranchiseModelForMahindraEPC
Sales center
Regions lacking in
grid connectivity
Huge demand of SEZs
Telecom
Towers
20
21. Big Data Meets Solar Energy
Recommendation 3
[8]
Recommendation 3About NSM EPC in India Objective 2 Appendix
21
22. Solar Investments Were Considered Risky In Phase 1 Due To
Lack Of Performance Records
Risky
Investments
Reverse bidding
leading to under
pricing of bids
Without a proven track
record
High interest
rate in India
Banks were reluctant to lend funds
Project Development Project Deployment Project Performance
Lack of Information on
[8]
Recommendation 3About NSM EPC in India Objective 2 Appendix
22
23. Data Monitoring Will Be A Value-added Service By Mahindra EPC
• Data would be accumulated directly from the solar plants
• Value added services to the clients – Long term relationship with prospective client
• Easier loan sanctions – Scientifically estimated bid for solar tenders
• Data can be sold to other solar plants for analysis
Urgent need for data monitoring and
data accumulation – maintaining a Solar
data depository
Long lead in
equipment
procurement
Delayed
Financial
Closure
Absence of
data in pre-
bid stage
Lack of data
[8]
Recommendation 3About NSM EPC in India Objective 2 Appendix
23
24. Roles of an EPC
Project Developer Project Consultant
Financing
Institutions/Banks
EPC Company
Vendors for
Procurement
Solar Offerings
On-Grid + Off-Grid
Cliental Offering
& Access
Operation &
Management
Consulting Consulting
Data
Accumulate
BoS Suppliers
Utility/PPARegulatory Authority
Module/Equipment
Supplier
[8]
Recommendation 3About NSM EPC in India Objective 2 Appendix
24
25. [8]
Case Study Objectives
How should Mahindra EPC scale up the
business?
How should Mahindra EPC become the
preferred player for solar power developers?
What Differentiated Offering can be made by
Mahindra EPC?
Reforming
Mahindra
EPC
25
27. CEPC over EPC
CEPC : Consulting, Engineering, Procurement & Construction
• Ensures early entry for Mahindra along the value chain
• Better relationship with the clients
• The same team can be further expanded to convert clients for REC
Central
Government
State Govt.
and captive
Power
Imposed
RPO
Meet RPO
Requirement
By PPA
By REC
Through
Allotment
Through
Trading
REC brings scores of business opportunities:
Source: Renewable Energy certificate registry of India
Website
[8]
Recommendation 4About NSM EPC in India Objective 3 Appendix
27
29. Requirement of Solar
capacity in MW in
different states of the
country to meet the RPO
Opportunity Assessment
CEPCforRenewableEnergyCertificates
State 2010‐11 2011‐12 2012‐13 2013‐14 2014‐15 2015‐16
Kerala 27.4 29.1 31.0 66.5 71.1 75.7
Gujarat 109.8 237.7 515.5 695.1 894.9 1115.1
Maharashtra 159.6 181.0 192.9 411.4 436.9 462.4
Uttar Pradesh 98.0 214.0 466.9 629.9 811.4 1011.3
Bihar 17.3 20.2 23.3 52.6 58.6 64.7
Haryana 47.8 52.1 56.7 61.4 66.1 70.8
Delhi 39.9 86.3 139.9 203.5 275.5 330.7
Punjab 67.0 146.0 238.4 341.0 455.3 581.1
Rajasthan 66.2 142.4 230.1 330.4 442.6 566.6
Karnataka 73.0 157.6 255.9 374.9 510.8 663.6
Andhra pradesh 121.6 266.5 437.2 639.4 869.8 1128.4
West Bengal 53.9 114.9 184.2 268.6 364.6 472.0
Madhya Pradesh 62.2 133.7 216.0 312.7 421.7 543.0
Chhattisgarh 26.5 58.0 95.1 140.0 191.4 249.4
Total 1467 2780 4550 6740 8729 10980
0
5000
10000
15000
FY11 FY12 FY13 FY14 FY15 FY16
Expected installations through PPA
Expected installations through REC
Source: Renewable Energy certificate registry of India
Website
[8]
Recommendation 4About NSM EPC in India Objective 3 Appendix
29
30. Key Challenges with respect to Indian Market :
CEPC for Renewable Energy Certificates
Penalties
imposed on
States for not
complying with
obligated RPO’s
Bankability of
products
without PPA in
question
IPP’s might
start late when
project costs
are dropped or
technology
improved
For a Market
driven
phenomenon
feasibility is
difficult to
access.
