DETAILED PROJECT REPORT ON VARIABLE ...sameeeksha.org/pdf/dpr/Vellore_rice_mill_cluster/VFD_for...ii BEE, 2010 Detailed Project Report on Variable Frequency Drives for ID/FD fan(7.5

DETAILED PROJECT REPORT

ON

VARIABLE FREQUENCY DRIVES FOR ID/FD FANS

(VELLORE RICE MILL CLUSTER)

Bureau of Energy Efficiency

Prepared By Reviewed By

VARIABLE FREQUENCY DRIVES FOR ID/FD FANS (7.5 HP)

VELLORE RICE MILLS CLUSTER

ii

BEE, 2010

Detailed Project Report on Variable Frequency Drives for ID/FD

fan(7.5 HP)

Rice Mills SME Cluster, Vellore, Tamilnadu (India)

New Delhi: Bureau of Energy Efficiency;

Detail Project Report No.: VEL/RM/EEB/03

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 “Rice Milling Cluster, Vellore”. 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 also thankful to “Shri V.P. Radhakrishnan, President, Shri

Thiagaraj, Secretary, Arni Taluk Paddy and Rice Merchant Association, Arni, Shri Appandai

Raj, Ex-President, Arni Taluk Paddy and Rice Merchant Association, Arni and to Mr. Arun

Kumar, M/s Anandi Modern Rill Mill for the support and co-operation and their valuable inputs

for identification of the units for energy use and technology audit studies, preparation of

Vellore Rice Mills cluster manual and facilitating the implementation of BEE SME program in

Vellore Rice Milling Cluster.

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

Rice Mill Unit Owners, Local Service Providers, and Equipment Suppliers for their active

involvement and their valuable inputs in making the program successful and in completion of

the Detailed Project Report (DPR).

ZESPL is also thankful to all the SME owners, plant in charges and all workers of the SME

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

implementation of the project objectives.

Zenith Energy Services Pvt. Ltd.

Hyderabad

iv

Contents List of Annexure vi

List of Tables vii

List of Figures vii

List of Abbreviation viii

Executive summary ix

About BEE’S SME program xi

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

1.1 Brief Introduction about cluster ........................................................................................ 1

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

1.2 Energy performance in existing situation ....................................................................... 3

1.2.1 Fuels and electricity consumption .................................................................................. 3

1.2.2 Average production by a typical unit in the cluster .......................................................... 4

1.2.3 Specific Energy Consumption ......................................................................................... 4

1.3 Existing technology/equipment ........................................................................................ 4

1.3.1 Description of existing technology ................................................................................... 4

1.3.2 Its role in the whole process ............................................................................................ 4

1.4 Establishing the baseline ................................................................................................. 5

1.4.1 Design and operating parameters ................................................................................... 5

1.4.2 Electricity Consumption ................................................................................................... 5

1.5 Barriers for adoption of new and energy efficient technology / equipment..................... 5

1.5.1 Technological Barriers ..................................................................................................... 5

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

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

1.5.4 Other barrier(s) ................................................................................................................ 6

2 TECHNOLOGY OPTION FOR ENERGY EFFICIENCY IMPROVEMENTS .................. 7

2.1 Detailed description of technology/equipment selected ................................................. 7

2.1.1 Description of technology ................................................................................................ 7

2.1.2 Technology/equipment specifications ............................................................................. 8

v

2.1.3 Justification of the technology selected & its suitability ................................................... 8

2.1.4 Superiority over existing technology/equipment ............................................................. 9

2.1.5 Availability of the proposed technology/equipment ......................................................... 9

2.1.6 Source of technology/equipment for the project ............................................................. 9

2.1.7 Service/technology providers .......................................................................................... 9

2.1.8 Terms of sales ................................................................................................................. 9

2.1.9 Process down time ......................................................................................................... 10

2.2 Life cycle assessment and risks analysis ...................................................................... 10

2.3 Suitable unit in terms of capacity/production .................................................................... 10

3 ECONOMIC BENEFITS OF NEW ENERGY EFFICIENT TECHNOLOGY .................. 11

3.1 Technical benefits .......................................................................................................... 11

3.1.1 Fuel savings ................................................................................................................... 11

3.1.1 Electricity savings .......................................................................................................... 11

3.1.2 Improvement in product quality ..................................................................................... 11

3.1.3 Increase in production .................................................................................................... 11

3.1.4 Reduction in raw material consumption ........................................................................ 11

3.1.5 Reduction in other losses .............................................................................................. 11

3.2 Monetary benefits .......................................................................................................... 11

3.3 Social benefits ............................................................................................................... 11

3.3.1 Improvement in working environment in the plant ........................................................ 11

3.3.2 Improvement in skill set of workers ............................................................................... 11

