MOSS ENERGY (PVT) LTD
Initially investments were made, by the Moss Family, into Renewable Energy projects in the UK such as Wind Cooperatives, Energy VCTís and Solar PV collecting FiTs. However whilst we applaud the various UK Governments support of Renewable Energy we became concerned about the level of government subsidies, damage to the environment and the loss of good agricultural land to Solar PV parks
Projects that are carried out on commercial lines are done through Moss Energy (Pvt) Ltd an Indian Company whose objective is to make Renewable Energy investments to demonstrate how Carbon Emissions can be saved in a profitable way. Most of the revenues are then used for researching new projects to give a spread of areas for investment for others with greater funding to follow. Our principal criteria is that each Rupee invested leads to new Renewable Energy production rather than investing in established projects that only serve to increase share prices or values.
Our first investment was in a 600KW Wind Turbine in Jetwai near Jaisalmer supplied and operated by Suzlon. This has achieved our objective of negating our lifetime Carbon Emissions and has not been a financial disaster. The projected EBITDA was 18.4% but after failing to claim CDMís and poor wind the return is currently 8.5% though it should noted that this is without any Government subsidy. Compare this to our UK wind investments that returns an EBIT of 7-11% with twice the wind and a near 50% Government subsidy. See more details under ďWindĒ Indian Energy Policy
India has set out a staggeringly ambitious energy policy to help ensure their energy security and reduce their reliance on imported fossil fuels. The energy policy steers heavily towards production of renewable energy in particular energy produced from wind, photovoltaic and thermal solar with production of electricity from Solar to reach 300 GW by 2050, more than the total current Indian consumption.. Solar PV produces power when consumption for air conditioners is at the peak so is a particularly beneficial form of generation for India. India suffers from large energy shortages with much of rural India still having no access to grid electricity and still relying on kerosene lamps and diesel generators to pump water. This current shortage and increasing demand has meant that the state governments are awarding high guaranteed feed in tariffs for project life spans. Although the returns are not the same for foreign investors as for Indian tax payers, as they can claim 80% first year depreciation, currently the rate of return that is received is above European base rates.
UK Energy PolicyWind
We appreciate the actions taken by the UK Government over the last 10 years. It has not been easy during the recession and with the complaints of those who feel they will be personally affected by the actions of others installing Renewable Energy. We have to mitigate Climate Change and that means either a big reduction in the demand for electricity or the building of more Carbon Free electricity generators. Currently the only real contributor is wind which requires only a 50% subsidy, which declines with time, but solar PV has a long way to go to become economic. Fitís have made a contribution to making more micro generators which provide electricity where it is consumed but at a significant cost in terms of subsidy. The case for large scale Solar Parks on agricultural land is weak and it would be much better for Climate Change and UK economics to subsidize Solar Parks in the desert in India where the Renewable Energy produced replaces that produced from poor quality coal whilst in the UK we could build Gas Powered generating plants that have fewer emissions. Climate Change being a World problem it is inconsequential where emissions are saved.
Patterns do change and there was a fall in wind speeds in Jaisalmer in 2004/2006 but it has since returned to normal although the peak months are moving from May / July to July / September. In 2013/2014 the PLF(Power Load Factor) was 18.65% cf budget of 18.5%. As much of the wind is created from the heating and cooling of the desert, it is possible that wind speeds will increase with Global Warming.
Grid AvailabilitySolar PV
The Indian Government has built a good grid system and at present offers in most states 100% availability. Due to the current and projected demand forecasts most States will be keen to transmit as much renewable electricity as possible. India has one of the fastest expanding grid systems, with many of the rural areas beginning to be given grid electricity that is necessary to pump water from great depths for irrigation. Added to this is the large increase on electrical demand from urban areas, where standards of living are rising with greater use of electrical appliances and air conditioning.
100 KW of Solar PV was commissioned on April 15th 2014 at the Rays Solar Park near Gajner Rajasthan. If the minimum electricity pice of 6p/KWh is given then there is a return of 12.5% but it is hoped a higher payment will be made until 2017. Thin film panels from DuPont have been installed with a guaranteed production for 25 years with a 1% decline per year. Payment for the electricity after 2017 depends on the Average Power Production Cost (APPC) which is expected to increase to 6p/KWh in a few years as the subsidy on imported coal is removed. India still produces most of their electricity from coal so any substitution by Renewable Energy makes a major contribution to Climate Change. As the Indian Government has released the land with planning and grid connection there is a very short time between contract and installation. We opened discussions on March 1st 2014, signed contracts on March 12th, paid the majority of funds on March 24th and starting producing power on April 16th 2014.
Political RiskIndian Renewable Energy Possibilities
Investors have to realize there are risks in investing in developing economies, but of the two leaders China and India we prefer the latter as democracy and the judicial system are historically based on the British experience. Within India, States offer varying incentives to ensure they meet their Government set targets.
Wind and Solar PV
Wind and Solar PV are currently the selected options as packages including purchase, operation and maintenance, together with sales to Government utilities at guaranteed prices are available for the complete life of the project. Purchase of electricity from Wind Turbins is increasing from 3p/KWh to 5.5 p/KWh and due to the decrease in Solar Panel prices the price from Solar PV has reduced from 17.5p/KWh to 6p/KWh with IRR ranging from 12% to 15%.
Solar Thermal Biomass Gasification
There will be many plants built in India, but they are unlikely to be packaged for sale to individual investors.
Undoubtedly an interesting energy source with small plants being built and operated successfully. There are potential opportunities in village electrification schemes but at present there are no Government guarantees. Many traditional village Biogas plants were installed in the 1990's but a proportion of these have fallen out of use.
Much has been written about the planting of Jatropha to produce Biodiesel and Moss Energy (Pvt) Ltd have a two acre research unit. Results have been extremely disappointing and at this stage we would be wary of advising anyone to invest until new more prolific species are available.
The Company is run on strictly commercial lines with the objectives to increase the asset base under the favorable tax treatment of the Indian Government's campaign to promote renewable energy, an objective we wholehearted support and wish to promote. To increase the asset base the Managing Director and Directors do not take salaries or dividends and it is intended to limit total office expenditure to a minimum. A minimum of 5% of profits are used for Sustainable Energy projects some of which, for example the solar boats in Kerala, are purely promoting the use of Sustainable Transport while others such as Jatropha research, solar vehicles and Biomass gasification may lead to future profitable investment by others.
Malcolm Moss BSc, who is the Managing Director, had a successful career in the oil and chemical industries being a co founder of the International Petroleum Exchange. Mrs Yvers Lancaster is an executive Director and Hemang Shah a non executive director. We have been involved in renewable energy in India and the UK for 16 years commencing with the World's first commercial solar powered water taxi and moving on through solar ferries to solar vehicles. By investing in true renewable energy projects Moss Energy (Pvt) Ltd generates over one million Kilowatt hours of carbon free electricity per annum.