tariff determination of the waste heat recovery power ... no. 26 of... · whrb waste heat recovery...

Tariff Determination of the Waste Heat

Recovery Power Plant of M/s Sunvik

Steels Pvt. Ltd

Venkatesh Vunnam

Riya Rachel Mohan

Roshna N

Center for Study of Science, Technology and Policy

March 2017

Center for Study of Science, Technology and Policy (CSTEP) is a private, not-for-profit (Section 25)

Research Corporation registered in 2005.

Designing and Editing by CSTEP

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While every effort has been made for the correctness of data/information used in this report, neither

the authors nor CSTEP accept any legal liability for the accuracy or inferences for the material

contained in this report and for any consequences arising from the use of this material.

© 2017 Center for Study of Science, Technology and Policy (CSTEP)

No part of this report may be disseminated or reproduced in any form (electronic or mechanical)

without permission from CSTEP.

This report should be cited as: CSTEP, (2017). Tariff Determination of the Waste Heat Recovery Power

Plant of M/s Sunvik Steels Pvt. Ltd. (CSTEP-Report-2017-09).

March, 2017

Center for Study of Science, Technology and Policy # 18, 10th Cross, Mayura Street, Papanna Layout, Nagashettyhalli, RMV II Stage, Bangalore-560094 Karnataka, INDIA Tel.: +91 (80) 6690-2500 Fax: +91 (80) 2351-4269 Email: [email protected]

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mailto:[email protected]

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Acknowledgements

The authors would like to express their gratitude to Karnataka Electricity Regulatory

Commission (KERC) for providing us an opportunity to conduct this study. The authors are

grateful to Mr. Jaganatha Gupta, Consultant (Tech), KERC, for his guidance and immense support

and to Mr. Seshadri, Deputy General Manager, KERC, for sharing the information and valuable

insights needed for the study. The authors would also like to thank Sunvik officials and the

Sponge Iron Manufacturing Association team for their time and support.

The authors also acknowledge the inputs provided by Dr. Krishnan S.S. (Advisor), Dr. Bellarmine

K.C., Mr. Thirumalai N. C., Ms. Rishu Garg, Mr. Ravi Lepakshi, Ms. Bhavna Sharma and other

colleagues from CSTEP. Last but not the least, this work would not have been possible without

the valuable support and encouragement from Dr. Anshu Bharadwaj, Executive Director, and Dr.

Jai Asundi, Research Coordinator, at CSTEP.

Acronyms and Abbreviations

AFBC Atmospheric Fluidised Bed Combustion

BESCOM Bangalore Electricity Supply Company Ltd

CERC Central Electricity Regulatory Commission

DCS Distributed Control System

DRI Direct Reduction Iron

ESCOM Electricity Supply Company

ESP Electro Static Precipitator

GCV Gross Calorific Value

GBI Generation-Based Incentive

KERC Karnataka Electricity Regulatory Commission

KPTCL Karnataka Power Transmission Corporation Limited

MCR Maximum Continuous Rating

MNRE Ministry of New and Renewable Energy

MoEFCC Ministry of Environment, Forest and Climate Change

MU Million Units

MW Mega Watt

O&M Operation and Maintenance Cost

PLF Plant Load Factor

PPA Power Purchase Agreement

R&M Repairs and Maintenance

RCC Reinforced Concrete

RE Renewable Energy

RoE Return on Equity

RPO Renewable Purchase Obligation

SHR Station Heat Rate

SSPL Sunvik Steels Private Limited

STG Steam Turbine Generator

TPD Tonnes per Day

TPH Tonnes per Hour

WACC Weighted Average Cost of Capital

WHR Waste Heat Recovery

WHRB Waste Heat Recovery Boiler

Executive Summary

Karnataka is one of the most industrialised states in India with an annual steel production

capacity of more than 10 Million tonnes. Many steel plants have Waste Heat Recovery

(WHR)-based Captive Power Plants (CPPs) that utilise the waste flue gas from the sponge

iron kiln. Currently, the surplus energy is exported to the grid using a short-term Power

Purchase Agreement (PPA) between generators and Electricity Supply Companies (ESCOMs)

which needs to be renewed frequently. Sponge iron manufacturers requested Karnataka

Electricity Regulatory Commission (KERC) to provide a preferential tariff for a long-term

PPA. With reference to this, KERC commissioned this study to identify key parameters for

tariff determination of Sunvik Steel’s WHR plant.

Sunvik Steels Pvt. Ltd has commissioned a 10 MW CPP for power generation by utilising

waste heat from sponge iron kiln operation. The heat from flue gases is tapped for steam

generation using three WHR boilers. Since the steam generation from flue gases varies with

sponge iron production, an Atmospheric Fluidised Bed Combustion (AFBC) boiler of 25

Tonnes per Hour (TPH) was installed to supplement any shortfall of steam and to ensure

continuous power generation. The power generated by the power plant is consumed

internally for steel manufacturing and other unit operations. The surplus energy is currently

exported to the grid at a tariff of Rs. 3.90/kWh.

The report focuses on the following aspects:

Assessment of capital cost of different components of a CPP

Station Heat Rate (SHR) and Plant Load Factor (PLF) of the plant

Assessment of technically viability of the plant without using AFBC

Monetary value of waste heat

Parameters for tariff calculation.

Methodology

CSTEP team conducted a site visit to Sunvik Steels’ CPP in Tumkur to check the actual plant

layout and processes. Also, CSTEP contacted several stakeholders, including steel

manufacturers owning waste heat recovery power plants, consultants, etc., to assess the

capital cost and technical viability of the project. In case of tariff determination, capital cost,

Operation and Maintenance (O&M) costs and the PLF of the plant were taken as per actual.

The tariff guidelines in KERC Order on Renewable Energy, 2015, were used to benchmark the

remaining parameters for tariff determination.

Key Findings

Capital cost: Sunvik Steels have incurred Rs. 6,814 lakhs for setting up the 10 MW waste heat

recovery-based CPP. The project cost is higher as compared to the standard value of Rs. 600

lakhs/MW due to the cost overrun incurred due to a delay in commissioning of the power

plant largely due to circumstances beyond their control.

SHR and PLF: From the time of commissioning, the average SHR of the plant is 3,876

kcal/kWh and the average PLF of the plant is 84%.

