solar power plant project-libre

5/20/2018 Solar Power Plant Project-libre

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Solar Power Plant ProjectSetup Details

TABLE OF CONTENTS

1. LATEST SOLAR NEWS AND VIEWS IN ANDHRA PRADESH

2. CAPITAL COST OF SOLAR PV - MW SCALE POWER PLANTS

3. TWO ROUTES TO SOLAR POWER GENERATION: PPA / REC

4. IDEAL LAND FOR SOLAR POWER PLANTS

5. SOLAR POWER GENERATION PROJECT FINANCING

6. REC

7. APPC COST PER UNIT STATE WISE

8. ACCELERATED DEPRECIATION

9. SUBSTATION LOCATIONS AND POWER GENERATION POTENTIAL

10. UNBID AND UNDERBID SUBSTATIONS - OPPORTUNITY!

11. GRID CONNECTIVITY AND EVACUATION PROCEDURE

12. SOLAR PARK: AVAILABILITY IN AP

13. STEPS FOR SOLAR CAPTIVE FOR FACTORY

14. AP SOLAR POLICY

15. DESIGN OF ROOF TOP

16. OTHER SOLAR BUSINESS OPURTUNITIES

17. DNI AND NEWS OF DISTRICTS IN ANDHRA PRADESH

18. FAQ'S


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SOLAR NEWS AND VIEWS

*AP GOVT GIVES SOLAR PROJECT DEVELOPERS TIME TILL 30TH SEPTEMBER TO ACCEPT RS 6.49/UNIT 2 august 2013

Solar photovoltaic power generation companies, who have submitted bids to set up units in Andhra Pradesh, or those now interested,have been given time till September 30, 2013 to submit their proposals. The Government had recently decided to allow more com paniesinterested in taking part in the projects under the State solar power policy.As a part of development of green power, particularly the solar, the Andhra Pradesh Government represented by AP Transco has givenopportunity to all the solar developers, including those who have not participated in the recently concluded competitive bidding for 1000MW, to submit their applications for executing the solar projects.

*AP GEARS UP FOR SOLAR NET METERING POLICY: ROOFTOP SOLAR POWER24 august 2013The state energy department on Friday said citizens going for roof top solar power generation could get their system connected to the

grid or remain off the grid.

*AP GOVT HAS COME OUT WITH A INCENTIVE SCHEME TO ENCOURAGE SOLAR ROOF TOP !!!You need to invest just Rs 50,000 to set up a solar rooftop system with a capacity to generate power of one KW in Andhra Pradesh.

*SEED TO PROVIDE SOLAR DRYERS TO BOOST THE DRY FISH INDUSTRY IN BHEEMILI: APIn a bid to turn Bheemili into a hub of dry fish trade, the Greater Visakhapatnam Municipal Corporation (GVMC) has mooted a proposal

of introducing solar dryers with the help of Hyderabad-based Society for Energy Environment and Development (SEED).

*500 VILLAGES IN AP STILL LACK POWER SUPPLY12 augustAround 500 hamlets across the state still lack power supply. Three years have passed since a Rural Electrification Plan was launchedbut there are over 10 lakh un electrified rural as well as BPL households in the state.

REC SOLAR TO SET UP 6.5MW SOLAR PLANT FOR EENADU NEWSPAPER: ANDHRA2 AUG 2013 REC, a leading global provider

of solar electricity solutions, will supply 25,720 REC Peak Energy Series solar panels aggregating to 6.5 MWp to power a ground-mounted tracker system in Andhra Pradesh, India. All electricity produced 12,289,500 kWh of clean, green electricity each year willbe used for the printing of the Eenadu, the largest circulated Telugu newspaper in Andhra Pradesh, owned by the Ramoji Group.

*CNPV DELIVER 10MW SOLAR MODULES TO RAYS POWER INFRA!!!: AP30 JULY 2013 LUXEMBOURG and DONGYING, China, July 30, 2013 /PRNewswire/ -- CNPV Solar Power SA, a public limited liability companyorganized under the laws of the Grand Duchy of Luxembourg and a leading integrated manufacturer of solar photovoltaic products, todayconfirmed their on-time progression with Rays Power Infra Private Limited, Jaipur, India ("Rays Power") as part of their 30 MW strategicagreement. Started as a brain child of professors and students of Indian Institute of Technology (IIT), they are among the largest solarpower service provider in India. Today, Rays Power Infra has rapidly evolved into one of the biggest Solar park developer & serviceproviders in India. Services are offered in either a "turnkey" form or on an EPMC basis, making Rays Power Infra Private Limited. The"one stop shop" for solar power plant projects.

*ENVIRONMENT MINISTRY HEADQUARTERS TO BECOME FIRST 'NET ZERO ' CONVENTIONAL ENERGY CONSUMPTIONBUILDING!!!14 july 2013The country's first "net zero" conventional energy consumption multi-storey building - the new headquarters of the environment ministry -will be completed in Jor Bagh next month. The building will meet its annual requirement of 14 lakh units of electricity by generating solarpower on the site.

*ZUARI CEMENT INAUGURATES A 850MW PLANT IN YERRAGUNTLA, ANDHRA PRADESH 12 july 2013


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Zuari Cement inaugurated its solar power project at Yerraguntla on 9th July 2013, a bold initiative towards energy sustainability in linewith the Italcementi Group energy policy.

2. COST OF A 1 MW SOLAR POWER PLANT: ESTIMATE

Total 730 lakhs (7.30 Crores)

Mounting Structurers (with tracking - Single Axis) 80

Mounting Structurers (with tracking - Dual Axis) 140

Its a known fact that single axis and dual axis tracking technologies provide more than 15% additional generated power. Howevertechnical experts choose to operate without both single axis and dual axis tracking systems, simply to avoid any moving part in the plant.They want to avoid the risk of a breakdown ever.

ITEMRs (in lakhs)

Supply, Installation, Erection & Commissioning of Modules 400 (REC)

Module Mounting Structureand associated civil works 80

Installation, Erection & Commissioning of Inverters 60 (AEG)

Cablesand associated civil works 40

Testing & Commissioning of Transformer 18

H. T. Paneland associated civil works 15

Meters with C.T. & P.T., Isolators, four pole structure & relatedevacuation system with switchyard lightingand civil works 18

SCADA, Weather station, Earthing & Lighting Protection 25

ACDB, DCDB, Batteries with Chargers, Control Panel etc. 08

String Combiner Boxes 12

Inverter & Control room, Boundary wall work, approach road withwater tank 30

Insurance 09

Engineering & Men Power & Out of Pocket Expenses 15

Miscellaneous


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Even CERC has estimated the cost of a solar power plant without taking tracking systems .

There are some newer Tracking systems which claim lower costs and higher efficiencies. Costing less than 10 % of the projectcost and providing more than 25 % efficiency. These seem pretty good to go.

Heresa breakup of the costs for Solar PV projects as recommended by CERC:

SNO Particulars

Capital Cost Norm forSolar PV project(Rs.Lakh/MW) % of total cost

1 PV Modules 344.50 43%

2 Land Cost 16.80 2%

3 Civil and General Works 94.50 12%

4 Mounting Structures 105.00 13%

5 Power Conditioning Unit 60.00 7%

6

Evacuation Cost up toInterconnection point(Cables andTransformers) 105.00 13%

7

Preliminary and Pre-Operative Expenses

including IDC andcontingency 80.00 10%

Total Capital Cost 805.80100%


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COST OF 1MW WITH CNPV/ CSUN

ITEMRs (in lakhs)

Supply, Installation, Erection & Commissioning of Modules 360


Installation, Erection & Commissioning of Inverters 60 (BONFIGLIOLI)









Insurance 09


Miscellaneous


WHAT IS THE REAL CAPITAL COST OF A SOLAR PV PLANT?(BY EAI NARSI)

Nirvanas have the basic data of the component costs for solar PV power plants the panel cost, the balance of system cost, land costs,installation & evacuation costs.

There is significant variability in practically all the cost componentsPanels could be thin film or crystalline (not to mention CPV), and could be made in India, or imported from high-quality, high costcountries such as Germany, or from our nice neighbor China at dirt cheap prices (with questionable quality of course)

Balance of systemsIt capital cost depends on whether you wish to use trackers or not, for instance. The cost of inverters can vary alot, based on the brand. Many of the other commoditized components, cables, transformers etc., can be estimated with a fair degree ofprecision


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Land costIs it 3 lakhs per acre or 10 lakhs per acre. Depends on where you put it up, doesnt it?

Installation costsEPCs come in many varieties, it is 5% of project cost or 7%? 2% is a lot of money when you are talking about projectcosts upwards of 10 crores.

Taking low-end estimates for each of the above gives me the following number (all costs per MW)

PanelsRs 3 crores (thin film, 60 cents per W)

Balance of systemRs 4 crores

Land cost0.12 crores (3 lakhs per acre)

Installation cost & evacuation0.35 crores approx (5% of total cost)

The total comes to approximately 7.5 crores

Now, zip to the high end (all costs per MW)

PanelsRs 4 crores (crystalline, 80 cents per W)

Balance of systemRs 5 crores (super quality inverters and trackers)

Land cost0.4 crores

Installation cost & evacuation0.65 crores (7% of total cost)

The total comes to approximately 10 crores

Now, this is the band most of us have been talking about Rs 7.5-10 crores. Of course, there are folks talking about sub-7 crores aswell, and I would like to hear from them too how they arrived at those numbers.

