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. 

1.	Non de-bundling nature of the project is not justified properly in the section A.4.5. DOE has to validate whether there is no registered project with the PP nor there is an application for registration of any project. PP doesn’t confirm in the PDD that there is no application for registration. 
2.	Operating margin, build margin, combined margin is not as per “Tool for emission factor for an electricity system”. The tool is not used at all. Pls. calculate combined margin as per the tool. Pls. justify that grid emission factor calculated is as per CEA data latest version.
3.	The date of investment decision is not provided transparently. It should be used generously in the PDD for clarity. 
4.	How risk free return, market return and beta is calculated is not documented in the PDD. How many companies included in the calculation of beta. Government bond rates should be taken from the date of inception of BSE 500. 
5.	The application of MAT which is based on tax holiday while calculating WACC is not appropriate. 
6.	The project cost of the project should be based on offer and not on purchase order or tariff order.
7.	O&M charges considered are on higher side. Pls. clarify. 
8.	Justification of tariff rate is not provided.
9.	Justification of PLF is not provided. There is a huge difference between two projects. It should be based on guideline as provided by latest EB report. Pls. clarify. DOE has to validate this.
10.	A notification has to be sent to government of India and EB stating the starting of the project. It is not clear from the PDD whether it is done since this aspect is not provided in the PDD. Pls. clarify. 
11.	The date of board meeting, investment decision meeting, and offer date are not provided in the chronology of events column. 
12.	The value for OM, BM, and CM seems to be on the higher side. Normally, it will be in the range of 0.86 only. The calculation is not as per tool for emission factor for electricity system. It needs to be validated by DOE.