Technical viability: The CPP is currently running at 84% PLF with a combination of a WHR

boiler (3 X 10 TPH) and an AFBC boiler (1 X 25 TPH). Since the flow rate of flue gas is highly

dependent on sponge iron production, the AFBC boiler was installed to provide steam at a

continuous rate. Steam from AFBC is also supplied to the 10 MW turbine, which otherwise

cannot run on full capacity. The PLF of the plant could reduce to 31% if the plant runs purely

on WHR boilers, leading to low turbine efficiency, high technical losses, etc.

Monetary value of waste heat: Since the flue gases from the sponge iron kilns were not used

for any other purpose, the monetary value for the waste flue gas is considered as nil for the

purpose of this study.

Parameters for tariff calculation: A two-part tariff, using fixed and variable costs, was

designed for the tariff calculation. The fixed costs included O&M costs, interest from term

loan, depreciation, interest on working capital and return on equity, whereas the variable

costs included the fuel cost. The fixed costs were levelised over the lifetime of the project,

whereas the variable cost was levelised for the remaining lifetime of the project. Based on

the parameters assumed, the tariff for Sunvik Steels’ CPP was calculated around Rs.

4.54/kWh.

Table of Contents

1. Introduction ........................................................................................................................................................ 1

1.1. Overview of Sunvik Steels Private Limited................................................................................... 1

2. Plant Overview ................................................................................................................................................... 3

2.1. Process Description ................................................................................................................................ 3

2.2. Working Principle of a WHRB ............................................................................................................ 5

2.3. Working Principle of AFBC Boilers .................................................................................................. 6

3. Co-generation Power Plant ........................................................................................................................... 7

3.1. Performance of Co-generation Power Plant ................................................................................ 7

4. Assessment of Capital Costs ......................................................................................................................... 8

4.1. Segregation of WHRB and AFBC Project Cost ............................................................................. 9

5. Determination of SHR .................................................................................................................................. 10

6. GCV of Flue Gas ............................................................................................................................................... 10

7. Monetary Value for Waste Flue Gas ....................................................................................................... 10

8. Lifetime of the Plant ...................................................................................................................................... 11

9. Plant Load Factor of the Plant .................................................................................................................. 11

10. Turbine Performance Assessment with WHRB................................................................................. 11

11. Determination of Tariff ................................................................................................................................ 12

11.1. Determination of Fixed Cost .......................................................................................................... 12

11.2. Determination of Variable Costs .................................................................................................. 14

11.3. Determination of Levelised Tariff ............................................................................................... 15

12. Parameters for Tariff Determination for the Waste Heat Recovery Project (excluding

AFBC) ……………………………………………………………………………………………………………………………16

13. Sensitivity Analysis ..................................................................................................................................... 17

14. Conclusion ....................................................................................................................................................... 18

Annexure I .................................................................................................................................................................. 20

Annexure II ................................................................................................................................................................. 21

Annexure III ............................................................................................................................................................... 22

Annexure IV ............................................................................................................................................................... 23

List of Figures

Figure 1: Schematic of a CPP .................................................................................................................................. 4

Figure 2: Working Principle of a WHRB ........................................................................................................... 5

Figure 3: Schematic Diagram of an AFBC Boiler............................................................................................ 6

Figure 4: Performance of a Co-generation Power Plant ............................................................................. 7

Figure 5: Tariff vs Project Cost and Fuel Mix ............................................................................................... 17

List of Tables

Table 1: Chronology of Events .............................................................................................................................. 2

Table 2: Technical Specifications of the Boilers ............................................................................................ 2

Table 3: Component-Wise Capital Cost of the Co-generation Power Plant (Rs. Lakhs) ............... 8

Table 4: Segregated Project Cost (Rs. Lakhs) ................................................................................................. 9

Table 5: Plant Performance Analysis .............................................................................................................. 10

Table 6: GCV of Flue Gas ....................................................................................................................................... 10

Table 7: Annual Power Generation from the SSPL CPP ........................................................................... 11

Table 8: Turbine Performance with Steam from WHRB ......................................................................... 11

Table 9: Electricity Generation by the Power Plant .................................................................................. 14

Table 10: Calculations of Per-Unit Fuel Cost ................................................................................................ 15

Table 11: Parameters for Tariff Determination for CPP (excluding AFBC)..................................... 16

Table 12: Parameters for Calculation of Tariff ............................................................................................ 21

Table 13: Calculation of Levelised Fixed Cost ............................................................................................. 22

Table 14: Calculation of Levelised Variable Cost ....................................................................................... 23

Tariff Determination of the Waste Heat Recovery Power Plant of M/s Sunvik Steels Pvt. Ltd

© CSTEP www.cstep.in

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1. Introduction

Iron and steel is the largest consumer of energy among all industrial sectors. This sector

accounts for about 10% of the total electricity and 27% of the total coal consumption of the

Indian industry, contributing to nearly 30%–35% of the sector’s production cost. Coal is used

as a reducing agent to convert iron ore to sponge iron, and large quantities of flue gases,

produced after the process, are released into the atmosphere. Steel plants try their best to

utilise the waste flue gases, derived from steel manufacturing, by limiting the purchase of

fuels and electric power from grid. Instead, the energy from waste flue gases is recovered

and used in power generation process, resulting in improved energy efficiency, reduction in

pollution and reduction in auxiliary energy consumption.

Karnataka is one of the most industrialised states in India and the top producer of iron and

steel in the country. Waste Heat Recovery (WHR) is an important Energy Efficiency (EE)

measure that could be harnessed by the state, especially for iron and steel industries.

Currently, the adoption of WHR technology in Karnataka is very low due to financial and

policy barriers like the high capital costs and low incentives. The existing WHR projects in

Karnataka are utilising the power generated from flue gases, for their self-consumption.

However, the excess power generated by the industry is allowed to be fed to the grid at a rate

fixed by the state regulatory commission. Industries have to sign a short-term Power

Purchase Agreement (PPA) with the state government and renew the tariff frequently. As of

now, there is no provision for a long-term PPA for WHR projects in Karnataka, which creates

insecurity within the project proponents to set up such technologies in their industries.

1.1. Overview of Sunvik Steels Private Limited

Sunvik Steels Private Limited (SSPL), established in 2003, deals with the manufacture of

sponge iron, mild steel ingots, Thermo Mechanically Treated (TMT) bars and fly ash bricks.

The plant is located in Jodidevarahalli village, Sira taluk, Tumkur district, Karnataka, and is

the first Integrated Steel Plant in Karnataka.

SSPL started with an annual manufacturing capacity of 30,000 MT of sponge iron in July

2004, which was later expanded to 1,00,000 MT in 2009. The chronology of events leading to

the company’s expansion from 2004 to 2010 is provided in Table 1. Steel manufacturing

being a power-intensive process, SSPL decided to be self-sufficient in power generation.