In case of non-
compliance the utilities
will be imposed a
penalty equivalent to
the forbearance price
multiplied by the
shortfall in RPO
compliance. Hence, the
state agencies will
comply with obligated
RPO’s
The prices are still
regulated between a
floor and a forbearance
price which has been
done to ensure the
minimum feasibility of
the project and
simultaneously giving
room for profit making
A lot of incentives are
offered to early starters
like higher floor and
forbearance
prices, allowing
Accelerated
Depreciation
benefit, assuming a
higher project
cost, excise duty
off, custom duty off etc.
These incentives will
not be available to the
next phase developers.
This issue has been
addressed by limiting
the number of PPA’s
that the government
will sign with the
Project developers and
moreover all PPA’s will
be through the bidding
route thus minimizing
any extra incentive.
REC has been successful in other countries like UK, Australia, USA etc.
Source: Renewable Energy certificate registry of India
Website
[8]
Recommendation 4About NSM EPC in India Objective 3 Appendix
30
31. Solar Parks
Ready To Sell Power Plants
Recommendation 5
[8]
Recommendation 5About NSM EPC in India Objective 3 Appendix
31
32. Targeted Capacity by
2022 in National Solar
Mission : 20,000 MW
Average Capacity
targeted per State :
690 MW
For an average 5 MW
Plant, Number Of
Plants per State : 138
Increased cost of setup
Increased ONM cost
Use of less efficient solar technology in the
power plant
Costly connection to the Grid
STAGGERED CONFIGURATION CAUSES THE
FOLLOWING ISSUES
CurrentIssuesWithStaggeredPowerPlantsunderJNNSM
Source: MNRE website
[8]
Recommendation 5About NSM EPC in India Objective 3 Appendix
32
33. Surmounting The Challenges
LAND AVAILABILITY
CONNECTING TO THE
GRID
WATER AVAILABILITY
ISSUE
GAS, SEWERAGE, ROADS
AND FENCING
Existence of suitable land not a barrier
“As per Status report (Arora et al, 2010), the land area with DNI greater than
2,000 kWh/m2/year in India is around 112,500 km2. This is sufficient for a
generating potential of about 10,930 TWh per year, many times the total
electricity consumption projected for the country. Thus the existence of
suitable land per se is not a barrier.”
Solar Park concept vindicated
The Indian HV transmission network is extensive. However, the 11kV
distribution system is limited. HV transmission is a mixture of
400kV, 132kV and 33kV, substations drop this to 11kV for the
distribution system. As a substation is expensive, it needs a large load to
justify the investment.
Solar Parks more cost effective towards following:
• potential limited physical availability of water,
• approvals process for accessing water supplies, and
• cost of supply infrastructure.
