Prepared for: 
USAID-SARUEnergy Program 
wwwsari-energy.org 
Evaluation Report 
Technological Readiness 
of the Micro Turbines 
0 NexQnT 
OCTOBER 2002 
For 
United States Agency for International Development 
Under 
South Asia Regional Initiative for Energy 
Prepared by 
Mr. Suchet Singh 
NEXANT SARI I Energy 
Acknowledgement 
We are especially indebted to the Micro Turbine manufacturers - Capstone Turbine 
Corporation, Turbec AB, Bowman Power Systems, Elliott Energy Systems and Ingersoll 
Rand for sharing with us information on their products. 
Many useful suggestions, both substantive and editorial, were provided by the manufacturers, 
Nexant inmates and staff at TERI, IREDA and PGCIL. Despite of all this useful assistance, 
the views and opinions expressed herein, and all remaining errors, are solely those of the 
author. 
We are grateful to the USAID for its continuous technical, financial and other forms of 
support, which contributed immensely to the successful completion of the evaluation report. 
Contents 
Section Page 
Executive Summary ................................................................................................................. V 
1 Introduction To Micro Turbine Technology ............................................................. 1-1 
1.1 Introduction ......................................................................................................... 1-1 . . 1.2 Applications ........................................................................................................ 1-2 
1.3 Performance ........................................................................................................ 1-2 
1.4 Cost ..................................................................................................................... 1-3 
1.5 Strengths & Weaknesses ...................................................................................... 1-3 
1.6 Future Developments ....................................................................................... 1-3 
2 Available Technologies .................................................................................................. 2-1 
2.1 Available Technologies And Vendors ................................................................. 2-1 
2.1.1 Bowman Power Systems ................................................................ 2-1 
2.1.2 Capstone Turbine Corporation ......................................................... 2-1 
2.1.3 Elliott Energy Systems , ........................................................................ 2-6 
2.1.4 Ingersoll Rand Energy Systems ........................................................... 2-6 
2.1.5 Turbec Ab ............................................................................................ 2-8 
3 Quantitative Evaluation Of Available Technologies .................................................. 3-1 . . 3.1 Basis Of Quantitative Evaluation ........................................................................ 3-1 
3.1.1 The "DER" Cost Of Electricity Calculation Methodology .................. 3-1 . . 3.1.1.1 Declsion Analysis ................................................................. 3-2 
3.1.1.2 Example ................................................................................ 3-3 
3.1.1.3 The "DER" Cost Of Electricity Quantitative Evaluation ..... 3-4 
3.1.2 The "NPV " Cost Of Electricity Calculation Methodology . 
................. 3-7 ~ 
4 Findings ......................................................................................................................... 4-1 
4.1 Findings Drawn From "DER" Quantitative Analysis ........................................ 4-1 
Findings Drawn From "NPV" Quantitative AnaIysis ............................................. 4-1 
4.2.1 Capstone Turbine Corporation C30 Biogas NPV Method . . Findmgs ............................................................................................. 4-1 
4.2.2 Capstone Turbine Corporation C30 Liquid Fuel NPV Method 
Findings ........................................................................................ 4-2 
4.2.3 Capstone Turbine Corporation C60 High Pressure Natural Gas . . NPV Method Fmdlngs ................................................................. 4-3 
4.2.4 Turbec AB TI00 Natural Gas NPV Method Findings ....................... 4-3 
4.2.5 Ingersoll Rand 701m/70sm Natural Gas NPV Method Findings ....... 4-4 . . 4.3 Findmgs Summary .............................................................................................. 4-6 
0 NtXmT Evaluation Report: Technological Readiness of Micro Turbines i 
Contents 
Section Page 
5 Bibliography ................................................................................................................. 5-1 
Appendix 1 Emission Regulatory Norms ..................................................................... A-1-1 . . . . A.l.l Emmion Guldehnes ............................................................................. A-1-1 
Appendix 2 Fuel Prices And Heat Values .................................................................... A-2-1 
A.2.1 Fuel Prices (Rs/Btu) And Heating Value (BtuILb) .................................... A-2-1 
Appendix 3 Grid Tariffs ................................................................................................ A-3-1 
A.3.1 Tariffs Charged By Power Utilities In India ............................................ A-3-1 
Appendix 4 Regulatory And Other Guidelines ........................................................... A41 
A.4.1 CERC (Central Electricity Regulatory Commission) Tariff . . Guldellnes ................................................................................................... A41 
A.4.1 . 1 Ministry Of Non-Conventional Energy Sources (MNES) Guidelines .... A41 
A.4.1.2 IREDA LendingIFinancing Guidelines (2002-03) ................................. A41 
A.4.1.3 Indian Accounting Standard - 6 ............................................................... A41 
A.4.1.4 Customs And Import Duty Tariff ............................................................. A46 
A.4.1.5 Income Tax .............................................................................................. A47 
A.4.1.6 Foreign Exchange Rate ............................................................................ A47 
Appendix 5 Pre-Tax And Pre-Subsidy Quantitative Results And Findings ............ A-5-1 
A.5.1 Pre-Tax And Pre-Subsidy Quantitative Results And Findings By "DER" 
Method ....................................................................................................... A-5-1 
A.5.2 Pre-Tax And Pre-Subsidy Quantitative Results And Findings By "NPV" 
Method ....................................................................................................... A-5-2 
UNm Evaluation Report: Technological Readiness of Micro Turbines ii 
Figures 
1.A.1 
1.1.2 
4.2.1 
4.2.2 
4.2.3 
4.2.4 
4.2.5 
Tables 
ES . 1 
ES.2 
1.1.1 
1.3.1 
1.4.1 
1.5.1 
2.1.2.1 
2.1.2.2 
2.1.2.3 
2.1.4.1 
2.1.5.1 
3.1.1.1 
3.1.1.3 
3.1.2.1 
3.1.2.2 
3.1.2.3 
3.1.2.4 
3.1.2.5 
4.1.1 
4.2.1 
4.2.2 
A.2.1.1 
Micro Turbine .............................................................. Recuperated Micro Turbine system .................................... Capstone C30 Biogas Payback Graph ............................... Capstone C30 Liquid Fuel Payback Graph ......................... 
Capstone C60 High Pressure Natural Gas Payback Graph ........ Turbec TlOO Natural Gas Payback Graph .......................... Ingersoll Rand 70LhU70SM Natural Gas Payback Graph ........ 
Correlation Ranking by Monte Carlo technique for cost of electricity 
by NPV method .............................................................. Correlation Ranking by Monte Carlo technique for cost of electricity 
by DER method ............................................................. Micro Turbine technology overview ..................................... Micro Turbine efficiency ................................................... Micro Turbine cost .......................................................... Strengths and Weaknesses of Micro Turbine technology ............... Capstone turbine corporation C30 Biogas Micro Turbine system 
specifications ............................................................... Capstone turbine corporation C30 Liquid Fuel Micro Turbine system 
specifications ................................................................. Capstone turbine corporation C60 High Pressure Natural Gas Micro 
Turbine system specifications ........................................ Ingersoll Rand Energy Systems 70LMl70SM Micro Turbine system 
specifications ................................................................. Turbec AB TlOO Micro Turbine system specifications 
................... 
"DER" Method for calculating Cost of Electricity ....................... "DEW Cost of Electricity Quantitative Evaluation ...................... Capstone Turbine Corporation C30 Biogas NPV Method Quantitative 
Analysis ........................................................................ Capstone Turbine Corporation C30 Liquid Fuel NPV Method . . Quanbtatwe Analysis ......................................................... 
Capstone Turbine Corporation C60 High Pressure Natural Gas NPV 
Method Quantitative Analysis .............................................. 
Turbec AB TI 00 Natural Gas NPV Method Quantitative Analysis ... Ingersoll Rand Energy Systems 70 LMl70 SM Natural Gas NPV 
Method Quantitative Analysis .............................................. Results of "DER" method Quantitative Analysis ......................... Detailed quantitative analysis "NF'V" method findings .................. Quantitative Analysis results by "NPV" method ........................... Fuel Prices ...................................................................... 
Page 
1-1 
1-2 
4-2 
4-2 
4-3 
4-3 
4-4 
Page 
viii 
... 
Vlll 
1-1 
1-2 
1-3 
1-3 
2-3 
2-4 
2-5 
2-7 
2-8 
3-2 
3-6 
3-9 
3-11 
3-13 
3-15 
3-17 
4-1 
4-5 
4-6 
A-2- 1 
L~NHU~ Evaluation Repwl: Techndogiil Readiness d Micro Turbines i 
Fuel Price analysis for 5x100 cu.m. Biogas plant using NPV method ... A-2-2 
Grid tariffs ....................................................................... A-3-1 
IREDA Lending Norms ..................................................... A41 
Average Tax Liability for Power Utilities .............................. A47 
Pre-Tax and pre-subsidy "DEW Cost of Electricity quantitative 
Evaluation ..................................................................... A-5-1 
Pre-Tax and pre-subsidy "NPV" Cost of Electricity quantitative 
Evaluation ..................................................................... A-5-2 
67 NWanT Evalualion Report: Techndogical Readiness of Mim Turbines N 
Executive Summary 
Background 
Due to the developing nature of the South Asia Regional InitiativelEnergy countries, 
resources to provide electricity to the entire population of these countries is a daunting task. 
Prohibitive infrastructure development costs have deprived large segments of their 
population from having access to grid-connected electricity. Providing electricity to these 
sections of populations through innovative means especially through the off-grid systems 
assumes greater significance. Establishment of distributed power generation facilities in 
these countries will not only help provide electricity to people living in far flung areas but 
will also help to improve quality and reliability of supply and meet the peak-demand 
through cogeneration. SARI/Energy countries have a potential for utilizing distributed 
power, especially in the light of the slow pace of upcoming power generation projects, high 
T&D costsAosses, inaccessible geographic terrains and other problems that make it difficult 
to meet the energy demand of secluded pockets of population. 
Distributed generation systems employ power systems that may be installed at the load site. 
Typical distributed generation systems may employ a variety of fuel based systems, out of 
which the Micro Turbine systems are one option, given their advantage of compact size, 
light weight, smaller number of moving parts, low emissions and low maintenance costs. 
The power generation capacity of Micro Turbines ranges from 20 kW to 500 kW. The 
efficiencies ranges from 15% in unrecuperated systems to 85% in waste heat recovery 
systems. These systems employ a capital cost typically ranging from $700 - I100 MV and 
an operation and maintenance cost of $0.005 - 0.016 /kW. 
Scope of Work 
The ultimate aim of this study is to evaluate the technological readiness of the Micro 
Turbine technology for widespread introduction in South Asia. The study will focus on 
reviewing the different applications, for which the various Micro Turbine systems could 
be used (e.g. base load, peak shaving), availability of technology and models of such 
systems available in the market today. The study will act as a basis to suggest whether the 
choice of Micro Turbine will be a technologically mature solution in the context of 
SARVEnergy countries. The principal terms of reference for this study were: 
Assessment of current and available technology1 techno-economic developments: 
Generation capacities 
Efficiencies 
= Reliability 
Power qualityand 
Cogeneration capability 
Investigation of cost of power generation with various fuels and application options: 
Capital cost 
~~NWU~T Evaluation R+: Technological Readiness of ~iao Turbines v 
Executive Summary 
= Operational cost 
= Maintenance cost 
= Scheduled downtimesand 
Efficiency and other performance characteristics for different applications, e.g. 
application to different consumer categories - household, commercial, industrial and 
different application options - unrecuperated, recuperated, cogeneration, heat 
recovery etc. 