According to Ministry of Power,1 “Captive power plants may be defined as plants meant for

catering to the needs of a particular industry/consumer or group of industries/consumers for

their own use, which should be not less than 50% of the total output of the plant.” The heat

energy from the waste gases discharged from the kiln (900C) is tapped for power

generation. Hence, with a view to capturing the energy from the waste gas, a 10 MW captive

power plant was installed in March 2010.

1 http://powermin.nic.in/en/content/policy-captive-and-co-generation-plants.


www.cstep.in © CSTEP

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Table 1: Chronology of Events

Date Event July 2004 Commissioned first Direct Reduced Iron (DRI) kiln with annual manufacturing

capacity of 30,000 MT of sponge iron December 2005 Commissioned second DRI kiln and enhanced the sponge iron manufacturing

capacity to 60,000 MT per annum September 2006 Commissioned Furnace Melting Division with annual capacity of 75,000 MT June 2007 Commissioned Rolling Mill with annual capacity of manufacturing 75,000 MT of

TMT bars March 2009 Commissioned third DRI kiln and enhanced the sponge iron manufacturing

capacity to 1,00,000 MT per annum March 2010 Set up 10 MW WHR Boilers (WHRBs) and an Atmospheric Fluidised Bed

Combustion (AFBC) boiler-based CPP

The thermal energy available in the three DRI kilns, is captured by three WHRBs, of 10

Tonnes per Hour (TPH) capacity each, for the generation of steam. The remaining steam

required to be supplied to the turbine is generated using an AFBC boiler of 25 TPH capacity.

The technical specifications of the boilers are provided in Table 2.

Table 2: Technical Specifications of the Boilers

Boiler Type Number Steam Flow Rate (TPH) Pressure (kg/cm2) Temperature (C) WHRB 3 10 63 485 AFBC 1 25 63 485


© CSTEP www.cstep.in

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2. Plant Overview

Sponge iron is typically produced by direct reduction of iron ore with coal or coke as the

reducing agent. The objective of the reduction process is to remove oxygen in the iron ore

without melting the ore. Typically, rotary kilns of 1 to 4 m diameter and 30 to 100 m length

are used to carry out the DRI process in steel plants. In the SSPL Captive Power Plant (CPP),

they are mounted at a very minor slope and rotated at a speed of 0.5 to 2 revolutions per

minute by electric drive motors. The iron ore and coal are properly mixed and fed at the

upper end of the kiln, while air for the combustion of coal is supplied through the lower end

of the kiln. The flame travels upward to the kiln, counter-current to the solids, and the rotary

motion of the kiln enhances heat transfer. The temperature required for the DRI process

typically ranges from 800C to 1,200C. After completion of the reduction process, the

sponge iron and un-burnt carbon are discharged through the lower end of the kiln. The hot

gases formed during the reactions are released from the upper end of the kiln. The products

from the rotary kiln are cooled and then sponge iron is separated from un-burnt carbon. The

un-burnt carbon from the kiln, called “Dolochar,” has a reasonable amount of calorific value

which can be utilised further for effective heat recovery. The sponge iron plant at SSPL

consists of three kilns each with maximum capacity of 100 TPD. The coal used in the sponge

iron plant is generally imported from South Africa.

2.1. Process Description

The hot gases formed during the reduction reaction are at a temperature of around 900C.

Hot gases from each kiln are released at around 25,000 m3/h during the reduction process;

however, the actual quantity varies depending on the operational conditions in the kilns. The

average thermal energy content of the gases from each kiln is about 7.48 Million kcal/h. This

thermal energy from the hot flue gas can be used to produce 10 TPH of steam with pressure

of 63 kg/cm2 and temperature 485C. Therefore, to extract heat from waste gas, SSPL has

installed three WHRBs, each individually connected to a rotary kiln. Hot gases from the kiln

are passed through the WHRBs, a shell and a tube heat exchanger for generating steam. The

energy thus extracted from waste gas is sufficient to generate 6 MW of electricity.

In order to become self-sufficient in power and to maximise waste heat recovery, SSPL has

set up an AFBC boiler along with WHRBs. The primary fuel for the AFBC boiler is a mixture of

dolochar and imported coal. This boiler is designed to utilise 100% dolochar to comply with

the guidelines of the Ministry of Environment, Forest and Climate Change (MoEFCC). Based

on the actual operational data, the average coal-to-dolochar ratio used in the boiler is found

to be 60:40. The AFBC boiler installed in SSPL has capacity to generate 25 TPH of steam with

pressure of 63 kg/cm2 and temperature of 485C. The maximum power that can be

generated with this boiler at Maximum Continuous Rating (MCR) condition is 5.5 MW. This

reserve generation capacity is essential to compensate for any shortfall in energy generation

from the WHRBs. Figure 1 shows a schematic diagram of a waste heat recovery power plant.


4 www.cstep.in © CSTEP

Figure 1: Schematic of a CPP


© CSTEP www.cstep.in 5

The steam from WHRBs and the AFBC boiler is collected and mixed at a common steam

distribution header and is supplied to a steam turbine. The maximum electricity that can be

generated from the CPP is 10 MW.

The power generated from the CPP is used for running the sponge iron plant, induction

furnace and rolling mill, and for the in-house requirements of the power plant. However,

SSPL also imports power from Karnataka Power Transmission Corporation Limited (KPTCL)

grid as required. The surplus energy is exported to the grid during the maintenance of the

steel plant.

Proper ash handling systems are provided to avoid settlement of dust inside the WHRBs.

SSPL has also installed Electro Static Precipitators (ESPs), each connected to the outlet of the

WHRBs and the AFBC boiler to remove particulate matter from flue gas. CPP has an air-

cooled condenser instead of water-cooled condenser, mitigating difficulties owing to

shortage of sufficient water. The water required for power plant operation is obtained from

bore wells set up in the plant premises. Raw water is treated at an in-house water treatment

plant before being fed into the boilers. The instrumentation and control system for the power

plant are based on a distributed control system and the entire power plant system can be

monitored and controlled remotely.

2.2. Working Principle of a WHRB WHRBs use medium-to-high temperature exhaust gases from energy-intensive plants such

as steel industries to extract thermal energy for steam and power generation. In steel plants,

the flue gases formed during reduction reactions exit at a high temperature of about 900C –

950C. Most of the WHRBs are usually water tube boilers in which water is circulated

through tubes as shown in Figure 2. This makes WHRBs a very effective option to generate

steam in a sustainable way. The steam generated from WHRBs can be used to generate

electricity.