COST OF A 1MW SOLAR PLANT WITH TIER2 PANELS & PRACTISES

ITEMRs (in lakhs)

Supply, Installation, Erection & Commissioning of Modules 330


Installation, Erection & Commissioning of Inverters 55









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Insurance 09



This is avoidable, solar power generation is a profitable project. With an investment of Rs.2 Crores one can earn upto 40 crores andmore in the ensuing 25 years, so itsbetter to go with tier 1 panels, BOS and practices.

EPCs that use best brands. Best practices with proven performances.

Accelerated Depreciation of 80 % of the capital to companies with tax liabilityREC route ideal for Companies with high tax liability, with AD benefitPromoters equity approx Rs 2 cr/ MWDetailed Project report cost included in the project cost

Bank loan can be 70%, with collateral security from promoterProject viable even with own capital without bank loan,It takes 6 months to complete a project

As per REC route Rs 12.60/ unit (discom2.60, rec9.30) can be realized, REC price range of Rs9.30-13.40 will be valid till 2017 march.Post 2017 march the price band will be announced by MNRE .It is likely to be low to very low approx Rs 2-3.1 MW can generate approx1.5- 1.7million units per year

3. TWO ROUTES IN WHICH YOU CAN PRODUCE SOLAR POWER PPA& REC MAJOR STEPS TO MW SCALE SOLAR

Designing and Planning Detailed Project Report Power evacuation planning

DPR preparation Codes & Standards interpretations Regulatory approvals

Power Purchase Agreement (PPA) facilitation Technology Tie Ups Banking documentation

Financial closure Project Structuring & Designing Project Management

Security cover & major clause Electrical works Project commissioning

PPA Projects

Through competitive bidding Fixed tariff Allotment not assured

Average but fixed returns Limited allotments No trading

Minimum 5 MW Viable only to companies No Accelerated Depreciation benefit

REC Projects

Open access High but variable returns Any capacity

Allotment is assured Certificates to be traded Variable tariff

Unlimited allotments due to huge demand


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KCP LIMITEDIS THE FIRST COMPANTYIN ANDHRA PRADESH TO GET ACCREDITATION AND REGISTRATION FOR SOLAR POWERGENERATION UNDERREC MECHANISM.

Total Capacity (MW) = 5.75 | Number of Projects = (1)

Sr.No State Energy Source RE Generator Project No. Capacity (MW) Date of Accreditation Date of Registration

1AndhraPradesh Solar PV

THE KCPLIMITED 001 5.75 08-04-2013

N/A

STATES LIKE RAJASTHAN , MAHARASHTRA AND MADHYA PRADESH ARE LEADING IN REC MECHANISM

(23.04.2013)

PPAANDTHIRD PARTY PPA

PPAstands for power purchase agreement. In the recently concluded government auction of 1000MW in Andhra Pradesh, The AndhraPradesh Government will provide PPA for solar purchase for the next 25years. THE GOVERMENT has announced the price of 6.49 perunit. Only sun borne energy and easel mining industries bid 6.49 and 6.52 respectively. Together at best they will be able to do 70MW..This low unviable price literally opens up, the third party PPAplus REC route.

Third Party PPA is a power purchase agreement which a developer can use and claim REC. Third party PPA REC is normally got bygovernment authorized power trading companies. Companies that set up large solar plants of size 10MW and above can approach thesecompanies to avail the 3rd party PPA for their solar project in Andhra Pradesh. The current third party PPA for solar power doing therounds in Andhra Pradesh is Rs 4.50 - 5 per unit with 5% escalation once or twice a year. This third party PPA is available for 5 and 10

years tenure. Companies that avail 3rd Party PPA for their solar project in Andhra Pradesh can also avail REC benefits.

LIST OF INTER-STATE TRADING LICENSEES OR POWER TRADING COMPANIES:

These companies are eligible to provide third part PPA. Third party PPA plus REC route provides probably the best revenue modelamong the other sources of revenue in solar energy power generation. Companies in Andhra Pradesh desirous of monetizing, havingstrong balance sheets and are capable of investing in large projects like 15MW and above can reach out to them to get a third partyPPA.


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APPC PLUS REC

The APPC price is 2.50 per unit. Adding APPC plus REC it works out to be rupees 11.80 ( REC 9.30).Appc prices will go up next year bymore than 5%. It will not be a surprise that if appx price reach Rs 3. This estimate of Rs 3 is based on a) AP Govt is planning to buy1000MW or more solar power at Rs 6.49 per unit) AP GOVT has ordered a purchase of 450MW OF POWER AT RS 12.50 per unit forthe next six months.

An official from APERC on probing accepted that APPC can go up to Rs 6 in the next two or three years.

The Central Electricity Regulatory Commission (CERC) has released (APR 2013) a second set of (draft) amendments to theirREC guidelines.

REC and Reverse Bidding/TenderingProjects which have signed a PPA through any state tendering mechanisms (reverse bidding)would be ineligible for procuring RECs. The objective of REC is to fund the gap between APPC and the viability.

APPCThe guidelines now clarify that the PPA would have to be signed at a price equal to the APPC pricewhich was prevalent theprevious year.

Electricity duty and captive generators - CERC has now proposed to remove the electricity duty exemption as a disqualificationcriterion as the quantum of contribution to final tariff is quite miniscule. The other criteria for disqualification such as concessionalwheeling/banking would still be in force.

Time period for availing RECscurrent regulations state that there is a three month time window after approval from the SLDC to getthe required clearance from the central agency. However since the receipt of information from the SLDC sometimes takes more thanthree months to reach the central agency, it has been proposed to extend the window to six months. In addition to this, currently theapplication for receipt of the certificates can be made only on the 1st and 15th of each month. This has been revised to the 10th, 20thand last day of each month.

No cap on minimum capacitypreviously, it was proposed that RE power plants with a capacity of 250 kW and above would only beeligible for certificates under the REC mechanism (subject to approval by MNRE) even though the CERC guidelines do not dictate aminimum requirement. CERC has clarified that there is no minimum capacity and that ANY RE generator would be eligible to claim RECprovided they satisfy the prescribed criteria.

Retention of RECs CERC has now clarified that all RECs generated through a RE captive power plant can be retained by the

developer (to fulfill their obligations) thereby reducing the overheads which is subject to verification by the SNA.

Shelf-life of RECs as reported earlier, RECs would now have a shelf-life of two years as opposed to one year and the regulationswould be amended accordingly.

Date of issuanceany power plant setup under the REC mechanism would be eligible for RECs from the date of commercial operationor from the date of registration of such plant by the Central Agency whichever is later.

All RE Generators are requested to pay fees & charges related to Registartion/Issuance inclusive of service tax @12.36% with immediateeffect:

The details of fees and charges of REC payable to Central Agency are as under: Registration Charges

Sr.No. Fee and Charges towards Registration Amount in Amount including Service @ 12.36%

1. Application Processing Fees (One Time) 1,000 1,124

2 Registration Charges (One Time) 5,000 5,618

3 Annual Charges 1,000 1,124

4Revalidation Charge at the end of five (5)years 5,000 5,618


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Issuance Charges (Service tax @12.36% will be applicable on total amount)

Sr.No.Fee and Charges towards Issuance ofREC

Amount

in

1. Fees per Certificate 10

All fees and charges shall be payable by way of Electronic Clearing system (ECS) only and Payment shall be made as per the details givenbelow

Sr.No.Name of the AccountHolder

AccountNo

AccountType

BankName Branch Name and Code IFSC Code

PAN ofPOSOCO

1.NLDC REC FEES &CHARGES 931764650

CurrentAccount

IndianBank

Mehrauli InstitutionalArea & 943 IDIB000M089 AAFCP2086B

4. IDEAL LAND FOR SOLAR POWER GENERATION IN ANDHRA PRADESH

TOTAL LAND AVAILABLE IN ANDHRA PRADESH AND ITS GENERATION POTENTIAL

26.4 lakh acres of non - agricultural land available and 20.6 lakh acres land available under barren and uncultivable land. Total of 47 lakhacres of land available for solar power generation, If it takes approximately 5 acres of land for 1MW, we can produce more than 9,00,000MW. Even if we have 1% of land that have access to substations if we use, We can produce about 9000MW.So there is a lot of potential.

Rocky lands are not ideal for solar power generation. Many times soil testing of the land is done before deciding the feasibilityIdeally the land has to be very close to a substation. 11 kva, 33 kva, 66 kva, 132 kva, etc

For a 1 mw plant 11 kva is substation required.

For each km the substation is away from your land, one has to incur about Rs 10 /12 lakhs for laying the transmission lines. Better thanthat is to buy up the land between your land and the substation.

If there is some land between your land and the substation, there will ROW ie right of way issues.

CAPITAL GAINS TAX

At times some land brokers buy agricultural land and sell and want to sell it off as agricultural land itself to avoid short term capital gainstax. It is advisable for the potential developers to buy the converted land by sharing the short term capital gains tax with land broker.