3.4 Environmental benefits .................................................................................................. 12

3.4.1 Reduction in effluent generation.................................................................................... 12

3.4.2 Reduction in GHG emission such as CO2, NOx, etc .................................................... 12

3.4.3 Reduction in other emissions like SOx .......................................................................... 12

4 INSTALLATION OF NEW EQUIPMENT ....................................................................... 13

4.1 Cost of technology/equipment implementation .............................................................. 13

4.1.1 Cost of technology/equipments ...................................................................................... 13

4.1.2 Other costs ..................................................................................................................... 13

vi

4.2 Arrangement of funds .................................................................................................... 13

4.2.1 Entrepreneur’s contribution ........................................................................................... 13

4.2.2 Loan amount .................................................................................................................. 13

4.2.3 Terms & conditions of loan ............................................................................................ 13

4.3 Financial indicators ........................................................................................................ 13

4.3.1 Cash flow analysis ......................................................................................................... 13

4.3.2 Simple payback period .................................................................................................. 13

4.3.3 Net Present Value (NPV)............................................................................................... 14

4.3.4 Internal rate of return (IRR) ........................................................................................... 14

4.3.5 Return on investment (ROI) .......................................................................................... 14

4.4 Sensitivity analysis in realistic, pessimistic and optimistic scenarios ........................... 14

4.5 Procurement and implementation schedule .................................................................. 14

vii

Annexure

Annexure 1: Energy audit and base line establishment ............................................................ 15

Annexure 2 Process flow diagram ........................................................................................... 16

Annexure 4 Detail technical assessment report ...................................................................... 21

Annexure 5 Detailed financial calculations & analysis ............................................................. 22

Annexure 6 Details of procurement and implementation schedule .......................................... 26

Annexure 7 Details of technology/equipment service providers .............................................. 27

Annexure 7 Quotations or Techno-commercial bids ................................................................ 28

List of Tables

Table 1.1: Energy consumption of a typical unit (Sri Lakshmi Modern Rice Mill) ....................... 4

Table 1.2: Specific energy consumption for a typical unit (Sri Lakshmi Modern Rice Mill) ......... 4

Table 1.3 Blower specification and operating parameters ......................................................... 5

Table 1.4 Electricity Consumption in three typical rice mill units ................................................ 5

Table 4.1 Details of Project Cost ............................................................................................. 13

Table 4.2 Sensitivity analysis .................................................................................................. 14

viii

List of Figure

Figure 1: General Process Flowchart of a Typical unit …………………………….…....................3

List of Abbreviations

BEE - Bureau of Energy Efficiency

DPR - Detailed Project Report

DSCR - Debt Service Coverage Ratio

FD - Forced Draft

GHG - Green House Gases

HP - Horse Power

IBR - Indian Boiler Regulation

IRR - Internal Rate of Return

ID - Induced Draft

MSME - Micro Small and Medium Enterprises

MoP - Ministry of Power

NPV - Net Present Value

RBI PLR - Reserve Bank of India Prime Lending Rates

ROI - Return On Investment

MoMSME - Ministry of Micro Small and Medium Enterprises

SIDBI - Small Industrial Development Bank of India

ix

EXECUTIVE SUMMARY

Zenith Energy Services Pvt. Ltd. is executing BEE-SME program in Vellore Rice Mills Cluster,

supported by Bureau of Energy Efficiency (BEE) with an overall objective of improving the

energy efficiency in cluster units.

There are about 340 rice mills in the cluster spreaded in Arni in Thiruvannamalai District and

Arcot in Vellore Districts. These rice mills are engaged in production of boiled, steam and raw

rice. The major Energy forms used in the cluster are electricity and fuels like Firewood, GN

Shell and Rice husk. Electricity is used for driving the prime movers of rice mill machinery

such as paddy cleaners, rice graders, hullers, separators, whiteners, silky etc. The fuels are

used in the boilers and dryers.

The cost of energy as a percentage of processing cost of paddy varies anywhere between 4-

5%, which includes electrical as well as thermal. Majority of the rice mills in the cluster are

producing ponni rice and require thermal energy in the form of steam and hot air.

Boilers are one of the important equipment of the rice milling industry in thermal energy

section and are used for steam generation for cooking of paddy by direct injection of steam in

the tanks. Majority of the rice mills are producing steamed and boiled rice. Majority of the

units has natural draft boilers and about 20% of the units has either forced draft, inducted

draft or balanced draft boilers. The boilers are used for generating steam required for drying

and cooking of paddy. The FD and ID fans are installed for supply of combustion air and to

remove flue gases or boilers and flow of air and flue gas control by mechanical damper.