In SSPL, the waste hot flue gases from the three kilns are supplied to the WHRBs. For

producing the additional steam, required for 10 MW power generation and for continuous

operation of the CPP under any circumstances, Fluidised Bed Combustion (FBC) boilers were

implemented along with the WHRBs.

Figure 2: Working Principle of a WHRB


www.cstep.in © CSTEP 6

2.3. Working Principle of AFBC Boilers In an AFBC boiler, air is passed upward through a bed of inert solid particles, changing it to a

fluidised state. The fluidised bed is heated to a temperature higher than the ignition

temperature of coal and uniform fluidisation is maintained in the boiler. The particles are

suspended in air to provide enough surface area for combustion of coal. Coal is screened and

crushed to a size of () 6 mm for easy combustion, resulting in a release of high energy to

generate steam as shown in Figure 3. Compared to conventional pulverised coal combustion,

an AFBC boiler is techno-commercially more feasible for low- and medium-capacity steam

generation, and is easy to manage with respect to environmental issues by way of effective

management of ESP and ash handling systems.

Source: http://www.photomemorabilia.co.uk/FBC.html

Figure 3: Schematic Diagram of an AFBC Boiler

http://www.photomemorabilia.co.uk/FBC.html



3. Co-generation Power Plant

According to Policy for Captive and Co-Generation Plants, 2

“A co-generation facility is defined as one which simultaneously produces two or more forms of

useful energy such as electric power and steam, electric power and shaft (mechanical) power

etc.

Two basic co-generation cycles have been identified: i. Topping Cycle: Any facility that uses fuel input for power generation and also utilises useful heat

for other industrial activities. In any facility with a supplementary firing facility, it would be required that the useful heat, to be utilized in the industrial activities, is more than the heat to be supplied to the system, through the supplementary firing, by at least 20%.

ii. Bottoming Cycle: Any facility that uses waste industrial heat for power generation by supplementing heat from any fossil fuel.”

SSPL can be categorised as a “Bottoming Cycle” co-generation power plant, which uses the waste industrial heat produced in a sponge iron kiln for power generation, while supplementing heat with coal firing.

3.1. Performance of Co-generation Power Plant SSPL’s co-generation power plant generates about 73.7 MU per annum, with 7.7 MU being

exported to the grid every year. On average, about 10% of the power generated is exported

by SSPL and the remaining is utilised for captive consumption. This is well within the range

of 50% as defined by Ministry of Power for CPPs. Figure 4 shows the gross power generated

and power exported to the grid from the time of commissioning of the power plant.

Figure 4: Performance of a Co-generation Power Plant

The input heat requirement, for generating steam in a WHRB, is completely met with flue

gases from the sponge iron plant’s kiln, which is based on the sponge iron production.

However, because the production varies, the WHRB cannot be relied upon solely for

producing power and meeting the company’s power requirement. It is observed that about

46%–50% of the steam input is from WHRB and the remaining is from AFBC.

2 http://powermin.nic.in/en/content/policy-captive-and-co-generation-plants.

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2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

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Gross power generated (MU) Power exported to grid (MU)



4. Assessment of Capital Costs

Capital cost is the most significant component in tariff determination. This comprises cost of

plant and machinery, civil works, erection and commissioning, switch yard, transmission

lines, etc. The detailed breakup of the capital cost incurred by SSPL at the time of

commissioning of the power plant (2009–10) is provided in Table 3. The auditor’s certificate

certifying the total capital cost incurred by the power plant is provided in Annexure I. The

total project cost was verified and validated from the company’s balance sheets (2009–10).

Table 3: Component-Wise Capital Cost of the Co-generation Power Plant (Rs. Lakhs)

Particulars Components Cost

Boiler & Associated Equipment

Boilers 2,099

Boiler accessories 266.6

Electrical works 354.3

Civil works 588

Turbine and Alternator

Turbo Generator & Auxiliaries 460.6

Turbine accessories 724.1

Civil works 617

66/11 KV Switch Yard 66 KV Switch yard 140

Generator transformer 65.1

66 KV Transmission Line 66 KVA line erection & commissioning 12

Balance of Plant

Water treatment plant, laboratory

expenses 409

Freight Machinery 6.4

Pre-operative Expense 1,071.7

Total 6,813.7

For the purpose of assessing the capital costs of the WHR power project in an iron and steel

industry, we consulted various independent energy consultants on the typical capital cost of

a WHR power project. The average cost of a WHR power project of similar size (10 MW) is

between 5.5 and 6 Crore/MW. SSPL has, however, incurred 6.8 Crore/MW, which is much

higher compared to the standard rate. The project cost includes a pre-operative expense of

more than 10 Crore which contributes 15.72% of the total capital costs. The higher pre-

operative expenses were incurred due to a delay in commissioning of the plant, which is

largely due to circumstances beyond their control. Also, the high capital costs incurred by

SSPL for the WHR project are due to the inclusion of several energy-efficient measures in the

power plant like installing de-dusting systems to improve steam generation, variable-

frequency drive motors, automatic ash handling system, etc.



4.1. Segregation of WHRB and AFBC Project Cost The WHRB-based power plant was conceptualised together with the AFBC-based plant to

ensure uninterrupted power supply to the process. The project consists of one common

turbine of 10 MW for which steam is supplied from WHRBs and AFBC through a common

steam header. The cost of setting up a 10 MW power plant will also be much lesser than

constructing 6 MW and 4 MW power plants, separately.

The power generation from WHRBs is entirely dependent on sponge iron kiln Operation and

Maintenance (O&M) requirements. The overall plant availability for a sponge iron plant is

around 60% annually. Also, during routine kiln operation, the WHRB boiler generates at

around 65%–75 % of its capacity due to numerous operational complexities. Due to the

above constraints in generating the rated steam in WHRBs, SSPL has installed an AFBC boiler

of 25 TPH steam generation capacity.

Also, it is not possible to clearly segregate the cost components of the WHRB part, from that

of the CPP, as common equipment like steam turbine generator, steam header, water

treatment plant, water storage Reinforced Concrete (RCC) tanks, electrical systems, switch

yard, Distributed Control System (DCS) and automation, ash silos, air compressors, building

cost, etc., are shared by both WHRB and AFBC systems.

