Validation Report. Beijing Guotou Energy Conservation Company. Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China

Transcription

1 Validation Report Beijing Guotou Energy Conservation Company Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China Report No rev July 2006 TÜV SÜD ndustrie Service GmbH Carbon Management Service Westendstr Munich GERMANY

2 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 1 of 22 Report No. Date of first issue Revision No. Date of this revision Certificate No th October th July Subject: Executing Operational Unit: Client: Contract approved by: Report Title: Number of pages Validation of a CDM Project TÜV SÜD ndustrie Service GmbH Carbon Management Service Westendstr Munich Federal Republic of Germany Beijing Guotou Energy Conservation Company 33, Qihelou Street, Dongcheng District, Beijing , China Michael Rumberg Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China 22 (excluding annexes and cover page) Summary: The Certification Body Climate and Energy has been ordered by Beijing Guotou Energy Conservation Company to perform a validation of the above mentioned project. n summary, it is TÜV SÜD s opinion that the project The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China, as described in the revised project design document of May 2006, meets all relevant UNFCCC requirements for the CDM, set by the Kyoto Protocol, the Marrakech Accords and relevant guidance by the CDM Executive Board and that the project furthermore meets all relevant host country criteria and correctly applies the baseline and monitoring methodology ACM0002 / Ver 06. Hence, TÜV SÜD will recommend the project for registration as CDM project activity by the CDM Executive Board. Additionally the assessment team reviewed the estimation of the projected emission reductions. We can confirm that the indicated amount of emission reductions of tonnes CO 2e over a crediting period of seven years, resulting in a calculated annual average of tonnes CO 2e represents a reasonable estimation using the assumptions given by the project documents. Work carried out by: Michael Rumberg Cuiyun Zhang nternal Quality Control by: Werner Betzenbichler

3 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 2 of 22 Abbreviations CAR CDM CER CR DOE EA / EA ER GHG KP MP PDD TÜV SÜD UNFCCC VVM Corrective Action Request Clean Development Mechanism Certified Emission Reduction Clarification Request Designated Operational Entity Environmental mpact Assessment / Environmental Assessment Emission reduction Greenhouse gas(es) Kyoto Protocol Monitoring Plan Project Design Document TÜV SÜD ndustrie Service GmbH United Nations Framework Convention on Climate Change Validation and Verification Manual

4 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 3 of 22 Table of Contents Page 1 NTRODUCTON Objective Scope GHG Project Description 6 2 METHODOLOGY Review of Documents Follow-up nterviews Resolution of Clarification and Corrective Action Requests 9 3 VALDATON FNDNGS Project Design Baseline and Additionality Monitoring Plan Calculation of GHG Emissions Environmental mpacts Comments by Local Stakeholders 20 4 COMMENTS BY PARTES, STAKEHOLDERS AND NGOS 21 5 VALDATON OPNON 22 Annex 1: Validation Protocol Annex 2: nformation Reference List

5 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 4 of 22 1 NTRODUCTON 1.1 Objective Beijing Guotou Energy Conservation Company has commissioned TÜV SÜD ndustrie Service GmbH (TÜV SÜD) to validate the The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China. The validation serves as design verification and is a requirement of all CDM projects. The purpose of a validation is to have an independent third party assess of the project design. n particular, the project's baseline, the monitoring plan (MP), and the project s compliance with relevant UNFCCC and host country criteria are validated in order to confirm that the project design as documented is sound and reasonable and meets the stated requirements and identified criteria. Validation is a requirement for all CDM projects and is seen as necessary to provide assurance to stakeholders of the quality of the project and its intended generation of certified emission reductions (CERs). UNFCCC criteria refer to the Kyoto Protocol criteria and the CDM rules and modalities as agreed in the Bonn Agreement and the Marrakech Accords. 1.2 Scope The validation scope is defined as an independent and objective review of the project design document, the project s baseline study and monitoring plan and other relevant documents. The information in these documents is reviewed against Kyoto Protocol requirements, UNFCCC rules and associated interpretations. TÜV SÜD has, based on the recommendations in the Validation and Verification Manual employed a risk-based approach in the validation, focusing on the identification of significant risks for project implementation and the generation of CERs. The audit team has been provided with the final PDD-version in September Based on this documentation a document review and a fact finding mission in form of an on site audit has taken place. The demanded additional information is addressed in annex 1. Requested information was given and the PDD was updated accordingly. That final PDD was submitted in May 2006 and serves as the basis for the final assessment presented herewith. The changes were not significant as only additional information to clarify the project was added to the final PDD, thus the global stakeholder process was not repeated. Studying the existing project documentation, it was obvious that the competence and capability of the validation team has to cover at least the following aspects: Knowledge of Kyoto Protocol and the Marrakech Accords Environmental and Social mpact Assessment Skills in environmental auditing (SO 14000, EMAS) Quality assurance Technical aspects of wind power and grid connection Monitoring concepts Political, economical and technical conditions in host country According to these requirements TÜV SÜD has assembled a project team in accordance with the appointment rules of the TÜV certification body climate and energy :

