Voluntary Carbon Standard Version 2007 Verification Report

Transcription

1 Voluntary Carbon Standard Version 2007 Verification Report 19 November 2007 Verification Report: Name of Verification Date of the issue: company: TÜV SÜD Industrie Service GmbH Report Title: Approved by: Verification Report: Thomas Kleiser Verification of the Nikunj Agarwal Chile: Hornitos Hydroelectric Project. Client: Colbún S.A. Project Title: Chile: Hornitos Hydroelectric Project. Summary: TÜV SÜD Industrie Service GmbH has performed the VCS Verification of the registered CDM project: Chile: Hornitos Hydroelectric Project. The objective is to verify the emissions reduction generated from the project operating start date to the date of CDM registration; known as pre-registration VCUs. The Chile: Hornitos Hydroelectric Project has been registered as a CDM project by the UNFCCC (CDM project 1374) on July 9 th, The project consists on a 55MW run-of-river power plant; replacing others fossil fuel based power plants in the Interconnected Central Grid in Chile.

2 VCS 2007 Verification Report The verification was performed following the guidance and criteria of the VCS Standard as well as the AM0026 (Version 02) CDM methodology. Poch Ambiental S.A. (the consultant agency contracted by Colbún S.A) together with Colbún S.A. are responsible for the preparation of the GHG emissions data and the reported GHG emissions reductions. A document review, followed by an on-site visit was conducted to verify the information submitted by the project participant regarding the present verification period. Based on the assessment carried out, the verifier confirms: That in general terms the project has been implemented and operated in accordance with the description given in the registered PDD (Version 2.1 dated: 27/06/2008) and the applied methodology AM0026 (Version 02). The GHG emission reductions are calculated without material misstatements. TÜV SÜD s opinion refers to the project s GHG emissions and resulting GHG emission reductions reported, both determined due to the valid and registered project s baseline, its monitoring plan and its associated documents. Based on the information we have seen and evaluated, we confirm that the implementation of the project resulted in 66,318 t CO2e of emission reductions during the following verification period: to Work carried out by: Javier Castro Eric Tolcach Lester Saldías Sabina Yunis Number of pages: 26 2

3 VCS 2007 Verification Report Table of Contents Page 1. Introduction 1.1 Objective Scope and Criteria VCS Project Description Level of Assurance 6 2. Methodology 2.1 Verification Process Verification Team Review of Documents On-site Assessment and follow-up Interviews Quality of Evidence to Determine Emission Reductions Resolution of Clarification and Corrective Action Requests 2.7 Internal Quality Control Verification Findings 3.1 Remaining issues, including any material discrepancy, from previous validation Project Implementation Completeness of Monitoring Accuracy of Emission Reduction Calculations Quality of Evidence to Determine Emission Reductions Management and Operational System VCS Validation Description of the Project Demonstration to confirm that the project was not implemented to create GHG emissions primarily for the purpose of its subsequent removal or destruction Demonstration that the project has not created another form of environmental credit (for example renewable energy certificates) Project rejected under other GHG programs (if applicable) Ownership Proof of Title Projects that reduce GHG emissions from activities that participate in an emissions trading program (if applicable) 4. Double-Counting and Carbon Ownership Verification Conclusion 26 Annex 1: TUV SÜD s Verification Protocol Annex 2: Information Reference List 3

4 VCS 2007 Verification Report 1 Introduction 1.1 Objective Colbún S.A. has commissioned an independent verification by TÜV SÜD Industrie Service GmbH (TÜV SÜD) of its registered CDM project: Chile: Hornitos Hydroelectric Project. The objective of the verification work is to comply with the requirements of the Voluntary Carbon Standard (VCS) According to this assessment TÜV SÜD shall: Ensure that the project activity has been implemented and operated as per the registered PDD Chile: Hornitos Hydroelectric Project Version , and that all physical features (technology, project equipment, monitoring and metering equipment) of the project are in place; Ensure that the published MR and other supporting documents provided are complete and verifiable and in accordance with applicable VCS requirements; Ensure that actual monitoring systems and procedures comply with the monitoring systems and procedures described in the monitoring plan and the approved methodology; Evaluate the data recorded and stored as per the Methodology for zero-emissions grid-connected electricity generation from renewable sources in Chile or in countries with merit order based dispatch grid, AM0026, Version Scope and Criteria The verification scope is defined as an independent and objective review of the Monitoring Report for VCU claim. The verification is based on the submitted monitoring report, the validated Project Design Documents including its monitoring plan and validation report, the applied monitoring methodology (AM0026, Version 02), relevant decisions, clarifications and guidance from the VCS and any other information and references relevant to the project activity s resulting emission reductions. These documents are reviewed against the requirements of the VCS and related rules and guidance. TÜV SÜD has applied a rule-based approach. The principles of accuracy and completeness, relevance, reliability and credibility were combined with a conservative approach to establish a traceable and transparent verification opinion. 4