This study tried to segregate the project cost between WHRB and AFBC through simple

apportionment. The costs of a boiler and its accessories were divided between WHRB and

AFBC based on the ratio of the designed steam output (i.e., 30:25), while the cost of turbine,

water treatment plant, freight expense and pre-operative expenses were divided based on

the electrical output ratio (i.e., 6:4). Since the switchyard and transmission line had to be

constructed irrespective of the power output, the cost incurred for construction of

switchyard and transmission lines are not segregated under WHRB and AFBC.

Table 4 shows the segregated project cost for the 10 MW CPP.

Table 4: Segregated Project Cost (Rs. Lakhs)

Particulars 10 MW CPP Cost 6 MW WHRB Related Cost

4 MW AFBC Related Cost

Boiler & Associated Equipment 3,308 1,620 1,688 Turbine and Alternator 1,802 1,081 721 66/11 KV Switch Yard 205

66 KV Transmission Line 12 Balance of Plant and Pre-

operative Expenses 1,487 892 595 Total 6,814 3,810 3,221



5. Determination of SHR

Station Heat Rate (SHR) is the thermal energy required to generate one unit of electricity.

The AFBC unit in SSPL is operated with 60% coal and 40% dolochar. The average Gross

Calorific Value (GCV) of the fuel mix is 4,468 kcal/kg. On the other hand, the WHRB system

utilises the heat content of the flue gases coming out of the sponge iron kilns. The average

SHR is estimated as 3,876 kcal/kWh, as shown in Table 5. The yearly data of the CPP have

been analysed to draw key findings from the plant. Table 5: Plant Performance Analysis

Parameter Average Value AFBC Fuel consumption (tonnes) 35,374 Average GCV of fuel (kcal/kg) 4,468 Thermal Energy from AFBC (Gkcal) 158 WHRB Steam flow rate (tonnes/year) 1,52,243 Boiler efficiency (%) 81.5 Enthalpy of steam (kJ/kg) 2,861 Enthalpy of steam (kcal/kg) 684 Thermal energy in steam (Gkcal) 104 Thermal energy in flue gas (Gkcal) 128 Total power generation (MU) 74 SHR (kcal/kWh) 3,876

6. GCV of Flue Gas

The volumetric flow rate of the exhaust gas is 25,000 Nm3/h with a density of 1.31 kg/m3.

Based on the analysis, the heat content of the kiln exhaust gas is found to be 228 kcal/kg. The

parameters used in calculating the GCV of flue gas are provided in Table 6.

Table 6: GCV of Flue Gas

Parameter Value

Volumetric flow, m3/h 25,000

Density, kg/Nm3 1.31

Mass flow, kg/h 32,825

Heat content of exhaust gas, Million kcal/h 7.48

Heat content of kiln exhaust, kcal/kg 228

7. Monetary Value for Waste Flue Gas

Coal is used as a reducing agent as well as a fuel to generate heat for heating the raw

material. The flue gas emitting from the DRI kiln, which is generally released to the

environment as a waste gas, has about 36% of the thermal energy of the coal fed to the kiln.3

Since this flue gas is not used for any other purpose, its monetary value is considered as nil

for purposes of this study.

3 http://file.scirp.org/pdf/OJEE_2014091514403413.pdf.



8. Lifetime of the Plant

The lifetime of boilers is generally 20 years, which can be considered as the lifetime of the

power plant. Also, according to Central Electricity Regulatory Commission (CERC)4, the

lifetime for tariff computation in bagasse-based co-generation plants, which use similar

equipment, is determined as 20 years.

9. Plant Load Factor of the Plant

PLF of a plant is the ratio between the actual energy generated and the maximum possible

energy that can be generated from the plant working at its rated power over a year. The

actual generation of the power plant from the time of commissioning is shown in Table 7.

Based on the data, the PLF of the power plant at SSPL is estimated as 84%.

Table 7: Annual Power Generation from the SSPL CPP

Year Gross Power Generation (MU)

2010–11 70.9

2011–12 75.3

2012–13 74.5

2013–14 77.7

2014–15 70.8

2015–16 73.3

Average 73.7

10. Turbine Performance Assessment with WHRB

The total heat from the plant or the extractable energy from the flue gases is used for the

power generation process. Based on last six years data, the average steam generated from

WHRB system was 18 TPH. As shown in Table 8, the power generation by utilising steam

from the standalone WHRB system is estimated to be 3.7 MW, with a corresponding PLF of

31%.

Table 8: Turbine Performance with Steam from WHRB

Parameter Value

Installed capacity, MW 10

Steam pressure, kg/cm2 64

Steam temperature, C 480

Inlet steam enthalpy, kJ/kg 3,389

Exit steam enthalpy, kJ/kg 2,432

Enthalpy difference, kJ/kg 957

WHRB steam flow, TPH 18

Power generation, MW 3.7

4 http://cercind.gov.in/2016/orders/sm_3.pdf



The WHRB system cannot provide continuous steam supply at the desired conditions to

ensure efficient operation of the 10 MW turbine. The turbine will operate at lower efficiency

in the absence of AFBC steam due to a part load condition. Therefore, it is recommended to

utilise steam from both the WHRB and AFBC boilers for power generation.

11. Determination of Tariff

Levelised tariff is a tool for making investment decisions. It ensures realisation of the

present-day value of investment to investors. As a generic approach used in a biomass co-

generation power plant, a two-part tariff approach was considered in the tariff

determination. The tariff was divided into two parts – fixed cost and variable cost. Fixed

costs include all cost components which do not depend on the electricity generated by the

power plant, whereas variable costs include components which are directly dependent on

the running of the project activity. Coal costs are volatile over the lifetime of the project and

were considered under variable costs.

“KERC Order on Renewable Energy” dated 01/01/2015 (referred to as “KERC RE Tariff

Regulations, 2015”)5 was used as the basis to benchmark a few parameters for tariff

determination. It mentions the parameters used for determination of tariff with regard to

mini-hydel, bagasse-based co-generation and Rankine cycle-based biomass renewable

energy projects. Since the project under study is a co-generation power plant, a few of the

parameters mentioned for tariff determination of a bagasse-based co-generation plant can be

compared.

11.1. Determination of Fixed Cost

Fixed costs include interest from term loan, depreciation, return on equity, interest on

working capital and O&M costs for a power plant. The levelised fixed cost is calculated for the

lifetime of the project activity (i.e., 20 years).

Capital Costs

Since KERC RE Tariff Regulations, 2015, do not mention any benchmark capital cost for a

waste heat recovery co-generation power plant, the actual capital cost has been used in the

calculation of the tariff. The total cost of the plant, as on the commissioning date, is Rs. 6,814

lakhs. The detailed breakup of the capital costs is mentioned inTable 3. As on 1 December

2016, SSPL has incurred an additional expenditure of Rs. 27.3 lakhs on the capital cost.