How many acres of land are required for a 1 MW solar power generation plant?

The most popular solar panels are Poly crystalline and it needs 5 acres of land.3.5 to 4acres for crystalline silicon/ mono crystalline (c-Si) technology and 6 to 7 acres per MW for thin film solar (C- CIG, CdTe)technology.

In reality, it depends on other parameters like cost of land, Ground Coverage Ratio (GCR)(to avoid inter array shading, GCR can be0.45 to 0.65 and generation will vary based on GCR) and choice of sun tracking with sun trackers the land required will be about 6acresper MW for crystalline solar modules).

Which are the ideal states for setting up of solar power projects?

Hot destinations are Rajasthan, Gujarat and MH, MP, Andhra, Karnataka, Tamil Nadu as far as solar radiation is concerned.


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Will bankers finance Solar power generation plants?

The Debt Service Coverage Ratio (DSCR) works out to an average of 1.49 which is considered quite acceptable to commercial banksfor sanction of loan.

The maximum debt that is permitted as per CERC norms is 70% and most banks should find this acceptable based on the financialstrength and net worth of the company / promoters. The present policy driven by the National Solar Mission and PPA for 25 years with a

central PSU like NTPC's subsidiary should provide adequate confidence to the Banker to finance solar power projects."

MODES OF ACQUIRING LAND FOR SOLAR POWER GENERATION

Got Land for Solar power generation !!

Those of you, who have large acres of non cultivable lands in Andhra State near substations and do not have the resources to develop asolar power plant, can register their lands here forA) outright sale, B) lease for 26 years C) partnership with the power plant D) any other suggestion from the land owner

We need the following information.

Exact location of the land: Address of land including district and taluk,

Total area in acres

Right of way ( ROW)*

Proof of its ownership.

Name, address including district and taluk,

DNI of the location:

Type of the land in government records.

Agricultural/ non agricultural/ barren/ rocky/industrial/ waste/ dry/ any other specify

KVA rating of substation nearby and distance.

Capacity available in the substation

List of solar projects in the neighborhoods, if you know.

Rate per acre. ie current market price of land available nearby, adjoining your land

Expected sale price : minimum price expected per acre.

Open for partnership: Open for leasing for 26 years? Yes / No

Are there lands available nearby: how many acres: how much do these lands cost

* ROW - if you have direct access to the substation, it is fine. But if electricity produced has to go thru the neighboring lands,that means you have a ROW issue.

**Agricultural lands are not permitted to set up a solar plant, even if there is no water and no agriculture has been done for years.

If you are going to convert, your land from agricultural land to any other, say so.

*ANANTAPUR, LAND PRICES IN THE DISTRICT HAVE SHOT UP MANIFOLD

With investors beginning to set up solar generation units in Anantpur, land prices in the district have shot up manifold. Already, theseunits have started generating 33 MW of solar based power. Many more such units are to follow suit, thanks to the regionsclimate ideallysuited to solar power generation. Nearly 51 companies including the multinational companies have sought permission to set up theirunits with a capacity of 585 MW of solar power generation.

With so many solar power generating units coming this nondescript district is also tipped to witness a massive real estate boom. In fact,a private firm had purchased nearly 80 acres of land at Rs 2 lakh per acre that too in an interior village falling in Kadiri division recently.


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5. Solar Power Project Financing

Various options available for getting funding for your Solar Power projects are,

1) Asset / Collateral based Funding2) Balance Sheet based Funding3) Project Funding

1) Asset Based Funding: Individuals and Companies

In asset based funding the lender provides loan for solar power plants based on valuation of the assets that your company hasor you have and that you can offer as collateral security for the loan.

You can even get 100 % funding depending upon the value of the collaterals.

Normally for most projects, the banks may demand 30 % equity and loan can be given for 70%.

Some banks in Hyderabad demand 35 % equity. But if the value of the collateral is high, it can be as said before, 100 % loan..

Many banks ask for urban property as collateral. It is not actually necessary. Once the banks get used to the performance of

solar power generation plants, they will minimize the need for collaterals.

Already many banks are accepting less than 70 % of collaterals when the projects are pledged.

2) Balance Sheet Based Funding: Companies only

The profit that the company has made in the last three years, the reserves and surplus it has etc will be taken into account and the bankcan then fund.

Companies that can avail Accelerated Depreciation for solar power generation will find it easier to avail loans and lower rates.Companies should note that it is not a fixed rate of interest. Good rapport based on good performance in the past can bring the interestpercentage down.

3) Project Funding: Companies and Individuals

The projected cash flow of the project or more specifically the PPA will determine the decision to fund. Payment security is important.Many of these types of funding can be got from India as well as from abroad.

With hedging the cost of international funds also tend towards 11%. Indian banks are now getting closer to 12.5 % and if the asset /balance sheet / PPA are sound one could look at lower rate of interest.

The project cash flow is much better in companies that can avail accelerated depreciation for solar power generation.

COMMISSION FOR GETTING BANK LOAN.

There are many Chartered Accountants who help individuals form a company and they also act as agents to get bank loans.

Commission for getting bank loan is approximately 1- 2% at present in Andhra Pradesh.

These agents normally help put the loan application for solar power generation plant and submit with two to three banks. This helps themget the best interest rate for solar power generation plants in AP.

For companies, this may not be the ideal route, as they themselves will have a finance /accounts department with access to severalbanks. Whereas for individuals and NRI's, it makes more sense to go thru such chartered accountants who also help get loans, thantrying it on their own.

Individuals can try on their own, if they have 30% or more equity and or good collaterals. They can then go to more than one bank andtry to get the best rate of interest.


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BANKS THAT LEND FOR SOLAR POWER PLANT

APSFC ANDHRA BANK STATE BANK OF HYDERABAD

CENTRAL BANK OF INDIA BANK OF INDIA CANARA BANK

YES BANK AXIS BANK SBI

CHECK LIST FOR COMPANIES AND INDIVITUALS FOR GETTING BANK LOAN TO SET UP A SOLAR POWER PLANT IN ANDHRA PRADESH

Solar power plant projects for loan proposal are new to Andhra Pradesh and particularly to the bankers. It is difficult for them tocomprehend a business proposition with no raw material and little capital like a solar power generation project. After a few years, onceseveral loan sanctions happen for solar power projects. The process will become more simple as the bankers will have a better idea.

A. CONSTITUTION:

A solar power generation plant can be started in any one of the following constitutions i.e.

(1) Proprietary Concern, (2) Partnership Firm, (3) Private Limited/Limited Companies,

GENERAL REQUIREMENT

1. Proprietary Concern

Bio-data of the proprietor by way of copies of PAN Card / Passport / Voters identity card / Bio-data with photo and signature attestationby Gazetted Officer.

2. Partnership Firms that are applying for a bank loan for a solar power generation plant

a. Copy of Partnership Deed

b. Copy of Firm Registration Certificate

c. Extract of Form-A from Registrar of Firms (for old firms and in case of additional loans) regarding existing partners as on date.

d. Bio-data of partners and copies of PAN card/passport/voters identity card/bio data with pass port size photograph and signature dulyattested

3. Private Ltd Companies or Public limited companies applying for a loan for solar power generation plants

a. Memorandum & Articles of Association.

b. Bio-data of Promoter Directors affixing colour photo duly attested /

Copies of PAN Card/Copies of Passport./voters identity card.

c. Resolution of Board of Directors of the company authorizing two directors to raise loans from and sign necessary loan securitydocuments and affix common seal thereof.

d. Copy of certificate of incorporation if it is a Private Limited Co.

e. Copy of Certificate of Incorporation and Commencement of Business in the case of Limited companies.

f. Copy of General Body Resolution u/s.293 (i) (d) of Companies Act in case of Limited Companies, permitting the company to borrow inexcess of paid-up capital and free reserves and Resolution u/s.293 (1) (a) of Companies Act for mortgaging the fixed assets of thecompany in favour of the Corporation.

g. Consent letters from the Directors about furnishing of their personal guarantee with copies of property documents.

h. Search Report from CA/Extract of register of charge from ROC in case of existing companies and companies seeking additional loans.


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B.PRIMARY SECURITY

The primary security can be either leasehold interest or freehold interest. If the solar power plant is going to be started in a leaseholdlands, it is called leasehold and if the solar power plant is going to be started in own lands, it is called freehold.

Original Regd. title deed in the name of the Proprietor/ Firm / Company along with certified copy having clear approach road.

Pattadar Pass Book/title deed issued by MRO/RDO in the name of the proprietor/firm/company/society.

Original/Copies of link documents (Vendors title deed) pertaining to the property under the scheme along with copies of Pass Book and Title Deed reflecting the sale entry. If pass book and title deeds are not issued, a certificate from MRO to that effectis required.

Extracts of revenue records i.e. Khasra Pahani for 1954-55 along with Pahanies in Telangana Area and 10 (1) along withAdangals in Andhra Area for the last 13 years.

No PT Certificate in case of Telangana Area.

E.C for 13 years (or) from the date of document if title deed is of beyond 13 years to the date of deposit disclosing alltransactions.

ULC permission u/s.26/exemption under ULC Act as the case may be in case the land is within urban agglomeration.

Permission from Urban Development Authority/ Building Plans if the site is within the Master Plan of Urban DevelopmentAuthority.