5 VCS 2007 Verification Report The verification considers both quantitative and qualitative information on emission reductions. 1.3 VCS Project Description The Chile: Hornitos Hydroelectric Project (1374) consists of a run-of-river power plant of 55 MW of capacity that utilizes the waters of the Aconcagua river. It produces an average annual generation of 270 GWh. The Project helps to reduce the GHG emissions obtained from the interconnected central grid, due to the presence of fossil fuel fired power plants. The merit order based dispatch grid ensures that this type of projects would always be considered first at the time of generation, assuring the reduction of emissions due to this type of grid. The design consists of a Pelton vertical turbine power generator of 55 MW capacity that utilizes the waters of the Juncal and Juncalillo rivers, both tributary of the Aconcagua River, a system of channels and tunnels (12.1 km), a penstock and a powerhouse with one vertical pelton turbine-generator. UNFCCC Registration Number: 1374 Project Participants: Hidroeléctrica Guardia Vieja S.A. and the International Bank for Reconstruction and Development (IBRD) as Trustee of the Netherlands Clean Development Mechanism Facility (NCDMF). Location of the project: The Chile: Hornitos Hydroelectric Project is located near Los Andes city. This is approximately 100 km northeast from Santiago (capital of the country). The hydro power plant will be located in a small valley surrounded by mountains (Aconcagua Valley). The Chile: Hornitos Hydroelectric Project power plant is in cascade with three other existing downstream hydropower plants (Aconcagua of 72 MW, Los Quilos of 39 MW and Chacabuquito 26MW). The specific direction of the Power Plant is Los Andes- Mendoza International Road KM 38. The GPS coordinates taken during the on-site visit are: Power House : Lat: , Lon: Intake 1 (Juncalillo): Lat: , Lon: Intake 2 (Juncal) : Lat: , Lon:

6 VCS 2007 Verification Report Date of UNFCCC / CDM registration: Starting date of the VCS crediting period: Level of Assurance The level of assurance of this report is defined as reasonable. Furthermore, TÜV SÜD would like to point out that based on the process and procedures conducted as part of this verification, there are enough evidences that indicate this GHG assertion: It is materially correct and it is a fair representation of the GHG data and information; Was prepared in accordance with the related VCS Standard on GHG quantification, monitoring and reporting. The emission reduction calculation methodology used was appropriate and correctly applied, and The emission reductions have been accurately monitored. 2 Methodology 2.1 Verification Process The verification process is based on the approach depicted in the VCS Guidelines. Standard auditing techniques have been adopted. The verification team performs first a desk review, followed by an on-site visit which results in a protocol including all the findings. The next step is to close out the findings through direct communication with the PPs and finally prepare the verification report. This verification report and other supporting documents then undergo an internal quality control by the CB Climate and energy before submission to the VCS Registry Operator. 2.2 Verification Team According to the technical scopes and experiences in the local or national business environment TÜV SÜD has composed a project team in accordance with the appointment rules of the TÜV SÜD certification body Climate and energy. The composition of an assessment team has to be approved by the Certification Body (CB) ensuring that the required skills are covered by the team. The CB TÜV SÜD operates four qualification levels for team members that are assigned by formal appointment rules: Assessment Team Leader (ATL) Greenhouse Gas Validator/Verifier (GHG-V) 6

7 VCS 2007 Verification Report Greenhouse Gas Validator Trainee (T) Experts (E) The appointment of the team takes into account the coverage of the technical area(s), sectoral scope(s) and relevant host country experience for verifying the ER achieved by the project activity in the monitoring period for this verification. Considering the activity of the project and related documentation, the technical area of the project is 1.1 (Renewable energies (hydro, wind, solar)) The verification team was consisting of the following members: Name Javier Castro Eric Tolcach Lester Saldías Sabina Yunis Qualification Coverage of technical scope Coverage of sectoral expertise ATL GHG-V GHG-V T Host country experience Javier Castro is ATL of this project and head of the International GHG Training and Knowledge Management Climate and Energy at TÜV SÜD Industrie Service GmbH. He has an academic background in chemical engineering and energy systems. In his position he participates as project manager in validation, verification and certifications processes for GHG mitigation projects. He has received extensive training in the CDM and JI validation processes, and participated in many validation and verification CDM projects. Eric Tolcach is biologist and is working as GHG validator/verifier at TÜV SÜD Industrie Service GmbH. He was involved in several CDM projects activities and has received extensive training on all aspects of the validation and verification Process. Previously, he was working as auditor in ISO systems and developing environmental audits for due-diligence assessments. Lester Saldías is an Environmental Engineer working as a Freelance Auditor in Chile. He is an auditor for integrated management systems (ISO 9001/ISO 14001/OHSAS 18001). He has received intensive training in the CDM validation process and is now working as GHG validator/verifier of several CDM projects in Latin America. 7

