detailed project report on variable frequency drive for ...

DETAILED PROJECT REPORT

ON

VARIABLE FREQUENCY DRIVE FOR REFRIGERATION PLANT,

COOLING TOWERS & CENTRIFUGAL

(VAPI CHEMICALS & DYES CLUSTER)

Bureau of Energy Efficiency

Prepared By

Reviewed By

VARIABLE FREQUENCY DRIVE FOR REFRIGERATION PLANT, BOILER FAN, COOLING TOWERS & CENTRIFUGES

VAPI CHEMICALS & DYES CLUSTER

BEE, 2010

Detailed Project Report on Variable Frequency Drive for Refrigeration

Plant, Boiler fan and Cooling Towers & Centrifuges

Chemicals & Dyes SME Cluster, Vapi, Gujarat (India)

New Delhi: Bureau of Energy Efficiency;

Detail Project Report No.: VAPI/C&D/VFD/01

For more information

Bureau of Energy Efficiency (BEE)

(Ministry of Power, Government of India)

4th Floor, Sewa Bhawan

R. K. Puram, New Delhi – 110066

Telephone +91-11-26179699

Fax +91-11-26178352

Websites: www.bee-india.nic.in

Email: [email protected]/ [email protected]

http://www.bee-india.nic.in/

mailto:[email protected]/

mailto:[email protected]

Acknowledgement

We are sincerely thankful to the Bureau of Energy Efficiency, Ministry of Power, for giving us

the opportunity to implement the „BEE SME project in “Chemicals & Dyes Cluster, Vapi,

Gujarat State”. We express our sincere gratitude to all concerned officials for their support

and guidance during the conduct of this exercise.

Dr. Ajay Mathur, Director General, BEE

Smt. Abha Shukla, Secretary, BEE

Shri Jitendra Sood, Energy Economist, BEE

Shri Pawan Kumar Tiwari, Advisor (SME), BEE

Shri Rajeev Yadav, Project Economist, BEE

Zenith Energy Services Pvt Ltd is thankful to Shri Mahesh Pandya, President, Vapi Industries

Association (VIA) and Shri Dilip Doshi, Hon. Secretary, Vapi Industries Association (VIA),

Vapi, for the support and co-operation extended, their valuable inputs, for identification of the

units for Energy Use and Technology Audit studies and in preparation of the Vapi Chemicals

& Dyes cluster manual.

We take this opportunity to express our appreciation for the excellent support provided by

various SME owners, local service providers, and equipment suppliers for their active

involvement and valuable inputs in making the studies successful and in completion of the

cluster manual.

Zenith Energy Services Pvt Ltd is also thankful to all the plant supervisors and workers of the

SME units for their support during the energy use and technology audit studies and in

implementation of the demonstration projects.

Zenith Energy Services Pvt. Ltd.

Hyderabad

Contents

List of Annexure vii

List of Tables vii

List of Figures viii

List of Abbreviation viii

Executive summary ix

About BEE’S SME program xi

1 INTRODUCTION ...................................................................................................... 1

1.1 About the Vapi chemicals and dyes cluster ............................................................... 1

1.1.1 Production process ................................................................................................... 1

1.2 Energy performance in vapi chemicals and dyes cluster ........................................... 4

1.2.1 Specific energy consumption of final product ............................................................ 4

1.3 Proposed equipment to be upgrade .......................................................................... 4

1.3.1 Description of existing equipment .............................................................................. 4

1.3.2 Role in process ......................................................................................................... 5

1.4 Establishing the baseline for the technology/equipment ............................................ 5

1.4.1 Design and operating parameter ............................................................................... 5

1.4.2 Electricity consumption ............................................................................................. 5

1.5.2 Financial Barrier ........................................................................................................ 6

1.5.3 Skilled manpower ..................................................................................................... 6

1.5.4 Other barrier (If any) ................................................................................................. 7

2 PROPOSED ENERGY EFFICIENT EQUIPMENT .................................................... 8

2.1 Detail description of technology ................................................................................. 8

2.1.1 Description of equipment .......................................................................................... 8

2.1.2 Availability of equipment ................................................................................................. 9

2.1.3 Service/equipment providers ..................................................................................... 9

2.1.4 Technology/equipment specification ....................................................................... 10

2.1.5 Justification of technology selected and suitability .................................................. 10

2.1.6 Superiority over existing system ............................................................................. 11

2.1.7 Terms and conditions in sales & service of VFD ..................................................... 11

2.1.8 Process down time during Implementation .............................................................. 11

2.2 Life cycle assesment and risk analysis .................................................................... 12

2.3 Suitable unit for implementation of proposed technology......................................... 12

3 ECONOMIC BENEFITS OF PROPOSED EUIPMENT ........................................... 13

3.1 Technical benefits ................................................................................................... 13

3.1.1 Fuel saving ............................................................................................................. 13

3.1.2 Electricity saving ..................................................................................................... 13

3.3 Social benefits ......................................................................................................... 14

3.2.1 Improvement in working environment ..................................................................... 14

3.2.2 Improvement in skill set of workers ......................................................................... 14

3.2.3 Impact on wages/emoluments ................................................................................ 14

3.4 Envirinmental benefit ............................................................................................... 14

3.4.1 Reduction in effluent generation ............................................................................. 14

3.4.2 Reduction in GHG emission such as CO2, NOx, etc ............................................... 14

3.3.3 Reduction in other emissions like Sox ..................................................................... 14

4 INSTALLATION OF PROPOSED EQUIPMENT ..................................................... 15

4.1 Cost of equipment implementation .......................................................................... 15

4.1.1 Cost of equipment ................................................................................................... 15