6 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 5 of 22 Michael Rumberg is head of the division CDM/J at TÜV ndustrie Service GmbH TÜV SÜD Group. n his position he is responsible for the implementation of validation, verification and certifications processes for greenhouse gas mitigation projects in the context of the Kyoto Protocol. Before entering this company he worked as an expert for renewable energy, forestry, environmental issues, climate change and sustainability within the environmental branch of an insurance company. His competences are covering risk assessments, quality and environmental auditing (EMS auditor), baseline setting, monitoring and verification due to the requirements of the Kyoto Protocol. Cuiyun Zhang is a lead auditor for environmental management systems (according to SO 14001) at Jiangsu TÜV Product Service Ltd. She is based in Shanghai. n her position she is implementing validation, verification and certifications audits for management systems. She has received extensive training in the CDM validation process and participated already in several CDM project assessments. The audit team covers following requirements: Knowledge of Kyoto Protocol and the Marrakech Accords (All) Environmental and Social mpact Assessment (All) Skills in environmental auditing (SO 14000, EMAS) (All) Quality assurance (All) Technical aspects of wind power and grid connection (All) Monitoring concepts (All) Political, economical and technical conditions in host country (Zhang) n order to have an internal quality control of the project, a team of the following persons has been composed by the certification body climate and energy : Werner Betzenbichler - Head of certification body climate and energy

7 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 6 of GHG Project Description This project is aimed to develop a 30MW wind farm to be located within Tuoli Town of Urumqi County, under the jurisdiction of the Urumqi city, capital of Xinjiang Uygur Autonomous Region of the P.R.C. n this proposed project, 20 wind turbines with the per-unit capacity of 1.5MW will be invested by Beijing Guotou Energy Conservation Co., and installed and operated by its sub company located in Xinjiang Urumqi City. Project participant are Beijing Guotou Energy Conservation Co and Tokyo Electric Power Co.. Host Party of the project activity is China and nvestor Party is Japan. According to the PDD and involved parties the starting date of the project activity is June 10, The crediting period is committed as a 7 year renewable crediting period and it starts on January 1, 2006.

8 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 7 of 22 2 METHODOLOGY The validation of the project consists of the following three phases: Desk review Follow-up interviews Resolution of clarification and corrective action requests n order to ensure transparency, a validation protocol was customized for the project, according to the Validation and Verification Manual. The protocol shows, in a transparent manner, criteria (requirements), means of verification and the results from validating the identified criteria. The validation protocol serves the following purposes: t organizes details and clarifies the requirements a CDM project is expected to meet; t ensures a transparent validation process where the validator will document how a particular requirement has been validated and the result of the validation. The validation protocol consists of three tables. The different columns in these tables are described in Figure 1. The completed validation protocol is enclosed in Annex 1 to this report. Validation Protocol Table 1: Mandatory Requirements Requirement Reference usion Cross reference The requirements the project must meet. Gives reference to the legislation or agreement where the requirement is found. This is either acceptable based on evidence provided (OK), or a Corrective Action Request (CAR) of risk or non-compliance with stated requirements. The corrective action requests are numbered and presented to the client in the Validation report. Used to refer to the relevant checklist questions in Table 2 to show how the specific requirement is validated. This is to ensure a transparent Validation process. Validation Protocol Table 2: Requirement checklist Checklist Question Reference Means of verification (MoV) The various requirements in Table 1 are linked to checklist questions the project should meet. The checklist is organised in seven different sections. Each section is then further subdivided. The lowest level constitutes a checklist question. Gives reference to documents where the answer to the checklist question or item is found. Explains how conformance with the checklist question is investigated. Examples of means of verification are document review (DR) or interview (). N/A means not applicable. Comment The section is used to elaborate and discuss the checklist question and/or the conformance to the question. t is further used to explain the conclusions reached. Draft and/or Final usion This is either acceptable based on evidence provided (OK), or a Corrective Action Request (CAR) due to non-compliance with the checklist question (See below). Clarification is used when the validation team has identified a need for further clarification.