Approach Involved in the Evaluation Report 
The approach employs a quantitative evaluation of the identified technologies, in terms of 
parameters such as cost of electricity, installed cost per kW, nett present value of project 
savings, nett present value of tariff, debt ratio, interest rate of borrowing, equity 
investment, long-term cumulative savings, internal rate of return, payback, normalized 
savings, normalized tariff etc. 
The data provided by the vendors, regulatory bodies, public sector enterprises - oil & gas 
and power, non government organizations, research and development organizations and 
other such setups. 
This evaluation report does not in any way preach the use of the Micro Turbine 
technology or any of its descendants' technology. This evaluation report only focuses at 
evaluating the applicability of the Micro Turbine technology with respect to the existing 
norms in the SARI countries. 
Major Findings 
On careful quantitative evaluation of the various Micro Turbine systems that are 
commercially available in the market today, and for which vendors were ready to share 
information for evaluative purposes, we have arrived at the decision that the Capstone 
Turbine Corporation's C60 High Pressure Natural Gas (HPNG) Micro Turbine system 
scores the highest on all fronts, closely followed by Capstone Turbine Corporation's C30 
Biogas Micro Turbine system. The Turbec AB TI00 Micro Turbine system also fares 
well on the evaluation but since this system can run only in the grid parallel mode, hence 
its economics would not be favorable. The Capstone Turbine Corporation's C30 Liquid 
Fuel Micro Turbine system has unfavorable economics and is not profitable in the Indian 
scenario. The Ingersoll Rand Energy Systems' 70LMl70SM Micro Turbine system also 
has unfavorable economics and is not suitable in the Indian scenario. 
The Capstone C60 HPNG Micro Turbine system scores second highest on the Qualitative 
Analysis with 2.179 points on a scale of 3 (trailing the leader by only 0.018 points or 1%) 
and scores highest on the Quantitative Analysis by "DEW method, with lowest cost of 
electricity at $0.087 kWh (Rs. 4.26 kwh); whereas, it scores second on the Quantitative 
Analysis by WPV" method, with cost of electricity at $0.0541 kwh (Rs. 2.64 kwh). 
The Capstone C30 Biogas Micro Turbine system scores third highest on the Qualitative 
Analysis with 2.143 points on a scale of 3 (trailing the leader by only 0.054 points or 2%) 
and scores highest on the Quantitative Analysis by 'WPV" method, with lowest cost of 
electricity at $0.046 /kwh (Rs. 2.22 /kwh); whereas, it scores fourth on the Quantitative 
Analysis by ''DEFY method, with cost of electricity at $0.0.1 11fkWh (Rs. 5.41 kwh). 
69 NmnT Evaluation Repoct: Technological Readiness of Mm Turbrnes vi 
Executive Summary 
The cost of electricity figures quoted here are post-tax and post-subsidy figures. For pre-tax 
and pre-subsidy quantitative analysis and results, refer Appendix 5, Table A.5.1 and Table 
A.5.2. 
A sensitivity analysis was carried out to establish the correlationldependence of the cost of 
electricity (both by DER and NPV Methods) on various input parameters. The various 
input parameters taken into account were: interest rate of borrowing, subsidy on interest 
rate of borrowing, grant on equity, tax exemption, average tax for utility operations, basic 
customs duty, debt-equity ratio, return on equity, salvage value for depreciation, additional 
customs duty, average electric utility demand rate (SkWImonth), FOB percentage on 
capital cost, custom wheeling duty, interest rate on equity, fuel price (SIMMBTU), foreign 
exchange rate (1 USD to INR). The sensitivity analysis employed the Monte-Carlo 
simulation technique (with 5,000 simulations on each parameter) to rank, in order of 
correlation, each of the parameters listed above to the cost of electricity for each Micro 
Turbine system being evaluated. Rank 1 implies greater correlation and lower ranks 
signify lesser correlation of that parameter with the cost of electricity. The ranking results 
are as shown in Table ES.1 and ES.2 below: 
0 NMU~T Evaluation Report: Techndcgical Readiness of ~iao ~urbines ni 
Executive Summary 
Table ES.l Correlation Ranking by Monte Carlo technique for cost of electricity by 
NPV method 
Table ES.2 Correlation Ranking by Monte Carlo technique for cost of electricity by 
- (I 
. . Custom Wheeling Duty 
Interest Rate on Equity 
FII~ Price (WMMRTl n 
0 Nmnr Evaluation Repotl: Technological Readiness of Mm Turbines bi 
Average Electric Utility Demand Rate 
($/kW/month) 
Average Tax for Utility Operations 
Tax Exempt 
15 
16 
- 
16 
17 
18 
17 
5 
11 
8 
14 
NIA 
2 
9 
11 
8 
14 
NIA 
1 
10 
12 
10 
11 
8 
14 
NIA 
1 
9 
14 
NIA 
1 
Executive Summary 
Challenges Ahead 
The key challenges to Micro Turbine applicability in the SARI region are listed below: 
Creating awareness amongst the various regulatory, hding and public sector groups 
of the technological readiness and commercial viability of the Micro Turbine 
technology 
Availability/constant supply of Natural Gas as a fuel for the Micro Turbine systems; 
Commercial and technological challenges of setting up biogas plants for feeding Micro 
Turbine systems running on biogas as fuel 
Determining of market potential of the Micro Turbine technology 
Thorough cost-benefit analysis to benchmark the Micro Turbine technology with 
other distributed generation systems available in the market todayand 
Formulate subsidy and regulatory policies to promote distributed generation using 
Micro Turbine equipment in the SARI region 
Key Recommendations 
After conducting a thorough evaluation of the technological readiness of the Micro Turbine 
technology, the findings of this evaluation report strongly recommend to conduct a Phase I1 
study, which will help determine the market potential of the Micro Turbine technology in 
SARI countries. As part of the Phase 11, there needs to be carried out a cost-benefit analysis 
to benchmark the Micro Turbine technology with other distributed generation systems 
available in the market today. Due attention must be given to the ranking established by the 
Monte Carlo simulation technique to help formulate subsidy and regulatory policies to 
promote distributed generation using Micro Turbine equipment. 
0 NWanT Evaluation Report: Technological Readiness d Mim Turbines a 
Section 1 Introduction to Micro Turbine Technology 
1.1 lntroduction 
Micro Turbines are small combustion turbines that produce between 25 kW and 500 kW of 
power. Micro Turbines were derived from turbocharger technologies found in large trucks or 
the turbines in aircraft auxiliary power units (APUs). Most Micro Turbines are single-stage, 
radial flow devices with high rotating speeds of 90,000 to 120,000 revolutions per minute. 
However, a few manufacturers have developed alternative systems with multiple stages 
and/or lower rotation speeds. 
Micro Turbines are nearing commercial status. Capstone, for example, has delivered over 
1700 Micro Turbines to customers (as of October 2001). However, many of the Micro 
Turbine installations are still undergoing field tests or are part of large-scale demonstrations. 
Pholo source: Coplone Turbine Copmiim 
Fig 1.1.1 Micro Turbine 
Commercially available I Yes (Limited) 
Size Range 125-500kW 
I nnw 
Efficiency 
Environmental 
Other features 
Commercial Status 
Micro Turbine generators can be divided in two general classes: 
20-30% 
Low (<9-50 ppm) NO, 
Cogen (50-80°C water) 
Small volume production, commercial prototypes 
Recuperated Micro Turbines, which recover the heat from the exhaust gas to boost the 
temperature of combustion and increase the efficiencyand 
= Umecuperated (or simple cycle) Micro Turbines, which have lower efficiencies, but also 
lower capital costs. 
While some early product introductions have featured umecuperated designs, the bulk of 
developers' efforts are focused on recuperated systems. The recuperator recovers heat from 
the exhaust gas in order to boost the temperature of the air stream supplied to the combustor. 
0 Nmam Evaluation Report: Technological Readiness of Mim Turbines 1-1 
Seciion 1 lnlrcduclion fo Miio Tukine Techndogy 
Further exhaust heat recovery can be used in a cogeneration configuration. The figure below 
illustrates a recuperated Micro Turbine system. 
Fig 1.1.2 Recuperated Micro Turbine system 
1.2 Applications 
Micro Turbines can be used for stand-by power, power quality and reliability, peak shaving, 
and cogeneration applications. In addition, because Micro Turbines are being developed to 
utilize a variety of fuels, they are being used for resource recovery and biogas applications. 
Micro Turbines produce between 25 and 500kW of power and are well-suited for small 
commercial building establishments such as: restaurants, hotels/motels, small offices, retail 
stores, amongst many others. 
The development of the Micro Turbine technology for transportation application is also in 
progress. Automotive companies are interested in Micro Turbines to provide a lightwei&t 
and efficient fossil-fuelbased energy source for hybrid electric vehicles, especially buses. 
1.3 Performance 
Commercial Micro Turbines used for power generation range in size from about 25 kW to 
500 kW. They produce both heat and electricity on a relatively small scale. The fuel-energy￾to-electrical-conversion efficiencies are in the range of 20 to 30%. These efficiencies are 
attained when using a recuperator (a device that captures waste heat to improve the efficiency 
of the compressor stage). Cogeneration is an option in many cases as a Micro Turbine is 
Unrecuperated 
Recuperated 
With Heat Recovery 
0 NmnT Evaluation Repoct: Techndcgical Readiness d Miao Turbines 1-2 
15% 
20-30% 
Up to 85% 
Section 1 lnlrcduction to Miao Turbine Tech￾located at the point-of-power utilization. The combined thermal electrical efficiency of Micro 
Turbines in such cogeneration applications can reach as high as 85% depending on the heat 
process requirements. Unrecuperated Micro Turbines have lower efficiencies at around 15%. 
1.4 Cost 
Tahle 1.4.1 
Micro Turbine capital costs range from $700 - $I,lOO/kW. These costs include all hardware, 
associated manuals, software, and initial training. Adding heat recovery increases the cost by 
$75 - $350ikW. Installation costs vary significantly by location but generally add 30-50% to 
the total installed cost. 
Capital cost 
O&M cost 
Maintenance interval 
Micro Turbine manufacturers are targeting a hture cost below $650/kW. This appears to be 
feasible if the market expands and sales volumes increase. 
-- 
$70041 100kW 
$0.005-0.016kW 
5000-8000 hrs 
With fewer moving parts, Micro Turbine vendors hope the units can provide higher 
reliability than conventional reciprocating generating technologies. Manufacturers expect that 
initial units will require more unexpected visits, but as the products mature, a once-a-year 
maintenance schedule should suffice. Most manufacturers are targeting maintenance intervals 
of 5,000-8,000 hours. 
