Term-Paper

Of

Project Management.

Submitted To:-

Mr. Puneet Bawa

Submitted By:-

A term paper as this would not have been written without the significant inputs and efforts of many people. I would thus like to first thankMr. Puneet Sirfor his guidance and help during the course of the making of this term paper. Without his support this term paper would have not been made.

I would also like to thank my friends for helping with the correct format of the term paper. It is his contribution that has led to a clear and more readable form of this manuscript. Though full care has been taken, I welcome any suggestions regarding the work.

THANKING YOU

TOPIC

“PROJECT ON SOLAR WIND ENERGY PLANT”

Energy is a basic requirement for economic development. Every sector of Indian economy agriculture, industry, transport, commercial, and domestic – needs inputs of energy. The economic development plans implemented since independence have necessarily required increasing amounts of energy. As a result, consumption of energy in all forms has been steadily rising all over the country.

This growing consumption of energy has also resulted in the country becoming increasingly dependent on fossil fuels such as coal and oiland gas. Rising prices of oil and gas and potential shortages in futurelead to concerns about the security of energy supply needed to sustain

our economic growth. Increased use of fossil fuels also causesenvironmental problems both locally and globally.

Against this background, the country urgently needs to develop asustainable path of energy development. Promotion of energyconservation and increased use of renewable energy sources are thetwin planks of a sustainable energysupply.

Fortunately, India is blessed witha variety of renewable energysources, the main ones beingbiomass, biogas, the sun, wind, andsmall hydro power. (Large hydro power is also renewable in nature,but has been utilized all over theworld for many decades, and is generally not included in the term‘new and renewable sources ofenergy’.) Municipal and industrial

Wastes can also be useful sources ofenergy, but are basically differentforms of biomass.

The Ministry of Non-Conventional Energy Sources has been implementing comprehensive programmers for the development and utilization of various renewable energy sources in the country. As a result of efforts made during the past quarter century, a number of technologies and devices have been developed and have become commercially available. These include biogas plants, improved wood stoves, solar water heaters, solar cookers, solar lanterns, street lights, pumps, wind electric generators, water-pumping wind mills, biomass gasifies, and small hydro-electric generators. Energy technologies for the future such as hydrogen, fuel cells, and bio-fuels are being actively developed.

India is implementing one of the world’s largest programmers in renewable energy. The country ranks second in the world in biogas utilization and fifth in wind power and photovoltaic production. Renewable sources already contribute to about 5% of the total power generating capacity in the country. The major renewable energy sources and devices in use in India are listed in Table 1 along with their potential and present status in terms of the number of installations or total capacity.

Introduction

Wind energy has been utilized by mankind for sailing, grinding, and other mechanical applications for centuries. In the recent past, wind energy has emerged as a viable renewable energy option with

Increased application in water pumping, battery charging, and large power generation. It is environmentally benign and does not emit greenhouse gases (GHG).

Wind Power Generation

Generation of electricity has emerged as the most important applicationof wind energy world-wide. The concept is simple: flowing wind rotatesthe blades of a turbine, and causes electricity to be produced in generatorunit. The blades and generator (housed in a unit called ‘nacelle’) aremounted at the top of a tower.

Technology

Wind turbines generally have three rotor blades, which rotate withwind flow and are coupled to a generator either directly or through agear box. The rotor blades rotate around a horizontal hub connectedto a generator, which is located inside the nacelle. The nacelle alsohouses other electrical components and the yaw mechanism, whichturns the turbine so that it faces the wind. Sensors are used to monitorwind direction and the tower head is turned to line up with the wind.The power produced by the generator is controlled automatically aswind speeds vary. The rotor diameters vary from 30 metres (m) to

about 90 m, whereas the towers on which the wind electric generators(WEGs) are mounted, range in height from 25 to 80 m.