4.1.2 Other costs ............................................................................................................. 15

4.2 Arrangement of funds .............................................................................................. 15

4.2.1 Entrepreneur‟s contribution ..................................................................................... 15

4.2.2 Loan amount ........................................................................................................... 15

4.2.3 Terms & conditions of loan...................................................................................... 15

4.3 Financial indicators ................................................................................................. 16

4.3.1 Cash flow analysis .................................................................................................. 16

4.3.2 Simple payback period ............................................................................................ 16

4.3.3 Net Present Value (NPV) ........................................................................................ 16

4.3.4 Internal rate of return (IRR) ..................................................................................... 16

4.3.5 Return on investment (ROI) .................................................................................... 16

4.4 Sensitivity analysis .................................................................................................. 16

4.5 Procurement and Implementation schedule ............................................................ 17

vii

List of Annexure

Annexure 1 Establishment of baseline .................................................................................. 18

Annexure 2 Process flow diagram ......................................................................................... 19

Annexure 2 Process flow diagram ......................................................................................... 19

Annexure 3 Technology assessment report .......................................................................... 20

Annexure 4 Electrical drawings for proposed equipment ....................................................... 21

Annexure 5: Detailed financial analysis of Variable Frequency Drives .................................. 23

Annexure 6 Details of procurement and implementation plan ................................................ 27

Annexure 7 Details of equipment and service provider .......................................................... 28

Annexure 8 Quotations of proposed equipment ..................................................................... 29

List of Tables

Table 1.1 Details of annual energy consumption of a typical (Yasho Industries Pvt Ltd) .......... 1

Table 1.2 Specific electricity consumption of a typical unit ...................................................... 4

Table 1.3 Power consumption in different section of a typical unit ........................................... 5

Table 1.4 Electricity consumption ............................................................................................ 6

Table 3.1 Energy Saving and cost benefit of VFD ................................................................. 13

Table 4.1 Details of Project Cost ........................................................................................... 15

Table 4.2 Financial indicator of project .................................................................................. 16

Table 4.3 Sensitivity analysis in different scenario ................................................................. 17

viii

List of Figures

Figure 1.1 Process flow chart of typical chemical & dye unit .................................................... 3

Figure 2.1 Variable frequency drive ......................................................................................... 8

List of Abbreviations

BEE Bureau of Energy Efficiency

DPR Detailed Project Report

DSCR Debt Service Coverage Ratio

FD Force Draft

GHG Green House Gas

ID Induced Draft

IRR Internal Rate of Return

kWh kilo Watt Hour

NPV Net Present Values

O&M Operational & Maintenance

PAT Profit After Tax

PBT Profit Before Tax

ROI Return on Investment

SIDBI Small Industries Development of India

SME Small and Medium Enterprises

VFD Variable Frequency Drives

ix

EXECUTIVE SUMMARY

Zenith Energy Services Pvt. Ltd is executing BEE - SME program in Vapi chemicals & dyes

cluster, supported by Bureau of Energy Efficiency with an overall objective of improving the

energy efficiency in cluster units.

Since Vapi cluster is one of the largest clusters in chemicals & dyes sector in India, accordingly

this cluster was chosen for energy efficiency improvements by implementing energy efficient

technologies, so as to facilitate maximum replication in other chemicals & dyes clusters in India.

Vapi chemicals & dyes cluster is famous for the production of Organic/Inorganic chemicals,

Specialty chemicals, Disperse dyes, Dye Intermediates, Reactive dyes, Acid dyes, Direct dyes

etc. In fact majority of the chemical units in the cluster are manufacturing two or three types of

products as per the demand for the products in the market.

During energy use and technology audit studies in various chemicals & dyes industries in Vapi

various chemicals & dyes cluster, it was observed that boiler, thermic fluid heaters, dryers,

cooling tower etc has fans and pumps. From energy use and technology gap audit studies in

various chemicals & dyes industries, it is observed that the flow if fan is controlled by mechanical

systems as per the requirement for all the fans and pumps are operated continuously at the high

speed than the requirement. Hence, it is proposed to installed variable frequency drives to

control the speed of fan and pumps as per the requirement.

This DPR highlights the details of the study conducted for assessing the potential for installation

of VFD on different load, possible energy saving, and its monetary benefit, availability of the

technologies/design, local service providers, technical features & proposed equipment

specifications, various barriers in implementation, environmental aspects, estimated GHG

reductions, capital cost, financial analysis, sensitivity analysis for three different scenarios and

schedule of Project Implementation

This bankable DPR also found eligible for subsidy scheme of MoMSME for “Technology and

Quality Upgradation Support to Micro, Small and Medium Enterprises” under “National

Manufacturing and Competitiveness Programme”. The key indicators of the DPR including the

Project cost, debt equity ratio, monetary benefit and other necessary parameters are given in

table:

S.No Parameter Unit Value

1 Project cost ` in lakh 2.83

2 Power saving kWh/year 70644

2 Monetary benefit ` in lakh 4.03

x

The projected profitability and financial indicators shows that the project will be able to earn profit

from inception and installation of VFD‟s for fans, pumps etc is financially viable and technically

feasible.