8 VCS 2007 Verification Report Sabina Yunis is environmental engineer and is working as a GHG validator (Trainee) for TÜV SÜD in Argentina. She was involved in several CDM projects activities and is receiving extensive training on all aspects of the validation and verification Process. Previously, she submitted a new CDM methodology to the SSC WG (SSC-NM024) Methodology for using recyclable material instead of virgin material. 2.3 Review of Documents The Monitoring Report (MR) was submitted by the PP on May 2009 and was made publicly available on TÜV SÜD s netinform webpage ( This report and the accompanying documents including the emission reduction calculations were assessed based on all the relevant VCS criteria. A complete list of all documents reviewed is available in Annex 2 of this report. 2.4 On-site Assessment and follow-up Interviews During to , TÜV SÜD performed a physical inspection and on-site interviews with PP to: Confirm the implementation and operation of the project; Review the data flow for generating, aggregating and reporting the monitoring parameters; Cross-check the information provided in the MR documentation with other sources (raw data); Check the monitoring equipment against the requirements of the registered PDD, the approved methodology, and the VCS standard, including calibrations, maintenance, etc; Review the calculations and assumptions used to obtained the GHG data and ER and, Identify whether the quality control and quality assurance procedures are in place to prevent or correct errors or omissions in the reported parameters. A list of the people interviewed during this verification activity is included in Annex Quality of Evidence to Determine Emission Reductions Among many others the following relevant and reliable evidences have been used by the audit team during the verification process: 8

9 VCS 2007 Verification Report External Data: The calibration of the equipments was always contrasted with external certificates of measurements, performed by independent laboratories, assuring their objectiveness. The calibration documents reviewed during the onsite audit include, inter alia: For Electric Meters ION 7650 meters-, calibration certificates from Tecnored and CAM S.A. (IRL 25 and 26). For OM and BM data, information downloaded directly from the CDEC-SIC (Official Entity) (IRL 28) All the default values were linked to their sources and double checked. Where IPCCC or National Values were used, these values were crosschecked with their original source. Internal Data: All the forms used by the Project Proponent were investigated carefully. Special focus on the calculation tool used by the PP (Access database) was taken. The internal calculation procedures, the input of the data and the final results were carefully checked. Logbooks are used by the project participants in order to identify and control all the events occurred on the landfill gas system. Interviews with Operational and IT Responsible were performed during the onsite audit. The raw data was submitted to the audit team to be crosschecked (IRL 23). This was verified through several checks between the published values on the Monitoring report and the raw data. See section 3.4, chapter means of verification on each parameter for more information. Sufficient evidence covering the full verification period in the required frequency is available to validate the figures stated in the final MR. The source of the evidences will be discussed in chapter 3.3 of this report. Specific cross-checks have been done in cases that further sources were available. All figures in the monitoring report were cross-checked by the audit team against the raw data. The data collection system meets the requirements of the monitoring plan as per the methodology. 2.6 Resolution of Clarification and Corrective Action Requests The objective of this phase of the verification process was to resolve any outstanding issues which needed to be clarified for TÜV SÜD s positive conclusion on the GHG emission reduction calculation. To guarantee the transparency of the verification process, the concerns raised, based on the desk review and subsequent on-site audit assessment and follow up 9

10 VCS 2007 Verification Report interviews, together with the responses given are documented in Annex 1 (verification protocol). A Corrective Action Request (CAR) is raised where TÜV SÜD identifies: Non-conformities in monitoring and/or reporting with the monitoring plan and/or methodology; The evidence provided is not sufficient to prove conformity; Mistakes in assumptions, data or calculations that impair the ER; FARs stated during validation that are not solved until the on-site visit. A Clarification Request (CL) is raised where TÜV SÜD does not have enough information or the information is not clear in order to confirm a statement or data. Information or clarifications provided as a response to a CAR or CL could also lead to a new request. 2.7 Internal Quality Control As an ultimate step of the verification the final documentation including the verification report and the protocol have to undergo an internal quality control by the Certification Body (CB) Climate and energy, i.e. each report has to be finally approved either by the Head of the CB or the Deputy. In case one of these two persons is part of the assessment team, the approval can only be given by the other one. Upon approval by the CB, the report will be submitted to the project proponents including a written assurance that the GHG emission reductions and removals have been achieved in accordance with the VCS. 3 Verification Findings 3.1 Remaining issues, including any material discrepancy, from previous validation There are no remaining issues from the previous validation of this project. 3.2 Project Implementation The project is implemented according to the description presented in the PDD. The verifier confirms, through the visual inspection that all physical features of the proposed project activity including data collecting systems and storage have been implemented in accordance with the registered PDD. The project activity is completely operational and the same has been confirmed on-site. The turbine and generator specified on the PDD 10

