PROJECT CONCEPT NOTE

1. Name of Project

2.9 MW grid connected electricity generation project in India by KAMAL ENGINEERING

CORPORATION [UNIT OF KEC INDUSTRIES LTD]

2. Location of Project (Village/ District/ State)

The location of the project is at two sites namely Bhramanvel and Devarkulam, which fall in
the Western and Southern part of India. The project sites are located on a land not suitable
for any agricultural activities. The project consists of above two WTG's having total capacity of
2.90 M.W. wind farms at Brahmanvel in Dhule district of Maharashtra state of Southern
India and in Devarkulam , Tirunelveli District in the State of Tamil Nadu in Southern India.

3. Name of Project Sponsor(s) & Contact details

Not applicable

4. Name of Project (Developer/ Consultant) & Contact details

KAMAL ENGINEERING CORPORATION

[UNIT OF KEC INDUSTRIES LTD]
,Delhi Office: 616, Antriksh Bhawan, 22 Kasturba Gandhi Marg, New Delhi
INDIA-110001
Phone: 91-11-23351365, 23723158 Fax: 91-11-23721656, 23351369
E-MAIL: kamal@kecindustries.com

5. Ownership details of Project Sponsor(s) Company

KAMAL ENGINEERING CORPORATION

[UNIT OF KEC INDUSTRIES LTD]
,Delhi Office: 616, Antriksh Bhawan, 22 Kasturba Gandhi Marg, New Delhi
INDIA-110001
Phone: 91-11-23351365, 23723158 Fax: 91-11-23721656, 23351369
E-MAIL:kamal@kecindustries.com

6. CER sharing arrangements amongst Project Sponsors

Not applicable

7. Project description

The first project activity as sub bundle 1 has been set up to produce clean power from the
wind electric converters in the Indian state of Maharashtra to provide reliable, renewable
power to the Maharashtra state electricity grid, which forms part of the Western Regional
Electricity Grid of India. The project activity puts to use the barren land in Dhule district of
Maharashtra state. The project activity consists of 1 nos. NEG/VESTAS-82 makes 1650 KW
wind turbine capacity of 1.65 MW. The Project harnesses renewable resources in the region,
thereby displacing non-renewable natural resources thereby ultimately leading to sustainable
economic and environmental development. NEG-MICON (Now Vestas Wind Technology
India Pvt. Ltd.), a wholly owned subsidiary of VESTAS Group of Denmark is the equipment
supplier and the operations and maintenance contractor for the Project. The generated
electricity is supplied to Maharashtra State Electricity Distribution Company Limited
(“MSEDCL”) under a long-term power purchase agreement (PPA) for 13 years. Details of
sub-project that comprise the project activity are as under second activity of a project as sub

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bundle 2 involves the establishment of a wind farm of 1.25 MW capacity enabling generation
of electricity by state-of-art 1.25 MW Wind Electricity Generator (WEG) (One of the latest
available technologies in the country developed by Suzlon Energy Limited), in Devarkulam
and Sankaneri, Tirunelveli District in the State of Tamil Nadu in Southern India. The detail of
investor is furnished in Annex 5. 100 % of the electricity generated will be sold to the state
electricity utility - Tamil Nadu Electricity Board (the “TNEB”)

8. Technology to be employed (Whether state of art/Technological

innovation, if any)

State of art

9. Transfer of Technology (methodology)

No technology transfer from other countries is involved in this project activity.

10. Project start date

01.04.2009

11. Project completion date

29.03.2005 & 09.02.2006

12. Project Life time

20 YEARS

13. Status of Project Clearances

ALL OBTAINED

14. Status of Resource inputs

ALL DEPLOYED

15. Financing details of the Project

Term loan from IREDA and promoters equity participation.

16. Total CDM contribution sought

KAMAL ENGINEERING CORPORATION SEEKS A CONTRIBUTION OF CER

EVERY YEAR

17. CDM contribution expected upfront

No upfront CDM expected

18. Indicative CER price

20 EURO

19. Name & Address of buyer of CER's

TO BE SELECTED

20. Cost of CER to the Company

Cost of the CER to the company about 20 Euro Rs.1340 per CER.