Maintenance costs for Micro Turbine units are still based on forecasts with minimal real-life 
situations. Estimates range from $0.005-$0.016 per kwh, which would be comparable to that 
for small reciprocating engine systems. 
1.5 Strengths & Weaknesses 
Micro Turbines offer many potential advantages for distributed power generation. Selected 
strengths and weaknesses of Micro Turbine technology are listed in the following table: 
Table 1.5.1 
Compact size I Loss of power output and efficiency with higher 
1.6 Future Developments 
Light-weight 
Good efficiencies in cogeneration 
Low emissions 
Can utilize waste fuels 
Low maintenance intervals 
Extensive field test data collected from units currently in use at commercial and industrial 
facilities will provide manufacturers with the ability to improve the Micro Turbine design, 
ambient temperature and elevation 
63 NmnT Evaluafion Report: Technological Readiness of Mim Turbines 13 
Sedion 1 lntrodudion lo Miao Turbine Teaalogy 
lowering costs and increasing performance, in order to produce a competitive distributed 
generation product. Utilities, government agencies, and other organizations are involved in 
collaborative research and field testing (see Research Initiatives Section). 
Development is ongoing in a variety of areas: 
Heat recoverylcogeneration 
Fuel flexibility 
Vehicles and 
Hybrid systems (e.g., fuel cellMicro Turbine, flywheellMicro Turbine). 
0 NWQIIT Evaluation Reporl: Technological Readiness of Miio Turtines 14 
Section 2 Available Technoloaies 
2.1 Available Technologies- And Vendors 
There are more than twenty companies worldwide that are involved in the development and 
commercialization of Micro Turbines for distributed generation applications. Below are 
details of five of the leading Micro Turbine manufacturers: 
2.1.1 Bowman Power Systems 
Bowman Power Systems is a U.K. based company that develops 80-kW Micro Turbine 
power generation systems for distributed generation and mobile power applications. Bowman 
Power Systems were unable to provide the specifications of the Micro Turbine system for 
the purpose of this evaluation report. 
2.1.2 Capstone Turbine Corporation 
Capstone Turbine Corporation, based in Chatsworth, California, is a leader in the 
commercialization of low-emission, high-reliability Micro Turbine power generators. The 
company offers 30-kW and 60-kW systems for distributed generation applications. Details of 
the various product offering are given below: 
a) The Capstone C60 high pressure natural gas Micro Turbine system is a compact, 
ultra-low-emission generator providing up to 60 kW of power and 150 kW of heat for 
combined heat and power applications. Solid-state patented power electronics permit 
0-60 kW load following, safe zero-hardware ~irect2~rid~ interconnection, advanced 
communications and 2-to-20-unit stand-alone. Multi ~ackine " with no external 
hardware except computer cables. Automatic gridstand-alone switching, 100-unit 
powerserverm nett work in^, -. remote monitoringldispatch - and other functionalities are 
available capstone options. The system incorporates a compressor, recuperator, 
combustor, turbine and permanent magnett generator. The rotating components are 
mounted on a single shaft, supported by patented air bearings that spin at up to 96,000 
rpm. This is the only moving part of the Micro Turbine. The generator is cooled by 
inlet air flow. The system uses no oil, no lubricants, no coolants and has no pumps, 
gearbox or other mechanical sub systems. The system achieves ultra-low NO, 
performance with no post-combustion catalysts or other exhaust clean up devices. 
System output is variable frequency (50160 Hz) 3-phase ac powerand 
b) The Capstone C30 low pressure natural gas Micro Turbine system is a compact, 
ultra-low-emission generator providing up to 30 kW of power and 85 kW of heat for 
combined heat and power applications. Solid-state patented power electronics permit 
0-30 kW load following, safe zero-hardware ~irect2~rid- interconnection, advanced 
communications and 2-to-20-unit stand-alone. Multi packing with no external 
hardware except computer cables. Automatic gridstand-alone switching, 100-unit 
powerserverm nettworking, remote monitoringldispatch and other functionalities are 
available Capstone options. The system incorporates a compressor, recuperator, 
67 NewfK Evaluation Re@: Techndogical Readiness of Mim Turbmes 2-1 
Section 2 AvAW Techndogjes 
combustor, turbine and permanent magnett generator. The rotating components are 
mounted on a single shaft, supported by air bearings that spin at up to 96,000 rpm. This is 
the only moving part of the Micro Turbine. The generator is cooled by inlet air flow. The 
system uses no oil, no lubricants, no coolants and has no pumps, gearbox or other 
mechanical sub systems. The system achieves ultra-low NO, performance with no post￾combustion catalysts or other exhaust clean up devices. System output is variable 
frequency (50160 Hz) 3-phase AC power. The capstone C30 Micro Turbine system is 
available in the following variants: 
= The Capstone C30 Low Pressure Natural Gas 
= The Capstone C30 High Pressure Gaseous Fuels 
= The Capstone C30 Biogasand 
The Capstone C30 Liquid Fuels 
Three main products of the Capstone Turbine Corporation has been taken up for 
evaluation as part of this report. The detailed specifications of the same are listed below: 
0 Neuanr Evaluation Reporl. Techndagml Readiness of MiiTurbines 2-2 
6 
Section 2 Avzilabk Techndoqies 
General identification 
Turbine Type 
Model number and Year 
Power A~~lication (standbv. nid ~arallel. combined heat and 
Micro Turbine 
Model 330 ( 2002 ) 
. . . Grid Connect 
power, peak shaving, reliability) 
Installation load type 
Physical Dimensions 
Calibration Details 
Mean sea level 
Relative humidity 
Temperature 
Micro Turbine Cost data j 1 A"--- (2 - -- 
-. 
Meters Width 
Height 
Performance data 
Nett electrical efficiency 
Nett electrical output 
Nett total efficiency 
Nett thermal output 
Heat Rate (LHV) of turbine (BTUkWhr) 
Industrial 
0.762 
1.943 
Meters 
"C 
0 
60% 
15 
% 
kW 
% 
kW 
BTUkWhr 
-. 
Annual maintenance cost / $/kWhr 
25 
30 
- 
13.100 
- 
~p~tal cost I I 5 5U,lb3 
 imp",^ "l 
Scheduled annual downtime / HRS 2 
Mmor overhaul after I HRS 8,000 
Major overhaul after HRS 40,000 
Emission data 
Volumetric exhaust gas at 100% Load 
r, uty (for FOB) - 
- 
( 67 
Noise level dtr~ @j 10m 65 
Electrical data 
S 10,460 
Installatic.. ---. ,-. . .. . . - --,- -- 
I S 0.010 
Voltage output 415 VAC @ 
m ma (Ciuil+Merh+FI~centhemI 1 1 S 45 711h 
, - .. 
Frequency output Hz 50 
Mains frequency variation % < l 
Mains voltage variation YO < 1 
0 NeWM Evalu* Re@: Techndogicai Readiness d Mii Turbines 23 
I 
Section 2 Available Techndogjes 
Table 2.1.2.2 
0 Nmanr Evaluatioo Repl: Technological Readiness d Miio Turbines 2-4 
Section 2 Available Techmbgies 
0 NWU~ Evaluation Report: Teehndogical Readiness d ~iao Turbines 25 
2.1.3 Elliott Energy Systems 
~liiott Energy Systems, located in Stuart, Florida, develops and manufactures 80-kW Micro 
Turbines now, with plans for larger units later. Elliott Energy Systems were unable to provide 
the specifications of the Micro Turbine system for the purpose of this evaluation report. 
2.1.4 Ingersoll Rand Energy Systems 
Ingersoll Rand Energy Systems of Portsmouth, New Hampshire develops the ~owerworks~' 
line of Micro Turbine generators with output of 70-kW now with plans for larger units later. 
The detailed specifications of the Ingersoll Rand product are listed below: 
Ulimanr Evaluation Repoct: Technological Readiness d Mim Turtines 2-6 
10 
Section 2 Auailable Tdux@k 
Turbec AB is a Swedish company jointly owned by ABB and Volvo Aero. The company 
offers a 100-kW Micro Turbine power generator for commercial distributed generation 
applications. 
Table 2.1.4.1 .- - - . .-i...-.-i-.. - : : . . , : . , ,,I..,X ;.- -Xi-..' ..,---.-L,......, "r( ze.,,w,..... , 
..j- 
. ~~;~::.~~-~~~~.lnger~o~l~~h~Erierpy System's 7Q:L;f3y.~~tS.&~~<~i@cPrfij$~ii~~fo@~~;~i~jiii, . -:.: . . ~. -: Tx 
The detailed specifications of the turbine Model no. TI00 is listed below: 
NWUnT Evaluation Repxi: Techndcgical Readiness of Mim Turbines 2-7 
. . ~,.~~$~~~~~ :,..,::; 
Micro Turbine 
70 LMl70 SM - 2001 
All 
IndustriaV Commercial 
1.080 
2.220 
. . ,, . .l.,_&_ _. . - . . , .~ ??. :,>,., . - . :.,: ~ ..> , .:., ~. . ,,, ,:!,: :r:"iz;i:j.:,- ;-p:Sjie&i&tlon: - . ., : ,: . ,: !?.::*,.-Z3 , . s:~~,:,. 
General identification 
Turbine Type 
Model number and Year 
Power Application (standby, grid parallel, combined heat and 
power, peak shaving, reliability) 
Installation load type 
Physical Dimensions 
4cS& :.h7-.,z (@~i@=$!!::j$:. 
meters Width 
Height 
Weight 
Calibration Details 
Mean sea level 
Relative humidity 
Temperature 
Performance data 
Nett electrical efficiency 
Nett electrical output 
Nett total efficiency 
Nett thermal output 
Length 1.810 
Kg 1,860 
metres 
"C 
% 
kW 
Heat Rate (LHV) of turbine (BTUkWhr) 1 BTUkWhr 14,290 
Micro Turbine Cost data 1 
Capital Cost S 66,650 
Import Duty (for FOB) ! I S 43,189 
Installation cost (Civil+Mech+ElectOthers) .! $ 4,000 
A~ual maintenance cost I $k% S 0.013 
Scheduled amual downtime HRS 8 
0 
60% 
15 
28.5 
70 
% 70 
kW 110 
80,000 
80,000 
5 
Minor overhaul after 
Major overhaul after 
Emission data 
Volumetric exhaust gas 
NOx 
HRS 
HRS 
at 100% Load 
ppdv 
CO 
Noise level 
Electrical data 
Voltage output 
Frequency output 
Mains frequency variation 
Mains voltage variation 
ppdv I 5 
dBA@lOm I 60 
415 VAC@ 3 ph 
Hz 50 
% < l 
YO <I 
2.1.5 Turbec AB 
Section 2 Available Tedtixkqiies 
Table 2.1.5.1 
Relahve humldlty 60% 
Temperature ' "C 15 
0 N~U~T Evaluation Repotl: Technological Readiness of Miio Turbines 2-8 
Performance data 
Nett electrical efficiency % 28 5 
Nett elecmcal output kW 100 
Nett total efic~ency % 76.5 
Nett thermal output kW 167.0 
Heat Rate (LHV) of turbzne (BTUikWhr) I BTUikWhr 1 1,940 
Micro Turbine Cost data j 
Capltal Cost S 78,232 
Import Duty (for FOB) I S 50,694 
Installahon cost (C~v~l+Mech+Elec+Others) 1 S 29,337 
Amual mamtenance cost UkWhr s 0.011 
Scheduled annual downhme 1 HRS 24 
Mmor overhaul atter / HRS 6,000 
Major overhaul after 
Emission data 
Volumemc exhaust gas 
NOx 
HRS 30,000 
at 100% Load 
ppdv 15 
CO I ppmlv 15 
No~se level dBA @ lh 70 
Electrical data 
Voltage output 415VAC@3pb 
Frequency output Hz 50 
Mams frequency vanahon Yo < 1 
Malns voltage vanahon I % C 1 
Section 3 Quantitative Evaluation Of Available Technologies 
3.1 Basis of Quantitative Evaluation 
The quantitative evaluation of the Micro Turbine systems, for which the detailed 
specifications have been obtained from the vendors (listed in Section 3.1 of this report), has 
been conducted based on the following two methodologies: 
= Cost of Electricity by Department of Energy, California (as stated on their website on 
"Distributed Energy Resource Guide (DER guide)" and 
Cost of Electricity based on Nett Present Value (NPV) analysis of tariff and savings 
on electricity cost as compared to electricity cost from grid connection, also taking 
into account the regulatory, tax, financing and aid guidelines in India. 