The proposed technology i.e. installation of Variable Frequency Drives (VFD) on ID/ FD fan of

control the speed of the motor according to the load thereby, reduce electricity consumption in

ID & FD fan. Proposed system would lead to save about 4800 kWh of electricity per year.

The DPR highlights the details of the study conducted for assessing the potential for reducing

electricity consumption by installing VFD on ID/FD fan, possible fuel savings and its monetary

benefit, availability of the technologies/design, local service providers, technical features and

proposed equipment specifications, various barriers in implementation, environmental

aspects, estimated GHG reductions, capital cost, financial analysis, 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

x

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

table below:

S.No Particular Unit Value

1 Project cost `(in Lakh) 0.42

2 Electricity saving kWh 4800

3 Monetary benefit ` (in Lakh) 0.24

4 Simple payback period Years 1.75

5 NPV ` (in Lakh) 0.45

6 IRR %age 39.05

7 ROI %age 26.79

8 Average DSCR Ratio 2.30

9 CO2 reduction Tonne/annum 3.9

10 Process down time Weeks Nil

The projected profitability and cash flow statements indicate that the project

implementation i.e. installation of VFD on ID /FD fan will be financially viable and

technically feasible solution for the cluster units.

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. Vellore Rice Mills 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 audit

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 up of energy efficiency

projects in the clusters

Activity 3: Implementation of energy efficiency measures

To implement the technology up-gradation project in the 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.

Variable Frequency Drives For ID/FD Fan (7.5 HP)

1

1 INTRODUCTION

1.1 Brief Introduction about cluster

Rice is the staple food of majority of Indians and specifically in Southern Indian. Paddy is the

one major crop cultivated in the Southern states especially in the state of Tamilnadu. The

Rice comes out of milling of paddy. Hence rice milling is an important activity in the state.

Rice mills are the lifeline for the economic development of rural India. The rice mills are

generally located in the rural areas and near to paddy growing area.

There are about 340 rice mills in the cluster spreaded in Arni in Tiruvannamalai District and

Arcot in Vellore Districts. These rice mills are engaged in production of boiled, steam and raw

rice. The major Energy forms used in the cluster are Electricity and Fuels like Firewood, GN

Shell and Rice husk. Electricity is used for driving the prime movers of rice mill machinery

such as screeners, paddy cleaners, rice graders, hullers, separators, whiteners, cones etc.

The fuels are used in the boilers and dryers.

The cost of energy as a percentage of processing cost of paddy varies anywhere between 4

to 5% of the cost of paddy, which includes electrical as well as thermal. Majority of the rice

mills in the cluster are producing ponni rice and require thermal energy in the form of steam

and hot air.

1.1.1 Production process

The milling process in larger commercial mills combines a number of operations that

produces higher quality and higher yields of rice from paddy. The process involves:

Soaking, Cooking and Drying

The raw paddy procured is directly feeded to the tanks and soaked in normal water for about

12 hours. After completion of the soaking process, the water is drained from the tanks. Then

the soaked paddy is cooked by direct injection of steam to the paddy. The cooked paddy is

then dried by using natural sunlight or bed dryer for reducing the moisture content from 24 to

18%.

The paddy containing moisture content of 18% is dried in the hot air dryer for about 16 to 18

hours and the final moisture content is reduced to 8.5 to 9.0% and then the paddy is taken to

the raw mill for further processing.

Pre-cleaning

When paddy comes into the mill it contains foreign material such as straw, weed seeds, soil

and other inert material. If this is not removed prior to hulling the efficiency of the huller and

the milling recovery are reduced.


2

Most pre-cleaners separate three groups of materials:

The first separation is done by scalping or removing the objects that are larger than the

grain. Either a flat oscillating screen or a rotary drum screen that allows the grain to pass

through but retains straw can do this.

The second separation retains the grains but allows broken grains, small stones and weed

seeds to pass through. An air aspirator may also be incorporated to remove the dust and

the light empty grains

Huller

The objective of a hulling/dehusking operation is to remove the husk from the paddy grain

with a minimum of damage to the bran layer and, if possible, without breaking the brown rice

grain. Since, the structure of the paddy grain makes it necessary to apply friction to the grain

surface to remove the husk; it leads to breaking of some of the rice.

The paddy is fed into the center of the machine through a small hopper. A vertically

adjustable cylindrical sleeve regulates the capacity and equal distribution of the paddy over

the entire surface of the rotating disc, paddy is forced between the two discs and as a result

of pressure and friction most of the paddy is dehusked (hulled).

Whitening, polishing & Silky

In the process of whitening, the silver skin and the bran layer of the brown rice are removed.