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21. IRR and DSCR without CER Revenue

FOR SUB BUNDLE 1 8.68% FOR SUB BUNDLE 2 8.16 %

22. IRR and DSCR with CER Revenue

FOR SUB BUNDLE 1 13.14% FOR SUB BUNDLE 2 16.14 %

23. Whether any ODA is flowing to the Project

No

24. Subsidy element if any in the project & source

There is no element any subsidy.

25. Total cost of the Project

a) In Indian Rs.
b) Break up of Foreign currency (if any)

RS.1596.07 LAC
Break up of foreign currency is not possible

26. Transaction Cost

Initial transaction cost is RS.15, 00,000 and for verification recurring annual
expenditure will be involved around RS. 3, 50,000/-

27. Whether Project appraised by any Financial Institution

Yes by IREDA

28. Financial Closure

Kamal Engineering Corporation decided to go for project closure on 09.02.2006

29. Expected date of first CER delivery & CER (Revenue) flow year wise

As both project has already been commissioned , expected date of first CER delivery is
01.04.2009 .Considering current CER trend of USD$ 28 per CER and as the total CER being
5052 Tt co 2-E per year ,CER[ Revenue] flow year wise is expected tobe USD$ 141456

30. Crediting period

10 YEARS

31. Estimate of GHG abatement in tCO2 eq. (Year wise)

GHG emission reduction are 5052 –tCO2 eq per year

32. Baseline Methodology (Approved or New)

APPROVED AMS I.D. (Version 10) 23 December 2006 Grid connected renewable electricity
generation
Reference: Appendix B of the simplified Modalities and Procedures (M&P) for small scale
CDM project activities.

33. Whether EIA conducted for the project

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Not required

34. Sustainable Development Criteria

The project activity contributes towards sustainable development of the country and the state
of Maharashtra and Tamil Nadu in India by reducing the dependency on fossil fuel based
electricity generation, which ultimately leads to reduction in greenhouse gas emissions. The
project also fulfills several other sustainable development objectives as set out below:

• Contribution towards the policy objectives of Government of India and

Government of Maharashtra of incremental capacity from renewable sources;
• Contribution towards meeting the electricity deficit in Maharashtra &
Tamilnadu.

• CO2 abatement and reduction of greenhouse gas emissions through

development of renewable technology;
• Reducing the average emission intensity (SOx, NOx, PM, etc.), average
effluent intensity and average solid waste intensity of power generation in the system;

• Conserving natural resources including land, forests, minerals, water and

ecosystems and

• Developing the local economy and create jobs and employment, particularly
in rural areas, which is a priority concern for the Government of India.

35. Specific global & local environmental benefits

The project utilizes wind energy for generating electricity which otherwise would have been
generated through alternate fuel (most likely - fossil fuel) based power plants, contributing to
reduction in specific emissions (emissions of pollutant/unit of energy generated) including
GHG emissions. As wind power projects produce no end products in the form of solid waste
(ash etc.), they address the problem of solid waste disposal encountered by most other
sources of power. Being a renewable resource, using wind energy to generate electricity
contributes to resource conservation. Thus the project causes no negative impact on the
surrounding environment.

The wind energy based electricity generation helps in less fossil-fuel burning in the system
and thus less GHG emissions in the atmosphere. Use of renewable energy source (wind
energy) also helps in conservation of natural resources (like coal), thereby contributing to
energy security of the country.

The project activity harnesses wind energy to generate and supply electricity to the western
regional electricity grid of India. The Project displaces fossil fuel based electricity generation
that would have otherwise been provided by the operation and expansion of the fossil fuel
based power plants in Western
Region electricity grid, thereby leading to reduction in emission of greenhouse gases
associated with fossil fuel based electricity generation.

36. Socio -economic aspects

Social well being:

India faces a peak power shortage of 11.70%1. Wind energy projects will not only contribute
in closing this deficit but they also contribute toward government of India’s plan of meeting
10% of the total power requirement in the country from renewable sources of energy.
Social well being is assessed by contribution by the project activity towards improvement in
living standards of the local community. The project activity has resulted in increased job
opportunities for the local population on temporary and permanent basis. Manpower was
required both during erection and operation of the wind farms. This has resulted in poverty

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alleviation of the local community and development of basic infrastructure leading to
improvement in living standards of the local population.