3.1.1 The "DER" Cost of Electricity Calculation Methodology 
In order to determine the cost-effectiveness of DER technologies, the estimated cost of 
electricity from a DER system may be compared with the local retail price of electricity from 
the electric utility or the estimated cost of electricity of another DER technology. For 
additional accuracy, it is recommended that the cost of electricity be calculated for a specific 
manufacturer's DER system, as well as for the location and application of the DER system. 
The cost of electricity (COE) is comprised of three components: capital and installation 
(C&I), operation and maintenance (O&M), and fuel (F). The total cost of electricity from a 
DER device is the sum of these three components, expressed in dollars (or cents) per 
kilowatt-hour: 
Total COE ($/kwh) = C& I + O&M+F 
The breakdown of the three components will vary with the size and type of equipment. 
However, the figure below provides an example of the breakdown for a 4.5 MW natural gas 
combustion turbine. As illustrated, the fuel component is typically the largest portion of the 
cost of electricity in a system that utilizes fuel. 
The capital cost component varies based on the capital and installation costs, as well as on the 
fixed charge rate and capacity factor of the DER system. These factors are described in more 
detail in the Decision Analysis section. The cost of electricity decreases as the amortization 
period of the DER device increases (e.g., as the fxed charge rate decreases). DER systems 
with high capacity factors (i.e., base load units) also have a lower cost of electricity. 
The operation and maintenance cost component takes into account both the fixed and variable 
O&M costs of the DER technology. Mature technologies, like internal combustion engines, 
tend to have lower O&M costs due to standard product designs and established nettworks for 
parts and maintenance 
UN~U~T Evaluation Report: Techndcgical Readiness of ~iao Turbines 51 
Mion 3 Quantitative Evaluabon of Available Technologies 
The fuel cost component is simply the cost of the fuel required to generate electricity with the 
DER device. The fuel cost component varies with the efficiency (or heat rate) of the 
equipment and with the cost of fuel. Therefore, a specific DER technology may have a lower 
cost of electricity in some geographic locations than in others due to fluctuations in the cost 
of natural gas, propane, or diesel. Some DER equipment, such as photovoltaic systems and 
wind turbines, will not have a fuel cost as no fuel is required. 
3.1.1.1 Decision Analysis 
A wide variety of criteria play a part in the economics of distributed energy resources. The 
following table lists some of the questions that may be asked in the decision-making process 
for the implementation of DER technologies. The cost of electricity variables in the right￾hand column may be defined by answering the questions on the left. The cost of electricity 
generated in a DER device may then be calculated based on the equations in the previous 
section. The cost-effectiveness of the DER system can then be determined by comparing the 
DER cost of electricity to the electricity price from the grid. An example is provided below 
for calculating the cost of electricity. 
Table 3.1.1.1 
Average electric load? 
Ideal power rating of the DER system? 
Heat rate of the DER system? 
Reliability of the DER system? 
Capital cost of the DER system? 
Installation cost ofthe DER system? 
O&M cost of the DER system? 
DECISION ANALYSIS QUESTIONS 
Technology 
PEMFC, SOFC, ICE, CT, PV, Wind? 
COST OF ELECTRICITY VARIABLES 
Fixed Charge Rate (FCR) 
Total Installed Cost (TIC) 
Operation & Maintenance Cost (O&M) 
Average Annual Nett Plant Heat Rate (NPHR) 
Method of payment for the DER system? 
DER system life? 
Fuel 
Application 
Natural Gas Price (NGP) 
Natural gas, propane, or diesel? Diesel Oil Price (DOP) 
Prooane Price RP) 
Residential, commercial, or industrial? 
Base load, backup, or peak shaving? 
Grid independent or grid parallel? 
The cost of electricity calculated based on the above criteria may be affected by additional 
economic factors, such as: 
Utility stand-by charge 
Nett metering 
Incentives or rebates for DER 
Energy efficiency credits for DER 
Capacity Factor (CF) 
~3 Nmnr Evaluation Repcii: Technological Readiness d Micro Turbines 3-2 
Section 3 Quantitative Evaluah of Available Technologs 
In addition to economic factors, there are a number of intangible issues that may have a role 
in the DER decision analysis: 
Prestigelstatus of early adopters 
Global warming concerns 
Emissions concerns 
Greedrenewable power advocacy 
Strong feelings for or against utility 
Desire to have independence from the grid 
Safetv concerns 
Fuel price instability/volatilityand 
Special sitting and permitting requirements 
3.1.1.2 Example 
The following example utilizes a simplistic method for determining the cost of electricity. 
The cost of electricity (COE) is comprised of three components: capital and installation 
(C&I), operation and maintenance (O&M), and fuel (F) per the following equation. 
Total COE ($/kwh) = C&I + O&M + F 
As an example, a small convenience store may utilize a significant amount of electricity 
during peak daytime hours. The installation of a DER system in a base load configuration 
may be a money-saving alternative for the business owner. For this example, the following 
assumptions are made: 
A natural gas-fueled, 30 kW Micro Turbine is the chosen DER technology 
The price of natural gas is $6/MMBtu 
The Micro Turbine will operate 19.2 hours per day, 365 days per year 
The Micro Turbine has a five-year life 
The electrical efficiency of the Micro Turbine (based on the lower heating value of 
the fuel) is 27% 
The total installed cost (TIC) of the Micro Turbine system is $1,000 per kW or 
$30,000. The interest rate is 0% 
The total operation and maintenance (O&M) cost of the Micro Turbine system is 0.5 
cents per kW. (The total O&M cost is the sum of fixed O&M and variable O&M 
costs.) 
The price of electricity purchased from the utility is 12 cents per kWand 
The waste heat WILL NOT be utilized for cogeneration 
Based on the above information, we can determine the total cost of electricity generated by 
the Micro Turbine : 
= The Self-Generation Incentive Program provides a credit of $1.00 per watt, up to 30% 
of the project cost. In this case, the maximum credit is $9,000 (30% of S30,000), 
reducing the total installed cost (TIC) to $700 per kW or $21,000. 
The capacity factor (CF) is equal to the number of hours per year that the DER system 
operates divided by the total number of hours per year (8,760). 
0 NRanT Evaluation Report: Tednological Readiness of Mii Turbines X3 
Section 3 Quantitative Evaluah of Avabble Tech￾19.2 hours per day x 365 days per year CF= = 0.80 
8,760 hours per year 
= The fixed charge rate (FCR) is equal to the annual amortized installed cost (Slyr) 
divided by the total installed cost ($). In this example, the cost of money was not 
included. Therefore, the amortized installed cost is simply one-fifth (or one over the 
amortization period) of the total installed cost. 
$700 per kW x 30 5 years 
FCR - 
$700 per kW x 30 kW 
The heat rate (HR) of the DER system is based on the higher heating value of the hel. 
It is assumed that the lower heating value is equal to 0.904 times the higher heating 
value. 
The total cost of electricity (COE) is equal to sum of the components for capital and 
installation (C&I), operation and maintenance (O&M), and fuel (F). 
cstr (sikm) = TIC: per k iiBx FCR - $700~ 0.20 = $0.020 
CF x 8,760 harm per year 0.80 x 8,760 
COE ($/ km) = C & I + 0 & M + F = $0.020 + $0.005 + $0.084 = $0.109 
At a price of 10.9 cents per kilowatt-hour, the electricity generated from the Micro Turbine 
in this example is less expensive than the 12 cents per kilowatt-hour from the grid. Therefore, 
in this case, the installation of the Micro Turbine would be cost-effective for the business 
owner. 
3.1.1.3 The "DER" Cost of Electricity Quantitative Evaluation 
Based on the "DER" cost of electricity calculation methodology, the cost of electricity was 
calculated for each of the Micro Turbine systems being considered for evaluation. The 
various parameters listed in the "DER" methodology were calculated or else obtained, in 
some cases, from the specific companieshodies (e.g., price of fuel in SIBTU units, see 
67 NNQnT Evaluation Report: Techndogical Readiness of Miao Turbines 34 
Section 3 Quantilative Evaluabbn d Avadable Technologies 
Appendix 2, Table 2.1.1). After calculating the Capital and Installation cost, Operation and 
Maintenance cost, and Fuel cost, the total cost of electricity for that particular turbine was 
arrived at, the results of which are compiled in Table 3.1.1.3 below: 
69 Nmm Evaluation Repoct: Techndcgid Readiness d Miuo Turbines 3-5 
Section 3 Quantitative Evaluation of Available Technologies 
Evaluallon Reporl: Technological Readiness of Micro Turbines 
3.1.2 The "NPV" Cost of Electricity Calculation Methodology 
In order to determine the cost of electricity from distributed generation systems, the 
difference between the Nett Present Value (NPV) of the tariff for such systems and the NPV 
of savings, which may be gained as against the grid tariff, must be computed. This will 
provide us with a fair picture of the cost of electricity that may be amved at, given the Indian 
investment, regulatory, subsidies, taxationlduties and technological scenario. 