During polishing of the whitened rice, the bran particles still sticking to the surface of the rice

are removed and the surface of the rice is slightly polished to give it a glazed appearance. For

further whitening if required as per the market demand or for export market, the polished rice

is further processed in the silky machine for additional polishing.

Rice grader

After polishing, the white rice is separated into head rice and, large and small broken rice by a

sifter. Head rice is normally classified as kernels, which are 75-80% or more of a whole

kernel. The sifter is made up of a series of oscillating or cylindrical screens through which the

rice passes. The output from the bottom screen is the very fine broken tips and is called the

“brewers”.

Elevators

The elevator buckets are made of MS material. Due to heavy weight of the buckets, the

elevator motors consume more power.


3

Electricity/ Wood/ Groundnut Husk

Cooking with steam

Dryer

Paddy Cleaner

Soaking of Paddy

Paddy

Storage

Huller

Packing

Colour Sorter

Grader

Silky

Whitener

The detailed process flow diagram of the unit is furnished below.

Figure 1: General Process Flowchart of a typical unit

1.2 Energy performance in existing situation

1.2.1 Fuels and electricity consumption

The main energy forms used in a typical rice mill of the cluster are electricity, rice husk, wood

and GN husk. Electricity is used for driving the prime movers of rice mill machinery


4

like fans, paddy cleaner, separator, grader, whitener, huller, silky, sortex and air compressors,

lighting etc. Rice husk, GN husk and wood are used as fuels in boiler and hot air dryer. The

energy consumption of a typical rice mill in the cluster having local make inefficient boiler and

production capacity of the unit is 33 TPD is furnished in Table 1.1 below:

Table 1.1: Energy consumption of a typical unit (Sri Lakshmi Modern Rice Mill)

1.2.2 Average production by a typical unit in the cluster

The average production in a year in a typical rice mill of the cluster is 10,890 tons/annum of

paddy processing.

1.2.3 Specific Energy Consumption

The specific energy consumption both electrical and thermal energy per ton of paddy

processing are furnished in Table 1.2 below:

Table 1.2: Specific energy consumption for a typical unit (Sri Lakshmi Modern Rice

Mill)

1.3 Existing technology/equipment

1.3.1 Description of existing technology

There are about 340 rice milling units in the Vellore rice mills cluster. Majority of the rice mills

are producing steamed and boiled rice. Majority of the units has natural draft boilers and

about 20% of the units has either forced draft, inducted draft or balanced draft boilers. The

boilers are used for generating steam required for drying and cooking of paddy. The FD and

ID fans are installed for supply of combustion air and to remove flue gases or boilers.

The detailed energy use and technology audit studies in various rice mills of the cluster, it

was observed that, in most of the boilers, the flow of air controlled by mechanical dampers.

1.3.2 Its role in the whole process

The boilers are one of the important equipment of the rice milling industry and are used for

S.No. Details Unit Value

1 Grid Electricity consumption kWh/annum 5,38,778

2 Wood Consumption Tons/annum 1,656

3 Paddy processing (330 days) Tons/annum 10,890

S. No. Type of Fuel Units Specific Energy Consumption

1 Wood consumption Ton of woof/ Ton of rice 0.152

2 Grid Electricity consumption kWh/ Ton of rice 49.5


5

steam generation for cooking of paddy by direct injection of steam in the tanks. There are

very few units, where the steam is used for dryers for drying paddy.

1.4 Establishing the baseline

1.4.1 Design and operating parameters

Based on the detailed energy use and technology audits carried out in a typical rice mill unit

of the cluster, design and operating parameters of existing blower and power consumption of

ID fan installed are furnished in Table 1.3 below:

Table 1.3 Blower specification and operating parameters

1.4.2 Electricity Consumption

The electricity consumption of the three rice milling units having fans and flow is controlled by

mechanical dampers along with the damper position normally kept open are furnished in table

1.4 below:

Table 1.4 Electricity Consumption in three typical rice mill units

1.5 Barriers for adoption of new and energy efficient technology / equipment

1.5.1 Technological Barriers

S. No Parameters Unit Value

1 Boiler capacity TPH 3

2 Rated capacity of blower HP 7.5

3 Measured voltage Volt 410

4 Measured current Amp 4.45

5 Power factor ----- 0.96

6 Measured power kW 3.03

7 Total operating hours Hr/year 6600

8 Percentage damper opening %age 50-60

9 Revolutions Per minute RPM 2899

10 Frequency Hz 50

S. No Name of the unit Power consumption (kW) % Damper opening

FD Fan ID Fan FD Fan ID Fan

1 Sri Lakshmi Modern Rice Mill 3.03 3.40 50-60 70

2 Shree Jayalakshmi Modern Rice Mill 2.54 - 50-60 -

3 Murthy Modern Rice Mill - 3.49 - 70


6

The major technical barriers that prevented the implementation of the VFD’s in the cluster are:

Lack of awareness among the VFD’s and its benefits

Absence of VFD’s suppliers and LSP’s

1.5.2 Financial Barrier

The lack of awareness of the losses and monetary benefit of VFD’s among the cluster

unit owners

The majority of the unit owners have a feeling that the accruable benefits are more

investing in the trading or purchasing of the paddy than in investing in energy

efficiency.