9 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 8 of 22 Validation Protocol Table 3: Resolution of Corrective Action and Clarification Requests Draft report clarifications and corrective action requests f the conclusions from the draft Validation are either a Corrective Action Request or a Clarification Request, these should be listed in this section. Ref. to checklist question in table 2 Reference to the checklist question number in Table 2 where the Corrective Action Request or Clarification Request is explained. Figure 1 Validation Protocol Tables 2.1 Review of Documents Summary of project owner response The responses given by the Client or other project participants during the communications with the validation team should be summarized in this section. Validation conclusion This section should summarize the validation team s responses and final conclusions. The conclusions should also be included in Table 2, under Final usion. The project design document submitted by the client and additional background documents related to the project design and baseline were reviewed. The audit team has been provided with the final PDD-version in September 2005 which had been made public on in the global stakeholder process. The project design document was assessed by several revisions addressing changes to the baseline and monitoring methodology requested by the CDM Executive Board and clarification requests issued by TÜV SÜD. The final updated PDD issued in May 2006 serves as the basis for the assessment presented herewith. 2.2 Follow-up nterviews n November 22, 2006 TÜV SÜD performed interviews with project stakeholders to confirm selected information and to resolve issues identified in the document review. Representatives of Beijing Guotou Energy Conservation Company, Mizuho nformation and Research nstitute, nc. and TEESA/GCC Tsinghua University were interviewed. The main topics of the interviews are summarized in Table 1. Table 1 nterview topics nterviewed organization Representatives of Beijing Guotou Energy Conservation Company, Mizuho nformation and Research nstitute, nc. TEESA/GCC University Tsinghua nterview topics Project design Technical equipment Sustainable development issues Baseline determination Additionality Crediting period Monitoring plan Environmental impacts Management system

10 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 9 of 22 Environmental impacts Stakeholder process Approval by the host country 2.3 Resolution of Clarification and Corrective Action Requests The objective of this phase of the validation was to resolve the requests for corrective actions and clarification and any other outstanding issues which needed to be clarified for TÜV SÜD s positive conclusion on the project design. The Corrective Action Requests (CAR) and Clarification Requests (CR) raised by TÜV SÜD were resolved during communications between the Client and TÜV SÜD. To guarantee the transparency of the validation process, the concerns raised and responses that have be en given are summarized in chapter 3 below and documented in more detail in the validation protocol in Annex 1. The validation is not meant to provide any consulting towards the client. However, stated requests for clarifications and/or corrective actions may provide input for improvement of the project design.