The cost of electricity calculated by the NPV method takes into account the following 
parameters in the context of the local Indian regulatory environment: 
Debt Equity Ratio guidelines (refer appendix 4, section A.4.1 and A.4.2) 
Return on Equity guidelines (refer appendix 4, section A.4.1) 
Current BorrowingILending Rates (refer appendix 4, section A.4.3) 
Subsidies On Interest Rates (refer appendix 4, section A.4.3) 
SubsidiesIGrant On Equity Investment 
Import Duty Tariffs (refer appendix 4, section A.4.5) 
Freight-On-Board Charges (refer appendix 4, section A.4.5) 
Depreciation/Salvage And Other Accounting Guidelines (refer appendix 4, section 
A.4.1 and A.4.1, Table A.4.1.3, section A.4.4) 
Mode Value Of Electric Energy Rates (refer Appendix 3, Table A.3.1 .l) 
Mode Value Of Electric Energy Demand Rates (refer Appendix 3, Table A.3.I .I) 
Current Fuel Prices (refer Appendix 2, Table A.2.1 .])and 
Average Income Tax at rates paid by power utilities across India (refer Appendix 4, 
Table A.4.1.6) 
Based on the above parameters, the NPV method calculates the Cash Inflows and the Cash 
Outflows and subsequently the Nett Cash Flow starting from the year in which the investment 
is made to the end of the tenth year from the investment date. The cash inflows are: 
= Avoided Site Electric Energy Costs 
Avoided Site Electric Demand Chargeand 
Depreciation 
And the Cash Outflows are: 
Fuel Cost 
= Maintenance Cost 
Interest on loan 
= Repayment of loan 
= Equity investmentand 
Income Tax 
From the NPV method, we arrive at the Nett Present Value of savings in cost of electricity 
(S1) as compared to the avoided cost of electricity from the grid. Using the following 
formula, we arrive at the annual normalized savings in cost of electricity (Al): 
S, xix(l+i)"-' 
A, = 
(l+i)" - 1 
67 NMaf?r Evaluation Report Tednological Readiness of Mi Turbines 57 
Sedion 3 Quanl!lative Evalua6on d Available Techndqks 
Similarly, the NPV method calculates the tariff inflows from the consumer, based on the 
following parameters: 
Return on Equity 
Interest Loan 
= Depreciation 
Operation costs (Fuel cost)and 
= Maintenance Cost 
We arrive at the NPV of tariff from consumers (S2), from the total annual tariff figures 
obtained from the parameters listed above. Using the following formula, we arrive at the 
annual normalized tariff (A2): 
The annual normalized savings in cost of electricity (Al) and the annual normalized tariff 
(A2) are averaged over the total annual units of electricity produced to give the average 
normalized savings in cost of electricity (A],,) and the average normalized tariff (AkJand the 
difference between Al,, and Ah gives the average normalized cost of electricity per unit of 
electricity produced (A,& which is inclusive of taxes, since income tax was taken into 
account in the nett cash flow calculation. In other words, 
kwh generated per annurn 
The NPV method helps us amve at the following output parameters: 
Average normalized savings in cost of electricity (A,,,) . 
Average normalized tariff (Az,,) 
Average normalized cost of electricity per unit of electricity produced (A,), inclusive 
of tax 
Internal Rate of Return (IRR %) 
Payback period on investment (in years) 
Cumulative savings in cost of electricity in 5 years 
Cumulative savings in cost of electricity in 10 yearsand 
Ratio of NPV of savings in cost of electricity to equity invested 
The NPV analysis was camed out for each of the Micro Turbine systems being evaluated as 
part of this study. The details of the analyses are compiled in the following Table 3.1.2.1, 
3.1.2.2, 3.1.2.3, 3.1.2.4, 3.1.2.5 and the detailed , payback analysis graphs for each of the 
Micro Turbine systems being evaluated are shown in Fig 3.1.2.1, 3.1.2.2, 3.1.2.3, 3.1.2.4, 
3.1.2.5 
@ NMUnT Evaluation Repal: Technological Readiness of Miao Turbines 38 
29 
Section 3 Quantitative Evaluation of Available Technologies 
. - 
lnstallcd cost of turbinc 
lnstallcd cost of biogas 
plant 
Total Eauivmcnt Installed . . Cost 
lnstallcd Cost pcr kWc 
Maintcnancc Cost 
Avcragc Elcctric Utility 
Encrgy Ratc 
Avcragc Elcctric Utility 
Demand Ratc 
Avcngc Gas Ratc 
Nominal kWc Rating 
Hours of Operation 
Heat Ratc 
Year - ~~~~ " 
CAS_H~FLOWANALYSIS~ 
Cash Inflow 
Avoided Sitc Elcctric 
Encrgy Costs -. -- 
Avo~dcd Site Electric I 
I)cn~imd Cllargc 
L>cprcci;~tion on turbinc 
Dcprccii~tion on biogas 
plant 
Fuel 
M;~intcnan&~osts ~~-- .....--u-.-.. 
Intcrcst on loan - .. 
Rcpymcnt , , , of loan 
)cr 
rWh 
)cr 
rWh 
)cr kW pcr Month 
)cr MM BTU 
HHV) 
:w 
lours pcr ycar 
3TU pcr kwh 
- - - - 
Evaluation Report Technological Readiness of Micro Turbines 

Secllon 3 Quant~tatlve Evaluation of Available Technolog~es 
Table 3.1.2.2 
CapstoneTurbine Corporatiout?30-Liquid Fuel NPV Method Quantitative Analysis 
... Innut$ 1- - -- 
Equipment Installed 
Cost 
installed Cost pcr kWc 
Maintcnancc Cost 
Avcragc Elcctric 
Utility Encrgy Ratc 
Avcragc Elcctric 
Utility Dcmand Ratc 
Avcragc Gas Ratc 
Nominal kWc Rating 
Hours of Opcrdtion 
Hcat Ratc 
Year I 0 
CASH FLOW ANALYSIS 
Cash Inflow $53,276 
Avo~dctl Sitc Elcctric 
Encrgy Costs i 
Avoitlcd Sitc Elcctric Dcmand 
Chargc 
Depreciation 
Cash Outflow 
Fucl 
Maintcnancc Costs 
lntcrcat on loun 
Rcpsynicnt of loan 
Equity it~vcstmc~it 
Nctt cilsli flow 
Tilx at 24% 
Tax i~t utility rtltcs 
Nett cnsh flow after 
tax 
pcr kwh 
pcr kwh 
per kW pct Month 
pcr MM BTU (HHV) 
kW 
hours pcr year 
BTU pcr kwh (HHV) 
2 
as pcr AS-( 
$18,330 
cciation 
$18,330 
$1,141 
$4,795 
($20,480) 
($2.030) 
($1.305) 
($3.720) 
($ 12.270) 
$0 
($12,270) 
10 ycnr cu~ 
I 7 
I 
htivc savings ($128,379) 
ntc of dcprt 
$18,330 
Evaluallon Report: Technological Readiness of Micro Turbines 3-11 
- 
Section 3 Quantitative Evaluation of Available Technolo ies 
NPV of project savings $(8 1,425) 
Normalized project ($12,785) 
savines - 
Per unit cost savings 
based on normalized 
233,925 
Normalized tariff $36 779 
Per unit tarifTfrom pcr kwh 
consumers 
Savings pcr kwh 
lntcrcst Rate 
. . . .~ . . ... ~ -~~ . ~ 
Evaluation Report: Technological Readiness of Micro Turbines 
Section 3 Quantitative Evaluation of Available Technologies 
-. Table 3.1.2.3 . . . . . - -- . . . . f Capstone.-Turbiue ~urpuratiunC60:~igh-~res&re~~~al Gas NPV Method'Quantitati<e An*lysis 
...,,... 
Inn.... ' 
Equipment lnstallcd Cost 
lnstallcd Cost pcr kWc 
Maintcnancc Cost 
Avcragc Elcctric Utility Encrgy 
Ratc 
pcr kwh 
pcr kwh 
per kW per Month 
per MM BTU (HHV) 
kW 
hours pcr yc 
BTU pcr kM 
I I 
Avcragc Elcctric Utility Dcmand 
Ratc 
Avcragc Gas Ratc 
Nominal kWc Rating 
Hours of Opcration 
Hcat Ratc 
Year 
ar 
Ih (HHV) 
2 
10% 
$37,923 
$2,361 
$8,389 
($1 3.835) 
($4,200) 
($5.546) 
($6,525) 
$1 8,568 
($4.486) 
$14,081 
3 
as pcr AS 
$37,923 
$2,361 
$8,389 .- 
:$13,835) 
($4,200) 
($4,804) 
($0,525) 
$19,220 
($4.644) 
$14.576 
. 
CASH FLOW ANALYSIS 
Cash Inflow 
Avoidcd Sitc Electric $37,923 
Avoidcd Sitc Elcctric 
Dcprcciation 
Cash Outflow 
Fucl 
Maintcaencc Costs 
Inlcrcst on loan 
Rcpaymcnl of loan 
Equity invcstmcnt 
Nclt cash flow 
'Tax at 24% 
7'. dx '11 . ulllity ralca 
Nett cr~sh flow r~fter tax 
c savings $158.135 NPV of proicct snvincs . .. .. .~~.- ~ 
Norn~;dizctl projccl swings $8.367 
I'cr unil cost snvinps bi~sctl on pcr k Wh 
norn~i~lizctl titrill' 
Evalualion Report: Technologlcal Readiness of Micro Turbines 
Section 3 Quantitative Evaluation of Available Technoloqies 
Normalizcd tariff %?I 087 
Pcr unit tariff from consumcrs pcrkWh 
Savings pcr kwh 
Cost of Capital 
lntcrcst Rate 
- 
Evaluallon Report Technological Readiness of Micro Turbines 
Section 3 Quantitative Evaluation of Available Technologies 
Table 3.1.2.4 
Turbec AB TlOO Natural Gas NPV wethod Quantitative Analysis 
Equipmcnt lnstallcd Cost 
lnstallcd Cost pcr kWc 
Maintcnancc Cost 
Avcragc Elcctric Utility 
Encrgy Ratc 
Avcragc Elcctric Utility pcr kW per Month 
Demand Ratc 
Avcragc Gas Ratc cr MM BTU (HHV) 
Nominal kWc Rating 
Hours of Opcration 
5 ycilr cumulative savings $120,321 10 ycar cumuli~tivc savings $26 1.646 
NI'V of projcct savings $86,096 
6.9 NeYQnT Evaluation Report Technological Readiness of Micro Turbines 3-15 
Section 3 - Quantitative Evaluation of Available Techndoqies 
Normalized projcct savings $13,659 
Per unit cost savings based 
on normalized tariff 
IRR 
lntcrest Loan 
NPV . .. nf .. tariff ..~~~~. $334.084 
Normalized tariff $52;455 
Per unit tariff from pcr kwh 
consumers 
Savings per kwh 
Cost of Capital 
Debt Equity Ratio for invcstmcl 
lntcrcst Kntc 
Subsidy on intcrcst 
Ndt Intcrcst Ratc 
Evaluation Report: Technological Readinass of Micro Turblnes 
Section 3 .- Quanti!ative Evaluation of Available Technologies 
Equipmcnt Installed Cost 
Installed Cost per kWc 
Maintcnancc Cost 
Avcragc Elcctric Utility 
Encrgy Ratc 
Avcragc Elcctric Utility 
Dcmand Ratc 
Avcragc Gas Ratc 
Nominal kWc Rating 
Hours of Operation 
Hcat Ratc 
Year 0 
CASH FLOW ANALYSIS -- - 
Cash Inflow $113,841 
Avoidcd Sitc Elcctric Encrgy 
Costs 
Avoidcd Sitc Elcctric 
Dcmilnd Chargc 
Dcprcciation 
Cash Outflow 
Fucl 
Maintcnancc Costs 
Intcrcst on loan 
Rcpymcnt of loan 
Equity invcstmcnt 
Nctt cilsh flow 
'I'i~x nt 24% 
.r. ax . (11 utility ri~tcs 
Nett cash flow after tilx 
NI'V ol'projcct swings $ 
44,486 
Normalized projcct swings $ 
ler kwh 
ler kwh 
icr kW per Month 
Icr MM BTU (HHV) 
:W 
lours per : 
3TU pcr k 
1 
jillvagc 
$44,244 
$2,755 
$1 0,246 
$1 8.906) 
($6.250) 
($7.570) 
($7,960) 
$16,540 
($3.')')')) 