11 VCS 2007 Verification Report contain the same characteristics than those found on site. As the VCS verification considers the pre-registration emission reductions, those values are not directly estimated nor compared with the values expressed on the PDD. However, the verifier confirms that all the values are within the range that should be expected considering the type and characteristics of the power plant. TÜV SÜD has verified the capacity of the turbines to be 55 MW. The construction of both turbines was in 2006 and the commissioning date of the same in January 09 th -, This was evidenced with an excel file downloaded directly from the CDEC-SIC webpage, where can be noticed that the generation directly to the grid started on 10/01/2008. The project is grid connected to Central Interconnected system (SIC). The net generated electricity of 125, MWh as stated in the monitoring report corresponding to the data collected from 10 January 2008 to 08 July 2008 was supplied to the grid during the monitored period according to the CDEC-SIC webpage records reviewed onsite- and the internal daily reports managed by the PP. The main electricity meter ION 7650, which is class 0.2, is installed at the power plant facilities. The project emissions of the Hornitos Power Plant were identified as the diesel generator of the power plant serving as a backup. Although this issue was not considered in the PDD, PP decided to calculate the consumption in order to verify that the emissions were in fact negligible. The calculation made by the PP verified that the project emissions correspond only to 0.012% of the Baseline emissions. Even so, in order to be conservative, the Project Participant decided to discount these emissions from the claimed VCU s. It is important to notice that the DOE verified the calculations, and can confirm that the values were calculated using official emission factors and in a conservative manner. See section d) of the MR. The reporting procedures, which are clearly stated on the monitoring report delivered to the audit team, has identified all the steps on the monitoring process, as well as the main responsibilities inside this process. This was scrutinized during the onsite audit, and the major troubles are the copy-paste activities. Troubles regarding the filling of the tables providing the values for project emission and GHG calculations were found. 11

12 VCS 2007 Verification Report 3.3 Completeness of Monitoring The monitoring has been carried out in accordance with the monitoring plan contained in the registered PDD. All parameters were monitored and determined as per the Monitoring Plan. The verification of the parameters required by the monitoring plan are provided as follows Data / Parameter: Data unit: Description: Source of data used: Means of Verification/Comments Cross-check Data / Parameter: Data unit: Description: Source of data used: Generation Energy in MWh Energy Generation of the Project for each hour h CDEC-SIC data officially available, obtained from the daily reports. The data is registered every 15 minutes and uploaded to the CDEC-SIC every 2 hours. The data can be downloaded directly from the website through a dedicated username and password. The registered data is undeletable, as the information can only be accessed by query to the database. Raw data was submitted to the audit team. This data was crosschecked by the audit team. During on-site activities several days were downloaded independently in order to check the accuracy of the data. One error could be found and CAR was followed in order to minimize human errors. Additional spotchecks were performed in the raw data in order to ensure the reliability of the data. Additional procedures (IRL 50) were developed by the PP to improve the quality of the obtained data. The equipment used has been calibrated according to the requirements of the approved monitoring plan. The calibration of this meter was performed on October 2008 and July The calibration certificate (IRL 25 and 26), showed that the meter was measuring within the uncertainty accepted for the equipment. The downloaded values were checked again during onsite activities, and the data is traceable as can be checked with the daily reports issued by the PP. EF y tco 2 /MWh CO 2 emission factor of the displaced energy from the grid. The emission Factor is a weighted average of the Operating Margin and the Build Margin. The Operating margin is calculated using the Access tool specially created in order to provide this value following the requirements of AM0026 ver02. The build margin is calculated using information available through the CDEC-SIC 12

13 VCS 2007 Verification Report Means of verification/comments Cross-check website, the yearly statistic report of national commission of energy and IPCC values. The final value is also presented through the Access calculation tool. The values used were taken from official reports. For the Access tool, see the information describe in the Operating margin table. In the case of build margin, all values included their source (IRL 1, 33, 34 and 36). All the values were checked and their sources scrutinized. The Project complies with the monitoring plan s requirements. The official website of the national commission of energy was used. icas/balances_energ.html cion/01_electricidad/otros/precios_nudo/otro s_precios_de_nudo/precios_de_nudo.html Data / Parameter: w BM Data unit: % Description: Weight for Build Margin emission factor Source of data used: Determined from AM0026 procedures. Means of verification/comments: It has been verified that this parameter has been properly determined as per AM0026 procedures. Cross-check - Data / Parameter: w OM Data unit: % Description: Weight for Operating Margin emission factor Source of data used: Determined from AM0026 procedures. Means of verification/comments: It has been verified that this parameter has been properly determined as per AM0026 procedures. Cross-check - Data / Parameter: Changes in the regulatory framework that could affect the methodology Data unit: - Description: Changes in the regulatory framework that could affect the methodology Source of data used: The official gazette presents all the information regarding the update of the Chilean legal framework. Additionally, Colbún S.A. performed periodical legal updates assessed by an external consultant. Means of verification/comments: Besides the official gazette and periodical legal updates, the information can be accessed from the main page of the National Commission of Energy, and related pages, as the National Environmental Ministry webpage. During the onsite audit, the audit team verified the tables developed by Colbún S.A. and crosschecked the information with official sites. No new laws affecting the methodology could be 13