S.No Parameter Unit Value

3 Simple payback period years 0.70

4 NPV ` in lakh 6.47

5 IRR %age 112.59

6 ROI %age 48.73

7 DSCR ratio 5.16

8 Process down time during implementation Hrs 2-3

9 CO2 emission reduction Tons/annum 57

xi

ABOUT BEE’S SME PROGRAM

Bureau of Energy Efficiency (BEE) is implementing a BEE-SME Programme to improve the

energy performance in 29 selected SMEs clusters. Vapi Chemicals & Dyes Cluster is one of

them. The BEE‟s SME Programme intends to enhance the energy efficiency awareness by

funding/subsidizing need based studies in SME clusters and giving energy conservation

recommendations. For addressing the specific problems of these SMEs and enhancing

energy efficiency in the clusters, BEE will be focusing on energy efficiency, energy

conservation, and technology up gradation through studies and pilot projects in these SMEs

clusters.

Major activities in the BEE -SME program are furnished below:

Activity 1: Energy use and technology studies

The energy use technology studies would provide information on technology status, best

operating practices, gaps in skills and knowledge on energy conservation opportunities,

energy saving potential and new energy efficient technologies, etc for each of the sub sector

in SMEs.

Activity 2: Capacity building of stake holders in cluster on energy efficiency

In most of the cases SME entrepreneurs are dependent on the locally available technologies,

service providers for various reasons. To address this issue BEE has also undertaken

capacity building of local service providers and entrepreneurs/ managers of SMEs on energy

efficiency improvement in their units as well as clusters. The local service providers will be

trained in order to be able to provide the local services in setting of energy efficiency projects

in the clusters

Activity 3: Implementation of energy efficiency measures

To implement the technology up gradation projects in clusters, BEE has proposed to prepare

the technology based detailed project reports (DPRs) for a minimum of five technologies in

three capacities for each technology

Activity 4: Facilitation of innovative financing mechanisms for implementation of

energy efficiency projects

The objective of this activity is to facilitate the uptake of energy efficiency measures through

innovative financing mechanisms without creating market distortion.

VFD for Refrigeration Plant, Cooling Towers, Boiler Fan & Centrifuges pump

1

1 INTRODUCTION

1.1 About the Vapi chemicals and dyes cluster

The products manufactured in Vapi Chemicals & Dyes Cluster are Organic/Inorganic

chemicals, Specialty chemicals, Disperse dyes, Dye Intermediates, Reactive dyes, Acid dyes,

Direct dyes etc. In fact majority of the chemical units in the cluster are manufacturing two or

three types of products as per the demand for the products in the market.

The raw material is different for the industries and depends on the product manufactured in

the respective industry.

The main energy forms used in the cluster units are Wood, Imported Coal, LDO, Furnace Oil,

Ground Nut Briquettes & Natural Gas as fuels for boilers, Thermopacs, Tray Dryers & Spray

Dryers. Electricity is used to run reactors, motors, pumps, centrifuges, blowers, fans & Air

Compressors etc.

The details of annual energy consumption of a typical unit engaged in the production of

Chemicals & Dyes are furnished in the Table 1.1 below:

Table 1.1 Details of annual energy consumption of a typical (Yasho Industries Pvt Ltd)

1.1.1 Production process

The process adopted by different units in the Vapi cluster varies with the type of product

manufactured in the unit. However, the general processes & operations involved in a typical

dyes & chemical manufacturing are as indicated below:

a) Raw material selection/ preparation

b) Preparation of solution

c) Precipitation

d) Filtration

e) Drying

f) Pulverization

g) Packing

Parameter Unit Value

Electricity consumption kWh/year 31,81,440

Natural gas consumption SCM/year 14,33,596


2

The process flow diagram of a typical unit producing dyes & chemicals is shown above. The

brief description of process is explained below:

Raw material selection/preparation

Raw materials are selected in various proportions to prepare the required product or to the

customer requirements.

Preparation of solution

Solution is prepared by mixing different proportions of solute and solvent in a reactor vessel

with the help of varying thermal inputs like steam or chilled water to make a chemical reaction

(i.e. endothermic or exothermic reactions) and this process will continue until the required raw

product is produced. In this step, both thermal energy and electrical energy is used in the

reactor vessel for maintaining temperature and pumping & mixing of solution during the

process to undergo chemical reaction.

Precipitation

Precipitation is the process of formation of solid particles from soluble raw product. In this

process, solid blocks/ crystals are prepared from sludge raw product. This sludge raw product

is produced from solution in reactor vessel as mentioned in previous step. In some units,

electrical energy is used to prepare solid cakes by means of hydraulic presses.

Filtration

After precipitation, the solid/ crystal product is filtered by various filtration methods for next

drying process, usually by electrically operated hydraulic filter presses.

Drying

The filtered pigment/ dyes contain moisture, which is removed by means of hot air generators.

Both thermal and electrical energy is used in hot air generators.

Pulverization

Pulverization is the process of making crystal pigments/ dyes into powder form. Pulverizers

use electrical energy.

Packing

The final product or solid pigments/ dyes are packed in appropriate packing without exposes

to atmosphere because some products are flammable.


3

The detailed process flow diagram of a typical unit is furnished below.

Figure 1.1 Process flow chart of typical chemical & dye unit

Raw materials

Preparation of solution

(Reactor Vessels)

Precipitation

Filtration

Drying

Pulverization

Packing

Electrical and

Thermal Energy

Electrical Energy

Electrical Energy

Electrical and

Thermal Energy

Electrical and

Thermal Energy


4

The production process as depicted above is similar for all chemical units in Vapi chemicals

and dyes cluster. However, depending on type of product and product quality, the above

stated process flow varies as per the requirement of the industry.

1.2 Energy performance in vapi chemicals and dyes cluster

The main energy sources for Vapi cluster units are Wood, Imported Coal, LDO, Furnace Oil,

Ground Nut Briquettes & Natural Gas as fuels for boilers, Thermopacs, Tray Dryers & Spray

Dryers. Electricity is used to run reactors, motors, pumps, centrifuges, blowers, fans & Air

Compressors etc.