The power generated by wind turbines is conditioned properly so as to feed the local grid. The unit capacities of WEGs presently range from 225 kilowatt (kW) to 2 megawatt (MW), and they can operate in wind speeds ranging between 2.5 m/s (metres per second) and 25 m/s.

Wind speed data of potential locations is compiled for a period of one to two years, to identify suitable sites for the installation of WEGs. Thereafter, WEGs are installed on the sites with appropriate distances

between them to ensure minimum disturbance to one another. After the identification of sites, wind turbines generally take two to three months for installation. The equipment is tested and certified by agencies to ensure that it conforms to the laid-down standards, specifications, and performance parameters. The machines are maintained by the respective manufacturers after installation.

Wind Power Potential in India

India’s wind power potential has been assessed at 45 000 MW. The current technical potential is estimated at about 13 000 MW, assuming 20% grid penetration, which would increase with the augmentation of grid capacity in potential states.

The success of Wind Energy in India

The next section will try to examine the policies and measure that were implemented, as well as other reasons that have allowed India to move so quickly in terms of wind energy deployment. It will look at the government policies, economic incentives, some technical and social factors, and lastly the infrastructural factors, that allowed wind energy to take off with such a boom.

Economic and Financial instruments responsible for the wind energy boom

The most relevant and powerful fiscal incentives did not come about on their own. It was government policy that gave the private sector a really strong motivation to set up wind turbines and get into the renewable energy business. These were,

  • 100% accelerated depreciation on investment on the capital equipment in the firstyear of installation itself.
  • Five year tax holiday on Income from sale of power generated by wind energy.
  • Industry status, entitling to capital subsidy in certain states.
  • Banking and Wheeling facility.
  • Buy back of power generation by State Electricity Board at a remunerative price.
  • Third party sale of power generation in certain states.

The 100% accelerated depreciation rule had the greatest effect in stimulating industryinterest. What it meant was that if a company’s taxable income (outside the wind power project) for the financial year was, for instance, Rs. 10,000, the company could show investments on WEG to the tune of Rs. 10,000 and get away by paying no tax at all.

This meant that some of India’s most prosperous businesses and industries, looking for tax breaks queued up in front of the MNES in order to sign installation contracts. The huge capital cost of wind-farm installation did not attract smaller entrepreneurs.This was a deliberate move by the Ministry to heavily reward installation and capitalcost acquisition, a barrier which usually prevents industries such as that of wind energyfrom taking off, and succeed it did.

Also, recognizing the limitations of conventional banks to shoulder large installation costs, the MNES created the IREDA (Indian Renewable Energy Development Agency) in 1987 in order to finance renewable energy technologies. By 1997, IREDA gave outloans amounting to RS 676 million (US $16.2 M) which enabled the development of over267 MW of wind power projects. This first confident move by the government spurred other groups to come forward to sponsor wind projects, such as the Gujarat Industrial Development Corporation Limited, the Industrial Development bank of India, and the Industrial Credit Investment Corporation of India.

Furthermore, the MNES streamlined the recognition and handling of wind-power plant financing by national and state-banks by drawing up “Guidelines for Clearance of Wind-Power Projects” in July 1995. It became mandatory for all State electricity boards and nodal agencies (which constitute the State bodies implementing wind-power development) to comply with conditions such as:-

  • Declare the schedule of envisaged capacity additions based on the powerevacuation facilities at identifies windy sites every six months, and ensure gridcompatibility.
  • Seek Detailed Project Reports (DPR’s) from independent consultants for(capacities above 1 MW) and verify project capital cost and generation againstcertified wind turbine power curves and wind data at the site before granting approval for projects.

Other financially related aspects that are relevant are

  • Power cuts (due to load shedding) during the summer months were a handicapfor industries, especially in regions such as Tamil Nadu. Incidentally the windgeneration during the summer months was at a peak and this incentivized boththe TNEB and the local industries.
  • The industries that invested heavily in wind energy came from the textiles andcement industry, which had earned huge profits and were eager to adopt windenergy to earn the 100% depreciation.