The unit owner in the cluster doesn’t approach for the loans, as they have strong

feeling that getting loans requires huge documentation and complex.

1.5.3 Skilled manpower

The non-availability of skilled manpower 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 importance.

1.5.4 Other barrier(s)

Information on the energy efficient technologies not available among cluster unit owners,

though the suppliers are available locally, the information was not disseminated among

cluster units.


7

Variable Frequency Drive

2 TECHNOLOGY OPTION FOR ENERGY EFFICIENCY IMPROVEMENTS

2.1 Detailed description of technology/equipment selected

2.1.1 Description of technology

More than 50% of the total electrical energy consumption in Indian industries is used by

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

applications such as fans, blowers, compressors, and pumps .With using Variable Speed

Drive technology the advantage gained in both productivity improvements and reduced

energy consumption has been widely documented in the past few years. For example, by

lowering fan speed by 15% to 20%, shaft power can be reduced by as much as 30%. The

main reason variable speed drives are used 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.

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. The variable frequency lessens mechanical

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


8

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 a fans energy use by as

much as 50%. For a 25 horse power 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 varies depending on system variables its important to

calculate benefits for each application before specifying a variable frequency drive saving

In Vellore rice mills, the flow of the fans is controlled by mechanical dampers. If the flow can

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

fan reduces with the cube of the speed.

The mechanical constriction 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 operation. 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. In fact the saving is greater than that might initially

be expected. As the speed of the fan is reduced, the required speed/flow will reduce partially,

while the power required by the fan reduce with cube of speed, for instance, if the speed is

reduced by 10%, the flow reduces by 10%, pressure reduces by 15% and power consumption

reduces by 25%.

2.1.2 Technology/equipment specifications

The detailed engineering drawings and technical specifications of the VFD are furnished in

the Annexure 3.

2.1.3 Justification of the technology selected & its suitability

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

consumes more power. If the flow is controlled by reducing the speed of the fan 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 is reduced, the flow will reduce

partially, while the power required by the fan reduces with the cube of the speed.

S. No Parameter kW Parameter RPM Frequency

1 P1 3.33 N1rpm 2899 50

2 P2 2.46 N2 rpm 2622 45

3 Expected % Saving kW 26.0 RPM Reduced (%) 10

4 Conservative basis 25%


9

2.1.4 Superiority over existing technology/equipment

The benefits of installing the drives are multifold as furnished below:

Unity power factor

Soft Start/Soft Stop

Allows Load Shedding

Reduced Inrush Currents

May Qualify for Utility Rebates

Reduce Utility (Operating) Costs

Minimize Peak Demand Charges

Maximize power distribution system

Eliminates Motor Voltage Imbalance

Controlled Acceleration and Deceleration

Reduction in breakages and motor burn’s

Reduction in breakdowns and smooth start

Improved power factor (0.98 across speed range)

Improved life of the motor and increased production

Reduced Energy Consumption, Process Operates at Most Efficient Point

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

bearings, etc

Eliminates Mechanical Shock and Stress on Power Train (couplings, belts, drive shafts,

gear boxes, etc.)

2.1.5 Availability of the proposed technology/equipment

The details of the VFD suppliers are provided in Annexure 7.

2.1.6 Source of technology/equipment for the project

The technology is locally available in Chennai, which is 120 km from Arni

2.1.7 Service/technology providers

The service providers are available in Chennai

2.1.8 Terms of sales

The terms and conditions of the VFD supply is furnished below:

TERMS & CONDITIONS:

Price : Net & Ex-works Kolkata.

Excise Duty : 10.30% extra as applicable at the time of dispatch.


10

CST : Extra @ 2%, against declaration form C

Delivery : Within one week from the date of issue of P.O.

Payment : 30% advance and balance against delivery

Warranty : 12 months from the date of installation or 15 months from the date

of dispatch whichever is earlier.

2.1.9 Process down time

No process down time is envisaged for installation of VFD, as the VFD is additional

equipment and the installation to the motor will take about only 2 hours to 3 hours.

2.2 Life cycle assessment and risks analysis

The life of the VFD’s is considered at 15 years

2.3 Suitable unit in terms of capacity/production

The VFD proposed is suitable for installing for 7.5 HP motor and is standard as per the

capacity of the motor.