$ l2,SS 1 
lr 
h (HHV) 
2 
10% 
$44,244 
$2,755 
$10,246 
'$18.006) 
($6,250) 
($6,774) 
($7.')hO) 
$17.346 
($4.191) 
$13,155 
Evaluation Repofl: Technological Readiness of Micro Turbines 
Section 3 ~~ ~... Quantitative Evaluation of Available Technoloqies 
6,985 
Per unit cost savings based on 
normalized tariff 
IRR 
NPV of tariff 
Normalized tariff 
Per unit tariff from consumcrs pcr kwh 
Savings pcr kwh 
Cost of Cnpitnl .. . 
p~ 
Debt Equity Ratio for invcstmc 
Intcrcst kltc 
~- 
Subsidy on intcrcst - 
~ 
Evaluation Report: Technological Readiness of Micro Turbines 
Section 4 Findings 
4.1 Findings Drawn From "DER Quantitative Analysis 
The "DER" method takes into account the Capital and Installation cost (C&I), Operation and 
Maintenance cost (O&M) and the Fuel Cost to arrive at the cost of electricity figure for each 
of the Micro Turbine systems. 
1 Capstone C30 HPNG Micro Turbine system 0.087 
2 I Turbec AB TI00 Micro Turbine system I 0.088 
I - - I 
5 I Capstone C30 Liquid Fuel Micro Turbine system I 0.208 
1 I 
4.2 Findings Drawn From "NPV" Quantitative Analysis 
As discussed in section 4.1.2, the NPV analysis helps us obtain the following ouput 
parameters, to decide the most cost-effective solution: 
Average normalized savings in cost of electricity (A,,,) 
Average normalized tariff (A2=") 
Average normalized cost of electricity per unit of electricity produced (A,), inclusive 
of tax 
Internal Rate of Return (IRR %) 
Payback period on investment (in years) 
Cumulative savings in cost of electricity in 5 years 
= Cumulative savings in cost of electricity in 10 yearsand 
Ratio of NPV of savings in cost of electricity to equity invested 
3 0.098 
First, we will discuss the Micro Turbine systems in terms of these parameters individually 
and then summarize the findings to quantitatively arrive at the most cost-effective solution. 
Ingersoll Rand 70LM.70SM Micro Turbine system 
4.2.1 Capstone Turbine Corporation C30 Biogas NPV Method Findings 
4 I Capstone C30 Biogas Micro Turbine system 
The NPV of cost savings for setting up this project at a site which already uses electric 
energy from the grid is positive and with the smallest of equity investment ($13,040) yields 
positive nett cash flow (Figure 6.3.1). This project pays back in 9.1 years, but uses a 
renewable source of energy. The incentives for setting up a project using renewable sources 
of energy are high, with the MNES and IREDA providing extremely attractive sops. The 
MNES provides a 40% subsidy on equity investment in addition to the 0.5% to 5% interest 
subsidy from IREDA, along with a two principal repayment moratorium. 
0.111 
LTN~YU~ Evaluation RW: Techndcgical Readiness of Miao Turbines 4-1 
3 ' 
We have based our analysis on 40% equity subsidy from MNES, 0.5% interest subsidy from 
IREDA and two years principal repayment moratorium. In addition to the above, MNES 
allows a debt-equity ratio of 75:25, which lowers the equity investment for promoters even 
further. The MNES allows 40% salvage value to be considered for calculating depreciation 
over ten years. 
The savings per unit of electricity generated is the highest, as compared to the other 
solutions being evaluated, at $ 0.030 (Rs.1.44) and the savings percentage per unit of 
electricity generated is highest at 39%. The cost of electricity per unit generated is lowest at 
$0.046 (Rs. 2.22). 
Year 
Net Cash Row after taxes 
Figure 4.2.1 Capstone C30 Biogas Payback graph 
4.2.2 Capstone Turbine Corporation C30 Liquid Fuel NPV Method Findings 
This system has been evaluated for running on high speed diesel (HSD). The price for HSD 
is highest at $ 10.60 per BTU. Given the low efficiency of the turbine and the high price of 
HSD, setting up such a project at a site which already uses electricity from the grid is not 
feasible. This is substantiated by the negative value of NPV of cost savings, negative nett 
cash flow and negative 5 year and 10 year cumulative savings (Fig 4.2.2) 
012305678910 
! Year 
Net cash flow afler tax Total tariff 
Figure 4.2.2 Capstone C30 Liquid Fuel Payback Graph 
0 ~e~ffn~ Evaluation Report: Technological Readiness of Miao Turbines 4-2 
4.2.3 Capstone Turbine Corporation C60 High Pressure Natural Gas NPV Method Findings 
The payback from setting up this project for a site already using grid power is fastest, at 6.4 
years. Investing in this project would yield a positive NPV of savings (Fig 4.2.3), which is 
substantially high at $ 53,291 (Rs. 2.60 MM). The cumulative five year and ten year savings 
are $ 72,882 (Rs. 3.55 MM) and $ 158,135 (Rs. 7.71 MM), respectively. The percentage 
savings per unit of electricity generated is 27%, with normalized savings at S 0.020 /kwh and 
normalized tariff at $ 0.074 kwh. The cost of electricity per unit of electricity generated for 
this solution is $0.054 (Rs. 2.64). 
40000 ' 
012345676910 
I Year 
= Net cash flow after tax Total lariff 
Figure 4.2.3 Capstone C60 High Pressure Natural Gas Payback Graph 
4.2.4 Turbec AB TI00 Natural Gas NPV Method Findings 
The NPV of savings for this project is highest at $ 86,996 (Rs.4.24 MM) and NPV of tariff 
from consumers is highest at $ 334,084 (Rs. 16.28 MM). The cumulative 5 year and 10 
year savings from investment in this project are also thehighest, amongst the solutions being 
evaluated, at $ 120,321 (Rs. 5.86 MM) and $261,646 (Rs. 12.75MM), respectively. The 
project pays back in 6.6 years, which is the second highest amongst the solutions being 
evaluated. This investment creates positive nett cash flow, but employs the highest equity 
investment of $ 47,478 (Rs. 2.3 MM).The cost of electricity from this solution is S 0.055 
/kWh (Rs. 2.7 kwh) 
I 
i 
Figure 4.2.4 Turbec TlOO Natural Gas payback Graph 
0 NeYQnT Evaluation Reprl: Technological Readiness of Miao Turbines 43 
33 
4.2.5 lngersoll Rand 70LMnOSM Natural Gas NPV Method findings 
The Ingersoll Rand solution employs an equity investment of $ 34,152 (Rs. 1.66MM) and 
pays back in 8.3 years. The 5 and 10 year cumulative savings are $68,797 (Rs. 3.35MM) and 
152,703 (Rs. 7.44MM). The normalized savings is $ 0.014 /kwh and the normalized tariff 
from consumers is $0.083, with the percentage savings at 17%. 
012345678910 
Year 
Net cash flow after tax D Total tariff 
Figure 4.2.5 Ingersoll Rand 70LMl70SM Natural Gas Payback Graph 
The detailed table of NPV findings and results is listed in Table 4.2.1 and Table 4.2.2 below, 
67 NHUnT Evaluation Report: Technolcgical Readiness of Miao Turbines 4-4 
Section 4 Findings 
Tshle 4.2.1 
. . .. - - . I I I I 
1 
Calculations for Cost of Electricity C30 Biogas C30 Liquid fuel C60 HPNG I TI00 I 70LM 170 SM - 2001 
. . ... 
I ..,,, 
Percentage Savings nett of taxes (35%) 27% 26% 1 7% 
Cost of Electricty (%/kwh) by NPV 0.244 0.054 0.055 0.069 
11.89 2.64 2.70 3.36 
-L9~NaQQnnr . 
Evaluation Report: Technological Readiness 01 Micro Turbines 4-5 
~ 3- 
13apstone ~30 Biogas 1 3 1 4 1 4 ( 5 
Zapstone C30 Liquid fuel .........-.--.--=--A ~ 
5 1 5 5 5 5 1 5 1 2 1 5 1 3 
Zapstone C60 HPNG ~ 2 5 2 12 2 1 2 1 3 1 2 1 4 
" 3 . - -*nn e " m " I - 
'I uroec AD I iuu I 3 1 ,, ,, ,, - -- I I I I 5 1 I I I 
Ingersoll Rand 70LM / 70 4 1 2 ( 
We observe from Table 4.3.1 and 4.3.2 that the Capstone Turbine Corporation C30 Biogas Micro Turbine system has the lowest cost of 
electricity and is thus the best ranked Micro Turbine system. 
4.3 Findings Summary 
On careful qualitative and quantitative evaluation of the various Micro Turbine systems that are commercially available in the market today, 
and for which vendors were ready to share information for evaluative purposes, we have arrived at the decision that the Capstone Turbine 
Corporation's C60 High Pressure Natural Gas Micro Turbine system scores the highest on all fronts, closely followed by Capstone Turbine 
Corporation's C30 Biogas Micro Turbine system. The Turbec AB TI00 Micro Turbine system also fares well on the evaluation but since this 
system can run only in the grid parallel mode, hence its economics would not be favorable. The Capstone Turbine Corporation's C30 Liquid 
Fuel Micro Turbine system has unfavorable economics and is not profitable in the Indian scenario. The Ingersoll Rand Energy Systems' 
70LMl70SM Micro Turbine system also has unfavorable economics and is not suitable in the Indian scenario. 
.. . 
Evaluation Report: Technological Readiness of Mlcro Turblnes 4.6 
Bibliography 
California Distributed Energv Resources Guide http://www.ener~.ca.1zov/dist4en/index.html 
Small Scale Biogas Plants. Indian Renewable Energv Development Agencv Ltd. IIREDA) 
http://ireda.nic.in/vsiredakasplants.htm 
Convcrtlt.com Measurement Converter 
ht~://www.convertit.com/Go/ConvertIt~MeasuremenWConverter.ASP 
Weight Dcnsitv and Spccific Gravity of various liquids 
http://pump.nctt/liquiddata/wds~cc~v.htm 
Capstone Turbine Cornoration 
= http://www.capstonetturbine.com/ 
= http://www.capstonetturbine.com/technolow/ce~fications.as~ 
http://www.capstonetturbine.com/technolow/s~ecsheets,asp 
http://www.capstonetturbine.com/technologv/options.as~ 
http://www.capstonetturbine.com/technolo~/w~te~apers.asp 
Turbec, AB 
= http://www.turbec.com/ 
http://www.turbec.com/products/t1OOchp.ht1n 
= http://www.turbec.com/products/techspecific.htm 
http://www.turbec.com/products/installation.htm 
Elliott Enerw Svstems 
http://www.elliott-turbo.com/newlproducts Micro Turbines.html 
Bowman Power Systems 
http://www.bowmanpower.com/ 
Gas Turbine Theory. Author: HIH Saravanamuttoo, GFC Rogers. H Cohen. Publishers: 
Pearson Education Asia, Fifth Edition 
Construction of Biogas Plants: A Manual. Tata Energy Research Institute 
Biocas: The NGO Experience, AFPRO-CHF Nettwork Promamme, Author: Soma Dutta, 
Ibrahim H Rehman. Preeti Malhotra. Venkata Ramana P 
Indian Renewable Energy Development Azencv Ltd. (IREDA) Renewable Enerw: Enerm 
Efficiencv Financing Guidelines, 2002-03 
Annual Report 2001-2002 BSES Ltd. 