Energy cost is around 8 to10 percent of manufacturing cost in typical manufacturing unit. In

typical manufacturing unit, the annual electricity and Natural gas consumption is 31,81,440

kWh and 14,33,596 SCM respectively.

1.2.1 Specific energy consumption of final product

Specific electrical and thermal energy consumption in chemical & dyes units depends on the

final product manufactured in that unit. However, as the units are producing number of

products, hence, the specific energy consumption could not evaluate.

The average specific fuel consumption per kg of the product for 3 typical units is furnished

below in Table 1.2.

Table 1.2 Specific electricity consumption of a typical unit

1.3 Proposed equipment to be upgrade

1.3.1 Description of existing equipment

During energy use and technology audit studies in various chemicals & dyes industries in

Vapi various chemicals & dyes cluster, it was observed that boiler, thermic fluid heaters,

dryers, cooling tower etc has fans.

S.No Name of unit

Electricity kWh/month

Production tonnes

Specific Electricity consumption

kWh/kg

1 M/s Hema Dye Chem Pvt Ltd 30,148 90 0.335

2 M/s Yasho Industries Pvt Ltd 2,65,120 ___ --

3 M/s Vapi Oxide Colours Pvt Ltd 24,418 80 0.305


5

From energy use and technology gap audit studies in various chemicals & dyes industries, it

is observed that the flow is controlled by mechanical systems as per the requirement for all

the fans.

1.3.2 Role in process

For production of chemicals & dyes, the process requires steam and process equipments.

Thermic fluid heater and boiler are used for hot water generation having FD & ID fans for

supply of combustion air to boilers and thermic fluid heaters and removal of hot flue gas from

the boilers and thermic fluid heaters. Pumps are used in cooling tower and refrigeration units.

1.4 Establishing the baseline for the technology/equipment

Energy consumption in FD & ID fans would depend on load on boiler or thermic fluid heater,

percentage opening of mechanical dampers and operational & maintenance practices.

Whereas, energy consumption in pumps motors is depend on the load.

1.4.1 Design and operating parameter

Present electricity consumption in a typical unit having boiler, thermic fluid heater, CSS and

GL motors etc is 3,53,220 kWh at 50 - 60% damper openings. The details of the equipment

are furnished below in table 1.3 below:

Table 1.3 Power consumption in different section of a typical unit

S.No Equipment Rated

HP

Power input measured (kW)

1 Secondary Pump 30 22.5

2 Centrifuge 1 12.5 5.2



5 Boiler FD fan 10 4.61

6 Cooling Tower 1 Fan 7.5 6.01


1.4.2 Electricity consumption

Electricity consumption for three typical units in the cluster having boilers and thermic fluid

heaters and other equipments, where the flow of fans/pumps is controlled by mechanical

systems is furnished in Table 1.4 below:


6

Table 1.4 Electricity consumption

1.5 Barriers for adoption of proposed equipment

1.5.1 Technological Barriers

The major technical barriers that prevented the implementation of variable frequency drives

are as follow:

Lack of awareness and information about the VFD and its benefit

Absence of local VFD supplier

The majority of the chemicals & dyes unit owners/entrepreneurs do not have in-depth

technical expertise, knowledge or training about energy efficiency, and are dependent

on local technology suppliers or service companies, whom they normally rely for

established and commonly used technology.

The lack of technical know-how makes it difficult for the chemicals & dyes unit owners

to identify the most effective technical measures.

1.5.2 Financial Barrier

The SME owners in the cluster have limited financial strength and hence owners would not

like to take the risk and invest in energy efficiency measures.

The owners don‟t have knowledge on the financial benefits of the VFD‟s and its

attractiveness. However, the financial attractiveness of the project activity may motivate the

owners to move forward in taking up initiatives in energy conservation and efficiency.

1.5.3 Skilled manpower

The non-availability of skilled manpower having awareness about energy efficiency and

related issues in the cluster is one of the major barriers. Though, the skilled manpower is

available in the cluster, they are not aware of energy conservation/efficiency and its

S.No. Name of unit Unit Value

1 M/s Yasho Industries Pvt Ltd kWh/year 3,53,220

2 M/s Hema Dye Chem. Pvt Ltd kWh/year 1,08,000

3 M/s Vapi Oxide Colors Pvt Ltd kWh/year 54,000


7

importance. Their prime responsibility of worker is to maintain machines and ensure

uninterrupted production by minimizing down time as per the targets set by the management.

Specialized training with the local service providers for better operation and maintenance of

the equipments, importance of energy use and conservation will create awareness among

workforce thereby enhancing their skill set about efficient use of energy and its conservation.

1.5.4 Other barrier (If any)

Absence of clean environment in the plant and VFD‟s require clean environment for

uninterrupted operation. The suitable location with clean environment is to be identified for

installing VFD‟s


8

2 PROPOSED ENERGY EFFICIENT EQUIPMENT

2.1 Detail description of technology

2.1.1 Description of equipment

In Indian industries more than 50% of the total electrical energy consumption is used by

rotating equipment. Out of which 65% of this is consumed by centrifugal or flow related

applications such as fans, blowers, compressors, and pumps. By using Variable Frequency

Drive (VFD) technology the advantage gained in both productivity improvements and

reduction in energy consumption has been widely documented in the past few years. For

example, by lowering fan or pump speed by 15% to 20%, shaft power can be reduced by as

much as 20-30%. The main purpose of variable speed drives is to reduce energy costs and

prolong the life of equipment by adjusting motor speed to meet load requirements

Variable Frequency Drive

A variable frequency drive is an electronic controller that adjusts the speed of an electric

motor by regulating the power being delivered. Variable-frequency drives provide continuous

control, matching motor speed to the specific demands of the work being performed. Variable-

frequency drives are an excellent choice for adjustable-speed drive users because they allow

operators to fine-tune processes while reducing costs for energy and equipment

maintenance.