14 VCS 2007 Verification Report Cross-check found. Official websites, as: enido_id= res?agr=1021&sub=&tipcat=1 acion/01_electricidad/otros/precios_nudo/ot ros_precios_de_nudo/precios_de_nudo.html Data / Parameter: Plant name Data unit: Text Description: Plant name. Identification of power sources. Source of data used: Gathered from CDEC-SIC databases: ( Means of verification/comments: The name of every plant has been gathered from the CDEC-SIC databases. A translator to name each plan with a unique name with its order of priority has been developed in Hornitos Audit Assistant.xls (spreadsheets Energy Trans and Priority Trans ) since some power plants have been named differently in the CDEC-SIC database. Cross-check The CDEC-SIC database has been positive cross-checked against Hornitos Audit Assistant.xls. Specific parameters for the calculation of the EF OM,y : Data / Parameter: Data unit: Description: Source of data used: Means of verification/comments: EF OM,y tco 2 /MWh Operating Margin Emission Factor. As the information should be presented in an hourly basis, and due to the big amount of information that is required to handle, PP decided to include an access database with all the information regarding the Operating Margin. The database s source is the information for merit order and generation submitted by the CDEC-SIC, along with default values from official sources. There are four steps in order to include all the needed information for the access database: to get the operational daily report, to get the merit order both files can be downloaded from the CDEC-SIC website-, use a translator in order to standardize the name of the power plants, and to get the maximum power of each equipment. During the audit, spot-checks were performed to this information through a query on the database. Programming of visual basic was reviewed on a step by step basis. Procedures were developed in order to improve the 14

15 VCS 2007 Verification Report Cross-check management of the calculation tool (IRL 50 and 62). Single downloads of data were performed independently. See CAR 5 for more info. All the values informed were crosschecked with the information displayed by the query to the server. N.A. Data / Parameter: EF j,h Data unit: tco 2 /MWh Description: Operating Margin Emission Factor of hour h. Source of data used: Calculated using CDEC-SIC databases ( and Methodology AM0026 procedures. Means of See comments above. verification/comments: Cross-check See comments above. Data / Parameter: D j,i Data unit: MWh Description: Energy displacement of the marginal plant i due to the proposed project j. Source of data used: Calculated using CDEC-SIC databases ( and Methodology AM0026 procedures. Means of verification/comments : This parameter has been calculated in the Access tool and then positive introduced in Hornitos Audit Assistant.xls. Cross-check Hornitos Audit Assistant.xls has been positive crosschecked with the Access tool and the CDEC-SIC database. Data / Parameter: d i Data unit: tco 2 e/mwh Description: Emission Factor of the marginal plant i. Source of data used: It is important to consider that this parameter includes the variables SFC, CEF, and Oxid. The variable SFC is taken from the yearly statistic report and the node Price report. All the sources were correctly linked. CEF was taken directly from IPCC values. The sources and means of verification for Oxid can be observed on parameter COEFi i, y Means of verification/comments : During the audit, spot-checks were performed to this information through a query on the database. Programming of visual basic was reviewed on a step by step basis. Procedures were developed in order to improve the management of the calculation tool (IRL 50 and 62). Single downloads of data were performed independently. The values extracted from IPCC were checked carefully and found correct. See CAR 5 for more info. 15

16 VCS 2007 Verification Report Cross-check All the values informed were crosschecked with the information displayed by the query to the server. icas/balances_energ.html Data / Parameter: SFC i Data unit: ton of fuel / MWh Description: Specific fuel consumption per unit of electric energy produced in the i th marginal plant. Source of data used: Calculation based on official data from the CDEC-SIC web site: (see IRL 26) and the CNE s Node Price Report (see IRL 39). Means of verification/comments: Cross-check This parameter has been estimated in the Access tool based on CNE s Node Price Report and the CDEC-SIC web site. This parameter has been also introduced in the ER calculation tool Hornitos Audit Assistant.xls in spreadsheet Power Plants. The crosscheck was performed based on the original documents, downloaded directly for the CDEC-SIC website. All values were found correct. Data / Parameter: M Data unit: Number Description: Number of electricity generation plants on the margin that would supply to the system in the absence of the CDM projects in the system. Source of data used: Calculated using CDEC-SIC databases ( and the Methodology AM0026. Means of verification/comments: Cross-check - It has been verified that the number of electricity generation plants in the ER calculation tool has been positive introduced. This was confirmed reviewing the CDEC-SIC databases. Data / Parameter: N Data unit: Number Description: List of CDM plants in the system Source of data used: Determined from CDEC-SIC databases ( Means of verification/comments: It has been verified that the number of CDM plants in the ER calculation tool has been positive introduced. This was confirmed reviewing the CDEC-SIC databases and the UNFCCC webpage. 16