Affidavit by promoters to the effect that there are no courts cases pending against the property under the scheme.

C.COLLATERAL SECURITY

Generally, Banks insists for Collateral Security and the percentage of Collateral Security is dependent upon the location and the natureof industry and the nature of loan. Also many Banks insists for preferably urban immovable property towards Collateral Security andpreferably belonging to the borrowers. The Collateral Security can be either in the form of vacant land, house, apartment, fixed deposits,Bank Guarantee.

Vacant land:

a. Original Regd. title deed in the name of the surety along with certified copies.

b. Original link documents (Vendors title deed).c. Extracts of revenue records i.e. Khasra Pahani for the year 1954-55

e. E.C for 13 years from the date of document and in case title deed is beyond 13 years from the date of document to the date of depositdisclosing all transactions.

f. ULC permission u/s.26/exemption under ULC Act as the case may be in case the land is within urban agglomeration.

g. Copy of the Approved Layout/Sketch drawn by Mandal Surveyor demarcating the site/plot with Sy.No and boundaries and a land markfor identification.

If it is house:A. Original Regd. Conveyance Deed along with certified copy.

B. All the relevant Link Documents.

C. EC for 13 years (or) from the date of document in case title deed is beyond 13 years to the date of deposit disclosing all transactions.

D. Tax Demand & Receipt/Ownership Certificate/ Extract of property tax demand register for the last 13 years.

E. Approved building plans from Competent Authority.


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If it is an Apartment:

Original Registered Sale deed in the name of the surety.

Copy of the development agreement and link documents.

Copy of the approved building plan.

Encumbrance Certificate for the last 13 years.

It shall be established that the original title deeds of the project are not mortgaged to bank or any financial institution availingproject finance, by way of declaration from Builder/Landlord.

Mutation in favour of the surety.

Tax Demand and Receipt / Ownership certificate/ EPPDR.

Fixed Deposits as collateral for loan for a solar power plant

The beneficiary/payee of fixed deposit should give a consent letter for pledging the fixed deposit with the Bank as CollateralSecurity in consideration of sanction of loan to the unit to which the security is being offered.

The beneficiary/payee of the fixed deposit should also assign the proceeds of fixed deposit in favour of the Corporation by a

proper endorsement by the concerned bank.

A discharge voucher from the beneficiary/payee of fixed deposit duly affixing necessary revenue stamp (without mentioning thedate) on the backside of the FDR.

Bank Guarantee:

Individuals who have good banking record and good rapport with the local bank can get bank guarantee to the lending bank.Such bank guarantees can be considered as collaterals.

The collateral security can be offered by the borrower by way of Bank guarantee also in such a case the following documents shall besubmitted:

Bank guarantee executed by the concerned Bank on required stamp paper by the authorized signatories of the Bank affixing their rubberstamp containing the serial number of the signatory as per the Bank rules.

A confirmation copy shall be forwarded by the Bank Manager to the lending Bank in a sealed cover by post.

A letter from the Bank that they will pay the amount in case the Bank guarantee is invoked in time.

Format for Bank Guarantee

(To be furnished on non-judicial stamp paper of appropriate value as per Stamp Act relevant to place of execution.)

(Note: - Bank Guarantee is to be submitted onor before estimate processing for evacuation of power generated (A) or before executingany agreement for wheeling/sale of power generated (3 rd party/captive/pooled costs) (B) or 45 days from issuance of technicalfeasibility, whichever is earlier (A/B/C)and the bank guarantee amount is Rs.2 lakhs per MW.)

Notes:The Stamp Paper of Rs. 100/- Non Judicial Paper should be in the name of the Executing Bank.


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The purpose of this bank guarantee is for early completion of the project within two years from the date of issuing of this Bank Guarantee.

This bank guarantee is valid for two years and two months till the date------------ with additional claim period of one month till the date.

In consideration of the ----------- [Insert name of the solar power developer ] (herein after referred to as solar power developer) submitting the proposalfor establishment of solar power project of the capacity of ______ MW, at [Insert the location], for supply of solar power to APCPDCL (hereinafter referred to as DISCOM) under third party sale / captive utilization purpose / pooled cost sale to Discom.

This guarantee shall be valid and binding on this Bank up to and including ___[Insert Date]___________ and shall not be terminable by notice or anychange in the constitution of the Bank or the term of contract or by any other reasons whatsoever and our liability hereunder shall not be impaired ordischarged by any extension of time or variations or alternations made, given, or agreed with or without our knowledge or consent, by or betweenparties to the respective agreement.

Our liability under this Guarantee is restricted to Rs._______(Rs._ only). Our Guarantee shall remain in force until [Insert date] / The DISCOM shall beentitled to invoke this Guarantee till [Insert date].

The Guarantor Bank hereby agrees and acknowledges that the DISCOM shall have a right to invoke this PERFORMANCE BANK GUARANTEE in partor in full, as it may deem fit.

The Guarantor Bank hereby expressly agrees that it shall not require any proof in addition to the written demand notice by DISCOM, made in anyformat, raised at the above mentioned address of the Guarantor Bank, in order to make the said payment to DISCOM.The Guarantor Bank shall make payment hereunder on first demand without restriction or conditions and notwithstanding any objection by -------------[Insert name of the Solar Power Developer] . The Guarantor Bank shall not require the DISCOM to justify the invocation of this PERFORMANCE BANK

GUARANTEE, nor shall the Guarantor Bank have any recourse against the DISCOM in respect of any payment made hereunder

This PERFORMANCE BANK GUARANTEE shall be interpreted in accordance with the laws of India and the courts at Andhra Pradesh shall haveexclusive jurisdiction.

The Guarantor Bank represents that this PERFORMANCE BANK GUARANTEE has been established in such form and with such content that it is fullyenforceable in accordance with its terms as against the Guarantor Bank in the manner provided herein.

This PERFORMANCE BANK GUARANTEE shall not be affected in any manner by reason of merger, amalgamation, restructuring or any other changein the constitution of the Guarantor Bank.

This PERFORMANCE BANK GUARANTEE shall be a primary obligation of the Guarantor Bank and accordingly the DISCOM shall not be obligedbefore enforcing this PERFORMANCE BANK GUARANTEE to take any action in any court or arbitral proceedings against the Solar Power Developer /Project Company, to make any claim against or any demand on the Solar Power Developer / Project Company or to give any notice to the Solar PowerDeveloper / Project Company or to enforce any security held by the DISCOM or to exercise, levy or enforce any distress, diligence or other process

against the Solar Power Developer / Project Company .

The Guarantor Bank acknowledges that this PERFORMANCE BANK GUARANTEE is not personal to the DISCOM and may be assigned, in whole or inpart, (whether absolutely or by way of security) by the DISCOM to any entity to whom the DISCOM is entitled to assign its rights and obligations underthe PPA dated: .

Notwithstanding anything contained here in above, our liability under this Guarantee is restricted to Rs. _________(Rupees ___________ only) and i tshall remain in force until [Insert date] with an additional claim period of thirty (30) days thereafter. We are liable to pay the guaranteed amount or anypart thereof under this Bank Guarantee only if the DISCOM serves upon us a written claim or demand.

Signature Power of Attorney No.

For

Name [Insert Name of the Bank]

Banker's Stamp and Full Address.

Dated this day of , 20

Witness:

1. Signature 2. .. SignatureName and Address Name and Address


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D.GENERAL GUIDELIENS:

For purchase of land, which is an Inam land, occupancy certificate/Form-B patta from competent authority shall be obtained.

Assigned lands should not be purchased without prior written permission of RDO.

For purchase of joint family property, the borrower should ensure that all the co-parceners of the vendor family join in theexecution of the sale deed.

For purchase of lands covered under Master Plan of the respective Urban Development Authority, the borrower shall ensurethat the proposed land is falling within the Industrial Zone.

If the borrowers are seeking loans on land & buildings, the borrower shall purchase the lands in the name ofproprietor/firm/company/ society as the case may be.

Generally, the Corporation will not accept third party collateral security.

The following are the loan security documents to be executed by the borrowers in favour of the Bank and the required documents for aparticular loan are to be taken from amongst the documents mentioned below:

1. Deed of Hypothecation

2. Memorandum of Deposit of Title Deeds

3. Guarantee Agreement

4. Loan Agreement

5. Promissory Note

6. Assignment of Development Rights

The applicable documents from out of the above shall be executed by the borrowers in favour of the Bank.

The solar power developer, in this case the borrower shall pay the necessary stamp duty that is to be payable and applicable in the Stateof Andhra Pradesh on the security documents.

The above list is not exhaustive and after scrutiny of the documents that are submitted, if some more documents are required forestablishing a valid marketable title for the properties being offered as security for the loan sanctioned by the Bank, the entrepreneurshave to submit the same. For any clarifications, you may contact the Legal Officer in the Branch or Legal Department in the Head Office.

SANCTION

Brief project report

Copy of company registration certificate

Bio-data of proprietor / partners / directors with 2 pasport size colour photographs as per preform along with copies of certificatesregarding academic qualifications, experience etc.

Solvency declaration of proprietor / partners / directors as per proforma (on rs.20 non-judicial stamp paper)

Copy of partnership deed & firm registration in respect of firms/memorandum and articles of association & certificate of incorporation inrespect of companies.