Figure 2.1 Variable frequency drive


9

Working Principle

Single-speed drives start motors abruptly, subjecting the motor to high torque and current

surges up to 10 times the full-load current. Variable frequency drives offer a soft start,

gradually ramping up a motor to operating speed. VFD minimizes the mechanical and

electrical stress on the motors and can reduce maintenance and repair costs and extend the

motor life.

Energy savings from variable-frequency drives can be significant. For example with

centrifugal fan even a small reduction in motor speed can reduce fans energy use by as much

as 50%. For example a 25 hp motor running 23 hours per day (2 hours at 100% speed; 8

hours at 75%: 8 hours at 67%; and 5 hours at 50%) a variable frequency drives can reduce

energy use by 45%. Because benefits vary depending on operating speed of the system

hence it is important to calculate benefits for each application before specifying a variable

frequency drive.

In Vapi chemicals and dyes cluster units, the flow of the fans is controlled by mechanical

dampers. If the flow can be controlled by reducing the speed of the fan‟s motor according to

the requirement this would offer a more efficient means of achieving flow control of air. In fact

the saving is greater than that might initially be expected by mechanical damper. As the

speed of the fan is reduced, the flow will reduce partially, while the power required by the fan

reduces with the cube of the speed.

The mechanical damper for control of the flow may reduce the load on the motor/fan/pump

motor, but the constriction itself is an energy loss, which is obviously an inefficient technique.

If the flow or speed can be controlled by reducing the speed of motor, this would offer a more

efficient means of achieving flow control.

Considering the above facts and for reducing electricity consumption in the present boilers

and thermic fluid heaters, it is suggested to install VFD for ID fans and for pumps also.

2.1.2 Availability of equipment

The VFD suppliers are available in the Vapi and Vadodara. M/s Tangent Technologies are

available in the local area and the details are furnished in Annexure 7.

2.1.3 Service/equipment providers

The details of the service/ equipment providers are furnished in Annexure 7.


10

2.1.4 Technology/equipment specification

The details of the technical specifications of VFD‟s are provided below

Power Rating: 5.5 kW / 7.5 HP

Protection class of VSCP-5R5T4

Sensor less vector control

Overload duty:150% for 2 minutes

50 oC Ambient

Power Rating: 7.5 kW / 10 HP




50 oC Ambient

Power Rating: 9.25 kW / 12.5 HP




50 oC Ambient

Power Rating: 22 kW / 30 HP

Protection class of VSCP- 022T4



50 oC Ambient

2.1.5 Justification of technology selected and suitability

As discussed above, controlling the flow of fans and pumps by mechanical damper is

inefficient and consumes more power. If the flow is controlled by reducing the speed of the

fan‟s/pumps‟s motor this would offer a more efficient means of achieving flow control. In fact

the saving is greater than that might initially be expected. As the speed of the fan/pump is

reduced, the flow will reduce partially, while the power required by the fan/pump reduces with


11

the cube of the speed. Proposed technology is completely suitable with existing system for

control of flow.

2.1.6 Superiority over existing system

The installation of VFD for fans has the following advantages:

Reduction in breakdowns and smooth start

Reduction in motor burning

Improved life of the motor and increased production

Reduction in production cost and maintenance cost due to frequent failures of belts,

bearings breakages

Improved power factor (0.98 across speed range)

Maximize power distribution system

Reduced inrush current

Minimize peak demand charges

Eliminates mechanical shock and stress on power train (couplings, belts, drive shafts,

gear boxes, etc.)

Reduce Utility operating costs

Allows Load Shedding

May qualify for utility rebates due increase in power factor

Controlled acceleration and deceleration

Eliminates Motor Voltage Imbalance

2.1.7 Terms and conditions in sales & service of VFD

There is no specific term and condition in sales & service of VFD however a general term &

condition of supplier is given at annexure 7.

2.1.8 Process down time during Implementation

No process down time is envisaged as installation of VFD will take 2 to 3 hours for

installation.


12

2.2 Life cycle assesment and risk analysis

Life cycle of VFD is considered as 15 years. Actual capacity and suitable location are two

improtant point must be considerd before instalation of VFD.

2.3 Suitable unit for implementation of proposed technology

The proposed VFD is selected based on the rated capacity of the motors installed for blowers,

pumps and others etc.


13

3 ECONOMIC BENEFITS OF PROPOSED EUIPMENT

3.1 Technical benefits

3.1.1 Fuel saving

No fuel saving is possible by the implementation of the project activity.

3.1.2 Electricity saving

The present utilization capacity of the ID fan flow is only 50% of the rated flow of the fan and

the flow is controlled by mechanical dampers. The flow can also be controlled by monitoring

the motor RPM also. It is well known fact that, a 10% reduction in RPM of the motor will

reduce the motor power consumption by 25%. For assessing the savings, under worst

scenario, a 10% flow reduction is considered for avoiding the other consequences like

overheating boiler and Thermopac and cooling tower also etc. Hence, only 20% power

savings is assumed by installing a VFD for various motors. The details of savings due to

installation of VFD‟s is furnished below:

Table 3.1 Energy Saving and cost benefit of VFD

S.No. Parameter Unit Value

1 Present power consumption in different load kWh/year 353220

2 Proposed power consumption kWh/year 282576

3 Annual savings kWh 70,644

4 Cost of electricity `/kWh 5.7

5 Monetary savings ` in lakh 4.03

.3.1.3 Improvement in product quality

Product quality achieved would be same as the present quality. It does not have any impact in

improving the quality of the product.