17 VCS 2007 Verification Report Cross-check - Data / Parameter: C j Data unit: MWh Description: Electric energy generation of the j th CDM project of the system (j:1 n) in the hour h. Source of data used: Calculated using CDEC-SIC databases ( and AM0026 procedures. Means of verification/comments: Cross-check - This parameter has been estimated in the Access tool based on the CDEC-SIC database. Then it has been introduced in the ER excel file Hornitos Audit Assistance.xls spreadsheet OP-Energy. Checks on a random basis of the values introduced in the Access tool with values from the CDEC-SIC database have been positive performed. Data / Parameter: A i Data unit: MW Description: Generation capacity of the i th plant on the margin during hour h. Source of data used: Determined from CDEC-SIC and CNE databases. Means of verification/comments: Cross-check - The CDEC-SIC database has been reviewed confirming that A i has been correctly introduced in the ER calculation tool. Data / Parameter: B i Data unit: MWh Description: Electric energy generation of the i th plant on the margin during hour h. Source of data used: Determined from CDEC-SIC databases ( Means of verification/comments: Cross-check - This parameter has been estimated in the Access tool based on the CDEC-SIC database. Checks on a random basis of the values introduced in the Access tool with values from the CDEC-SIC database have been positive performed. Data / Parameter: Oxid i Data unit: % Description: Fraction of fuel oxidized on combustion. Source of data used: Determined from IPCC Guidelines Means of The value was crosschecked against its verification/comments: source. Cross-check - Specific parameters for the calculation of the EF BM,y : Data / Parameter: Data unit: Description: EF BM,y tco 2 /MWh Build Margin Emission Factor of the grid for 17

18 VCS 2007 Verification Report Source of data used: Means of verification/comments : Cross-check the year y. The build margin is calculated using information available through the CDEC-SIC website, the yearly statistic report of national commission of energy and IPCC values. The final value is also presented through the Access calculation tool. Where default values from the IPCC or any other official value is used, they are properly linked on the calculation tool. The values are extracted from the yearly statistic book (IRL 33 and 34), which was crosschecked in order to verify the values. Also, the same stages in order to verify the Access calculation tool were performed regarding this parameter. icas/balances_energ.html. Data / Parameter: Data unit: Description: Source of data used: Means of verification/comments : Cross-check COEFi i,y tco 2 /mass or volumen CO 2 emission factor of the electricity used from the grid. CO2 emission factor of each plant by fuel type used, taking into account the carbon content of the fuels used by relevant power sources i and percent of oxidation of fuel in year y It is important to consider that this parameter includes the variables NCV, EFCO2,i and Oxid. In order to get these variables, IPCC Values and the CNE national yearly statistic report was used. The project complies with the monitoring plan and the methodology requirements. The values used were taken from official reports. In the case of NCV, the gross calorific value is obtained from Yearly Statistic Report 1998/2007 (IRL 33 and 34) and converted to net using IPCC guidelines. In the case of the EFCO2, i and Oxid, both values are obtained from the IPCC guidelines (IRL 1 and 36). All the values were checked and their sources scrutinized. The Project complies with the monitoring plan s requirements. Data / Parameter: EF BM, i Data unit: tco2/mwh Description: Emission Factor for the i th plant in the Build Margin Cohort for the year y Source of data used: The build margin is calculated using information available through the CDEC-SIC website, the yearly statistic report of national commission of energy and IPCC values. The final value is also presented 18

19 VCS 2007 Verification Report Means of verification/comments: Cross-check through the Access calculation tool. Where default values from the IPCC or any other official value is used, they are properly linked on the calculation tool. The values are extracted from the yearly statistic book (IRL 33 and 34), which was crosschecked in order to verify the values. Also, the same stages in order to verify the Access calculation tool were performed regarding this parameter. The values were correctly applied in Hornitos Audit Assistance.xls spreadsheet EF BM (ii), column K. icas/balances_energ.html. Data / Parameter: GEN BM,i Data unit: MWh Description: Energy generation of the i th plan on the Build Margin cohort. Source of data used: CDEC-SIC database ( Means of This parameter has been positive introduced verification/comments: in the ER excel file Hornitos Audit Assistance.xls spreadsheet EF BM (ii), column J. Cross-check Checks through spot checks of the values introduced in the ER tool with values from the CDEC-SIC database directly downloaded have been positive performed. Data / Parameter: F BMi Data unit: Ton of fuel/mwh Description: Specific fuel consumption of i th marginal plant in the build margin cohort. Source of data used: Calculation based on official data from the CDEC-SIC web site: (see IRL 26) and the CNE s Node Price Report (see IRL 39). Means of verification/comments: Cross-check It is important to note that this parameter is not considered in the PDD but included as part of the calculations of Build Margin in the spreadsheets. This parameter has been estimated in the Access tool based on CNE s Node Price Report and the CDEC- SIC web site. This parameter has been also introduced in the ER calculation tool Hornitos Audit Assistant.xls in spreadsheet EF BM (ii), column F. The crosscheck was performed based on the original documents, downloaded directly for the CDEC-SIC website. All values were found correct. 19