Copy of land sale deed/ sale agreement / allotment letter of apiic ltd.

Building plans (approved plans in respect of hotels/nursing homes/commercial & residential complexes proposals)

Civil estimates

Letter from the lessor expressing willingness to let out the building and execution of regd. Lease agreement for 25 years in the unit isproposed in leasehold lands with rough plan.

Quotations for machinery and equipment from standard suppliers alongwith comparartive quotations.


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Copy of panchayat / municipal approval.

Copy of power feasibility letter from A.P.TRANSCO.

Copies of collateral security property documents.

Working results (audited balance sheets and profit & loss accounts) for the last 3 years in respect of existing units and the provisional forthe current year with all schedules.

Working results (audited balance sheets and profit & loss accounts) for the last 3 years of associated concerns of promoters, in the caseof existing cos.

Particulars of available assets (land, buildings, machinery) in respect of existing unit.

Other details such as raw material & market tie-ups, technology tie-up with background of technical consultant etc.

.Copy of PPA

Credentials of the party providing PPA

URL of the party providing PPA

Service charge @ 0.5% of loan applied 12.36% service tax on the service charges at the time of filing the application.

Upfront fee @ 0.5% of the loan sanctioned 12.36% service tax on upfront fee at the time of first disbursement.

Steps involved

Register a company (Proprietorship or Partnership or Pvt Ltd or Public Limited) for setting up Solar power Project. Get accredition. Getregistered with mnre. Preferred for REC projects.

Open a bank account in the new company name if you are an individual . Old name will do if you intend running the solar powergeneration in the old companysname.

Acquire adequate land on your company name for setting up Solar Power Project. Create provision for evacuation or atleast get flowstudy done.

Deposit 10% of the project cost in the bank account on company name and take proof of funds from the bank.

GET Accredition from local NLDC. GET flow study approval from Transco. Prepare DPR

PPA copy to be there in the DPR or bank loan application. Get permission to feed power to the T&D network

Bank loan application to have

1) Proof of Land Ownership , patta, unencumberance certificate2) DPR,3) PPA /4) Company incorporation certificate by an auditor5) Bank Balance in the new bank account.

Equity funding: This is probably the best way to fund and manage a solar power project. Not many developers will have their own funds.Pre financing by EPC companies: This can be done by EPCs.But mostly most EPCs operate on tight budgets. The profits in EPCbusiness is not much and hence to expect funding from them is not right.

Supplierscredit: Normally given by module manufacturers from usa and china to large customers, it is not equity funding, but it helps alot. It is also possible to get such credits from Inverter makers and Tracking systems makers. That is in case you are going for a trackingsystem. Especially those tracking systems that claim over 25 % increase in efficiency can afford to give some credit as they can recovertheir money from the increased power generated. Many of these companies are funded by VCs and may have provision to give supplierscredit


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Non-recourse project financing

This is the preferred financing structure, wherein the lending institutions would provide debt to a special purpose vehicle set-up for theproject and would have a lien on the projects cash-flows. However as this structure does not provide recourse to the developersbalance sheet, lending institutions require rock-solid agreements for revenues from the projects.

The above structure gives an option for obtaining non-recourse Project Financing. However the developer needs to ensure that thefollowing are in place to make the lending institutions comfortable PerformanceContractual guarantees from technology providers forthe long-term performance of the plant revenues Long-term power purchase agreements with credible consumers,i.e. directpower sale to the consumer. As discussed above, the current structure of the JNNSM PPA may not be bankable due to the credibility ofmany states.

The government has been contemplating a tri-partite agreement between the developer, state discom and the Reserve Bank of Indiato ensure the PPAs bankability, however this is not confirmed yet.

Renewable Energy Certificatedevelopers can forego the preferential tariff and trade the RECs on the energy exchange. However themarket is in its nascent stage and depends on the states renewable purchase obligations.

Project viability In addition to the above, developers must convince lenders that projects are viable and have the capability of

repaying debt without outside assistance. This could mean that the project has to fund a Debt-Service-Reserve-Account in addition tohaving healthy

Debt-Service Coverage-Ratios, Other options for financing

Other non-conventional options for financing include:

Foreign funding Large project developers can tap international banks to get lower rates of finance. However, hedging can put asubstantial dent in the rate differential and only someone ready to take the currency risk should resort to this option.

The idea of collecting large number of small projects and approaching exim bank, it can probably operate as supplierscredit at best.

SBICAPS SBI Capital Markets (SBICAPS) finances solar projects. Foreign banks in general are open to lending to Indian investment

banks for a portfolio of similar projects. This debt is then passed on to the developers with a margin and a hedging charge. The actuallending to the developer takes place based on RBI guidelines.

SBICAPS has been involved with the financing of projects developed by Tata Power Co., Kiran Energy, Sunborne, Alex Astral and AcmeTele Power.

There are other investment banks operating in India include the Bank of America, Barclays Capital, BNP Paribas, Lazard, Credit Suisse,

IREDA: The Indian Renewable Energy Development Agency (IREDA) is a development funding institution but operates as a NBFCunder the administrative control of MNRE for providing term loans for renewable energy and energy efficiency projects.

IREDA has a Rs 13 billion of credit from KFW for a broad mandate of promoting renewable power in India but has not been particularlyactive in financing utility scale solar projects till date. IREDA also provides loans to other banks at interest rates as low as 2-5% so as to

incentivize them to finance renewable projects. Your bank manager can work with IREDA to get low cost funding. It is a less known andless used route.

ADB: ADB provides financing support under the India Solar Generation Guarantee Facility (ISGGF), under its Asia Solar EnergyInitiative (ASEI) . Apart from providing debt as per ADBs LIBOR-based lending facility towards solar transmission infrastructure inGujarat, ADB also considers direct financing and/or guarantees for projects greater than 25 MW. Reliance Powers 100 MW CSP plan thas been partially financed with both debt and equity participation by ADB. Under ISGGF, ADB provides partial credit guarantees(PCGs) available to local and foreign commercial banks that finance private sector solar power plants in the country. This guaranteecovers up to 50% of the payment default risk on bank loans made to project developers. Currently, two commercial banks have beenapproved by ADB as eligible partner banks: L&T Infrastructure Finance Company Limited (India) and the Norddeutsche Landes bank(abbreviated Nord/LB, Germany). ADB aims to support 3 GW of solar power capacity in developing member countries by May 2013.


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SOLAR OFF-GRID AND REFINANCE SCHEME

About the scheme :This is a scheme of The Ministry of New and Renewable Energy (MNRE) Government of India, New Delhi forpromoting commercial marketing of solar energy systems and devices in the country. This scheme is being implemented as soft loanscheme for offgrid applications of solar energy (Both Photovoltaic & Thermal) under capital subsidy.

Models eligible for Loaning: MNRE finalized 11 model projects in consultation with IREDA and NABARD. Projects that are not specified

by the MNRE, to be eligible for funding need prior approval from the PAC of MNRE.Applicable to Flat plate and evacuated Tube collector based solar water heating systems manufactured/installed by the BIS approvedmanufacturers subjected to fulfillment of terms and conditions.

Implementation period: The scheme will be in operation up to 31.03.2013 and continuation of scheme shall be informed from time totime. Loan Amount: Bank loan is 50%, subsidy 30%,and margin 20%.

Eligibility: Employees of Central /state Government, public sector undertakings.

Salaried employees with confirmed service of 5 years and take home monthly salary of not less than Rs. 2000/- after meeting theproposed loan installment.

Professional and self employed persons with Annual net income of Rs. 60000/- as evidenced by Income tax return or charteredAccountants certificate and supported by satisfactory P&C from their Bankers.

In addition to the above, any individual, Institution, non commercial organization or commercial organizations including Hostels, companyTownships, Hostels and colleges etc. are also eligible for finance

Note: End users (other then individuals) have to give an undertaking that no depreciation allowance will be claimed under Income Taxrules)

Rate of Interest and Lock in period of Bank loan

1. Rate of interest is @ 5% p.a. on residual project cost.(project cost minus capital subsidy and borrowers margin)2. The loan repayment period would have minimum lock in period of 3 years from the date of disbursement of the first installment of theloan.

Release of Capital Subsidy:

The capital subsidy component would be released to the suppliers on behalf of the borrower by the financing bank only after satisfactoryinstallation and commissioning of the system.

Repayment:Maximum period of 5 yearsProcessing and other service charges: To be levied as applicable to consumer durable Loans.Penal rate of interest: @ 2% over and above the stipulated interest rate for defaulted loans for the defaulted installments /amount

Security norms:

1. Hypothecation of assets created out of bank finance.

2. Suitable guarantor/ co obligation good for the loan amount.

3. No collateral security up to the credit limits of Rs. 50,000/-

4. If the credit limits exceeding Rs.50, 000/- adequate approved securities as collateral are to be obtained.

Insurance

The unit should be insured for full value and for all possible risks.