11

3 ECONOMIC BENEFITS OF NEW ENERGY EFFICIENT TECHNOLOGY

3.1 Technical benefits

3.1.1 Fuel savings

No fuel saving is considered

3.1.1 Electricity savings

The power savings due to installation of VFD is estimated at 25% of total power consumption

as well as 4% its own power consumption and the total electricity savings per annum is

estimated at 4800 kWh.

3.1.2 Improvement in product quality

There is no significant impact on product quality.

3.1.3 Increase in production

There is no significant impact on production.

3.1.4 Reduction in raw material consumption

No significant impact on the raw materials consumption.

3.1.5 Reduction in other losses

Not applicable

3.2 Monetary benefits

The monetary benefit due to installation of variable frequency drive for ID/FD fan is estimated

` 0.24 lakh per annum due to reduction in electricity consumption. Details of monetary benefit

are furnished at Annexure 4.

3.3 Social benefits

3.3.1 Improvement in working environment in the plant

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

improve and the maintenance and repairs also reduce.

3.3.2 Improvement in skill set of workers

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

provided by equipment suppliers will improve the technical skills of manpower for better

operation and maintenance; hence the technology implemented will create awareness among

the workforce and improves the skill.


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3.4 Environmental benefits

3.4.1 Reduction in effluent generation

There is no significant impact in effluent generation due to implementation of the project

activity.

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

The major GHG emission reduction source is CO2. The technology will reduce grid electricity

consumption and emission reductions are estimated at 3.9 tonnes of CO2 per annum due to

implementation of the project activity (taken on an Indian subcontinent average of .81kg of

CO2 produced per kWh of electricity consumed).

3.4.3 Reduction in other emissions like SOx

No significant impact on SOx emissions


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4 INSTALLATION OF NEW EQUIPMENT

4.1 Cost of technology/equipment implementation

4.1.1 Cost of technology/equipments

The total cost of the VFD is estimated at ` 0.32 lakh, which includes VFD, Panel, switches and

cabling and all applicable taxes as per the quotation provided at Annexure 8.

4.1.2 Other costs

The erection and commissioning and electrical modifications is estimated at ` 0.10 lakh.

Details of project cost are furnished in Table 4.1 below:

Table 4.1 Details of Project Cost

4.2 Arrangement of funds

4.2.1 Entrepreneur’s contribution

The entrepreneur’s contribution is 25% of total project cost, which works out at ` 0.10 lakhs.

4.2.2 Loan amount

The term loan is 75% of the total project cost, which is ` 0.31 lakhs.

4.2.3 Terms & conditions of loan

The interest rate is considered at 10.0% which is prevailing interest rate of SIDBI for energy

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

4.3 Financial indicators

4.3.1 Cash flow analysis

Considering the above discussed assumptions, the net cash accruals starting with ` 0.16

lakhs in the first year operation and increases to ` 0.83 lakhs at the end of eighth year.

4.3.2 Simple payback period

The total project cost of the proposed technology is ` 0.42 lakhs and monetary savings due to

reduction in fuel consumption is ` 0.24 lakhs and the simple payback period works out to be

S.No. Details Cost (` in lakh)

1 Cost of VFD 0.32

2 Cost towards panel, cabling and commissioning charges 0.10

5 Total Investment 0.42


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1.75 years.

4.3.3 Net Present Value (NPV)

The Net present value of the investment at 10.00% interest rate works out to be ` 0.45 lakh.

4.3.4 Internal rate of return (IRR)

The after tax Internal Rate of Return of the project works out to be 39.05%. 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 26.79%. The average

DSCR is 2.30.

4.4 Sensitivity analysis in realistic, pessimistic and optimistic scenarios

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

behave in different situations like there is an increase in fuel savings or decrease. For the

purpose of sensitive analysis, two scenarios are considered are.

Increase in fuel savings by 5%

Decrease in fuel 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.

Table 4.2 Sensitivity analysis

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 5.

Particulars IRR

%

NPV

`(In lakh)

ROI

%

DSCR

Normal 39.05 0.45 26.79 2.30

5% decrease in fuel savings 36.35 0.41 26.58 2.18

5% increase in fuel savings 41.74 0.50 26.98 2.42


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Annexure

Annexure 1: Energy audit and base line establishment

Sri Lakshmi Modern Rice Mill

The boiler has ID and FD fans and the flow is controlled by mechanical dampers for both the

fans. During our field visit, it is observed that, FD fan damper is open about 50 to 60% and ID

fan at 70%. The power consumption of both ID and FD fans of 7.5 Hp is 3.3 kW and 3.40

respectively.