20 VCS 2007 Verification Report Data / Parameter: F i,y Data unit: Mass or volume unit Description: Amount of each fossil fuel consumed by each power source/plant. Source of data used: Calculated based on information publicly available on CNE and CDEC-SIC website. Means of verification/comments: It is important to note that this parameter is not included in the PDD but nevertheless used as part of the calculation spreadsheet. This parameter has been positive calculated in Hornitos Audit Assistant.xls spreadsheet BM EF(i) (column J and spreadsheet EF BM (ii) column G ) Cross-check Several values were downloaded from the CDEC-SIC website and crosschecked against the submitted spreadsheet Data / Parameter: CEF i Data unit: tco 2 /GJ Description: Carbon emission factor of the fuel used in the i th plant of the Build Margin Cohort. Source of data used: Determined from IPCC Guidelines Means of verification/comments: Cross-check - It has been verified that this parameter has been properly determined as per IPCC Guidelines See Hornitos Audit Assistant.xls. Data / Parameter: SFC BMi Data unit: Kg or m 3 of fuel / MWh Description: Specific fuel consumption per unit of electric energy produced in the i th marginal plant. Source of data used: Calculation based on official data from the CDEC-SIC web site: (see IRL 26) and the CNE s Node Price Report (see IRL 39). Means of verification/comments: Cross-check This parameter has been estimated in the Access tool based on CNE s Node Price Report and the CDEC-SIC web site. This parameter has been also introduced in the ER calculation tool Hornitos Audit Assistant.xls in spreadsheet EF BM (ii), column F. The crosscheck was performed based on the original documents, downloaded directly for the CDEC-SIC website. All values were found correct. TÜV SÜD confirms that the implemented monitoring procedures fully satisfy the necessary criteria for a complete monitoring system and that the resulting emission reductions are calculated in a conservative and appropriate manner. 20

21 VCS 2007 Verification Report 3.4 Accuracy of Emission Reduction Calculations The calculation of the emission reductions simply involves the calculation of the baseline emissions: ER = BE. As indicated by the applied methodology, project emissions and leakage do not need to be considered for this project type. The baseline emissions equal the amount of electricity supplied to the grid multiplied by the calculated emission factor. In order to be conservative, project proponent rounded down the GHG emission reductions. Uncertainty of the equipments electric meter essentially- is very low, due to the Chilean technical norms regarding electricity generation (it requires a class 0.2 meter). The calibration of the equipments was performed by Tecnored Ltd and CAM S.A. Both companies are accredited to perform electrical comparison between meters (IRL 48, 52, and 53). This was checked during the onsite audit, and found it correctly applied. The uncertainty values of the devices were checked with their respective calibration certificate. TÜV SÜD checked and reviewed the provided excel spreadsheets (together with the Access file) for the calculation of these parameters thoroughly and confirms that the applied spreadsheet formulas and links are correct and in line with the indicated emission reduction calculations from the monitoring plan of the validated PDD and the applied methodology. During the revision of the generation data, it was noted that between January and February of 2008, the generated power exceeded the installed capacity of the power plant. This increase had to be explained by the PP in a clear way, as this would increase the amount of VCU s received. The increase was explained directly from the provider (See IRL 57), arguing that the system design itself has +/- 10% of surplus capacity. Considering the source of the information the provider itself- and the own technical capacity of the power plant this was considered as correct. TÜV SÜD further confirms that the applied default values are in line with the methodology and the registered monitoring plan and therefore, are considered appropriate. TÜV SÜD considers the implemented data handling and compiling system as appropriate and reliable. 21

22 VCS 2007 Verification Report In summary, TÜV SÜD considers the calculation of the emission reductions for the given period as accurate and reliable. 3.5 Quality of Evidence to Determine Emission Reductions Several procedures were developed by the PP (IRL 32, 49, 51, 54, 55, and 61) and the system is considered sound and solid in order to prevent human errors occurrence. The raw data was submitted to the audit team (IRL 23). This data is delivered in excel type (the system only can be accessed by query to the database using the software of the meter, and the real original raw data is completely inaccessible. The values were verified through spot-checks and specific dates were checked during on site activities. The data was found correct. The verifier confirms that the methods and formulae used to obtain the baseline, project and leakage emissions are appropriate. The same have been done in accordance with the methods and formulae described in the registered monitoring plan and applicable methodology. The verifier confirms that all the assumptions, emission factors and default values (ex-ante values from PDD) have been correctly justified and are properly explained. All the fixed values are linked with their official sources in the final Monitoring Report. It can be confirmed that the evidence is of sufficient quantity and appropriate quality. 3.6 Management and Operational System Based on the on-site observations and interviews, as well as the provided documents, TÜV SÜD considers the management and operational system of this project as suitable. Some findings were raised during the on-site visit, but positive closed out by the PPs. As per CAR No. 2, CAR No. 3 and CAR No.6, PP had to: Develop a document describing all responsibilities concerning the CDM project activity; Develop general procedures to identify the steps undertaken and responsible people for the transfer of data from raw data to the emission reduction calculation spreadsheet files 22