Economic well being:

The project implementation has provided a fillip to economic activity in the region. Direct &
indirect employment has been generated in the plant for the project implementation &
management. The success of this project will encourage more business houses to invest in
Wind Power projects positive contribution towards renewable energy generation and GHG
reduction and thereby contributing to national development as well climate change. This
further helps policy makers to divert the funds, to be originally used for power sector reforms,
for improvement of other sectors.

37. Local stake holders comments

A stakeholder's consultation meeting had been conducted by the project promoter at the
Vestas and Suzlon site offices in Dehivel-Taluka Sakri [Maharashtra] and Vadakkukaval
Kurrichi –Taluka Veerakeralampurthr in Tamilnadu villages in order to view the concerns of
the local stakeholders and their opinion about the WEGs installed in both these locations. The
meeting had been attended by around 10 villagers residing in the nearby villages. The project
promoters and WEG suppliers explained the various technology features, operation and
function of the WEGs and associated benefits of this project activity. They also explained the
stakeholders about the eco-friendly nature of the project. The local village people
unanimously agreed that due to this project activity the employment opportunities for the local
folk have increased to some extent. There has been considerable improvement in the
communication facilities in terms of construction of roads etc. The project proponent has
established good relationship with local people who ensure co-operation for the successful
and continuous operation of these projects. The local people also agreed that their
infrastructure facility like road and transportation was improved due this project activity. A
specially developed questionnaire had been circulated in order to welcome the comments of
the local people. No negative comments were received from the stakeholders who attended
the meeting.

The project promoter and the WEG suppliers gave a brief explanation about the project; about
its technicalities and its impact on the neighboring area and environment. The local people
had not faced any problems due to the project activity. On the contrary they admitted of being
benefited in terms of improved infrastructure facilities due to better roads etc. The local
people have also got employment opportunities due to this project activity. No negative
comments were received from the stakeholders. The questionnaire results can be
summarized as under:

• 100 % of the participants agreed that there has been improvement in

employment generation for the local residents of the area.

• All the participants were unanimous about the increase in the land values due
to the project activity as well as similar projects coming up in the area.

• They were also unanimous about the fact that they had been exposed to a
new technology which they were not aware of in the past.

• 80% of the respondents agreed that there have been considerable

improvement in the electricity facilities over the area due to such project activities.

• The respondents also agreed that the overall facilities have improved in the
local area due to the project activity.

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38. Environment Management Programme

However the Environmental Impact Assessment study is not required for wind mill
project as there is no negative environmental impact due to the project activity and
wind energy is one of the cleanest sources of energy.

39. Project risks (Economic, Legal, Political, Social & Environmental)

The overall picture confirms that the right political/legal/economic framework is crucial to
sustain the growth of renewable power around the world and to open new markets Including
India.

In addition to unstable political situations, some experts believe that weak markets and
competitive positions, social risks still present substantial risk factors for renewable energy.
"Companies have to pay attention to ongoing cost competitiveness of renewable against
conventional energy sources, e.g., coal, gas, oil, nuclear, and hydro.

40. Project promoter credentials (No. of Projects promoted in the past &
their status)

VESTAS AND SUZLON both are globally operated WTG machine suppliers on Turn Key
basis and both have installed and operated majorities of installations in India.

41. Developer / Consultant credentials

Established in 1973, Kamal Engineering Corporation (KEC), an ISO 9001 company, is one of
the industry leaders in designing and manufacturing Specialty Heat Recovery and Distillation
Equipment and is on the approved list of all major Indian Consultants and many foreign
consultants. KEC products include Heat and Mass Transfer equipment supplied to petroleum
refineries, petrochemical, fertilizer and chemical plants. KEC’s foundation is built upon
Customer satisfaction by delivering high quality products & services. Matchless quality, on
time delivery and a long list of satisfied customers stand testimony to our commitment. KEC
boosts a quality controlled & fully equipped fabrication unit and a completely automated
foundry plant located at Yamuna Nagar in the state of Haryana, India, about 125 miles north-
west of New Delhi.

42. Comments of MoEF/ Line Ministry (If any)