S. No Parameter kW Parameter RPM Frequency

1 P1 3.33 N1rpm 2899 50

2 P2 2.46 N2 rpm 2622 45

3 Expected % Saving about 25 % RPM Reduced 10


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Cooking with steam

Dryer

Paddy Cleaner

Soaking of Paddy

Paddy

Storage

Huller

Packing

Colour Sorter

Grader

Silky

Whitener

Electricity/ Wood/ Groundnut Husk

Annexure 2 Process flow diagram

Process flow diagram is same even after implementation of proposed technology


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Annexure 3 Drawings for proposed civil works required


18


19


20

Technical specification of VFD which is going to be installing


21

Annexure 4 Detail technical assessment report

S.No. Parameter Unit value

1 Power input measured kWh 3.03

2 No of days Days 330

3 Operating hours Hours 20

4 Present power consumption kWh 19998

5 Power saving (25 %) kWh 5000

6 Power consumption in VFD (4%) kWh 200

7 Actual power saving kWh 4800

8 Cost of Electricity `/kWh 4.90

9 Monetary benefit `(In lakh) 0.24

10 Project cost `(In lakh) 0.42

11 Simple payback period Year 1.75


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Annexure 5 Detailed financial calculations & analysis

Assumption

Name of the Technology VARIABLE FREQUENCY DRIVE

Rated Capacity 7.5 HP

Details Unit Value Basis

Installed Capacity HP 7.5

No of working days Days 330 Feasibility Study

No of operating hours per day Hrs./day 20

Proposed Investment

VFD 7.5 HP ` (in lakh) 0.32

Electrical works and Panel ` (in lakh) 0.10

Total Investment ` (in lakh) 0.42

Financing pattern

Own Funds (Equity) ` (in lakh) 0.10

Loan Funds (Term Loan) ` (in lakh) 0.31

Loan Tenure years 5 Assumed

Moratorium Period Months 6 Assumed

Repayment Period Months 66 Assumed

Interest Rate %age 10.00% SIDBI Lending rate

Estimation of Costs

O & M Costs % on Plant & Equip 4.00 Feasibility Study

Annual Escalation %age 5.00 Feasibility Study

Estimation of Revenue

Electricity saving tons/annum 4800

Fuel cost `/tons 4.9

St. Line Depreciation % 5.28 Income tax 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 0.31 0.02 0.29 0.04

2 0.29 0.05 0.24 0.03

3 0.24 0.05 0.19 0.02

4 0.19 0.06 0.13 0.02

5 0.13 0.08 0.05 0.01

6 0.05 0.05 0.00 0.00

0.31

WDV Depreciation ` (in lakh)

Particulars / years 1 2

Plant and Machinery

Cost 0.42 0.08

Depreciation 0.33 0.07

WDV 0.08 0.02


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Projected Profitability ` (in lakh)

Particulars / Years 1 2 3 4 5 6 7 8

Fuel savings 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24

Total Revenue (A) 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24

Expenses

O & M Expenses 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Total Expenses (B) 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

PBDIT (A)-(B) 0.22 0.22 0.22 0.22 0.22 0.21 0.21 0.21

Interest 0.04 0.03 0.02 0.02 0.01 0.00 - -

PBDT 0.18 0.19 0.20 0.20 0.21 0.21 0.21 0.21

Depreciation 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

PBT 0.16 0.17 0.17 0.18 0.18 0.19 0.19 0.19

Income tax - 0.04 0.07 0.07 0.07 0.07 0.07 0.07

Profit after tax (PAT) 0.16 0.13 0.11 0.11 0.11 0.12 0.12 0.12

Computation of Tax ` (in lakh)


Profit before tax 0.16 0.17 0.17 0.18 0.18 0.19 0.19 0.19

Add: Book depreciation 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Less: WDV depreciation 0.33 0.07 - - - - - -

Taxable profit (0.15) 0.12 0.20 0.20 0.21 0.21 0.21 0.21

Income Tax - 0.04 0.07 0.07 0.07 0.07 0.07 0.07

Projected Balance Sheet ` (in lakh)


Liabilities

Share Capital (D) 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10

Reserves & Surplus (E) 0.16 0.29 0.39 0.50 0.62 0.74 0.86 0.97

Term Loans (F) 0.29 0.24 0.19 0.13 0.05 0.00 0.00 0.00

Total Liabilities (D)+(E)+(F) 0.55 0.63 0.69 0.74 0.77 0.84 0.96 1.07

Assets 1 2 3 4 5 6 7 8

Gross Fixed Assets 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.42

Less Accm. Depreciation 0.02 0.04 0.07 0.09 0.11 0.13 0.15 0.18

Net Fixed Assets 0.39 0.37 0.35 0.33 0.31 0.28 0.26 0.24

Cash & Bank Balance 0.16 0.26 0.34 0.41 0.46 0.55 0.69 0.83

TOTAL ASSETS 0.55 0.63 0.69 0.74 0.77 0.84 0.96 1.07

Net Worth 0.26 0.39 0.50 0.61 0.72 0.84 0.96 1.08

Debt Equity Ratio 2.77 2.31 1.80 1.23 0.46 -0.03 -0.03 -0.03

Projected Cash Flow ` (in lakh)