11 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 10 of 22 3 VALDATON FNDNGS n the following sections the findings of the validation are stated. The validation findings for each validation subject are presented as follows: 1) The findings from the desk review of the project design documents and the findings from interviews during the follow up visit are summarized. A more detailed record of these findings can be found in the Validation Protocol in Annex 1. 2) Where TÜV SÜD had identified issues that needed clarification or that represented a risk to fulfil project objectives, a Clarification Request or Corrective Action Request, respectively, have been issued. The Clarification and Corrective Action Requests are stated, where applicable, in the following sections and are further documented in the Validation Protocol in Annex 1. The validation of the project resulted in several Co r- rective Action Requests and Clarification Requests. 3) Where Clarification or Corrective Action Requests have been issued, the exchanges between the Client and TÜV SÜD to resolve these Clarification or Corrective Action Requests is summarized. 4) The final conclusions for validation subject are presented. The validation findings relate to the project design as documented and described in the final project design documentation. 3.1 General Description of Project Activity Discussion Project participant are Beijing Guotou Energy Conservation Co and Tokyo Electric Power Co. Host Party of the project activity is China and nvestor Party is Japan. China as the host Party meets all relevant participation requirements. The letter of approval has been submitted form the national DNA. Japan as Annex party has also issued the letter of approval for this project. The objective of the project is to reduce GHG emissions by installing a wind power project. The project design engineering does reflect current good practices. The design has been professionally developed and laid out in project feasibility studies. Subsequently the project got approval by the relevant authorities. The project does apply state of the art equipment. The GE turbines are advanced in comparison to other wind turbines currently operated in average in P.R.China. t can be expected that the turbines can run for the whole project period and it can not be expected that they will be replaced by more efficient technologies, which for this project would mean turbines with larger capacity. The project requires initial training and causes also new requirements regarding the maintenance of the equipment. The project developer responds to these issues by conducting respective training courses. The project is in line with relevant legislation and plans of the P.R.China. P.R.China has published the Measures for Operation and Management of Clean Development Mechanism Projects (NDRC). According to this document renewable energy projects belong to the favoured options under the CDM. Hence, the project can currently be seen as being in line with the host country specific requirements for CDM. The enlargement of installed capacity of energy does moreover belong to the objectives of the Chinese policy regarding a sustainable development. t can be expected that the project will create employment in the erection phase.

12 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 11 of 22 The funding for the project does not lead to a diversion of official development assistance, as according to the information obtained by the audit team, ODA does not contribute to the financing of the project Findings Clarification Request No. 2: Chapter A.3 of the PDD should only refer to actual project participants and not list all companies and institutions involved in the project. To be clarified. Response: The PDD has been revised accordingly and now clearly outlines the project participants. Clarification Request No. 3: t should be demonstrated that the statement made in chapter A.4.3 of the PDD that 1.5 MW turbines of the respective type are the first time installed in China is applicable and correct. Response: t has been clarified in A.4.3 that it is an enhanced type of the wind turbine with 1.5MW that is the first time imported and installed in China, although the earlier type of the 1.5MW wind turbine has already been imported usion The project fulfils the requirements.

13 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 12 of Baseline and Additionalty Discussion The project is based on the approved methodology: ACM0002 Version 06. The methodology has been approved by the CDM Executive Board. The selected methodology has been designed for this project type. Therefore the respective baseline methodology is deemed to be the most applicable one for this project. The PDD responds convincingly to each of the applicability criteria which are outlined in the baseline methodology. The application, discussion and determination of the chosen baseline methodology are mainly transparent. The application follows the steps outlined in the methodology and answers the corresponding sections in a proper manner. The Operating Margin emission factor has been determined for the validation ex-ante and will not be determined for the verification ex-post. All date is derived from official statistics or other publicly available sources. As the source for this parameter is an official statistic the approach is considered to be acceptable. Regarding the Build Margin is it obvious from the statistical data that mainly coal fired power plants have been newly built. The calculation is based on installed capacity figures rather than on generation figures. This approach is accepted by the EB deviating from the original methodological approach. The baseline has been based on project specific data but could also serve other renewable energy projects in the same grid as a basis for their baseline establishment. The baseline methodology applied does only foresee to take the listed developments into account by including the build margin in the baseline. This has been done also for the project assessed herewith according to the requirements formulated in the baseline methodology. The baseline methodology asks for the application of the tool for assessment and demonstration of additionality. The PDD elaborates on step 0 and 1 in a convincing manner. The PDD does hereby elaborate on the starting date of the project activity and hereby successfully responds to the requirements defined in step 0 of the tool for the demonstration and assessment of additionality approved by the EB. Step 2 and 3 are performed in a plausible manner but lack in parts documented evidence substantiating the arguments given. t has also been considered in step 4 that other wind power projects have been implemented before at the same region without support from CDM. To do so, it has been discussed and supported by corresponding information to what extent these projects faced other barriers and why and how the other projects could be implemented without CDM. Step 5 is discussed in a plausible manner Findings Corrective Action Request No. 2: The PDD refers to version 01 of the applied methodology whereas currently version 03 is valid. To be corrected. Response: The PDD has been updated and refers correctly to version 06. Corrective Action Request No. 3:

14 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 13 of 22 Table 2 in the PDD (page 12) refers to the statistical data of to define the COEF. t should be elaborated why not more recent data has been used or more recent data should be applied. Response: The data has been updated and includes up to 2004 data in the revised PDD. Corrective Action Request No. 4: The BM needs to be calculated according to the rules. The current approach does consider only one plant and the selection is not retraceable. Response: The calculation has been revised according to the newly used version of the methodology. Hereby also a recalculation according to new weights for wind power project in ACM0002 version 06 has taken place. Clarification Request No. 1: The PDD describes the load factor to be 36% resulting in an expected annual power generation of GWh. t should be explained how these figures have been calculated and what is the basis for these values. Response: A dedicated Annex 5 regarding this issue has been attached in the revised PDD. Clarification Request No. 4: The imports and exports to and from the chosen electricity grid should be named, if any, and a source for the respective data should be given. The imports should be considered in the calculation of the OM and BM emission factor. Response: n the revised version of PDD, the chosen electricity grid has been upda-ted from the sub-grid level of Urumqi grid to the Xinjiang Autonomous grid at provincial level. However, the Xinjiang grid has not been connected to the North-Western regional grid physically, until after 2010 as expected. So it has been clarified in the Chapter B.4 that there is no electricity import and export between the chosen Xinjiang grid and the regional grid accordingly. Naturally the import is not considered in the calculation of the OM and BM emission factor. Clarification Request No. 6: For the calculation of the RR in the project case all calculations should be submitted to the audit team to allow the checking of the correctness of the calculated data. Response: The financial cash flow analysis sheet has been submitted to the audit team. The rational behind the basic parameter data and the underlying documented evidence has hereby been submitted to the audit team. Clarification Request No. 7:

15 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 14 of 22 The benchmark applied in the financial analysis should refer to a specific source which is not a company internal benchmark as the tool for demonstration of additionality does explicitly ask to use a market standard figure. Response: t has been clarified in the Chapter B.3. of the revised PDD, that a company internal benchmark was replaced by the electric power sector benchmark which is a market standard figure. The respective document has been submitted. Clarification Request No. 8: The choice to choose the Urumqi grid and not a regional grid should be justified as the methodology asks for a regional grid. Response: The selected grid has been changed. The project proponent now applies the Xinjiang grid. The same is justified in a proper manner. Clarification Request No. 9: The technological barrier is only based on the fact that 8 years ago another project which according to the PDD is not comparable has technological problems. The same is not deemed sufficient and the client should review to remove this barrier or to add further documentation. The electricity price barrier is a repetition of the argumentation given in the investment analysis and is not deemed sufficient and the client should review to remove this barrier or to add further documentation. Response: The argumentation has been updated in the PDD accordingly usion The project fulfils the requirements.

16 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 15 of Duration of the Project / Crediting Period Discussion The project starting date and the operational lifetime are clearly defined. The crediting period is clearly defined. During the validation process the audit team obtained the information and evidenced that the start of project activities has been before the registration date of the first clean development mechanism project Findings None usion The project fulfils the requirements.

17 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 16 of Monitoring Plan Discussion The project is based on an approved monitoring methodology. The methodology has been a p- proved by the CDM Executive Board. The selected methodology has been designed for this project type. Therefore the respective monitoring methodology is deemed to be the most applicable one for this project. The PDD responds convincingly to each of the applicability criteria which are outlined in the monitoring methodology. The methodology and its application are described in detail and in a transparent manner. All the parameters necessary to monitored for the calculation of the emission reductions are clearly and correctly use in the chapter D of the PDD. The overall authority and responsibility for the project is described in annex 4 of the PDD as well as in the monitoring plan. The monitoring plan does include all relevant parameters to determine baseline and project emissions and it is possible to monitor and/or measure the currently specified GHG indicators. The indicators which are not measured can be calculated using the formulas given in the methodology or obtained from PCC documents. The parameters defined allow calculating the baseline emissions in a proper manner Findings Corrective Action Request No. 5: The EB decided in its 23 rd meeting (para 24 of the report) that the monitoring plan as well as the monitoring report must contains statements regarding the following items: - uncertainty levels - accuracy levels - calibration procedures Statements regarding the mentioned parameters should be added in the PDD in a quantified manner. Response: The required information has been provided in the monitoring plan (para 6) of the revised PDD usion The project fulfils the requirements.