Technical and Social Factors

On the technical side, India has been fortunate in two ways. Firstly, they have discovered a good number of windy sites (recall that MNES identified 160 potential sites and 20, 000MW total available). Secondly, though they may not have previously been too familiar with wind technology, there are a large number of highly trained engineers and technicians who are graduates of institutions such as the IIT’s (Indian Institute of Technology). These provide the technical expertise that has allowed adaptation of foreign wind turbines for local use and their deployment in different parts of the country.

Wind Energy adoption has had almost no social or environmentally charged backlash,as far as can be told from the wealth of information on the subject. Unlike the United States or Europe, neither the problem of noise nor avian death, have been significant obstacles that needed to be overcome. There has been widespread acceptance of the technology from the Indian public and environmental groups and this has undoubtedly been a factor enabling the rapid proliferation of wind turbine use.

Infrastructural Factors

A number of infrastructural situations have also spurred wind energy use. For thisparticular instance we shall look at the state of Tamil Nadu and analyze some of the characteristics that made it the leader among Indian states in installed capacity. Among these are:-

  • The windy sites were close to towns for accessibility in bringing labor andproviding accommodation for the personnel involved in the projects.
  • The sites were well interlinked with highways.
  • Grid network by Tamil Nadu Electricity board (TNEB) was well connected andmainly passing through the sites.
  • Most of the wind turbine manufacturers/suppliers were located in Tamil Naduand so gave investors confidence in the supply of machines and after-salesservice of the machines.
  • Chennai port of Tamil Nadu has excellent facilities for import of heavymachinery of the turbine components and this facilitated inter-state andinternational transportation.

Government Policy

This was perhaps the strongest initiator in promoting wind power adoption and investment. The policies adopted allowed all the other factors to flow together in a way that made wind energy very attractive to businesses and investors. Apart from the ongoing efforts of the MNES, which first of all instilled confidence in the technical and commercial viability of wind energy by performing the Demonstration Program, monitoring the entire country for windy sites, and putting the tax incentives in place, a few other policy initiatives by the State government of Tamil Nadu are also to be noted. These are:-

  • Active promotional steps were taken by TNEB and the Tamil NaduDevelopment Agency (TEDA). For example TNED took the first steps in settingup wind farms at sites like Muppandal, Kayathar and Kethanur to prove theviability of wind farms.
  • TNEB extended all facilities for private entrepreneurs like consultancy services,processing of the application for issuance of No Objection Certificate (NOC), andother clearances, extending grid connections to wind farms and executing newdedicated sub-stations.
  • TNEB established an effective system for registering the energy generation byeach turbine and so enabled turbine owners to adjust their energy bill inaccordance, or effect payment to those who sold to TNEB.

National Wind Power Programme

The Wind Power Programme in India was initiated towards the end of the Sixth Plan, in 1983–84. The programme aims at survey and assessment of wind resources, setting up demonstration projects, and provision of incentives to make wind electricity competitive. As a result, wind electricity has emerged as an option for grid-quality power generation. The costs in respect of wind monitoring stations are shared between the Ministry of Non-Conventional Energy Sources (MNES) and the state nodal agencies in the ratio of 80:20 (90:10 for north-eastern states). With 2980 MW of installed wind power capacity, India now ranks fifth in the world after Germany, USA, Spain, and Denmark. Most of the capacity addition has been achieved through commercial projects by private investors.

Wind Resource Assessment Programme

The Wind Resource Assessment Programme is being implemented by C-WET (Centre for Wind Energy Technology) in coordination with state nodal agencies. An annual mean wind power density greater than 200 W/m2 (watts per square metre) at 50-metre height has been recorded at 211 wind monitoring stations, covering 13 states and union territories, namely Andaman and Nicobar Islands, Andhra Pradesh, Gujarat, Karnataka, Kerala, Lakshadweep, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttaranchal, and West Bengal. Handbooks titled Wind Energy Resource Survey in India have been published covering the wind data already generated.