Dependent upon the technology type being used
Recommendation 5About NSM EPC in India Objective 3 Appendix
[8]33
34. [8]
Recommendation 5About NSM EPC in India Objective 3 Appendix
Cost – Benefit analysis of Solar park (300 MW)
• Mahindra would be the sole ONM
contractor
— Reduced cost (Man power
per MW would reduce)
• Over and above ONM
contract, cost reduction of 24.6%
per 5 MW setup
0
1
2
3
4
5
6
7
EPCsetupcost(CrsINR)
Cost is INR 6.36 crores/MW
EPC Installation Cost
77%
9%
8%
5%
1%
Solar Plant
Civil works
Evacuation Cost
Preliminary and Preoperative Expenses
Land
Cost for 5 MW plant – INR 4,138 lakhs
84%
6%
5%
4% 1%
Cost for 300 MW plant – INR 3,121 lakhs for 5 MW
For a solar park, all other costs except ‘Solar Plant’ with get significantly reduced
Reduction in overall
cost
Assuming current tariffs, break-even can be
achieved by selling 134 MW in a 300 MW setup
34
35. Recommendation 5About NSM EPC in India Objective 3 Appendix
35
Cost Benefit sheet for Solar Parks in Rajasthan
Total Savings 24.57%
Break Even point (no. of 5 MW plant) 27
Break Even point (MW) 134
Barren land cost (Lakhs INR) 2
Land requirement for 1 MW (Acre) 4
Cost savings in Civil, Evacuation and
preliminary costs 50%
Components Cost (Lakhs INR) Components Cost (Lakhs INR)
Land and Infrastructure 40 Land and Infrastructure 2400 Fixed costs turnkey
Civil and General Works 389.895 Civil and General Works 11696.85 Land and Infrastructure 40
Solar Plant 3180 Solar Plant 157350 Civil and General Works 389.895
Evacuation Cost 312.75 Evacuation Cost 9382.5 Margins Evacuation Cost 312.75
Preliminary and Preoperative Expenses 215.45 Preliminary and Preoperative Expenses 6463.5 Preliminary and Preoperative Expenses 215.45
Total 4,138.10 Total 1,87,292.85 Total fixed costs turnkey 958.095
Margin for Solar plant 159
Effective Cost for 5 MW 3,121.55 1117.095
Fixed Cost 29942.85
Components Cost (Lakhs INR) Components Cost (Lakhs INR) Break Even Point 26.804211
Polysilicon 40 Polysilicon 12000 Total Power (MW) 134.02105
Wafer 50 Wafer 15000
Cell 30 Cell 9000
Module 70 Module 21000
Inverter 30 Inverter 6750
Other 260 Total cost Other 58500
Installation 156 75% Installation 35100
Total 636 Total 1,57,350.00
65.0% 70.00% 75.0% 80% 85.0%
40.0% 32.17% 29.48% 26.78% 24.09% 21.40%
45.00% 31.06% 28.37% 25.67% 22.98% 20.29%
50% 29.95% 27.26% 24.57% 21.87% 19.18%
55.0% 28.85% 26.15% 23.46% 20.76% 18.07%
60.0% 27.74% 25.04% 22.35% 19.65% 16.96%
Total returns for 5 MW plant
(Contribution)
Total cost for 5 MW Total Cost for 300 MW Break Even analysis
Cost (Lakhs INR)
Only 5% for cost
reduction for
developer
Synergy -
Cost
reduction
Cost savings in Civil, Evacuation and
preliminary costs
Synergy - Cost ReductionSensitivity Analysis
Solar Plant Cost for 1 MW Solar Plant Cost for 300 MW
36. Solar Plant To Meet State Power Deficit
Proposed Pertinent Operating Steps For
Such a Farm
• A rapid in-principle allocation process
that gives initial certainty to developers.
• Automatic loss of allocation if financial
closure is not achieved in a reasonable
timeframe.
• Permission to construct immediately
following financial closure but
contingent on lodge of bonds to allow
for site clearance if the project is not
completed.
• Automatic loss of allocation if the
project is not constructed in a
reasonable timeframe.