18 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 17 of Calculation of GHG Emissions by Source Discussion The project spatial boundaries are clearly described. A map elaborating the exact location of the turbines at this location has been submitted and is inserted in the PDD. The projects system boundaries are clearly defined. The project equipment is exactly described in technical terms and with an exact product description according the manufacturer information. The project does not generate any project emissions. Neither do leakage emissions occur. The calculations resulting in the final numbers have been submitted. The formulae used are correctly applied. The grid emission factor is ex-ante calculated following the steps shown in the approved methodology ACM Findings Corrective Action Request No. 1: The emission reduction should be displayed in a proper table being the same as provided in the guidelines for completing CDM-PDD. Response: The client has revised the table. Clarification Request No. 5: For the calculation of the OM as well as the BM and resulting CERs the respective calculations should be submitted to the audit team to allow the checking of the correctness of the calculated data. Response: n the Annex 3 of the revised version of PDD, the detailed calculations of the OM, BM and CM have been updated in Table 1, 2, 3 and 4, according to the ACM0002 Version 06. The CERs calculation has also been updated in the Chapter E. More detailed calculation can be found in the submitted Excel sheets. During the whole process of the PDD development, especially for the baseline emission factor calculation, the most latest data sources publicly available are mainly from the China s Electric Power Yearbook 2004 Edition and China s Energy Statistical Yearbook 2004 Edition. n both 2004 editions the latest data available are for Moreover, in the Power Yearbook, the data of the installed capacity and the electricity generation are aggregated for hydro, thermal and nuclear power types only. The data for thermal power are not disaggregated further by fuel types as coal, oil and gas, etc. While the carbon emission factors are fuel specific. On the other hand, in the Energy Yearbook, the electricity generation and their fuel consumptions are disaggregated by fuel types. So we have to use capacity data from the power yearbook and fuel related electricity generation data from the Energy yearbook in a combined manner. n such case we have to keep both data sources for the same year, the latest was for Although later on the Electric Power Yearbook, 2005

19 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 18 of 22 Edition was available, but the Energy Yearbook 2005 edition is not available yet, which will be published every two years usion The project proponent explains in a proper manner the way the data has been compiled and indicates reasons for use of consistent data. The project fulfils the requirements.

20 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 19 of Environmental mpacts Discussion The environmental impacts can be seen as being low. These low impacts have been sufficiently described in the PDD. The legislative requirements have been fulfilled. Transboundary effects are not expected as the project site is far from the national boundary. As no significant environmental impacts are expected, such impacts have not influenced the project design Findings None usion The project does comply with the requirements.

21 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 20 of Comments by Local Stakeholders Discussion A formal consultation process with local stakeholders has taken place and corresponding information has been submitted to the audit team. No stakeholder process is required according to national legislation. As all comments have been positive no need for a modification is seen Findings None usion The project does comply with the requirements.

22 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 21 of 22 4 COMMENTS BY PARTES, STAKEHOLDERS AND NGOS TÜV SÜD published the project documents on its website from November 13, 2005 to December 12, 2006 and invited comments within 30 days, by Parties, stakeholders and nongovernmental organizations. The following site has been installed: 8&mode=1 During the commenting period there has been one comment received from a non accredited observer organisation which is displayed on the TÜV SÜD webpage under the same link as above. The comment has due to the non accreditation not been considered. The audit team recognized that the content of the comment is reflected by the Clarification Request No. 8 of the validation report and the modifications made by the project proponent due to this clarification request are also in line with the claim made by the commenting party.