3.1.4 Increase in production

The proposed equipment does not contribute to any increase in production.

3.1.5 Reduction in raw material consumption

Raw material consumption is same even after the implementation of proposed technology.


14

3.2 Monetary benefits

The monetary benefit due to installation of VFD for various motor is estimated as ` 4.03 lakh

per annum due to reduction in electricity consumption. Details are shown in above table 3.1.

3.3 Social benefits

3.2.1 Improvement in working environment

As installation of VFD eliminates Mechanical shock and stress on couplings, belts, drive

shafts, gear boxes, etc., this may lessen the breakdowns and working environment may

improved.

3.2.2 Improvement in skill set of workers

The technology selected for the implementation is new and energy efficient. The technology

implemented will create awareness among the workforce about energy saving.

3.2.3 Impact on wages/emoluments

No impact on wages or emolument of workers.

3.4 Envirinmental benefit

3.4.1 Reduction in effluent generation

The effluent generation due to implementation of the project activity is insignificant.

3.4.2 Reduction in GHG emission such as CO2, NOx, etc

The major GHG emission reduction source is CO2 and the technology will reduce electricity

consumption of 70644 kW/year. The total emission reductions are estimated at 57 tons of

CO2 per annum due to implementation of the project activity.

3.3.3 Reduction in other emissions like Sox

No significant impact on SOx emissions.


15

4 INSTALLATION OF PROPOSED EQUIPMENT

4.1 Cost of equipment implementation

4.1.1 Cost of equipment

The cost of VFD‟s for the selected motors is estimated at `.2.43 lakhs, which includes VFD‟s,

Panel, switches and cabling.

4.1.2 Other costs

Other cost includes erection & commissioning charges, applicable taxes and misc. cost etc. A

detail of project cost is given in table 4.1 below:

Table 4.1 Details of Project Cost

S.No Particular Cost ( ` in lakh)

1 Equipment and machinery 2.43

2 Applicable taxes 0.25

3 Erection & Commissioning 0.05

4 Misc cost 0.10

5 Total 2.83

4.2 Arrangement of funds

4.2.1 Entrepreneur’s contribution

The total cost of the proposed technology is estimated at `2.83 lakh. The entrepreneur‟s

contribution is 25% of total project cost, which is `0.71 lakh.

4.2.2 Loan amount

The term loan is 75% of the total project, which is `2.12 lakh.

4.2.3 Terms & conditions of loan

The interest rate is considered at 10.00% which is normal Lending rate for energy efficiency

projects. The loan tenure is assumed 5 years and the moratorium period is 6 months.


16

4.3 Financial indicators

4.3.1 Cash flow analysis

Considering the above mentioned assumptions, the net cash accruals starting with `3.11 lakh

in the first year operation and gradually increases to `18.64 lakh at the end of eighth year.

4.3.2 Simple payback period

The total project cost of the proposed technology is `2.83 lakh and monetary savings due to

reduction in electricity consumption is ` 4.03 lakh and the simple payback period works out to

be 0.7 years (9 months).

4.3.3 Net Present Value (NPV)

The Net present value of the investment at 10.00% works out to be `11.82 lakh.

4.3.4 Internal rate of return (IRR)

The after tax Internal Rate of Return of the project works out to be 108.18% thus the project is

financially viable.

4.3.5 Return on investment (ROI)

The average return on investment of the project activity works out at 30.08%.

Table 4.2 Financial indicator of project

S. No Particulars Unit Value

1 Simple Pay Back period months 9

2 IRR %age 108.18

3 NPV lakh 11.82

4 ROI %age 30.08

5 DSCR ratio 5.63

4.4 Sensitivity analysis

A sensitivity analysis has been carried out to ascertain how the project financials would

behave in different situations like there is an increase in electricity savings or decrease in

electricity savings. For the purpose of sensitive analysis, two scenarios are considered are.


17

Increase in power savings by 5%

Decrease in power savings by 5%

In each scenario, other inputs are assumed as constant. The financial indicators in each of

the above situation are indicated along with standard indicators.

Details of sensitivity analysis for different scenario are furnished in Table 4.3 below:

Table 4.3 Sensitivity analysis in different scenario

Particulars IRR NPV ROI DSCR

Normal 108.18% 11.82 30.08% 5.63

5% increase in power savings 113.24% 12.53 30.25% 5.90

5% decrease in power savings 103.09% 11.11 29.89 5.35

4.5 Procurement and Implementation schedule

The project is expected to be completed in 1 week from the date of financial closure. The

detailed schedule of project implementation is furnished in Annexure 6.