Source: NREL Website
[8]
Recommendation 5About NSM EPC in India Objective 3 Appendix
36
38. Diversification In Emerging Markets: Why The Conventional
Definition And Strategy May Not Be Applicable
Diversification In Emerging
Markets
In developed markets, unrelated
diversification is thought to be
value destroying
Diversification in
Developed Markets
Emerging markets have different
dynamics as compared to
developed markets and thus
diversification and synergy have
different connotations
Diversification is justified if
• The company is the best owner of the business
• There is a synergy between existing and new
businesses
Diversification is justified because
• Large conglomerates typically have the resources and
relationships needed to navigate the maze of
government regulations
• Large conglomerates are more attractive to potential
managers because they offer greater career
development opportunities
• Large conglomerates have economic benefits that don’t
exist in the developed world, especially in infra sector
Source: McKinsey on Finance Number 42, Winter 2012
The diversification decision should not be based on the synergies only. Mahindra
EPC can diversify based on the opportunities available
[8]
RecommendationAbout NSM EPC in India Objective Appendix
38
39. [8]
RecommendationAbout NSM EPC in India Objective Appendix
Potential targets
Indian Suppliers to EPC
Companies
Potential targets for
acquisitions, JVs, and technology
transfer
Mahindra EPC
generating
synergies from
backward
integration
Moser Baer
Solar
Semiconductor
Lanco Solar
BHEL
BEL
Titan Energy
IndoSolar
Topsun Solar
PLG Power
Source: Green World Investor
39
40. 13% 12% 11% 10% 9% 8%
7.5 9.20% 9.70% 10.30% 10.90% 11.50% 12.10%
7.75 10.00% 10.60% 11.20% 11.70% 12.30% 13.00%
8 10.80% 11.40% 12.00% 12.60% 13.20% 13.90%
8.25 11.60% 12.20% 12.80% 13.40% 14.10% 14.80%
8.5 12.40% 13.00% 13.60% 14.30% 15.00% 15.70%
8.75 13.30% 13.90% 14.50% 15.20% 15.90% 16.60%
9 14.60% 15.00% 15.70% 16.40% 17.20% 17.90%
9.25 14.90% 15.50% 16.20% 17.00% 17.70% 18.50%
9.5 15.70% 16.40% 17.10% 17.90% 18.70% 19.50%
Interest Rate
Tariff(Rs/unit)Further reduction in bid prices is not sustainable at current interest rates
Sensitivity analysis of project IRR with Tariff and Interest Rates
Source: Crisil Research
[8]
RecommendationAbout NSM EPC in India Objective Appendix
40
41. Module manufacturers entering EPC space may pose a serious threat
to Mahindra EPC business in future
Threat from local module manufacturers entering EPC space
• Vikram Solar – Projects pipeline of 40MW for module supply and EPC under batch two of phase
one of the NSM and the Gujarat Solar Policy.
• Lanco Solar – Providing EPC for Gas Authority of India Ltd. (GAIL), is expected to use its own
modules.
• Enfield Infra-structure is developing a 10MW project under the batch two of phase one of the
NSM and is expected to use its own modules that are being manufactured under the name of
Sonthalia Group.
Source: India Solar Compass, BridgeToIndia, October 2012 edition; Indian solar manufacturers ask for anti-dumping duties of up to 200%, PV Magazine;
Business Today
[8]
Recommendation 1About NSM EPC in India Objective Appendix
41
42. A picture of the portal which is used to trade REC’s :
CEPC for Renewable Energy Certificates
[8]
AppendixAbout NSM EPC in India Objective Recommendations
42
44. Gujarat Case Study
• 963MW of solar PPAs had been executed but only 175 MW could meet the deadline of Dec
31, 2011 for achieving COD
• 128 MW awaiting transmission connectivity – no deemed generation in PPAs
• Also failed to forecast volatility of solar panel prices
Lost Opportunity:
Risks that were ignored or not
appreciated:
• Failure to achieve financial closure
• Logistics issues were not appreciated -
land aggregation and transmission
• Completely overlooked the significant
financial impact on retail tariffs
EPC Risks identified:
• Land aggregation
• R&R and local community sensitivities
• Land registration and conversion
• Financing
• Technology and Execution risks were minimal
[8]
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45. DCR : A Proven Model
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48. Other Recommendations
• Mahindra EPC can tie up with foreign companies to acquire new technologies and
build competencies in the domestic market
• Mahindra EPC can experiment with new BoS in initial years. Role of BoS can be a
crucial one for plant efficiency
• Mahindra EPC can also look for EPC opportunities abroad to develop a comprehensive
domestic strategy with learnings from foreign exposure.