23 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Page 22 of 22 5 VALDATON OPNON The Certification Body Climate and Energy has been ordered by Beijing Guotou Energy Conservation Company to perform a validation of the above mentioned project. The validation was performed on the basis of UNFCCC criteria and host country criteria, as well as criteria given to provide for consistent project operations, monitoring and reporting. UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and procedures and subsequent decisions by the CDM Executive Board. The review of the project design documentation and the subsequent follow-up interviews have provided TÜV SÜD with sufficient evidence to determine the fulfilment of stated criteria. n our opinion, the project does meet all relevant UNFCCC requirements for the CDM and all relevant host country criteria. The project will hence be recommended by TÜV SÜD for registration with the UNFCCC. By displacing fossil fuel-based electricity in principal with electricity generated from a renewable source, the project results in reductions of CO 2 emissions that are real, measurable and give long-term benefits to the mitigation of climate change. An analysis of the investment and technological barriers demonstrates that the proposed project activity is not a likely baseline scenario. Emission reductions attributable to the project are hence additional to any that would occur in the absence of the project activity. Given that the project is implemented as designed, the project is likely to achieve the estimated amount of emission reductions. Additionally the assessment team reviewed the estimation of the projected emission reductions. We can confirm that the indicated amount of emission reductions of tonnes CO 2e over a crediting period of seven years, resulting in a calculated annual average of tonnes CO 2e represents a reasonable estimation using the assumptions given by the project documents. The validation is based on the information made available to us and the engagement conditions detailed in this report. The validation has been performed using a risk based approach as described above. The only purpose of this report is its use during the registration process as part of the CDM project cycle. Hence, TÜV SÜD can not be held liable by any party for decisions made or not made based on the validation opinion, which will go beyond that purpose. Munich, July 19, 2006 Munich, July 17, 2006 Werner Betzenbichler Head of certification body climate and energy Michael Rumberg Project Manager

24 Validation of The 30 MW Tuoli Wind Farm Project in Urumqi, Xinjiang of China in the P.R.China Annex 1: Validation Protocol

25 Table 1 Mandatory Requirements for Clean Development Mechanism (CDM) Project Activities REQUREMENT REFERENCE CONCLUSON Cross Reference / Comment 1. The project shall assist Parties included in Annex in achieving compliance with part of their emission reduction commitment under Art The project shall assist non-annex Parties in achieving sustainable development and shall have obtained confirmation by the host country thereof 3. The project shall assist non-annex Parties in contributing to the ultimate objective of the UNFCCC 4. The project shall have the written approval of voluntary participation from the designated national authorities of each party involved Kyoto Protocol Art.12.2 Kyoto Protocol Art. 12.2, Marrakesh Accords, CDM Modalities 40a Kyoto Protocol Art Kyoto Protocol Art. 12.5a, Marrakesh Accords, CDM Modalities 40a Outstanding issue no. 1 Table 2, Section E.4.1 Table 2, Section A.3 Table 2, Section E.4.1 The project has not obtained such an approval from the Chinese and Japanese government up to now. The same needs to be provided before the project is submitted for registration. Outstanding ssue No. 1: 5. The emission reductions shall be real, measurable and give long-term benefits related to the mitigation of climate change Kyoto Protocol Art. 12.5b The Letters of Approval issued by the participating countries should be submitted to the audit team. Table 2, Section E Page A-1

26 REQUREMENT REFERENCE CONCLUSON Cross Reference / Comment 6. Reduction in GHG emissions shall be additional to any that would occur in absence of the project activity, i.e. a CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity 7. Potential public funding for the project from Parties in Annex shall not be a diversion of official development assistance 8. Parties participating in the CDM shall designate a national authority for the CDM Kyoto Protocol Art. 12.5c, Marrakesh Accords, CDM Modalities 43 Marrakech Accords Marrakech Accords, CDM Modalities The host country shall be a Party to the Kyoto Protocol Marrakech Accords, CDM Modalities Comments by local stakeholders shall be invited, a summary of these provided and how due account was taken of any comments received Marrakech Accords, CDM CR 2 Table 2, Section B.2 According to the information obtained by the audit team ODA does not contribute to the financing of the project. Both Parties involved have designated national authorities for the CDM Clarification Request No. 2: Chapter A.3 of the PDD should only refer to actual project participants and not list all companies and institutions involved in the project. To be clarified. P. R. China has approved the Kyoto Protocol on August 30, Table 2, Section G Page A-2