However, this cost is not included in the tariff calculation in this study.

Debt Equity Ratio

Debt equity mix of a project is an important parameter that influences the return on

investments of a developer. In this regard, KERC RE Tariff Regulations, 2015, have prescribed

70:30 as the debt equity ratio for co-generation power plants. The same ratio has been

considered for the tariff calculation in this study.

5 http://www.ireeed.gov.in/policyfiles/429-FinalREOrder.pdf.



However, Sunvik Steels had availed loans of Rs. 5,249 lakhs, including secured and unsecured

loans (i.e., 77% of capital cost), for the project, while the remaining amount was financed

through equity.

Interest from Term Loan

KERC RE Tariff Regulations, 2015, have assumed loan tenure of 12 years with 12.5% as the

interest on the term loan for co-generation power plants. These values have been considered

in the calculation of WHR power tariff.

Sunvik Steels had availed secured loans at 13.25% interest rate for 6 years (including 6

months moratorium) from three banks for the project activity. The loans were availed from

Canara Bank, State Bank of Patiala and State Bank of India as a consortium loan.

Operation and Maintenance Costs

O&M costs majorly include labour charges, Repairs and Maintenance (R&M) of the plant and

machinery, electrical maintenance and the refractory materials used in AFBC. Since KERC RE

Tariff Regulations, 2015, does not mention the O&M costs incurred by a waste heat recovery

co-generation plant, the average of the actual O&M cost incurred by SSPL for the past 6 years

has been taken for the tariff calculation in this study. Sunvik Steels has assigned the O&M to

Operational Energy Group India Ltd on a fixed contract basis. Hence, the accounts for the

O&M costs are maintained separately for the power plant. The O&M costs for the past 6 years

(from the time of commissioning of the power plant) were obtained from the company’s

balance sheets from 2010–11 to 2015–16, which were audited by a charted accountant.

The average O&M expense for the power plant for the past 6 years is Rs. 211.1 lakhs per

annum. The annual escalation rate for the O&M costs is considered as 5.72%, as suggested

by the KERC RE Tariff Regulations, 2015, for a bagasse-based co-generation power plant.

Depreciation

Depreciation has been calculated on the capital costs of the power plant using the Straight-

Line Method (SLM). The depreciation expense is calculated on 90% of the capital assets after

considering a salvage value of 10% on capital assets. In line with KERC RE Tariff Regulations,

2015, a depreciation rate of 5.83% is applied for the initial 12 years and the remaining

depreciable amount is distributed across the remaining lifetime of the project.

Return on Equity

Return on Equity (RoE) is considered as 16% in line with the KERC Tariff Regulations, 2015.

Discount Rate

The normative Weighted Average Cost of Capital (WACC) is considered as the discount rate

for the purpose of tariff calculation. WACC is calculated as follows:

𝑊𝐴𝐶𝐶 =(𝐸𝑞𝑢𝑖𝑡𝑦 % ∗ 𝑅𝑜𝐸) + (𝐷𝑒𝑏𝑡 % ∗ 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑛 𝑡𝑒𝑟𝑚 𝑙𝑜𝑎𝑛)

(𝐸𝑞𝑢𝑖𝑡𝑦 % + 𝐷𝑒𝑏𝑡 %).

The discount rate has been calculated as 13.55% for the tariff calculation in this study.



Interest for Working Capital

According to KERC, the working capital required for a biomass co-generation plant is the

amount equivalent to 2 months’ receivables. As suggested by KERC RE Tariff Regulations,

2015, 13.25% was considered as the interest for working capital for the tariff determination

in this study.

Net Electricity Generation

The average gross electrical energy generated by the 10 MW power plant is 73.74 MU per

annum. According to CERC’s RE tariff Regulations, 2016, the auxiliary consumption for a

biomass project using an air-cooled condenser is higher than that of a project using a water-

cooled condenser. CERC suggests 12% auxiliary consumption for an air-cooled condenser

after stabilisation of the power plant. The average net generation by the power plant is 64.89

MU. The actual net generation data are provided inTable 9.

Table 9: Electricity Generation by the Power Plant

Particulars Value

Capacity of the power plant 10 MW

Plant Load Factor (PLF) 84.18%

Gross generation 73.74 MU

Auxiliary consumption 12%

Net generation 64.89 MU

Levelised Per Unit Fixed Cost

The total fixed cost is the sum of the interest on loan, depreciation, RoE, O&M expense and

interest on working capital. The per-unit fixed cost is calculated by dividing the total fixed

cost by the net generation:

Per Unit Fixed Cost (Rs./kWh)

=Interest on loan + Depreciation + RoE + O&𝑀 + Interest on working capital

Net Generation.

The discounted per-unit fixed cost is calculated and levelised over the lifetime of the project

activity to calculate the levelised per-unit fixed cost:

Levelised per unit fixed cost =∑ [Per unit fixed cost𝑘

20

𝑘=1∗ Discount rate𝑘]

∑ Discount rate𝑘20𝑘=1

.

The levelised per-unit fixed cost for this project, under given assumptions and

available information, is Rs. 2.08/kWh.

11.2. Determination of Variable Costs

Since there is no monetary value for the flue gas released from the sponge iron kiln, only the

fuel cost required to generate steam from AFBC is considered under variable cost. The

levelised variable cost is calculated for the remaining lifetime of the project (i.e., 7th to 20th

year).



Fuel Cost

Sunvik Steels uses a mix of imported coal and dolochar as fuel in the AFBC boiler. The latter

constitutes 35%–40% of the total fuel consumption by AFBC in SSPL. Based on the past 6

years’ coal consumption, the power plant can be seen to have consumed an average of 21,224

MT of purchased coal and 14,150 MT of dolochar annually. Since dolochar is also mixed with

coal to generate steam in AFBC, the quantity of coal required and the cost incurred by the

power plant are calculated as shown in Table 10.

Table 10: Calculations of Per-Unit Fuel Cost

Particulars Unit Value Fuel mix: Coal % 60% Coal rate Rs./MT 4,832 Fuel mix: Dolochar % 40% Dolochar coal rate Rs./MT 2,200 Weighted average fuel cost Rs./MT 3,779 Annual fuel consumption (including dolochar) MT 35,374 Annual fuel cost (@3.28% escalation rate) Rs. lakhs 1,381 Net generation of the power plant MU 64.89 Per unit fuel cost Rs./kWh 2.13

Coal was escalated at 3.28% annually to include the inflation in coal price. The cumulative

annual growth rate of the Wholesale Price Index (WPI) of coal from 2009–10 to 2015–16 was

considered as the escalation rate.

