PP is selling the electricity to their sister concern. DOE can be misguided by the tariff rate for sale of electricity. It should reflect the electricity purchase price along with suitable escalation based on historic data.
Same case with the selling of steam. Steam price can be shown low so as to make project additional.

Also the risk husk will be purchase from sister concern (UAL). Again there is a very good chance of showing a higher price (as getting false documents from sister concern is always possible) to misguide the DOE. DOE to check the prevelant prices from tariff orders, suppliers, farmers etc and establish a conservative price for financials.

UAL is supplying the biomass (part) and also consuming the electricity and UAL is a sister concern and belong to the same group company as the PP, the project is non-additional.

From where was UAL getting electricity earlier to the project?

How are the subsidies and incentives from the state and central Govt taken into account while proving additionality?

Beta seems to be very high at 1.07. Please describe the method of Beta calculation. 

Whether a unlevered beta has been used? Are the comapnies considered for beta into cogeneration? How is the risk similar to project? What is the ratio of electricity-steam generation from the project?

Why CAPM is used? The project activity is managed withing the same group. Why not an internal benchmark used? See guidelines of investment analysis on benchmark. Why BSE 500 is used? Why not sensex??

The financial analysis should be for a period of 25 or 30 years. PP will misguide with a lesser period of 20 years which is not conservative and appropriate. DOE to check.

Per MW price comes to Rs 531 Lacs / MW which is very high. Please see the Tariff Order at weblink
http://www.cercind.gov.in/2010/ORDER/February2010/53-2010_Suo-Motu_RE_Tariff_Order_FY2010-11.pdf 

which indicates a per MW price of Rs 398 Lacs / MW for non-fossil fuel based cogen project for financial year 2010-11.
Also the O&M cost is Rs 14.11 Lakh/MW for FY 2010-11

Auxiliary consumption is stated to be 8.5%. How a higher aux consumption is considered in the project?

Calorific value for biomass in UP is 3371 kcal/kg. Why 3000 kcal/kg is considered? 
See the conservativeness.

Also, biomass price in the order is mentioned as Rs 1046/MT for the year 2010-11. How such a high biomass price (Rs 2198/MT) is taken for financial analysis? Also as UAL is sister concern, PP should get it at a much lower price??

PP has considered a higer price for making the project additional.

Biomass price seems to be very high. DOE to check. Does it escalate with 5% or less?
Also see, http://www.indiaenvironmentportal.org.in/content/biomass-nothing?quicktabs_2=0

How steam price is determined? Any publicly available data on this?

Boiler efficiency is low. Check for conservativeness.

Why a 100 km round trip is considered for biomass procurement, while maximum biomass is taken from sister concern? Also most of the biomass should be available nearby to the project site?

Why sensitivity is applied only after 10 years? Not acceptable. See the investment guidelines.

How the price for elec and steam from 11th year is determined?
 
It seems that only because of the capacity expansion this poject is coming up to cater to the increased energy demand. Why the PP has not planned for the project early and why now? Does the PP have an existing power plant to cater the electricity demand? If yes, why the project is not the baseline scenario? The applicability condition to be checked. It may be a capacity expansion project. page 46 states that biomass is left to decay. Why then to include the cost of this biomass as it will be free to the PP.

PLF is 90% and the operational days are 330. No explanation.

The project can get 80% accelerated depreciation. However the PDD is silent on the tax shielding as a result from accelerated depreciation.
PPs cleverly do not consider the accounting tax offsetting in their companies while calculating the IRR. The DOE is therefore requested to critically analyze how the accelerated depreciation benefit has been taken into account and confirm the accounting of the cash inflows as a result of the negative tax liability in the initial years. DOE should not be misguided by the financial presented by the PP or consultant which are custom made for CDM purposes and not the actual financial considered at the investment decision. Note that considering cash inflows results in an increase in the IRR making wind projects a profitable venture.


Stakeholder consultation:
No details provided on which all stakeholders attended the meeting. How were they informed and invited? refer guidelines for completion of PDD.