Samana and Saundatti Wind Power Project

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Gujarat Paguthan Energy Corporation (GPEC) established CLP Wind Farms (India) Private Limited (CLPWPL), a SPV, to implement 183.2 MW of wind power projects at Samana in Gujarat and Saundatti in Karnataka. The Samana Wind Power Project was a 100.8 MW (two phases of 50.4MW each) wind power project located at Samana Taluka, Jamnagar district, Gujarat, about 7 km from Rajkot. The Samana Wind Power Project involved the construction and operation of 100.8 MW of wind power generation facilities. The Project was physically a part of a larger wind energy farm being developed by Enercon (India) Limited (EIL) for GPEC and other interested power producers. Upon completion, the Samana wind farm as a whole would have 450 wind turbine generators (WTGs) with a combined power generation capacity of 360 MW (0.8 MW per WTG). Of the 450 WTGs, 126 WTGs would be owned by GPEC as a part of the Project while the remaining 324 WTGs would be owned by other power producers. Power from each WTG would be transmitted at 33kV to a power collection system at the Sadodar substation located inside the wind farm. The substation would be owned and operated by EIL and was proposed to have four 100 million volt-amp (MVA) transformers to step up the power from 33 kV to 220kV. The Saundatti Wind Power Project was a 82.4 MW wind power project located at Saundatti Taluka, Belgaum district, Karnataka state, and was about 85 km from Belgaum and about 80 km from Hubli.The Saundatti Wind Power Project involved the construction and operation of 82.4 MW of wind power generation facilities (103 units of 0.8 MW each). Approval from Gov of Karnataka to implement the project was granted on Aug 28, 2008 (later renewed on April 2009). This project was also being developed by EIL exclusively for GPEC. Power generated at the wind farm would be pooled through a power collection system and fed into the Karnataka Power Transmission Corporation Limited (KPTCL) substation located near Saundatti town on the southern ridge of the wind farm. The substation currently had 2 X 20 MVA transformers to step up power from 33 kV to 110 kV. EIL had received the requisite permissions from Gujarat Energy Development Agency (GEDA) and government of Karnataka for developing wind energy farms in Samana and Saundatti. Subsequently it approached GPEC with proposals to transfer the two projects to GPEC and develop them on a turnkey basis covering all aspects of development and commissioning. GPEC executed separate facilitation agreements with Enercon India Limited for turnkey implementation of the Samana project and Saundatti Project in July 2007 and November 2007, respectively. Under these agreements, EIL would transfer the projects to GPEC and would be responsible for (i) design, development,construction, and commissioning; (ii)land procurement/acquisition; and (iii) all regulatory and statutory approvals. The contracts were fixed price turnkey contracts with suitable provisions for recovery of liquidated damages for delays in implementation.The O&M contracts stipulate a fixed price payable to EIL per WTG (increasing over the years) for an initial period of 10 years. The contract comes with an availability guarantee (97% for the high-wind season and 95% for the low-wind season) and performance guarantees. GPEC would sell its output from the Samana Project to GUVNL under a 20-year PPA in line with the new renewable energy policy in effect in the state. The PPA will be executed prior to commissioning of the Project. The tariff had been fixed at INR3.37 per kWh for the entire tenor of the PPA. Twenty-five percent of gross Clean Development Mechanism (CDM) revenues through the sale of certified emission reductions (CERs) would be shared with GUVNL. GPEC had already initiated the CDM registration process for this Project. The model PPA is a “take-and-pay” contract, which granted a “must-run” status to the Project. It provides for complete offtake with explicit clauses providing for shutdowns only in emergency situations. The Samana Project was assured of offtake by GUVNL, both as per the terms of the PPA as well as renewable purchase obligation (RPO) imposed by Gujarat Electricity Regulatory Commission (GERC) stipulating a minimum (RPO) on utilities (currently 1% of total purchase, to be increased to 2% from 2010 - translating into additional renewable generation capacity requirement of up to 780 MW). Output from the Saundatti Project would be sold under a 20-year PPA to be executed with one of the electricity distribution companies in the state. As per terms of the facilitation agreement, EIL was responsible for facilitating the execution of a PPA in the following order of preference: Bangalore Electricity Supply Company (BESCOM), Mangalore Electricity Supply Company (MESCOM), Hubli Electricity Supply Company (HESCOM), Chamundeswari Electricity Supply Company (CHESCOM), and Gulbarga Electricity Supply Company (GESCOM). PPA for Saundatti between GPEC and BESCOM was signed on Aug 13, 2008.The model PPA had tariff fixed at INR3.40 for the first 10 years. Tariffs beyond the first 10 years would be determined by the regulator. The PPA did not provide for any CDM revenue-sharing arrangement with the offtaker and qualified as a base load generating station that is not subject to merit order dispatch. The KERC had determined the minimum RPO for state distribution companies at 10%, out of which about 7% could be met through wind generation (translating into additional potential wind capacity in the state of about 800 MW until 2012). The total project cost was US$237 million. Financial closure took place in May 2008 (based on ADB Loan sanction which constitutes the major portion of funding). The debt equity ratio for the project was 80/20. Financing comprised a loan of US$ 189.6 million and a equity of US$ 47.4 million. The main lender for the project was ADB (US$ 105million). The ADB loan had a maturity of up to 13 years from the date of first disbursement, with an availability period of 15 months and semiannual repayments starting 3 months from scheduled project completion. There would be no government guarantee on the ADB loan.The breakup of loan for the two phases were: Samana Phase-I - Local commercial banks -$2.6million ADB - $45million IFC - $20 million Samana Phase-II and Saundatti Local commercial banks -$41.8million ADB - $60 million IFC - $20 million Phase-1 of the Samana project (50.4 MW) was fully commissioned in Feb’09. Phase-II (50.4 MW) of the project, was under construction and was expected to be fully commissioned by December’09. Saundatti project was under construction and was expected to be fully commissioned in the first quarter of 2010.