• Mahindra EPC can experiment with the best EPC models prevailing globally –
LSTK, BoS-EPC, etc. – to finalize upon the best EPC model for India.
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1- Literature review2- talked to few SMEs3- visited solar power plant ….. Complete survey of the plant
Details across India …. Used in our research
Taken Over By PulkitBohra
CHANGEEPC is a manpower run business; not a production but management integration industry.
TABLE 7: Domestic content requirements or incentives have had some success globally CHINA ONTARIO, CANADA U.S. ITALY Stipulation vehicle National Development and Reform Commission Order 1204 Ontario Power Authority Feed- in-Tariff Program Rules American Recovery and Reinvestment Act (ARRA), “Buy American” Provisions Quarto ContoEnergia (the Fourth Energy Plan) Launch year 2003 2009 2009 2011 Industry benefited Wind All renewable energy industries All manufacturing industries Solar Details of local content requirement All wind farms developed in China, private or public, to have locally made components. The percentage of local content started at 50 percent in 2003 and was increased to 70 percent in 2004. Developers are requiredto have 50 percent of their project costs come from Ontario goods and labor at the time they reach commercial operation. Increased to60 percent from January 2011. All public projects backed by ARRA funds must use ARRA-compliant products. If the domestic content of a product is over 50 percent and manufactured within the U.S., it can be considered ARRA compliant. A bonus of 10 percent on the feed-in tariff when 60 percent of the material costs of an installation are from products manufactured in the European Union. Impact Worked effectively: By the time the condition was revoked in 2009, China had transformed from a marginal player to being the dominant manufacturer of wind turbines in the world. Working well: Companies like Silfab, Suntech, and Schneider set up manufacturing bases in Ontario. Mixed results (for solar): Most of ARRA-compliant companies are foreign players, such as Kyocera, Sharp, Sanyo (Japan); Suntech (China); Schott (Germany). At the same time, most U.S. players, such as FirstSolar, Sunpower, have bulk of manufacturing outside U.S. Impact as yet unknown: Likely to benefit manufacturers in Germany and Spain. FirstSolar qualifies. Norway included as an exception.
Taken By Mudit Jain
Change the chart …. More details
Advantages of Off-Grid Systems:Reliable grid-quality power supply, worldwideIdeal for local economic development and growthPV: a regional business model that creates jobsModular design enables expansions months or even years laterSupports all generators (PV, wind, hydropower, etc.)Standard AC technologyLocal Players V/s MahindraThere are several advantages that Local Payers have over Mahindra, these are detailed below:Personal touch, in small organizations the owners/promoters of the company themselves are involved in servicing the client. This gives a sort of personal touch in the services. Though with big companies brand name is an added advantage, but the general mentality of an investor is that if something goes wrong he can hold a local player accountable whereas in case of Mahindra he will just be running around. Lower overhead costs.
Leveraging the penetration of Mahindra Powersol for such sales centers in various cities
Taken by Mudit
Taken byTarun
Taken By Pulkit MathurRight of way …….. Issue in solar parksGovt or pvt land …. Problem solved with solar parkLand with high dniSoil suitable for civil workUnderground water etcAccess to grid and roads in densely populated regionsUtilize and ear mark land for such solar mission
Solar parks usually include incentives such as permits for developers and provide dedicated power infrastructure Well planned solar parks can allow quicker and more reliable project execution with fewer implementation risks for developers
(http://www.pv-magazine.com/news/details/beitrag/indian-solar-manufacturers-ask-for-anti-dumping-duties-of-up-to-200_100008789/#ixzz2BYXIb6GT); Business Today (http://businesstoday.intoday.in/story/american-businesses-eye-indias-solar-market/1/20370.html)
(http://www.pv-magazine.com/news/details/beitrag/indian-solar-manufacturers-ask-for-anti-dumping-duties-of-up-to-200_100008789/#ixzz2BYXIb6GT); Business Today (http://businesstoday.intoday.in/story/american-businesses-eye-indias-solar-market/1/20370.html)