Palace Solar Energy Private Limited

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Palace Solar Energy Private Limited (Essel Mining & Industries Limited held a 49% stake), signed an MoU with Gujarat Energy Development Agency (GEDA) for setting up a 15-MW photovoltaic solar project at Charanka Village in Patan District of Gujarat, under the Gujarat Solar Policy 2009. The 24,083 MWh output from the project would be fed to the North-East-West-North-East (NEWNE) grid of India. The project comprised of installation and operation of total 6,345,660 number of Poly Crystalline PV modules having capacity of 235 W(p) and 240 W(p). Canadian Solar International Limited was the manufacturer and supplier of the PV modules. EPC would be executed by Electrotherm Immodo Renewables Limited. Palace Solar had a 7-year operations and maintenance contract with Etain Immodo Renewables Limited (a JV between Electrotherm (India) Ltd and ImMODO Solar SA). Power evacuation was planned through a 66KV line to nearest substation, which, as per the state policy, was the responsibility of Gujarat Energy Transmission Corporation Limited (GETCO). Palace Solar Energy Private Limited (Palace Solar) had entered into a 25-year Power Purchase Agreement with the state utility Gujarat Urja Vikas Nigam Limited (GUVNL), on 17 November 2011, which would be effected at the time of commissioning of the project. The APPC (Average Power Purchase Cost) as per the Gujarat Solar Policy 2010, was US$ 0.25/Unit (INR 15 per unit @58.6 INR/USD) for the first 12 years, and US$ 0.085/Unit (INR 5 per unit @58.6 INR/USD) from 13th year to 25th year. The total capacity of 15MW was eligible for carbon credits. Proceeds of carbon credit were to be shared as follows: (a) 100% by Palace Solar in the first year after the date of commercial operation of the generating station/ transmission system;(b) in the 2nd year the share of GUVNL would be 10% which would be progressively increased by 10% every year up to 50% whereafter the proceeds would be shared in equal proportion, by Palace Solar and GUVNL. Transmission and/or wheeling charges would be paid by Palace Solar. Financial closure took place on 7th May 2013.The total estimated project cost was US$ 29mn (INR 1700mn @58.6 INR/USD).The debt equity ratio for the project was 76/24. Financing comprised a 10-year term loan of US$ 22.2mn (INR 1300mn) and sponsor equity of US$ 6.8mn (INR 400mn). The term loan had a repayment schedule of 41 quarterly installments. The debt was arranged by HDFC Bank. The plant became operational in March 2012.