Annual Report 2001-2002 Tata Power Ltd. 
NNQnT Evaluation Repwt: Technological Readiness of Miao Turbines 51 
Bibliography 
Annual Report 2001-2002 NTPC India Ltd. 
Annual Reoort 2001-2002 NHPC Ltd. 
Annual Report 2001-2002 Power Grid Corporation of India Ltd. 
0 NH(IM Evaluation Repoil: Technological Readiness of Mim Turbines 52 
3 q 
Appendix 1 Emission Regulatory Norms 
A. 1.1 Emission Guidelines 
General conditions of consent for emission under air (PREVENTION and control of 
pollution) act, 1981 as ammended to date: 
1. The applicant shall not change or alter the quantity, quality, the rate of discharge, 
temperature or the mode of the effluentlemission or control equipments provided for 
without previous written permission of Haryana pollution control committee. 
2. The applicant shall not cause nuisance in the premises and the surroundings by way of 
noiselvibrations and the ambient noise level shall not be allowed to exceed 75 dBA 
Leg. during daytime and 70 dBA Leg. during night time in commercial areas. 
3. The applicant shall comply with the norms laid down vide Gazette Notification of 
Ministry of Environment and Forests, Government of India dated 02.01.99 for the 
diesel generators set(s) (5kVA and above) as below: 
Acoustic enclosure/acoustic treatment of room for control of noise from the diesel 
generators sets shall be controlled by providing an acoustic enclosure or by 
treating the rooms acoustically. 
The acoustic enclosurelacoustic treatment of room should be designed for a 
minimum 25dBA, Insertion loss or for meeting the ambient noise standards, 
whichever is higher. The measurement for insertion loss may be done at different 
points at 0.5 meters from the acoustic enclosure/room, and then averaged. 
The diesel generator sets should also be provided with proper exhaust muffler 
with insertion loss off minimum 25 dBA. 
= This stack height for the diesel generator sets shall be as below: 
Height of stack (in meters) = Height of the building (in meters) + 0.2 kVA of DG Set 
The existing units having diesel generator set shall comply with the above 
notification within two months and submit the air emissionlnoise report fiom any 
of the approved laboratory of Haryana Pollution Control Committee. Eco-friendly/ 
with in-built acoustic enclosure diesel generators set(s) are recommended for new 
installations. 
= The applicant shall maintain the following emission standard from diesel 
generators set: 
Suspended particulate matter: Less than 100 mg/Nm3 
SOX: Less than 50 mg/Nm3 
NOx: Less than 100 mg/Nm3 
HC: Nil 
4. The industry shall ensure proper channelization/control system for fugitive emission 
from the activity so as to maintain clean and safe environment in and around the 
factory premises. 
0 Nemnr Evaluation Re: Techndqical Readiness of Miio Turbines A-1-1 
5. The applicant shall provide facilities for collection of environmental samples and 
samples of trade and sewage effluents air emission and hazardous wastes to the 
committee's staff at the terminal or designed points. Adequate facilities shall be 
provided for sampling with sampling holes at specified locations and dimensions, 
platform of specific size and strength, full arrangement of electrical connections etc. 
6. The applicant shall maintain good housekeeping and take adequate measures for 
control of pollution from all sources so as not to cause nuisance to surrounding 
aredinhabitants. 
7. The applicant/company shall comply with and carry out directivesforders issued by 
the committee in the consent order and at all subsequent time without any negligence 
on hislits part. The applicantlcompany shall be liable for such legal action against him 
as per provision of the lawlacts in case of violation of any order1 directives issues at 
any time andlor non compliance of the terms and conditions of the consent order. 
8. The above general conditions may be modified by the Haryana Pollution Control 
Committee from time to time and copies of such modified conditions will be 
communicated to the parties concerned by registered post. 
Note: Generallspecific industrial effluentlemission standards are mentioned in Environment 
Protection Rules, 1986 as amended to date. 
c3 NemV Evaluation Repoct: Technolcgical Readiness of Miao Turbines A-1-2 
-P 
Appendix 2 Fuel Prices And Heat Values 
A.2.1 Fuel Prices (RSIBTU) And.Heating Value (BTUILB) 
Fuel prices as obtained from the Indian Oil Corporation Ltd. as on August 2nd, 2002 
1 Calculated on the basis of setting up a Greenfield biogas plant of 500 cumlday of installed capacity. 
Methodology used for calculating tariff is the Nett Present Value (NPV) of investments. The calculations take 
into account purely Indian prices for setting up the plant, lndian investment scenario (lending rates, subsidies 
etc.), and Indian tax norms and then calculates the NPV of tariff (S) for the Biogas produced over a year or 
8,760 hours. Based on Indian investment scenario (weighted average interest, i), the normalized tariff (A) is 
calculated using the following formula: 
The normalized tariff (A) is averaged over the total heat required (BTU) to arrive at a Price figure in SBTU or 
RsJBTU. 
The detailed calculation by NPV method is shown in Table A.2.1.2 below: 
~3 Nmanr Evaluation Report: Technological Readiness of Miao Turbines A-2-1 
Appendix 2 Fuel Prices and Heat Values 
Table A.2.1.2 
Fuel prtce arialy'sis~~0r~5~%J.OO.c~.m;'biogas'plant using NPV method 
Inputs 
Equiprncnt lnstallcd Cost 
Fucl intakc rcquircd by turbinc 
I-lcat Ratc 
or 
Gas Ratc for turbinc Avcragc Gas Rate 
Pcr day Gas Ratc for turbinc cumlday Hours of Operation 
cudday Heat Ratc of turbinc 
63 NMUm Evaluation Report: Technological Readiness of Micro Turbines A-2.2 
Appendix 2 Fuel Prices and Heal Values 
Total Tariff Flow $6,811 $631 1 $6,619 $6,234 $5,850 $5,466 $5,082 $4,698 $4,314 $3,930 
NPV of tariff $34,397 
Nonnalizcd tariff $5,284 
Pcr unit tariff from consumers per per MMBTU 
MMBTU 
Cost of Capital 
Dcb9uity Ratio for" 
lntcrcst Ratc 
Subsidy on intcrcst 
Nett lntcrcst Ratc 
Wcightcd Debt Equity ~ ~ 
Wcightcd avcragc intcrc 
Evalualion Repofl Technological Readiness of Miuo Turbines 
Appendix 3 Grid Tariffs 
A.3.1 Tariffs Charged by Power Utilities in India 
Grid tariffs for commercial consumer cateaorv connections as obtained From the national 
council of power utilities (TARIFF schedules of electric power supply utilities in India 2002 
2. Haryana 
3. Uttar Pradesh 
4. Gujarat 
5. Madhya Pradesh 
6. Maharashtra 
7. BSES 
8. Ahmedabad Electric Company 
9. Tata Power Company 
10 Andhra Pradesh 
11 Kamataka 
12 Kerala 
13 Tamil Nadu 
14 Bihar 
15 Orissa 
16 West Bengal 
17 Sikkim 
18 Andaman and Nicobar 
19 Meghalaya 
20 Nagaland 
21 Tripura 
Mode value 
0 Newf?r Evaluation Repi: Techndcgical Readiness of Mim Turbines A31 
9 1/ 
Appendix 4 Regulatory And Other Guidelines 
A.4.1 CERC (Central Electricity Regulatory Commission) Tariff Guidelines 
Debt Equity Ratio for investments in project: 
Return on Equity 
Depreciation 
Salvage 
(Deprecia#ion is olso in ogreemen1 with Indian Accounting Stondard - 6) 
A.4.1.1 Ministry of Non-Conventional Energy Sources (MNES) Guidelines 
Percentage aid on equity invested 
Depreciation Salvage value 
A.4.1.2 IREDA LendinglFinancing Guidelines (2002-03) 
70:30 
16% 
Over 10 yrs. 
10% 
40% 
40% 
I I project cost 
Direct Users 9.5 1 25 1 upto 75% of total 
I I I I I project cost 
I 
A.4.1.3 Indian Accounting Standard - 6 
I project cost 
Statements of Accounting Standards (AS 6) Revised 
Depreciation Accounting 
The following is the text of the revised Accounting Standard (AS) 6, 'Depreciation 
Accounting', issued by the Council of the Institute of Chartered Accountants of India. 
0 NiXanT Evaluation Re@: Techndcgical Readiness d Mim Turbines A41 
Direct Users 3.0 1 8 1 2 1 25 1 upto 75% of total 
Appendix 4 Regubtocy & Other Guidelines 
Introduction 
1. This Statement deals with depreciation accounting and applies to all depreciable assets, 
except the following items to which special considerations apply: 
(i) forests, plantations and similar regenerative natural resources 
(ii) wasting assets including expenditure on the exploration for and extraction of minerals, 
oils, natural gas and similar non-regenerative resources 
(iii)expenditure on research and development 
(iv)goodwill 
(v) live stock 
This statement also does not apply to land unless it has a limited useful life for the 
enterprise. 
2. Different accounting policies for depreciation are adopted by different enterprises. 
Disclosure of accounting policies for depreciation followed by an enterprise are necessary 
to appreciate the view presented in the financial statements of the enterprise. 
Definitions 
3. The following terms are used in this Statement with the meanings specified: 
3.1 Depreciation is a measure of the wearing out, consumption or other loss of value of a 
depreciable asset arising from use, effluxion of time or obsolescence through technology 
and market changes. Depreciation is allocated so as to charge a fair proportion of the 
depreciable amount in each accounting period during the expected useful life of the asset. 
Depreciation includes amortization of assets whose useful life is predetermined. 
3.2 Depreciable assets are assets which 
(i) are expected to be used during more than one accounting period 
(ii) have a limited useful life and 
(iii)are held by an enterprise for use in the production or supply of goods and services, for 
rental to others, or for administrative purposes and not for the purpose of sale in the 
ordinary course of business. 
3.3 Useful life is either (i) the period over which a depreciable asset is expected to be used by 
the enterprise or (ii) the number of production or similar units expected to be obtained 
from the use of the asset by the enterprise. 
3.4Depreciable amount of a depreciable asset is its historical cost, or other amount 
substituted for historical cost in the fmancial statements, less the estimated residual value. 
Explanation 
4. Depreciation has a significant effect in determining and presenting the financial position 
and results of operations of an enterprise. Depreciation is charged in each accounting 
period by reference to the extent of the depreciable amount, irrespective of an increase in 
the market value of the assets. 