18

Annexure 1 Establishment of baseline

YASHO INDUSTRIES PVT. LTD

S.No. Details Unit Value

1 No of operating hours hr 20

2 No of operating days days 350

3 Power consumption in various motors kWh/hr 50.46

4 Power consumption kWh/day 1009.2

5 Power consumption kWh/year 3,53,220

S.No Equipment Rated HP Power input measured (kW)

1 Secondary Pump 30 22.5






10 Total 82.5 50.46


19

Annexure 2 Process flow diagram

Yarn

PACKING

REACTOR VESSELS

PRODUCT 1

NUTCH FILTER

REACTOR VESSELS

NUTCH FILTER

SEPERATION

REACTION

FILTER DRYING PULVERIZING

PRECIPITATOR

FILTER

PRODUCT 2

DRYING

PULVERIZING

PACKING

Electrical and Thermal Energy





20

Annexure 3 Technology assessment report

S.No. Parameter Unit Value

1 Total power input of the motors selected for VFD’s kW 50.46

2 Operational hours hours/day 20

3 Operational days per annum days/annum 350

4 Expected power savings % 20%

5 Annual savings kWh 70,644

6 Cost of electricity `/kWh 5.75

7 Monetary savings ` in lakh 4.03

8 Investment ` in lakh 2.83

9 payback period years 0.70


21

Annexure 4 Electrical drawings for proposed equipment

Major civil works is not required for the technology hence no drawings are furnished


22


23

Annexure 5: Detailed financial analysis of Variable Frequency Drives

Assumptions

Assumption

Name of the Technology Variable Frequency Drive

Rated Capacity

Details Unit Value Basis

No of working days Hrs 20

Total operating days Days 350

Proposed Investment

Plant & Machinery ` (in lakh) 3.12

Erection & Commissioning ` (in lakh) 0.35

Applicable taxes ` (in lakh) 0.22

Misc. cost ` (in lakh) 0.10

Total Investment ` (in lakh) 2.83

Financing pattern

Own Funds (Equity) ` (in lakh) 0.71 Feasibility Study

Loan Funds (Term Loan) ` (in lakh) 2.12 Feasibility Study

Loan Tenure years 5 Assumed

Moratorium Period Months 6 Assumed

Repayment Period Months 66 Assumed

Interest Rate % 10.00% SIDBI Lending rate

Estimation of Costs

O & M Cost % on Plant & Equip 5 Feasibility Study

Annual Escalation % 5 Feasibility Study

Estimation of Revenue

Power Saving KWh 70644

Cost `/KWh 5.7

St. line Depn. %age 5.28 Indian Companies Act

IT Depreciation %age 80.00 Income Tax Rules

Income Tax %age 33.99 Income Tax

Estimation of Interest on Term Loan (` in lakh)

Years Opening Balance Repayment Closing Balance Interest 1 2.12 0.06 2.06 0.25 2

2.06 0.24 1.82 0.20 3

1.82 0.36 1.46 0.17 4

1.46 0.48 0.98 0.12 5

0.98 0.60 0.38 0.07 6

0.38 0.38 0.00 0.01

2.12


24

WDV Depreciation

Particulars / years 1 2

Plant and Machinery

Cost 2.83 0.57

Depreciation 2.26 0.45

WDV 0.57 0.11

Projected Profitability ` in lakh

Particulars / Years 1 2 3 4 5 6 7 8

Revenue through Savings

Power savings 4.03 4.03 4.03 4.03 4.03 4.03 4.03 4.03

Total Revenue (A) 4.03 4.03 4.03 4.03 4.03 4.03 4.03 4.03

Expenses

O & M Expenses 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20

Total Expenses (B) 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20

PBDIT (A)-(B) 3.89 3.88 3.87 3.86 3.85 3.85 3.84 3.83

Interest 0.25 0.20 0.17 0.12 0.07 0.01 0.00 0.00

PBDT 3.64 3.68 3.70 3.74 3.78 3.83 3.84 3.83

Depreciation 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

PBT 3.49 3.53 3.56 3.59 3.63 3.68 3.69 3.68

Income tax 0.47 1.10 1.26 1.27 1.29 1.30 1.30 1.30

Profit after tax (PAT) 3.02 2.44 2.30 2.32 2.35 2.38 2.38 2.38

Computation of Tax ` (in lakh)


Profit before tax 3.49 3.53 3.56 3.59 3.63 3.68 3.69 3.68

Add: Book depreciation 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

Less: WDV depreciation 2.26 0.45 - - - - - -

Taxable profit 1.37 3.23 3.70 3.74 3.78 3.83 3.84 3.83

Income Tax 0.47 1.10 1.26 1.27 1.29 1.30 1.30 1.30

Projected Balance Sheet ` (in lakh)


Liabilities

Share Capital (D) 0.71 0.71 0.71 0.71 0.71 0.71 0.71 0.71

Reserves & Surplus (E) 3.02 5.46 7.75 10.07 12.42 14.80 17.18 19.56

Term Loans (F) 2.06 1.82 1.46 0.98 0.38 0.00 0.00 0.00

Total Liabilities D)+(E)+(F) 5.79 7.99 9.92 11.76 13.51 15.51 17.89 20.27

Assets

Gross Fixed Assets 2.83 2.83 2.83 2.83 2.83 2.83 2.83 2.83

Less: Accm. Depreciation 0.15 0.30 0.45 0.60 0.75 0.90 1.05 1.20

Net Fixed Assets 2.68 2.53 2.38 2.23 2.08 1.93 1.78 1.63

Cash & Bank Balance 3.11 5.46 7.54 9.53 11.43 13.58 16.11 18.64

Total Assets 5.79 7.99 9.92 11.76 13.51 15.51 17.89 20.27

Net Worth 3.73 6.16 8.46 10.78 13.13 15.51 17.89 20.27

Dept equity ratio 2.92 2.58 2.07 1.39 0.54 0.00 0.00 0.00


25

Projected Cash Flow: ` (in lakh)