Master plans

Master plans are available for 97 potential sites for wind power inAndhra Pradesh, Gujarat, Karnataka, Kerala, Madhya Pradesh,Maharashtra, Orissa, Rajasthan, Tamil Nadu, and West Bengal. The masterplans provide information on the availability of wind, land, grid availability,and accessibility to the site, which enables project promoters and statenodal agencies to undertake proper planning and implementation of theprojects. The master plans have been provided to the state nodal agenciesand are made available to project promoters, developers, and consultantsthrough C-WET at a nominal cost.

Cost of Wind Power Projects

The cost of wind power generation varies between Rs 4 and 5 croresper MW, depending upon state characteristics. The machines can bemaintained at a cost of Rs 0.25 to 0.60/kWh. The projects are estimatedto have a pay-back period of five to eight years.

Promotional Incentives

Wind power projects have been set up through private investment.The promotional incentives available are listed below.

  • 80% accelerated depreciation in the first year.
  • Concessional import duty of 5% on five specified wind turbinecomponents and their parts.
  • Favorable tariffs and policies in several states.

Manufacturing Base for Wind Turbine

Wind turbines are produced in the country by about a dozenmanufacturers, mainly through joint ventures or under licensedproduction agreements. A few foreign companies have also set up theirsubsidiaries in India. A few Indian companies are manufacturing WEGswithout any foreign collaboration. A list of manufacturers of windturbine models possessing valid approvals,along with their foreign collaborators, isgiven in Table 2 (A and B). Indian-madewind turbines are also being exported tosome countries.

The Problems faced by Wind Energy in India

To a large extent, wind energy in India can be said to be as much of a failure as a success. There are many more problems that are being encountered with the implementation of the technology than there have been successes. We shall now take a scrutinizing look at some of the reasons for the failures.

Economic causes

One of the first things that are pointed to for being responsible for the slump in wind energy use is the introduction of the Minimum Alternate Tax (MAT). This was a new tax of 12.9% in the 1996/1997 budget for companies going for “zero-tax planning” and also reduction in the marginal corporate tariff tax to 35% from 46%. Companies that had used wind turbine installation as a tax-shelter were affected because MAT forced companies that had been going for this zero-tax planning to pay at least 12.9% corporation tax on their book profits. And so MAT made it slightly less financially beneficial to invest in wind.Another reason for failure has been dire lack of financing institutions to back the hugecapital cost investment that wind farms require. The wind power plant sector is still predominantly debt-based for 60-75% of the project cost. IREDA and the handful of other banks were not enough to meet the installation needs and so in many states, wind energy did not even take off.

However probably the most damaging factor for the wind industry was the very thingthat really started the boom, namely the 100% accelerated depreciation. This rule had a number of negative impacts. Among these are:-

  • Enabled large-company finance officers to make hasty decisions around the timeof tax-filings to install wind plants. These hasty decisions often led to bad sitingof machines and consequent low performance.
  • The rule relies on the ability of promoters of the technology to absorb the taxbenefits - this restricted the number of potential entrepreneurs to companieswith huge profits, such as the textile and cement industries, which were actuallybig investors in the technology. Smaller entrepreneurs were not incentivized.
  • Led to an increase in capital cost of locally made wind turbines, as they were“gold-plated”. For example the rise in cost/MW in 96/97 over 92/93 was 27.5%with the rupee depreciating by 15.45 against the dollar. However the price ofDanish machines for example has been falling and so import of machines isencouraged even though these may not be the optimal designs for Indian terrain.
  • The worst impact this rule has had is that it placed no reward on the actualperformance of wind turbines. Since this was not a part of the package that wasrewarded by tax breaks, simply installation of wind turbines, whether they werewell sited, efficient or not, was the only thing that counted. This led to very poorperformance of the machines themselves.

Technical Problems