Degree
Master of Business Administration
Faculty / School
Faculty of Business Administration (FBA)
Advisor
Dr. Rameez Khalid, Assistant Professor, Department of Management
Committee Member 1
Dr. Rameez Khalid, Assistant Professor, Department of Management, Faculty of Business Administration, Institute of Business Administration (IBA), Karachi
Project Type
MBA Research Project
Keywords
https://ir.iba.edu.pk/do/search/?q=PARCO&start=0&context=8598587&facet=">PARCO, SWOT analysis, NPV, IRR, RoE, Renewable Energy, Gearless technology, Development costs
Abstract / Summary
Pakistan has relied mainly on thermal power generation since the beginning and due to the ever so fast rising demand, limited supply of energy and expensive oil and gas; it is becoming difficult to produce cheap electricity. Many small-scale investors as well as companies now seek an alternate solution to this energy crisis as cost of doing business and even cost of living have gone up significantly in the country over the decade. Renewable energy is the most popular solution as it removes the dependence over furnace oil and provides a clean source of energy by harnessing it from natural elements.
Some of the factors that were considered while limiting our scope to solar and wind energy in the beginning of the project included capital and operational costs, capacity factors, project duration, technical expertise availability in market and scalability of the project. Choosing wind and solar technologies, requires less technical expertise, adequate amount of budget for construction and maintenance, and desired amount of capacity as going with any other alternative, such as hydro or tidal, will either increase the size and the scale of the project but will also require a huge sum of investment, technical expertise and generous amount of time to construct the project. On other hand, bio fuel or geo thermal may not be able to produce enough energy due to the composition of source and the location respectively.
Primary and secondary research was performed along with unstructured interviews, SWOT, PESTEL, Risk and financial analysis on both projects based on 100% equity. Based on the financial analysis (NPV, IRR and RoE), we found that wind is the best option for PARCO and the most profitable one.
Once wind was selected, we conducted an in-depth research regarding existing related projects and found that previous wind projects existing in the country are operating at 80 percent debt and 20 percent equity. Owing to this fact, we changed our wind financial calculations to 20% equity and 80% debt. Furthermore, we conducted site visits so that we could propose a site to PARCO for installation of wind turbines. Secondary research revealed that currently there are three wind turbine companies active in Pakistan i.e. GE, Vestas and Goldwind. Based on available price data, we selected three turbines for our financial analysis.
Further, upon conducting technical analysis we found that Goldwind GW 87 is far superior due to following reasons;
1) Gearless technology significantly lowers the number of moving parts, reduces maintenance and minimizes noise produced.
2) Permanent magnet motor is highly efficient compared to induction motors used in other two turbines.
3) Rated wind speed of Goldwind is 9.9 m/s which is much lower than GE (12 m/s) and Vestas (15 m/s). This allows Goldwind to operate at 100% capacity at much lower wind speeds.
4) GE and Vestas are American companies whereas Goldwind is Chinese. With the recent progress in CPEC, we expect PARCO to gain discounts in its price.
Two sites i.e. Isa in Balochistan and Jhimpir in Sindh were then visited, analyzed and a CBA was done based on which Jhimpir was found to be the best site. Some of the reasons because of which this site was selected were:
1) Pre-existing infrastructure for generation and transferring of wind power to national grids
2) Security provided by Pakistan Army
3) Site is already flat which saves time and development costs
4) Best wind speed and capacity factor in the country
Recommended Citation
Mushtaq, A., Saleem, J., & Qadir, Z. (2019). Parco renewable energy feasibility report (Unpublished graduate research project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/research-projects-mba/213