Particulars / Years 0 1 2 3 4 5 6 7 8

Sources

Share Capital 0.71 - - - - - - - -

Term Loan 2.12 Profit After tax

3.02 2.44 2.30 2.32 2.35 2.38 2.38 2.38

Depreciation

0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

Total Sources 2.83 3.17 2.58 2.45 2.47 2.50 2.53 2.53 2.53

Application

Capital Expenditure 2.83 Repayment of Loan - 0.06 0.24 0.36 0.48 0.60 0.38 0.00 0.00

Total Application 2.83 0.06 0.24 0.36 0.48 0.60 0.38 0.00 0.00

Net Surplus - 3.11 2.34 2.09 1.99 1.90 2.15 2.53 2.53

Add: Opening Balance - - 3.11 5.46 7.54 9.53 11.43 13.58 16.11

losing Balance - 3.11 5.46 7.54 9.53 11.43 13.58 16.11 18.64

Calculation of Internal Rate of Return

` (in lakh) Particulars / months 0 1 2 3 4 5 6 7 8

Profit after Tax

3.02 2.44 2.30 2.32 2.35 2.38 2.38 2.38

Depreciation

0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

Interest on Term Loan

0.25 0.20 0.17 0.12 0.07 0.01 - -

Cash outflow (2.83) - - - - - - - -

Net Cash flow (2.83) 3.42 2.78 2.61 2.59 2.57 2.54 2.53 2.53

IRR 108.18%

NPV 11.82

Break Even Point ` (in lakh)


Variable Expenses

Oper. & Maintenance Exp (75%) 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15

Sub Total (G) 0.11 0.11 0.12 0.12 0.13 0.14 0.14 0.15

Fixed Expenses

Oper. & Maintenance Exp (25%) 0.04 0.04 0.04 0.04 0.04 0.05 0.05 0.05 Interest on Term Loan 0.25 0.20 0.17 0.12 0.07 0.01 0.00 0.00

Depreciation (H) 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 Sub Total (I) 0.43 0.38 0.35 0.31 0.26 0.21 0.20 0.20

Sales (J) 4.03 4.03 4.03 4.03 4.03 4.03 4.03 4.03

Contribution (K) 3.92 3.92 3.91 3.90 3.90 3.89 3.88 3.88

Break Even Point (L= G/I) 11.02% 9.75% 9.06% 8.06% 6.76% 5.31% 5.07% 5.14%

Cash Break Even {(I)-(H)} 7.20% 5.94% 5.24% 4.24% 2.93% 1.47% 1.22% 1.28%

Break Even Sales (J)*(L) 0.44 0.39 0.36 0.32 0.27 0.21 0.20 0.21


26

Return on Investment ` (in lakh) Particulars / Years 1 2 3 4 5 6 7 8 Total

Net Profit Before Taxes 3.49 3.53 3.56 3.59 3.63 3.68 3.69 3.68 28.85

Net Worth 3.73 6.16 8.46 10.78 13.13 15.51 17.89 20.27 95.93

30.08%

Debt Service Coverage Ratio ` (in lakh)

Particulars / Years 1 2 3 4 5 6 7 8 Total

Cash Inflow

Profit after Tax 3.02 2.44 2.30 2.32 2.35 2.38 2.38 2.38 14.80

Depreciation 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.90

Interest on Term Loan 0.25 0.20 0.17 0.12 0.07 0.01 0.00 0.00 0.82

Total (M) 3.42 2.78 2.61 2.59 2.57 2.54 2.53 2.53 16.51

Debt

Interest on Term Loan 0.25 0.20 0.17 0.12 0.07 0.01 0.00 0.00 0.82

Repayment of Term Loan 0.06 0.24 0.36 0.48 0.60 0.38 0.00 0.00 2.12

Total (N) 0.31 0.44 0.53 0.60 0.67 0.39 0.00 0.00 2.94

11.13 6.39 4.97 4.29 3.83 6.49 0.00 0.00 5.63

Average DSCR (M/N) 5.63


27

Annexure 6 Details of procurement and implementation plan

Project Implementation Schedule

Placement of Orders for

Equipment

Step 1

Supply of VFD’s

Step 2

Installation and trial runs

Step 3

5 days

1 day

1day

7 days TOTAL

Period


28

Annexure 7 Details of equipment and service provider

Equipment details Service/technology provider

Variable Frequency Drive

(VFD)

TANGENT TECHNOLOGIES

105, 131 Ambica Complex,

Gorwa Refinery Road, Vadodara India- 390016

E-mail: [email protected]

Mobile:+91 9825500449 Telefax:+91 265 2291264

Website: www.tangent.in


29

Annexure 8 Quotations of proposed equipment


30


31


32


33

Bureau of Energy Efficiency (BEE) (Ministry of Power, Government of India) 4th Floor, Sewa Bhawan, R. K. Puram, New Delhi – 110066 Ph.: +91 – 11 – 26179699 (5 Lines), Fax: +91 – 11 – 26178352

Websites: www.bee-india.nic.in, www.energymanagertraining.com

Zenith Energy Services Pvt. Ltd 10-5-6/B, My Home Plaza, Masab Tank HYDERABAD, AP 500 028 Phone: 040 23376630, 31, Fax No.040 23322517

Website: www.zenithenergy.com

India SME Technology Services Ltd DFC Building, Plot No.37-38, D-Block, Pankha Road, Institutional Area, Janakpuri, New Delhi-110058 Tel: +91-11-28525534, Fax: +91-11-28525535 Website: www.techsmall.com

http://www.bee-india.nic.in/

http://www.zenith/

detailed project report on variable frequency drive for ...

Documents

Transcript of detailed project report on variable frequency drive for ...