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

Sources

Share Capital 0.10 - - - - - - - -

Term Loan 0.31

Profit After tax 0.16 0.13 0.11 0.11 0.11 0.12 0.12 0.12

Depreciation 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Total Sources 0.42 0.18 0.15 0.13 0.13 0.14 0.14 0.14 0.14


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Application

Capital Expenditure 0.42

Repayment Of Loan - 0.02 0.05 0.05 0.06 0.08 0.05 - -

Total Application 0.42 0.02 0.05 0.05 0.06 0.08 0.05 - -

Net Surplus - 0.16 0.10 0.08 0.07 0.06 0.09 0.14 0.14

Add: Opening Balance - - 0.16 0.26 0.34 0.41 0.46 0.55 0.69

Closing Balance - 0.16 0.26 0.34 0.41 0.46 0.55 0.69 0.83

IRR

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

Profit after Tax 0.16 0.13 0.11 0.11 0.11 0.12 0.12 0.12

Depreciation 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Interest on Term Loan 0.04 0.03 0.02 0.02 0.01 0.00 - -

Cash outflow (0.42) - - - - - - - -

Net Cash flow (0.42) 0.22 0.18 0.15 0.15 0.15 0.14 0.14 0.14

IRR 39.05

NPV 0.45

Break Even Point ` (in lakh)


Variable Expenses

Oper. & Maintenance Exp (75%) 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02

Sub Total(G) 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02

Fixed Expenses

Oper. & Maintenance Exp (25%) 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.01

Interest on Term Loan 0.04 0.03 0.02 0.02 0.01 0.00 0.00 0.00

Depreciation (H) 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Sub Total (I) 0.06 0.05 0.05 0.04 0.04 0.03 0.03 0.03

Sales (J) 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24

Contribution (K) 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22

Break Even Point (L= G/I) 27.82% 23.77% 21.75% 19.34% 16.69% 13.09% 12.57% 12.75%

Cash Break Even {(I)-(H)} 17.99% 13.91% 11.86% 9.42% 6.73% 3.10% 2.55% 2.68%

Break Even Sales (J)*(L) 0.07 0.06 0.05 0.05 0.04 0.03 0.03 0.03

Return on Investment

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

Net Profit Before Taxes 0.16 0.17 0.17 0.18 0.18 0.19 0.19 0.19 1.44

Net Worth 0.26 0.39 0.50 0.61 0.72 0.84 0.96 1.08 5.36

26.79%


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Debt Service Coverage Ratio ` (in lakh)

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

Cash Inflow

Profit after Tax 0.16 0.13 0.11 0.11 0.11 0.12 0.12 0.12 0.74

Depreciation 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.13

Interest on Term Loan 0.04 0.03 0.02 0.02 0.01 0.00 0.00 0.00 0.11

Total (M) 0.22 0.18 0.15 0.15 0.15 0.14 0.14 0.14 0.98

DEBT

Interest on Term Loan 0.04 0.03 0.02 0.02 0.01 0.00 0.00 0.00 0.11

Repayment of Term Loan 0.02 0.05 0.05 0.06 0.08 0.05 0.00 0.00 0.31

Total (N) 0.06 0.07 0.07 0.08 0.09 0.05 0.00 0.00 0.43

3.65 2.35 2.04 1.95 1.62 2.75 0.00 0.00 2.30

Average DSCR (M/N) 2.30


26

Annexure 6 Details of procurement and implementation schedule

Project Implementation Schedule

Details of procurement and implementation –VFD

S. No Activity Days

1 - 2 2 - 4 4 - 6 6 - 8

1 Collection of quotations and order finalization

2 Placing of order

4 Delivery

5 Commissioning Trial and runs


27

Annexure 7 Details of technology/equipment service providers

Equipment details Source of technology

Service/technology providers

Variable Frequency Drive MOHD.KHALEEL AHMED, Manager Marketing Control Engineering Company M/G : B-28, 1st floor, Prakash nagar, Begumpet Hyderabd CELL: 93910 41544


28

Annexure 7 Quotations or Techno-commercial bids


29


30

## Savings at F40 Savings of 10% is taken between the range claimed by the manufacturer and as the air requirement of the present system.

*Extract of catalog provided by the manufacturer.

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/

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