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6. REC

State RPO Target for 2011-12 RPO Target For 2012-13 RPO Target For 2013-14

Andhra Pradesh 0.00% 0.25% 0.25%

PROCEDURE FOR APPLYING FORREC ACCREDITATION:

Procedure to be followed by RE generators while applying for Accreditation from APSLDC:

Log on towww.recregistryindia.in and enter the details of RE generator including the land registration / lease details, etc as perthe CERC guidelines dated 09-11- 2010.

Take print out of Acknowledgement; sign on each paper and submit along with application.

Sign the declaration form & strike-off the non-applicable paragraphs for claiming eligibility and also fill the details of possessionof land.

Submit the Application (hard copy) along with following documents to the Chief Engineer, APSLDC, Vidyutsoudha, Hyderabad.

1. Undertaking of availability of land in possession for setting up generating station or Certified copy of the Registered lease/SaleDeed.

2. Power Evacuation Arrangement permission letter from the host state Transmission utility or the concerned DistributionLicensee.

3. Confirmation of Metering Arrangement and Metering location with single line diagram.

4. Enclose ABT Meter Type, Manufacturer, Model, Serial Number, class and Accuracy etc. for Gross Energy Consumption,Auxiliary consumption and selfconsumption (for CPPs).

5. Documentary evidence for Date of Commissioning of RE project for existing eligible RE project or proposed date ofCommissioning for new RE project for accreditation.

6. Undertaking regarding Off-take/Power Purchase Agreement. Documentary evidence in case the generator is a Captive PowerPlant.

7. Proposed Model and Make for critical equipment (say WTG, STG, PVModule) for the RE project. Confirmation of complianceof critical equipment with relevant applicable IEC or CEA standards.

8. Undertaking for compliance with the usage of fossil fuel criteria as specified by MNRE.

9. Demand Draft towards application processing fees.

10. Demonstrate Compliance with the Eligibility conditions as prescribed by MNRE/Competent Authority.

11. Enclose connectivity Diagram/Single Line Diagram of the station clearly identifying the units to be considered for Accreditationand showing the Metering Arrangement.

12. Attach the copy of clearances/Approvals.

A. MoU between the company & NED cap.

B. Environment Clearance Certificate from AP pollution control board, Hyderabad(if applicable).

C. Boiler Certificate from AP boiler inspection department, Hyderabad (if applicable).

D. Contract labour license from AP labour department.

E. Fire safety certificate from AP fire department(if applicable).

F. Latest tax receipt from the Municipal/Gram panchayat for the factory land(if applicable).

G. Auditor compliance certificate regarding fossil fuel utilization.

H. Approval from Chief Electrical Inspector.
http://www.recregistryindia.in/http://www.recregistryindia.in/


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I. Clearance from forest department (if applicable).

13. Enclose Memorandum of Association & Articles of Association of a company and Certificate of Incorporation, in case of Pvt Ltdcompany/ Certificate of incorporation & certificate of Business commencement, in case of public Ltd company.

14. Appointment of Statutory Auditor.

15. Details of pending court cases, if any, with Honble APERC, Honble Supreme Court of India, Honble High Court of A.P. or any

other Court.16. Any other related documents as requested by APSLDC.

E) Fee particulars for processing of Accreditation:

The application for accreditation of RE Generation Projects shall be accompanied by a non-refundable one-time AccreditationProcessing Fees at the rate of Rs.5618 /- per application (including service tax at 12.36 %).

Checklist to be submitted by State Agency to Central Agency:

To be submitted on letter head of concerned State Agency

Checklist to be submitted by State Agency to Central Agency while recommending project for Registration under RECMechanism

Name of RE Generator:Accreditation Number:Source:

Total Capacity of Project(MW) Accredited Capacity (MW)

Accredited Capacity under thirdparty/ APPC sale (MW),if applicable

Accredited Capacity utilizedfor self consumption (MW),if applicable

S.N. Checklist

Yes(Please tick, ifapplicable )

No(Please tick, ifcorrect)

Remark / Any otherinformation

1. Is RE Generator opting for third party sale

Is RE Generator selling power to discom at APPC

2.

Is RE Generator a CPP opting for self

consumption

3.Is RE Generator a CGP opting for for selfconsumption

4.

Whether all procedures for accreditationaccording to CERC REC Regulations andapproved REC Procedures have been followed


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In case RE Generator is CPP/ CGP/ RE Generator opting for REC Scheme for self consumption then please provide followingdetails:

a

Whether electricity duty is leviable and being paid.If not, then reasons along with documentary

support be furnished by the said CPP/CGP/REGenerator

b.Whether benefits of concessional/promotionaltransmission or wheeling charges are availed

c. Whether banking facility benefit is availed

It is also certified that all procedures for accreditation according to CERC REC Regulations, approved REC Procedures havebeen followed at our end.

Place: Name of Authorised SignatoryDate: Name of State Agency

POINTS TO REMEMBER:

All communication regarding REC Mechanism is to be addressed as follows: "The Nodal officer, REC Mechanism,1st Floor NationalLoad Despatch Centre (NLDC) office,Power system Operation Corporation Limited (POSOCO),B-9, Qutab Institutional Area,KatwariaSarai, New Delhi-110016".All dak regarding REC Mechanism shall be accepted only through services of India Post and no dakshall be accepted by hand orthrough courier services.The Application(s) for issuance of RECs/Registration of Project or other issues should be sent by the RE generator(s) on ind ividual

project basis and the name of the RE Generator and 'Accreditation number' / 'Registration number', as applicable has to be clearly statedon the envelope.

SOLAR REC AT Rs4/- AND Rs 6.50 /- ?! ?! MNRE ?!

Floor Price: Solar PVThe Commission determined Solar PV tariff for FY 2013-14 at Rs. 8.75 per kWh. (Without Accelerated depreciation benefit) As per theproposed REC Regulations, the floor price is the maximum difference between the Minimum viability for that technology and the APPCcost for states for that year. The minimum viability is the tariff comes out to be Rs. 6.17 per KWh. Maximum difference between minimumviability and APPC of various States, comes out to be (6.17-2.26) 3.91 Rs./KWh. Rounding off to the nearest hundreds place, the floorprice for the year 2013-14 comes out to be Rs. 4000 per kWh.

Forbearance Price: Solar PV

The forbearance Price as per the CERC REC Regulations is the maximum difference between the tariff determined by the Commissionand the States APPC. For the year 2013-14, the Forbearance price comes out to be 6.49 Rs./KWh (8.75-2.26). Rounding off to the nexthundreds place, that Forbearance price comes out to be Rs. 6500 per MWh.

Vintage based Multiplier for Solar PV Projects registered so farFloor price proposed for the Solar PV projects commissioned now onwards in FY2013-14 to Rs. 4000/REC in FY 2013-14. It is proposedthat the Solar PV projects registered so far considering the Floor price of Rs. 9300 per MWh would be issued higher number of SolarRECs 31.03.2017, for 1 MWH of generation. The factor will be called VBM and this will be calculated as (Floor price during FY12 dividedby the floor price of FY13). Therefore 2.32 (9300/4000 =2.32) RECs will be issued for each MWh of generation and the plantcommissioned already registered so far be issued 2.32 REC for each MWh of generation.


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It is also proposed that in future 1.04 2017 if Floor price fixed below the proposed Floor price of 2013-14, for the projectsregistered so far denomination of RECs will be adjusted accordingly.

Beyond 1.04 2017, it is proposed that the projects already registered will issued one Solar PV RECs for generation andinjection of one MWh and will be traded between the Floor and forbearance price determined for the projects commissionedbeyond 1.04 2017.

Vintage based Multiplier for Solar PV ProjectsIt is proposed that, in case of future reduction in Floor price, Solar PV projects commissioned after the date of this Order, in a particularyear will be issued RECs considering their vintages for next 10 years. The Commission will determine suitable VBM for such projectsand protect the interest of such projects.

7. APPC:-AVERAGE POOLED PURCHASE COST

State Current purchase price by state discoms/ ebs

Rs per unit

Andhra Pradesh 2.50

Gujarat 2.98

Haryana 2.77

Himachal Pradesh 2.23

Karnataka 2.66

Kerala 1.99

Madhya Pradesh 2.09

Maharashtra 2.62

Punjab 2.71

Rajasthan 2.60

Tamil Nadu 3.38

Uttarakhand 2.34

Uttar Pradesh 2.62

West Bengal 2.43

* Please visit the respective state websites for the current prices, they may be marginally more by10 to 20 paise.* In a bid to relieve the state of power crisis, the AP Gov announced its Solar Energy Policy-2012 and invited developers to invest insolar power plants while announcing several incentives for them.


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The sops will be extended to solar power developers who commission their plants by June 2014 and the incentives will be in force for aperiod of seven years from the date of implementation of their projects. There will be no wheeling and transmission charges from theprojects to the desired locations for captive use or sale to a third party within the state through a 33 KV system subject to industrieskeeping within its contracted demand. However, wheeling and transmission charges for wheeling of power for sale outside the state willbe as per APERC regulations.`Cross-subsidy surcharge shall not be applicable for Open Access obtained for third party sale within the state subject to the industriesmaintaining their demand within its contracted demand with the Discoms. It is not applicable for captive use. All solar projects will be

exempted from electricity duty for captive consumption and third-party sale within the state.