23 VCS 2007 Verification Report Update the organizational chart in order to include the people who were in charge of the Monitoring and Dispatch section within the Company. In summary, the quality management and the operational system are well implemented and responsibilities and procedures are clearly defined. 3.7 VCS Validation The objective of this phase is to validate only the additional aspects required for registered Clean Development Mechanism projects. These aspects are chapters , , and from the Description of the Project; and chapters and from Ownership. As this project is claiming GHG credits sequentially under the VCS Program and the CDM, the validation of the following five clauses was completed and the statements are given below: Description of project Demonstration to confirm that the project was not implemented to create GHG emissions primarily for the purpose of its subsequent removal or destruction. It has been established by Hornitos Hydroelectric Project that the baseline emissions correspond to those generated by the Central Interconnected System (SIC in Spanish). The SIC is the main electric system of the country which supplies electricity about 90% of the national population. Considering the Chilean electrical system, run of river hydropower projects are power plants with zero emissions. As no reservoir was created due to the construction of the power plant, and the Hydropower plant only utilizes the actual river flow, no emissions due to reservoir are generated. Moreover, due to the merit order dispatch data system considered within the Central Interconnected Grid, the generation of Hornitos Hydropower project is immediately inserted into the grid, replacing all other sources that consume fossil fuels between other types of plants-. Thus, it demonstrates that Hornitos was not created to the purpose of generate emissions, but to displace existent fuel combustion emissions in the electric system Demonstration that the project has not created another form of environmental credit (for example renewable energy certificates). 23

24 VCS 2007 Verification Report It does not apply due to it doesn t exist any environmental credit associated to the project. This was furthermore confirmed in writing by the project participants. See IRL 58. A renewable energy certificate (RECs) specifically is a credit obtained only by project participants belonging to the European, USA, and Canada and South Africa market. Consequently, Chilean projects are not eligible to participate in it Project rejected under other GHG programs (if applicable) The project has not been rejected by any other GHG programs. Currently, Hornitos hydroelectric Project has been registered as a CDM project activity on July 9th, The project activity started its operation on January 10 th, 2008 (verified through Hornitos Power plant s operational logbook, IRL 24 and 72 and also evidenced with an excel file downloaded directly from the CDEC-SIC webpage, where can be noticed that the generation directly to the grid started on 10/01/2008.) and it is between this date and its registry date in the CDM that VCUs are claimed under VCS Ownership Proof of Title The Proof of title has been provided to the assessment team by a contractual arrangement and rights assignment. See IRL Projects that reduce GHG emissions from activities that participate in an emissions trading program (if applicable) Currently, Hornitos hydroelectric Project participates in an emission trading program, which is the Clean Development Mechanism (CDM). The registration of the project in the CDM was on July 9th, 2008 and it is from this date where the CERs are issued and traded. However, the project activity started its operation on January 10 th, 2008 and it is between this date and its registry date in the CDM, the period needed to entry to the voluntary market through Voluntary Carbon Standard. From above it has been validated that there is not a period in which carbon offset are issued from two different GHG emission trading programs, due to the entry of Hornitos Hydroelectric Project to VCS is only used to get VCUs during the previous date to CDM registry. 24

25 VCS 2007 Verification Report 4 Double-Counting and Carbon Ownership Based on a review of the recognized registries of VER standards and an analysis of internet sources, TÜV SÜD has not detected indications that the same project activity is included into any other standards or schemes intended to generate Voluntary Emission Reductions or renewable energy certificates. This was furthermore confirmed in writing by the project participants (See IRL 58). The ownership of the carbon rights are considered to be held by Colbún S.A. This conclusion has been reached based on the fact that Colbún S.A. is the operator of the plant resulting in the emission reductions. However, as the holding of carbon rights may be impacted by other legislation or contracts not subject to the audit service, TÜV SÜD refrains from any liabilities related to the legal holding of carbon rights. 25

26 VCS 2007 Verification Report 5 Verification conclusion The scope of this verification covers the determination of VCUs according to the VCS standard generated by the following project: Chile: Hornitos Hydroelectric Project. The management of Colbún S.A is responsible for the preparation of the GHG data and the reported GHG emission reductions on the basis set out within the project s monitoring plan indicated in the registered CDM PDD and the applied methodology AM0026(Version 02). As a result of this verification, TÜV SÜD can confirm that: The project is fully implemented and operational; The installed monitoring system runs reliably and is calibrated appropriately; The installed system is fully capable of recording the necessary data to determine the emission reductions; VCUs are calculated without any material misstatements in a conservative and appropriate manner. Based on the information provided and evaluated, TÜV SÜD confirms the following statement: Reporting period: From to Verified emission in the above reporting period: Baseline Emissions: 66,326 tco2 equivalents Project emissions: 8 tco2 equivalents Total Project ER s: 66,318 tco2 equivalents Munich, 02/12/2010 Munich, 02/12/2010 Thomas Kleiser Certification body Climate and energy Javier Castro Assessment Team Leader 26