0 NeXfffW Evaluatioo Report: Techndogical Readiness of Mii Turbines A42 
Appendix 4 Regulatory & Other GuiMines 
5. Assessment of depreciation and the amount to be charged in respect thereof in an 
accounting period are usually based on the following three factors: 
(i) historical cost or other amount substituted for the historical cost of the depreciable 
asset when the asset has been revalued 
(ii) expected useful life of the depreciable asset and 
(iii)estimated residual value of the depreciable asset 
6. Historical cost of a depreciable asset represents its money outlay or its equivalent in 
connection with its acquisition, installation and commissioning as well as for additions to 
or improvement thereof. The historical cost of a depreciable asset may undergo 
subsequent changes arising as a result of increase or decrease in long term liability on 
account of exchange fluctuations, price adjustments, changes in duties or similar factors. 
7. The useful life of a depreciable asset is shorter than its physical life and is: 
(i) pre-determined by legal or contractual limits, such as the expiry dates of related 
leases 
(ii) directly governed by extraction or consumption 
(iii) dependent on the extent of use and physical deterioration on account of wear and 
tear which again depends on operational factors, such as, the number of shifts for 
which the asset is to be used, repair and maintenance policy of the enterprise 
etc.and 
(iv) reduced by obsolescence arising from such factors as: 
(a) technological changes 
(b) improvement in production methods 
(c) change in market demand for the product or service output of the asset or 
(d) legal or other restrictions 
8. Determination of the useful life of a depreciable asset is a matter of estimation and is 
normally based on various factors including experience with similar types of assets. Such 
estimation is more difficult for an asset using new technology or used in the production of 
a new product or in the provision of a new service but is nevertheless required on some 
reasonable basis. 
9. Any addition or extension to an existing asset which is of a capital nature and which 
becomes an integral part of the existing asset is depreciated over the remaining useful life 
of that asset. As a practical measure, however, depreciation is sometimes provided on 
such addition or extension at the rate which is applied to an existing asset. Any addition 
or extension which retains a separate identity and is capable of beiig used after the 
existing asset is disposed of, is depreciated independently on the basis of an estimate of 
its own useful life. 
10. Determination of residual value of an asset is normally a difficult matter. If such a value 
is considered insignificant, it is normally regarded as nil. On the contrary, if the residual 
value is likely to be significant, it is estimated at the time of acquisition/installation, or at 
the time of subsequent revaluation of the asset. One of the bases for determining the 
residual value would be the realizable value of similar assets which have reached the end 
0 NmnT Evaluation Re@: Techndcgical Readiness of Mi! Turbines A43 
of their useful lives and have operated under conditions similar to those in which the asset 
will be used. 
1 1. The quantum of depreciation to be provided in an accounting period involves the exercise 
of.judgment by management in the light of technical, commercial, accounting and legal 
requirements and accordingly may need periodical review. If it is considered that the 
original estimate of useful life of an asset requires any revision, the unamortized 
depreciable amount of the asset is charged to revenue over the revised remaining useful 
life. 
12. There are several methods of allocating depreciation over the useful life of the assets. 
Those most commonly employed in industrial and commercial enterprises are the 
straight-line method and the reducing balance method. The management of a business 
selects the most appropriate method(s) based on various important factors e.g., (i) type of 
asset, (ii) the nature of the use of such asset and (iii) circumstances prevailing in the 
business. A combination of more than one method is sometimes used. In respect of 
depreciable assets which do not have material value, depreciation is often allocated fully 
in the accounting period in which they are acquired. 
13. The statute governing an enterprise may provide the basis for computation of the 
depreciation. For example, the Companies Act, 1956 lays down the rates of depreciation 
in respect of various assets. Where the management's estimate of the useful life of an 
asset of the enterprise is shorter than that envisaged under the provisions of the relevant 
statute, the depreciation provision is appropriately computed by applying a higher rate. If 
the management's estimate of the useful life of the asset is longer than that envisaged 
under the statute, depreciation rate lower than that envisaged by the statute can be applied 
only in accordance with requirements of the statute. 
14. Where depreciable assets are disposed of, discarded, demolished or destroyed, the nett 
surplus or deficiency, if material, is disclosed separately. 
15. The method of depreciation is applied consistently to provide comparability of the results 
of the operations of the enterprise from period to period. A change from one method of 
providing depreciation to another is made only if the adoption of the new method is 
required by statute or for compliance with an accounting standard or if it is considered 
that the change would result in a more appropriate preparation or presentation of the 
fmancial statements of the enterprise. When such a change in the method of depreciation 
is made, depreciation is recalculated in accordance with the new method fiom the date of 
the asset coming into use. The deficiency or surplus arising from retrospective 
recompilation of depreciation in accordance with the new method is adjusted in the 
accounts in the year in which the method of depreciation is changed. In case the change in 
the method results in deficiency in depreciation in respect of past years, the deficiency is 
charged in the statement of profit and loss. In case the change in the method results in 
surplus, the surplus is credited to the statement of profit and loss. Such a change is treated 
as a change in accounting policy and its effect is quantified and disclosed. 
16. Where the historical cost of an asset has undergone a change due to circumstances 
specified in Paragraph 6 above, the depreciation on the revised unamortized depreciable 
amount is providedprospectively over the residual useful life of the asset. 
0 Nmanr Evaluation Report: Techndcgical Readiness d Miao Turbines A44 
Appendix 4 Requlaloty & Other Guidelines 
Disclosure 
17. The depreciation methods used, the total depreciation for the period for each class of 
assets, the gross amount of each class of depreciable assets and the related accumulated 
depreciation are disclosed in the financial statements along with the disclosure of other 
accounting policies. The depreciation rates or the useful lives of the assets are disclosed 
only if they are different from the principal rates specified in the statute governing the 
enterprise. 
18. In case the depreciable assets are revalued, the provision for depreciation is based on the 
revalued amount on the estimate of the remaining useful life of such assets. In case the 
revaluation has a material effect on the amount of depreciation, the same is disclosed 
separately in the year in which revaluation is carried out. 
19. A change in the method of depreciation is treated as a change in an accounting policy and 
is disclosed accordingly. 
Accounting Standard 
(The Accounting Standard comprises paragraphs 20-29 of this statement. The Standard 
should be read in the context of paragraphs 1-1 9 of this statement and of the 'Preface to the 
Statements of Accounting Standards'.) 
20. The depreciable amount of a depreciable asset should be allocated on a systematic basis 
to each accounting period during the useful life of the asset 
21. The depreciation method selected should be applied consistently from period to period. A 
change from one method of providing depreciation to another should be made only if the 
adoption of the new method is required by statute or for compliance with an accounting 
standard or if it is considered that the change would result in a more appropriate 
preparation or presentation of the financial statements of the enterprise. When such a 
change in the method of depreciation is made, depreciation should be recalculated in 
accordance with the new method from the date of the asset coming into use. The 
deficiency or surplus arising from retrospective recompilation of depreciation in 
accordance with the new method should be adjusted in the accounts in the year in which 
the method of depreciation is changed. In case the change in the method results in 
deficiency in depreciation in respect of past years, the deficiency should be charged in the 
statement of profit and loss. In case the change in the method results in surplus, the 
surplus should be credited to the statement of profit and loss. Such a change should be 
treated as a change in accounting policy and its effect should be quantified and disclosed. 
22. The useful life of a depreciable asset should be estimated after considering the following 
factors: 
(i) expected physical wear and tear 
(ii) obsolescence 
(iii)legal or other limits on the use of the asset 
23. The useful lives of major depreciable assets or classes of depreciable assets may be 
reviewed periodically. Where there is a revision of the estimated useful life of an asset, 
NmafW Evaluation Re@: Techndogical Readiness of Mii Turbines A45 
Appendix 4 Requlalay & Oihec Guid&s 
the unamortized depreciable amount should be charged over the revised remaining useful 
life. 
24. Any addition or extension which becomes an integral part of the existing asset should be 
depreciated over the remaining useful life of that asset. The depreciation on such addition 
or extension may also be provided at the rate applied to the existing asset. Where an 
addition or extension retains a separate identity and is capable of being used after the 
existing asset is disposed of, depreciation should be provided independently on the basis 
of an estimate of its own useful life. 
25. Where the historical cost of a depreciable asset has undergone a change due to increase or 
decrease in long term liability on account of exchange fluctuations, price adjusbnents, 
changes in duties or similar factors, the depreciation on the revised unamortized 
depreciable amount should be provided prospectively over the residual useful life of the 
asset. 
26. Where the depreciable assets are revalued, the provision for depreciation should be based 
on the revalued amount and on the estimate of the remaining useful lives of such assets. 
In case the revaluation has a material effect on the amount of depreciation, the same 
should be disclosed separately in the year in which revaluation is carried out. 
27. If any depreciable asset is disposed of, discarded, demolished or destroyed, the nett 
surplus or deficiency, if material, should be disclosed separately. 
28. The following information should be disclosed in the fmancial statements: 
(i) the historical cost or other amount substituted for historical cost of each class of 
depreciable assets; 
(ii) total depreciation for the period for each class of assetsand 
(iii)the related accumulated depreciation. 
29. The following information should also be disclosed in the financial statements along with 
the disclosure of other accounting policies: 
(i) depreciation methods usedand 
(ii) depreciation rates or the useful lives of the assets, if they are different from the 
principal rates specified in the statute governing the enterprise. 
A.4.1.4 Customs and Import Duty Tariff 
Basic Import duty (-M,T) 
Additional Import duty(olmulative) 
Custom wheeling duty (currulnti~) 
Additional FOB (~~ht~nboard~harge) 
Note: A basic import duty of 20% is levied on equipment imported as renewable energy source, only; the 
additional import duty and custom wheeling duty are not to be levied 
0 N~U~T Evaluah Report: Technological Readiness d ~ii ~urbines A46 
Appendix 4 Regulalcuy 8 Mher Gui 
A.4.1.5 income Tax 
Tax @ 35% after a tax holiday of 10 years as per 80 (IA) of Income Tax Act for Biogasl 
Renewable sources of energy 
Absolute tax rate has been calculated on mean value of tax liability incurred by electric utility 
companies. 
Table A.4.1.6 
A.4.1.6 Foreign Exchange Rate 
Tata Power Ltd. 
Ahmedabad Electric Co. 
NTPC Ltd. 
PGClL 
Mean Value 
1 US $ = 48.73 Indian Rupee 
As on August l, 2002 
UNH~ Evaluation ~eport: Techndogical Readiness of ~ii Turbines A47 
24.4Y0 
5 1 .0% 
4.8% 
12.8% 
24.2% 
67 1.84 
3,458.00 
4,115.81 
779.91 
o(A) 9,327.39 
163.61 
1,759.00 
199.04 
99.97 
O(B) 2,253.66 

Appendix 5 Pre-Tax And PreSubsidy Quantitative Results And Findings 
A.5.2 PRE-TAX AND PRE-SUBSIDY QUANTITATIVE RESULTS AND FINDINGS BY "NPV" METHOD 
. .~ -- .. -~ ~ 
Evaluation Report: Technological Readiness of Micro Turbines