The discounted per-unit coal cost was calculated and levelised from the current year (i.e., 7th

year of operation) to the end of the lifetime of the project activity to calculate the levelised

per-unit variable cost:

Levelised per unit variable cost =∑ [Per unit coal cost𝑘

20

𝑘=7∗ Discount rate𝑘]

∑ Discount rate𝑘20𝑘=7

.

The levelised per-unit variable cost for this project, under given assumptions and

available information, is Rs. 2.46/kWh.

11.3. Determination of Levelised Tariff

Levelised tariff is the sum of the levelised per-unit fixed cost and variable cost.

The levelised tariff for this project, under given assumptions and available

information, is Rs. 4.54/kWh.

The parameters used for calculating the tariff are provided in Table 12 in Annexure II. Also,

the detailed calculation of fixed and variable costs are provided in Annexure III and

Annexure IV, respectively.



12. Parameters for Tariff Determination for the Waste Heat

Recovery Project (excluding AFBC)

It is not technically viable to run the 10 MW turbine with 18–20 TPH of steam (steam only

from WHRB) as discussed in SectionError! Reference source not found. However, since

KERC desires to analyse the scenario of tariff for a CPP power plant (excluding AFBC), this

study has attempted to identify the parameters for tariff determination. Since AFBC is

excluded from the system, there will not be any variable cost component. Hence, the tariff for

this scenario would be the levelised fixed cost. The parameters to calculate the levelised fixed

tariff are the same as shown in Section 11. Since the AFBC component has been removed

from the system, the values for the following parameters will be different as compared to the

values mentioned in Section 11.

Capital Cost

The boiler cost for AFBC is generally 25% higher than that of a WHRB boiler.6 After removing

the cost of an AFBC boiler from the system, the capital cost for tariff determination can be

taken as Rs. 5,126 lakhs.

PLF of the Power Plant

The PLF of the power plant excluding AFBC will be very low as described in Section 9. The

plant will be running at 31% PLF, which is not a healthy operational parameter.

The parameters to be used in the calculation of tariff are shown in Table 11.

Table 11: Parameters for Tariff Determination for CPP (excluding AFBC)

Parameters Value Units Source

Turbine capacity 10 MW Based on purchase orders

PLF of the plant 31% % Refer Section 9

Auxiliary consumption 12% % As per CERC tariff order, 2016

Capital cost 5,126 Rs. Lakhs Cost excluding AFBC boiler cost

Debt 70% % As per KERC tariff order, 2015

Equity 30% % As per KERC tariff order, 2015

Loan tenure 12 Years As per KERC tariff order, 2015

Interest rate 12.50% % As per KERC tariff order, 2015

RoE 16% % As per KERC tariff order, 2015

WACC 13.55% % Calculated

Depreciation 5.83% Of capital cost (for 1st 12 years)

As per KERC tariff order, 2015

Salvage value 10% % Assumption

Total O&M expense 3% Of capital cost

Escalation rate for O&M 5.72% % As per KERC tariff order, 2015

Working Capital-Receivables

2 Months As per KERC tariff order, 2015

Interest on working capital 13.25% % As per KERC tariff order, 2015

6 http://www.thesij.com/papers/IFBM/2013/March-April/IFBM-010105.pdf.



13. Sensitivity Analysis

The tariff computed in case of SSPL’s CPP under given assumptions and available

information, includes the AFBC component which utilises dolochar released from the DRI

kiln. Generally, the dolochar consumption in the boiler varies between 20% and 40% of the

total fuel consumption. A sensitivity analysis was performed to analyse the variation in tariff

for varying project costs and fuel mix (coal: dolochar). Effective utilisation of dolochar leads

to lower coal consumption in the boiler. As the quantity of dolochar increases, the tariff for

the CPP reduces due to the low cost of dolochar as shown in Figure 5. For every 10%

increment in dolochar quantity in the fuel mix, it is observed that the tariff reduces by about

Rs. 0.17/kWh. In case of SSPL, the coal-to-dolochar ratio is 60:40 at a project cost of Rs. 6,814

lakhs for the 10 MW CPP.

Figure 5: Tariff vs Project Cost and Fuel Mix

3.80

4.00

4.20

4.40

4.60

4.80

5.00

6000 6500 6814 7000

Ta

riff

(R

s/k

Wh

)

Project cost (Rs. Lakhs)

60:40 70:30 80:20



14. Conclusion

Karnataka currently does not consider waste heat recovery (WHR) from industries as a

source of renewable energy and has no added incentive for industries to adopt such projects.

This has led to very low penetration of such technologies in this state. This study was

conducted to examine various technical and financial parameters of the 10 MW WHR-based

power plant of Sunvik Steel Pvt Ltd. (SSPL). Various components of the Captive Power Plant

(CPP), including capital cost, power generation, Station Heat Rate (SHR), Plant Load Factor

(PLF) and parameters for tariff determination were looked into.

In sponge iron production, waste flue gases at high temperature are generated and released

into the environment. The heat from the flue gases is tapped and used in steam generation.

SSPL has installed a 10 MW turbine to be self-sufficient in power. In addition, since the steam

generation from flue gases varies significantly with sponge iron production, an Atmospheric

Fluidised Bed Combustion (AFBC) boiler of 25 TPH was installed to supplement the

remaining steam requirement. AFBC in SSPL uses a mixture of coal and dolochar as the

primary fuel for combustion, using 25%–40% dolochar in the total fuel mix. The steam

produced by AFBC contributes to 47%–52% of the total steam in the steam header.

The net power generated by the power plant is consumed internally for steel manufacturing

and other unit operations. The surplus energy is exported to the grid, which contributes

around 10% of the annual gross generation, which is in line with the definition of CPP. The

plant runs at a PLF of about 84% with an SHR of about 3,876 kcal/kWh.

Based on the study, it is understood that due to the inherent lower plant availability of

sponge iron kiln (approximately 60%), power generation with the WHRB system is only 3.7

MW against the expected capacity of 6 MW. Therefore, it is necessary to utilise steam from

both WHRB and AFBC boilers for power generation to meet the plant’s energy requirements

and achieve higher turbine efficiency.

