The Client, Sansur Renewable Energy, Inc. was considering an investment in a 15 MW biomass power plant in the state of Punjab in India. Bioenergy Technologies consist of a complex mix of technologies that face different types of barriers, requiring different policies for large-scale dissemination especially in a country like India, which has an aggressive renewable energy program. With the prevalent regulatory framework and market dynamics in mind, Mercados EMI provided advisory services to the Client for strategic decision-making.
Mercados EMI Services:
- A.TECHNICAL DUE DILIGENCE
- Analysis of operating history: Review of actual electricity production, plant availability and/or operation running hours, auxiliary consumption, power outage and data pertaining to operation and maintenance
- Analysis of operating parameters: of performance of equipment: boiler, turbine generator and cooling tower
- Stack Analysis and adherence to environment clearance norms
- Fuel Flexibility and supplementary fuel use
- B.COMMERCIAL DUE DILIGENCE
- Review of commercial terms including analysis of PPAs: Review of feed-in tariffs, term of applicability of tariff and PPA term
- Analysis of the Indian Regulatory and Policy Framework for setting up biomassbased power generation project in India
- Demand-Supply Scenario: Power deficit/surplus status of Punjab in the future and additional biomass based capacity proposed in the state
- Risk Assessment – Market risk, off-taker risk, price risk, generation risk, input cost risks, operations risks, transmission risk etc
- Assessment of Financial Ratios and information affecting profitability of plant
- Assessment of financial ratios and information affecting the profitability of the project: Project and Equity IRR, DSCR, etc
- Sensitivity analysis on account of different sources of variation such as change in load factors, change in tariffs, change in generation, etc.
- C. ACCOUNTING DUE DILIGENCE
- Analysis of Past Financial Statements: Review of annual accounts of the last two (2) years including status of receivables, payables, bank statements and other investments;
- Review of Debt Repayment History: Analysis of outstanding debt as on date, financing terms, debt covenants;
- Review of Articles of Association/Memorandum of Association and records of Minutes of the Meeting
- Review of all tax filings, returns
- Client:Renewable Energy, Inc.
- Contract Value:USD 40,000
- Project ScheduleDecember 2010 to April 2011