VAT for inputs required for the projects will be refunded by commercial taxes department. The industries department will provideincentive in terms of refund of stamp duty and registration charges for land purchased for setting up of the projects. All projectsdeveloped with the above incentives will also be eligible for REC benefits. Power generated from a project shall be injected at anappropriate voltage to the nearest sub-station of the AP Transco.

Land acquisition: The state government made it clear that no fossil fuel like coal, gas, lignite, naphtha and wood shall be allowed to beused in a solar power plant.

The New and Renewable Energy Development Corporation of AP Ltd (NEDCAP) will act as a nodal agency and implement the policy. Ahigh-level committee headed by the principal secretary (energy) will monitor the progress of executon of solar power projects under thenew policy.

AP's advantage: Andhra Pradesh is one of the most suitable locations in the country for installing solar power projects as, on an average,it gets about 300 sunny days in a year with solar insolation of 5.5 to 6 KWh/m. Also, well-networked power grid will facilitate projectswith easy connectivity.

ACCELERATED DEPRECIATION

What is Accelerated Depreciation in solar power generation and how can I benefit from it?

There is nothing called Accelerated Depreciation in solar power generation or for that matter in any other field.At least the IT Act and the Ready Reckoner does not talk about it. There is no such term in the glossary, appendix or the contents.

Depreciation is 20 % on plant and machinery for any business.In the case of solar power generation, in order to incentivize the entrepreneurs to enter into the solar power generation market,the Government of India has allowed claiming 80% depreciation in year one of the commissioning of the solar power generation plant.Example: Let us assume that the total project cost is Rs7crores.

If a solar power generation plant costs Rs7crores, the company setting up that plant can claim 80 % depreciation in the first year itself.Depreciation of 80 % is allowed on plant and machinery of the solar power plant.

Deducting Rs20 lakhs (approximately) from the project cost for land costs, which are eligible for only 10 % depreciation, we getRs6.80crores.

80 % of this is Rs5.44crores. This can be depreciated in a new solar power generating plant in year one itself. This is why they call itAccelerated Depreciation (depreciating 80% in one year instead of 20%).

33.99% of Rs5.44cr is about Rs1.85 cr. So, in a solar power generation plant of Rs7crores, Rs1.85cr is the tax saving that the companygets using Accelerated Depreciation.

AD benefit in year one is Rs1.85 cr. So, the actual project cost of solar power plant for an AD client is Rs5.15crIn fact the Accelerated Depreciation or AD client will be able to depreciate 80% of the written down value of the project, next year. Thusthe saving in taxes will be nearly Rs2.1crores.


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Calculation of AD (as done by First Green Consulting): (Table Source)

Let us try to understand how AD works in a 1MW solar power generation:

Project cost (capital cost) to be Rs800 Lakhs (Rs8 Cr)

The depreciation amount to be 90% (assuming 10 % scrap value)

Book depreciation (on fixed assets) to be 5.28 % (Dep. As per companies act)

Tax depreciation rate to be 80% (under AD benefit)

Effective tax rate (as per government) to be 33.99%

*Can a group company of a tax paying company set up a solar plant and claim depreciation?

It is a case of set off of laws under the same head of income (section 70) of the income tax act. There are 6 heads of income under theincome tax act.

(Section 1961)

There are 5 heads of income under which income of assesse is being assessed under the income tax:

1. Income from salaries2. Income from house properties3. Profit and gains of business and profession4. Income from capital gains5. Income from other sources

It is a case of income under Profits and gains of business and profession.And as per section 70 of income tax act, set off of laws under the same head of income can be done.

Years Unit 1 2 3 4 5

Book Depreciation 2.64% 5.28% 5.28% 5.28% 5.28%

Book Depreciation (Capital cost*Book depreciation) Rs Lakh 21.12 42.24 42.24 42.24 42.24

Opening % 100% 60% 12% 2%

Allowed during the year % 40% 48.00% 9.60% 1.92%

Closing % 60% 12% 2.40% 0.48%

Accelerated Depreciation Rs Lakh 320.00 384.00 76.80 15.36

Net Depreciation Benefit Rs Lakh 298.88 341.76 34.56 -26.88

Tax Benefit Rs Lakh 101.59 116.16 11.75 -9.14
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It means a group company which is taxpaying on account of business or profession can set off its loss under the head business orprofession arising from solar activities can be set off.

*How do we claim the AD for a solar power generation plant? By regular tax returns or is there any special form for claimingthe Accelerated Depreciation for a solar power generation plant?

The rate of depreciation allowed under the income tax for solar power generation units is 80 % and it is an accelerated rate ofdepreciation. So we have to file the regular tax returns only. There is no special form prescribed for claiming the depreciation benefit.

What solar energy devices, equipment and processes those are eligible for 80 % accelerated depreciation?

1. Flat plate collectors2. Concentrating and pipe type solar collectors3. Solar cookers4. Solar water heaters and systems5. Solar crop driers and systems6. Solar refrigeration7. Solar cold storages8. Solar air-conditioning systems9. Solar desalination systems and solar steels10. Solar power generating systems

11. Solar pumps based on solar thermal12. Solar pumps based on solar PV13. Solar PV modules and panels for water pumping

*What is this stipulation of 31stMarch and 1stSep in the claiming of Accelerated Depreciation benefit for a solar powergeneration plant?

As per income tax provision, if an asset is put to use for less than 6 months, only the 50 % of the prescribed rate of depreciation isallowed to be deducted from the profits of business in that year. It means if the asset is put to use for more than 6 months, even for asingle day more than 6 months, then 100 % of the prescribed rate of depreciation will be allowed to be deducted from the profits of thebusiness.

*Many times a group of companies come together to bid for solar power generation projects of state governments or for

JNNSM. How will a consortium plan the depreciation? Is it enough if one of the companies has tax liability? What happens if aforeign company has tax liability in its country? Or will only the Indian tax liabilities be taken into account?

In case of consortium agreements, the consortium is normally formed for the purpose of capital infusion, or if there is any statutoryrequirement as in the case of foreign cos.

Normally after a successful bid, the consortium is asked to form a new company or special purpose vehicle (SPV) to take up the project.In that case all the assets are purchased by the new company the benefit of depreciation will go to the new company.

*Can individuals set off depreciation benefit in a partnership firm?

No. Any individual having any profit or loss cannot be assessed in the hands of a partnership firm in which he or she is the partner. Sothe benefit of depreciation in the case of an individual cannot be passed to the partnership firm.

But as per section 70 of income tax act a loss because of business or depreciation can be set off under the same head of income. Itmeans if an individual is having income under the head business or profession he/she can set off her business loss arising out of solarbusiness.

In other words an individual having huge business profits can enter into the business of solar power generation for the benefit of claimingaccelerated depreciation so that his or her tax liability can be minimized.

*Is there a standard price for depreciation?

Cost of the plant and machinery will be the basis of calculating depreciation. Even the PPA will play an important role.


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*In how many years does a small solar company stand a chance to get bought?

Only infrastructure companies can buy to avail the section 80(I) A. Even after absorption of full depreciation, the small company canmake for an attractive proposition to be purchased because it is tax free income source up to 15th year from the commencement ofproduction.

Assume an income of Rs1.5cr per annum and the total project cost of plant was Rs7cr. So, the selling price of solar power generationplant will be based on tax free income i.e. Rs1.5cr as against the cost of plant Rs7cr, so that deal can be concluded on the basis of IRR.

*For its depreciation potential besides its normal business returns??*A partnership solar company, can it sell a part and let the buyer benefit from sellers share of depreciation?No.

*Is there any lock in period for solar companies before they can sell?No.

*What are the buildings in a solar plant?

The office space is the building, the rooms for inverter, etc. are not considered as building.

*Can the Government change the depreciation policy with relevance to solar power generation, without any prior intimation??

Government can change the rate of depreciation ANYTIME. Rate of depreciation is announced one year in advance by the income taxdept.

*Wouldntthat be a risky proposition to small firms which haventclaimed their depreciation?

Government can change the rate of depreciation ANYTIME. Rate of depreciation is announced one year in advance by the income taxdept. The plant established in a particular year cannot be denied the rate of depreciation as per the existing rate of depreciation.As theloss gets carried forward, the small firms nor the big companies stand to lose.

*What all constitute plant and machinery in a solar plant?*Isnteverything other than land is depreciated?YES

*When are the profits from a solar plant taxable?After 15 years

*Doesntit make sense to hike the project cost for a solar plant so as to avail the extra benefit from accelerated depreciation?

Yes. But the banks are clever to find out. Setting up such a solar power generation plant with an eye on gaining extra from AcceleratedDepreciation, will result in the Bankers viewing the project with a suspicious eye. Because there are many solar projects that are comingup, the bankers will have an idea already as to which projects are genuine and which wont be pursued seri ously after claimingaccelerated depreciation benefit.

*A solar company makes about Rs2crores in a year. By this depreciation rule it gains 33.99 % for an existing tax payingcompany. Does it make sense to borrow money at 14% (for equity) to build a plant?What are the opportunities for a small solar company with its depreciation? After claiming 80 % depreciation, the plant fails? What happens?The plant is commissioned, it produces power for a few days / months and after that it fails. Can depreciation be claimed? 80%

*For how long can depreciation benefits be carried forward?Indefinite period.

