PDD is not at all transparent! How can a DOE web-host such a PDD? This defeats the purpose of transparency in CDM!!!



The PP states that they have considered 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. 

This is evident from the recently registered projects and those requesting registration.  
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.

Please also check the offer from WTG supplier and Purchase Order while validating the PLF. It may be so 

that the third party report may indicate a lower PLF. The third party report can be forge just to indicate 

a lower PLF. Also cross check with tariff order.


Is PP also claiming REC? How can DOE ensure that REC is not claimed during project operation?

Land cost and insurance cost seems to be high. Compare with actual costs.

Grid connected Wind Power Generation Project by PSW

It is clear from authentic sources and public resources that Premier Mills is an experienced player in the wind power segment and had planned to set up a 47.85 MW wind farm in 2004 itself in Tirunelveli and Coimbatore districts of Tamil nadu.
http://wind-power.industry-focus.net/index.php/tamil-nadu-wind-power-projects/172-premier-mills-to-set-up-4785-mw-wind-power-project-at-tamil-nadu.html

2.	Previously the PP had applied for validation of the entire capacity split in to different PPs. The PDD was rejected at validation stage by the DoE.
3.	The investment board decision is the same for both the entire bundle of 47.85 MW. But this project is for a capacity of 24.75 MW only. For the remaining capacity, the PP has created another CDM project and submitted for validation for 14.85 MW capacity https://cdm.unfccc.int/Projects/Validation/DB/SSPNJ9BYJAJEJV22N2ZX4I4URQ7SXI/view.html

4.	What is significant in the PDD for 14.85 MW is that the PP categorically declares that the pre-project scenario used fuel oil and diesel for captive power requirement as early as from 2002 onwards. Before 2002 , the import from grid was done for captive consumption. As Fuel Oil prices increased, the FO was discontinued and PP opted for wind power.

5.	Thus the most conservative baseline scenario for premier mills group would be fuel oil or diesel as a captive power plant was existing before wind farm investment.

6. DOE has to check the applicability conditions of the proposed project activity.

7. Regarding Benchmark and IRR, the previous PDD has lower benchmark for entire bundle (as investment date is same), while in this PDD two benchmarks on the higher side are calculated?. The DoE is being made in to a fool and their incompetence in validating such projects is the first criteria for the consultant selecting them.

8. Thus the most conservative baseline scenario for premier mills group would be fuel oil or diesel as a captive power plant was existing before wind farm investment

The PP states that they have considered 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. This is evident from the recently registered projects and those requesting registration.  

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.

Please also check the offer from WTG supplier and Purchase Order while validating the PLF. It may be so that the third party report which is made after investment decision making - indicates a lower PLF.
The PLF seems to be very low. Also check the tariff order.


Benchmark: 
No details are provided on the beta estimation. Is the beta levered or unlevered and what is the reason?? How is the beta appropriate for irr chosen?

Stakeholder consultation:
No details provided on which all stakeholders attended the meeting. 

Benchmark:
The benchmark is too high. Even after considering CDM benefits the IRR will not cross the benchmark. Then WHY did the PP go ahead with this non-profitable venture??
This clearly indicates the benchmark is made high just to prove additionality and is not the real benchmark expected by the PP.

Why has the PP considered Reliance Infrastructure Ltd for beta determination when Reliance Infrastructure Ltd. has many other businesses other than pure power generation? How come the risk profile of Reliance Infrastructure Ltd match with the project activity which involves wind electricity generation?

What is the vintage considered for beta determination? Is considering only one year appropriate?
Why tax computations for beta are only considered for one year?? What is the basis for considering a particular vintage for the market returns, beta estimation and risk free returns?

Why the particular index is considered for calculating the market returns? DOE to evaluate whether the PP has made any other investments considering the same index. Only because a particular index results in a higher benchmark??

Project cost seems to be very high. Are the quotations real or fabricated?

Are REC benefits being claimed? How will the DOE ensure that the PP does not claim REC benefits during project operation?

DOE to submit a negative opinion in case the IRR does not cross the benchmark even after considering CDM benefits as it clearly indicates the projects unviability in any case. Why would any one invest in a loss making venture? 

And if the PP can still go ahead with the project - it indicates that the benchmark is fabricated and is not considered by the PP while making the investment decision!! DOE to validate this critically!! How are the investment decisions really made???

DOE to check if the financials correctly apply the 10 year tax holiday - i.e. not liable for taxes for 10 years from the initial 15 years. PP may show taxation with the logic of cumulative losses - which is totally incorrect!!