A levelised tariff approach was used in calculating the tariff for the electricity generated by

the CPP. The per-unit fixed cost was levelised over the entire lifetime of the project (i.e., 20

years), while the per-unit variable cost was levelised for the remaining project lifetime (i.e.,

14 years). By assuming no monetary value for the waste flue gas, the various components of

tariff were calculated as:

Levelised fixed cost: Rs. 2.08/kWh

Levelised variable cost: Rs. 2.46/kWh

Levelised tariff: Rs. 4.54/kWh.

It was also noted that the tariff varies with varying quantity of fuel mix used in AFBC. With a

10% increase in dolochar quantity in the fuel mix, the tariff reduces by Rs. 0.17/kWh. An

efficient policy framework needs to be developed to encourage the consumption of dolochar

in AFBC to reduce the cost of generation.

Since it does not seem technically viable to run the 10 MW turbine with only WHR-based

steam, the tariff for the same was not calculated. The project cost for the existing system,

excluding AFBC boiler cost, was estimated as Rs. 4,860 lakhs, with reduction of the PLF of the

plant (excluding steam from AFBC) to 31%.



The policy framework for renewable energy projects is well defined unlike WHR based co-

generation systems. Though WHR-based power projects have helped in displacing an

equivalent amount of CO2 emissions which would have been emitted from conventional

sources of energy, there is no additional benefit to the industries.

This project also helps in reducing the burden of power supply on the state and central

generation, transmission and distribution networks, by generation of a large share of the

steel plant’s demand, and also helps the power supply situation by exporting excess power to

the grid. To make progress in this regard, the industries should be provided with a long-term

PPA, with periodic escalation, to sell the surplus power which reduces the uncertainty of

future tariffs. Also, it is suggested to provide Generation-Based Incentives (GBIs) similar to

that provided by Ministry of New and Renewable Energy (MNRE) for wind and solar projects

to improve the market penetration of such technologies in the country in order to help the

national goal of electricity for all.



Annexure I



Annexure II Table 12: Parameters for Calculation of Tariff

Parameters Value Units Source

Turbine capacity 10 MW Based on purchase orders

PLF of the plant 84% % Based on last 3 years’ data

Auxiliary consumption 12% % As per CERC tariff order, 2016

Capital cost 6,814 Rs. Lakhs As per CA-certified cost sheet

Loan Details

Debt 70% % As per KERC tariff order, 2015

Equity 30% % As per KERC tariff order, 2015

Loan tenure 12 Years As per KERC tariff order, 2015

Interest rate 12.50% % As per KERC tariff order, 2015

RoE 16% % As per KERC tariff order, 2015

WACC 13.55% % Calculated

Depreciation

Depreciation 5.83% Of capital cost (for 1st 12 years)

As per KERC tariff order, 2015

Salvage value 10% % Assumption

Depreciable amount 6,132 Rs. Lakhs Calculated

Depreciation amount between 13th and 20th year

230.27 Rs. Lakhs Calculated

O&M Expense

Total O&M expense 211 Rs. Lakhs Average of last 6 years’ data

Escalation rate for O&M 5.72% % As per KERC tariff order, 2015

Coal Cost

Wt. average coal cost 3,779 Rs./tonne Calculated based on actual

Wt. average GCV of coal 5,543 kcal/kg Calculated based on actual

Escalation rate on coal cost

3.28% % WPI for coal

Working Capital

Receivables 2 Months As per KERC tariff order, 2015

Interest on working capital

13.25% % As per KERC tariff order, 2015

Tariff at which power is sold to BESCOM

3.9 Rs./kWh As per invoice submitted to BESCOM



Annexure III Table 13: Calculation of Levelised Fixed Cost

Amount in Rs Lakhs 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Interest on loan capital 571 522 472 422 373 323 273 224 174 124 75 25

Depreciation 358 358 358 358 358 358 358 358 358 358 358 358 230 230 230 230 230 230 230 230

Return on equity 327 327 327 327 327 327 327 327 327 327 327 327 327 327 327 327 327 327 327 327

O&M 211 223 236 250 264 279 295 312 330 348 368 389 412 435 460 486 514 544 575 608

Interest on working capital 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56

Total 1523 1485 1449 1412 1377 1342 1309 1276 1244 1213 1183 1155 1025 1048 1073 1100 1128 1157 1188 1221

Net Generation (Mn kWh) 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65

Fixed Cost (Rs/kWh) 2.35 2.29 2.23 2.18 2.12 2.07 2.02 1.97 1.92 1.87 1.82 1.78 1.58 1.62 1.65 1.69 1.74 1.78 1.83 1.88

WACC 13.55%

Discount factor 1.00 0.86 0.75 0.65 0.56 0.48 0.42 0.36 0.31 0.27 0.23 0.20 0.17 0.15 0.13 0.11 0.10 0.08 0.07 0.06

PV of fixed cost (Rs/kWh) 2.35 1.98 1.67 1.41 1.19 1.00 0.84 0.71 0.60 0.50 0.43 0.36 0.28 0.24 0.22 0.19 0.17 0.15 0.13 0.12

Levelised fixed cost (Rs/kWh) 2.08

Interest on term loan 1 2 3 4 5 6 7 8 9 10 11 12

Opening Balance 4770 4372 3975 3577 3180 2782 2385 1987 1590 1192 795 397

Closing balance 4372 3975 3577 3180 2782 2385 1987 1590 1192 795 397 0

Repayment 397 397 397 397 397 397 397 397 397 397 397 397

Interest on loan capital 571 522 472 422 373 323 273 224 174 124 75 25

Interest on working capital

Receivables 422 422 422 422 422 422 422 422 422 422 422 422 422 422 422 422 422 422 422 422

Interest on working capital 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56 56



Annexure IV Table 14: Calculation of Levelised Variable Cost

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Cost of coal 1381 1426 1473 1521 1571 1623 1676 1731 1788 1847 1907 1970 2034 2101

Per unit variable cost (Rs/kWh) 2.13 2.20 2.27 2.34 2.42 2.50 2.58 2.67 2.76 2.85 2.94 3.04 3.14 3.24

Discount factor 1 0.86 0.75 0.65 0.56 0.48 0.42 0.36 0.31 0.27 0.23 0.20 0.17 0.15

Discounted Per unit variable cost (Rs/kWh) 2.13 1.90 1.70 1.51 1.35 1.21 1.08 0.96 0.86 0.77 0.69 0.61 0.55 0.49

Levelised variable cost (Rs/kWh) 2.46

# 18, 10th Cross, Mayura Street, Papanna Layout

Nagashettyhalli, RMV II Stage, Bangalore-560094

Karnataka, INDIA

Ph: +91 80 6690-2500

www.cstep.in

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