*Company A sets up a solar plant for Rs8cr avails 80 % depreciation and sells it to B, say at Rs4 cr. , whereas its written downvalue (WDV) is Rs1.6 Cr. How much depreciation can be claimed? At what rate?Rs1.6 Cr ONLY CAN BE CLAIMED.

*At what stage of commissioning can one claim depreciation?


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Only AFTER PRODUCTION* Indias Andhra Pradesh state introduced its first solar-energy policy, offering tax benefits to projects and exemptions from power-transmission fees as the local government seeks investment to curb electricity shortages.

Plants built by June 2014 will be able to claim the incentives for seven years, according to an order issued yesterday by the state energydepartment.

If executed appropriately, this policy would enable Andhra Pradesh to get a huge influx of investment from solar developers, said Vishal

Pandya, director atREConnect Energy Solutions Pvt.,which advises companies in the industry.

The southern state, which says it gets some of Indias highest sun irradiation, is promoting solar energy to boost generation capacityafter suffering a17.3 percent power deficit in July. Its working with other states toward a national goal of becoming one of the worldsfastest-growing solar markets, with a targeted 20,000 megawatts acrossIndia by 2022.

Andhra Pradesh didnt set a specific goal for solar installations or announce higher tariffs, unlike the central government and Gujarat andKarnataka states, which have awarded above-market rates to developers for a limited amount of capacity.

To attract investment, Andhra Pradesh will waive transmission fees for using state-owned infrastructure. It also wont charge a so-calledcross-subsidy fee, which is levied to compensate state-owned distributors for losses they incur on supplying power below cost tohouseholds and farmers.

Solar projects will get refunds on value-added tax paid for equipment and on land duty and registration charges for sites. In addition, thestate plans to speed up the approvals process, issuing permits to build grid connections within 21 days.

10.UNBID SUBSTATIONS LIST IN ANDHRA PRADESH AS ON MARCH 2013

During the recent bids (APRIL 2013) the following substations got no bids , hence people having lands in and around these substationshave great chance to start up the project soon. They have to for PPA plus REC route and third party PPA plus REC route.

UNDERBID LIST

That means there is scope for capacity addition in these substations.MORE........................ There are another 40 substations which didnot get fully bid. That is Underbid.

11. APPLICATION FOR GRID CONNECTIVITY & EVACUATION FACILITY

As per Andhra Pradesh Solar Policy, 2012, vide G.O. Ms No: 39 Dt: 26.09.2012, Vide item(9), Grid Connectivity and Evacuation facility,the power generated from a Solar Power Project shall be injected at an appropriate voltage to the nearest sub-station of theAPTRANSCO / DISCOMs.

The evacuation line from interconnection point to grid substation shall be laid by the APTRANSCO or DISCOM at the cost of the projectdeveloper. However, if the project developer wishes to lay evacuation line by themselves, they can do so by paying the supervisioncharges, Engineering charges and Service Tax etc., as communicated by APTRANSCO / DISCOM to the respective organisation.The intending private developers shall submit the grid connectivity application in the prescribed format to APTRANSCO / DISCOMsunder copy to NREDCAP.
http://topics.bloomberg.com/andhra-pradesh/http://www.reconnectenergy.com/http://cea.nic.in/reports/monthly/executive_rep/aug12/25-26.pdfhttp://topics.bloomberg.com/india/http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://www.eai.in/club/users/aathmika/blogs/22487http://topics.bloomberg.com/india/http://cea.nic.in/reports/monthly/executive_rep/aug12/25-26.pdfhttp://www.reconnectenergy.com/http://topics.bloomberg.com/andhra-pradesh/


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Description To whom application is to be filed

For Plant Capacity of 1MW to 10MWat 33KV level and below to be connected to 33/11KV SS at

DISCOM Substations depending on existing power transformercapacity ORDedicated 33KV feeder from 132K/33KV of STU Substations

Chief General Manager Commercial & IPC Respective DISof AP(CPDCL/NPDCL/EPDCL/SPDCL)

Above 10 MW at EHT level based on

Executive Director,

Planning, RAC & Reforms

Room No 149, A Block,

Vidyut Soudha, APTRANSCO,

capacity at 132KV/220KV/400KV Khairatabad, Hyderabad

email:[email protected]

The Application fee for Grid Connectivity is as follows

Sr. No Quantum Power to be injected into Intra State Transmission system Non-refundable Application Fees (Rs. Lakhs )

1 Up to 100 MW 2.00

2 More Than 100 MW and upto 500 MW 3.00

3 More Than 500 MW and upto 1000 MW 6.00

4 More than 1000 MW 9.00

The Application fee has to be paid by way of Demand Draft Drawn in favour of PAY OFFICER, APTRANSCO payable at Hyderabad toprocess Application.

APPLICATION FOR GRANT OF CONNECTIVITY FOR SOLAR POWER PROJECTS IN ANDHRA PRADESH

Sr.No Item Status /Information

I. Company Details

1Name of the Applicant/Organisation & Address for Correspondence

2 State Whether the applicant
mailto:[email protected]:[email protected]


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/organisation is aa) Company Registered under Indian Companies act 1956.b) Co-Operative Society.c) Any other corporate entity.d) R.O.C

3

ADDRESS

i) OFFICEa) Telephone Nob) Fax No:c) email Addressii) Authorised PersonPrime Contact PersonDesignation Phone Number (Landline) PhoneNumber(Mobile)Fax:E-Mail

Alternate Contact personDesignation

Phone Number (Landline) Phone Number(Mobile)Fax: E-Mail

4In case of any other Corporateentity, give details of Partners/Directors/ Owners

5 Income Tax Permanent Account No:

TRANSMISSIONCORPORATIONOFANDHRAPRADESHLIMITED

Vidyut Soudha, Khairatabad, Hyderabad -500 082, Website:www.aptransco.gov.in

12. ADVANTAGES AND DISADVANTAGES OF SETTING YOUR SOLAR PLANT IN A SOLAR PARK ADVANTAGES

1. Ready to move & start facility for any solar power developer with clear title land.

2. Proper North-South oriented plots to be allotted so as to reduce land wastage, which are ideal for solar plant designing

3. Reduction in time to both start and execute the project.

4. No ROW (right of way) issue will be there for laying of transmission line, which will be done only once and common to all.

5. Ease of work execution and management will be there.

6. Relief from local issues which again will result into time and money saving in project execution.

7. Evacuation from individual project will be done right from the individual plot to the discoms sub station at 132KV level.

8. Reduced transmission losses to the tune of 1/16th of the normal at 33KV.

9. Individual plant metering at pooling substation for ease of billing.

10. Security, preventive maintenance of approach roads & transmission line etc. will be done on periodic basis.

11. Grid down time is also minimum for 132 kV sub-station, which means higher revenue generation
http://www.aptransco.gov.in/http://www.aptransco.gov.in/


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12. Better financials than in your own lands.

DISADVANTAGES

1. Your project is not in your state, benefitting your people

2. Your project is not in your lands. Absence of Prestige value in the neighborhood.

3. You cant to do the maintenance of the solar power plant directly and daily in your village

* Dont have lands. See solar as a business opportunity. Go for Solar Park.

* Want to invest in and reap regular dividends with least hassles. Go for Solar park

* Interested in availing accelerated depreciation and making decent safe returns, invest in a solar park.

13. SEVEN STEPS TO DESIGNING A SOLAR CAPTIVE POWER PLANT FOR A FACTORY

There are seven steps involved in designing a successful captive solar PV installation

Scoping of the project

Calculating the amount of solar energy available

Surveying the site

Calculating the amount of energy needed

Sizing the solar system

Component selection and costing

Detailed design

Step 1SCOPING THE PROJECT

As with any project, you need to know what you want to achieve. This basically involves detailing what you want from the captive PV

installation, once installed. Do you want it to completely provide your day time electricity usage? Or do you want it to support a part ofyour usage? To start with, the scope of the project can be simple and later as we progress we can flesh it out to suit the requirements.Defining the scope is in fact the most important step because once the basic scope is wrong, we might not be able to get the system do,what we exactly want it to do.

Step2 - CALCULATING THE SOLAR POWER AVAILABLE

Solar insolation is the amount of electromagnetic energy (solar radiation) incident on the surface of the earth. Basically that means howmuch sunlight is shining down on the area under consideration.

The values are generally expressed in kWh/m 2/day. This is the amount of solar energy that strikes a square metre of the earth's surfacein a single day. Of course this value is averaged to account for differences in the days' length. There are several units that are usedthroughout the world.

By knowing the insolation levels of a particular region one can determine the number of PV modules that are required. An area with poorinsolation levels will need a larger number of PV modules than an area with high insolation levels. Once the regions insolation level isknown, one can more accurately calculate collector size and energy output.

The typical thumbrule that is used for the amount of electricity that solar PV can produce is as follows: On average, 1 W of solar PV, atcurrent crystalline silicon panel efficiencies, can produce about 4 Wh of electricity per day. This is however only an average estimate andbased on the location, this could be a bit lower or higher than the average.


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Step 3SURVEYING THE SITE

A site survey basically consists of a brief interview with the developer to get a feel for their electricity needs and a physical inspection ofthe proposed array site to see if it is suitable for solar. When a qualified photovo

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