NALCO

National Aluminium Company Limited

Engineering, Procurement and Construction (EPC) contract of 50 (±5%) MW

capacity Wind Energy Project at suitable site in any wind potential State in India
with its Comprehensive Operation & Maintenance for 20 years.

Project Plan

Surujit Medda (185)

Ayush Javeri (210)
 1) Overview:
In 2004, Nalco enhanced its in house power generation capacity to 1200 MW. Now, as a part of its CSR
initiative, it wants to set up a Wind based power generation unit. It wants to register this project as a
CDM project. Nalco has floated a tender for the same. Potential bidders are expected to carry out
Engineering, Procurement and Construction for the same at a suitable site in any wind potential location
in India with its Comprehensive Operation & Maintenance for 20 years. Generation of 50 MW as a CDM
project is to primarily meet in-house requirements, selling the excess power generated to state grids.
The major milestones are acquisition of land, supply of equipment, construction, erection and
commissioning of the plant and finally operation and maintenance for the above mentioned period.

2) Objectives:
Profit Goals:
CDM mechanism enables the project to earn Carbon credits which can be traded for money. Excess
power being sold to the state grids also enables them to earn some revenue.

Competitive Goals:
Nalco is a state owned company, and setting up a CDM project helps it position itself competitively. It
also helps it better its social image.

Technical Goals:
50 (±5%) MW capacity Wind Energy Project at suitable site in any wind potential State in India with a
basic constraint that each turbine should be of a minimum 500KW capacity.

3) General Approach:
Nalco’s core competencies obviously lie around Aluminium and its works. Setting up a power plant
requires special expertise which is most likely to be unavailable in house and hence needs to be
contracted to an external entity. Setting up a Wind Farm project is an even specialized requirement
requiring expert knowledge and experience in that particular domain. Nalco’s previous experience with
power plant set up is mainly with conventional energy. Hence the management approach will be to
outsource the work. It is also specified that the company should have had a minimum turnover of 3750
million rupees in at least one of three preceding financial years.
The document mentions that only a project engineer will be present on site from NALCO. Hence the
structure is that of a weak matrix. The NALCO engineer will primarily only oversee the project whereas
the contractor’s people will be managing work/resources and running the show.

Other specifications include that:

• The bidder should be a manufacturer of Wing Energy Equipments
• Should have prior satisfactory experience on a turnkey basis with aggregate capacity not
exceeding 50MW and unit rating of 500 KW.
• Such experience should be in the last 5 years and should have been executed in a period not
exceeding one year.
• Aggregate 50 MW might be across various sites but at least one of them should have capacity
greater than or equal to 15 MW.
• The WEG should be type certified from an accredited test house.
• The land chosen for the project should be either self owned or government land on lease and
should be free of encumbrances, encroachments and litigations.
 4) Contractual Approach:
Beyond the above mentioned, the contract includes the following activities to be done:
For Establishment:
• Any suitable site with wind potential
• Acquisition of Land
• Design, Manufacture and Supply
• Documents & Drawings
• Wind Monitoring Mast
For Installation, Testing & Monitoring:
• Statutory Approvals
• Micrositing
• Civil Work, Erection & Commissioning of WEGs on towers
• Setting up grid interfacing Equipments
• Setting up measuring equipment
• Setting up Centralized motorized control system
For O & M:
• Supply of spares & consumables
• All Statutory compliances as may be required
• Arrangement of Tools & Tackles
• Crane Management
• Testing
• Liaison with all Government agencies
• All administrative & Security
• Maintain at the facility accurate and up-to-date records and submissions to all concerned
authorities
Other Information:
• Currency of Payment:
– Euro/USD/Yen/INR(rate specified, against milestones)
– Currency of Payment for O & M – INR only(quarterly basis after expiry of guarantee)
• Project should qualify as a CDM
• Interconnection with state’s grid
• It is at the contractor’s risk to subcontract any of his work.

5) Schedules:
An average wind farm project completes in a period of about 8-12 months. The time for completion of
this project is required to be within 8 months
Major milestones:
1) Acquisition of land
2) Supply of plant and Equipment
– Acceptance of micrositing report
– Completion of tower foundation
– Completion of OH lines and substation
– Completion of evacuation systems and metering
– Completion of remaining civil and electrical works
– Receipt of completed WEGs
– Erection of WEGs
– Commissioning of WEGs
– Rectification of deficiencies
 – Submission of completion report
– Completion of one year of operation and maintenance

6) Resources:
Based on data collected from similar wind farm projects across Indian states by giants like Tata Power,
Suzlon, China Power etc. the estimated cost per MW of wind power generation is about 6 crores. Hence,
the total cost of generating 50 MW of power amounts to a total of about 300 crores. Cost monitoring
and control is carried out jointly by a team of executives built out of NALCO and the successful bidder.
Other Resources required are consumables, spares, testing equipment, construction material, crane
management systems, equipment for power evacuation, HT cables, logistics and special materials.

A typical cost breakdown structure can be as follows:

Based on report released by RISO, Denmark

Data from European wind turbine installations:

www.wind-nfg-the-facts.org

A typical CBS for the O&M Project

Based on report released by DEWI,
Germany
7) Personnel:
Construction phase:
• Skilled decision making personnel to be present at site
• Site engineer’s decision final at all times
• At time of
– Design, Construction & Establishment (Short Term, Specialized)
– Supply Erection (Short Term, Specialized)
– Commissioning (Short Term, Specialized)
– O & M (Long Term, Fewer Specialized people needed on site)
• In Numbers – About 250+ onsite personnel will be required for this construction and erection
task (Referenced from the Kittitas Valley Wind Power Project Report)
– Engineering/Design – 18
– Construction of Roads and Foundation – 90
– Electrical Collection System Construction – 40
– Construction of Substation – 20
– Wind Turbine Assembly and Erection – 40
– Commissioning – 30
– Others – 15
Operation & Maintenance Phase:
• Administrative Staff
o Supervisory – 2
o Subordinate – 4
• Engineering Staff
o Supervisory – 2
o Technically qualified subordinates – 4
o Junior level staff – 4
• Miscellaneous
o Janitorial – 2
o Office Help – 2
o Maintenance – 2

8) Evaluation Method:
• Quality specification clearances required are:
o Type Certification from an accredited test house such as
 RISO Denmark
 DEWI- Germany
 Germanischer LLOYD- Germany
 CWET
 any other agency approved by Ministry of New and Renewable Energy (MNRE),
Government of India.
• Initial micrositing report along with assumptions considered
• Daily and monthly data statements – post execution and delivery
• Power quality:
o Power factor
o Reactive compensation power
o Electrical harmonics
o Frequency
 o Voltage Stability
• Fortnightly and monthly progress report
• Review of non conformance report issued by the contractor during fabrication stage and
addressing of action items
• Periodic wind resource assessment report of the entire wind farm

9) Potential Problems:
• Government Regulations
• Problems for clearances
• Problems from seasonal variation
• Problems due to procurement/supply
• Opposition from locals
• Disqualification as a CDM project
• Natural calamities
• Accidents
• Initial design flaws/Machine design faults
• Change of scope during project execution

A lot of the data we have used here is collected from European surveys and standards. We make an
assumption here that the data is universal and applicable to the Indian context also considering the
complexity of the technology involved and that the major Wind turbine manufacturers in India are world
class.