27 REQUREMENT REFERENCE CONCLUSON Cross Reference / Comment 11. Documentation on the analysis of the environmental impacts of the project activity, including transboundary impacts, shall be submitted, and, if those impacts are considered significant by the project participants or the Host Party, an environmental impact assessment in accordance with procedures as required by the Host Party shall be carried out. 12. Baseline and monitoring methodology shall be previously approved by the CDM Methodology Panel 13. Provisions for monitoring, verification and reporting shall be in accordance with the modalities described in the Marrakech Accords and relevant decisions of the COP/MOP 14. Parties, stakeholders and UNFCCC accredited NGOs shall have been invited to comment on the validation requirements for minimum 30 days, and the project design document and comments have been made publicly available Modalities 37b Marrakech Accords, CDM Modalities 37c Marrakech Accords, CDM Modalities 37e Marrakech Accords, CDM Modalities 37f Marrakech Accords, CDM Modalities, 40 Table 2, Section F Table 2, Section B.1.1 and D.1.1 Table 2, Section D A global public stakeholder process on the UNFCCC website has taken place from November 13, 2005 for 30 days. Until the end of the stakeholder process, December 12, 2005, one comment have been received. But the stakeholder has not identified himself as being an accredited observer organisation under UNFCCC. The comment is nevertheless displayed on the TÜV SÜD homepage for public view. Link: Page A-3

28 REQUREMENT REFERENCE CONCLUSON Cross Reference / Comment 15. A baseline shall be established on a project-specific basis, in a transparent manner and taking into account relevant national and/or sectoral policies and circumstances 16. The baseline methodology shall exclude to earn CERs for decreases in activity levels outside the project activity or due to force majeure 17. The project design document shall be in conformance with the UNFCCC CDM-PDD format Marrakech Accords, CDM Modalities, 45c,d Marrakech Accords, CDM Modalities, 47 Marrakech Accords, CDM Modalities, Appendix B, EB Decisions weiser/guide2.aspx?d=1444&eb ene1_d=26&ebene2_d=358&m ode=1. Table 2, Section B.2 Table 2, Section B.2 The PDD is in conformance with the CDM Project Design Document (version 02) which is in effect as of July 1, Page A-4

29 Table 2 Requirements Checklist CHECKLST QUESTON MoV* COMMENTS A. General Description of Project Activity The project design is assessed. Draft Final A.1. Project Boundaries Project Boundaries are the limits and borders defining the GHG emission reduction project. A.1.1. Are the project s spatial (geographical) boundaries clearly defined? A.1.2. Are the project s system (components and facilities used to mitigate GHGs) boundaries clearly defined? The project spatial boundaries are clearly described. A map elaborating the exact location of the turbines at this location has been submitted and is inserted in the PDD. The projects system boundaries are clearly defined. The project equipment is exactly described in technical terms and with an exact product description according the manufacturer information. A.2. Technology to be employed Validation of project technology focuses on the project engineering, choice of technology and competence/ maintenance needs. The validator should ensure that environmentally safe and sound technology and knowhow is used. A.2.1. Does the project design engineering reflect 1-3, DR, Yes, the project design engineering does CR 3 * MoV = Means of Verification, DR= Document Review, = nterview Page A-5

30 CHECKLST QUESTON MoV* COMMENTS current good practices? 5-7 reflect current good practices. The design has been professionally developed and laid out in project feasibility studies. Subsequently the project got approval by the relevant authorities. A.2.2. Does the project use state of the art technology or would the technology result in a significantly better performance than any commonly used technologies in the host country? A.2.3. s the project technology likely to be substituted by other or more efficient technologies within the project period? A.2.4. Does the project require extensive initial training and maintenance efforts in order to work as presumed during the project period? 1-3, , , 5-7 DR, DR, DR, Clarification Request No. 3: t should be demonstrated that the statement made in chapter A.4.3 of the PDD that 1.5 MW turbines of the respective type are the first time installed in China is applicable and correct. Yes, the project does apply state of the art equipment. The GE turbines are advanced in comparison to other wind turbines currently operated in average in P.R.China. No the turbines can be expected to run for the whole project period and it can not be expected that they will be replaced by more efficient technologies, which for this project would mean turbines with larger capacity. Yes the project requires initial training and causes also new requirements regarding the maintenance of the equipment. The project developer responds to these issues by conducting respective training courses. A.2.5. Does the project make provisions for meeting 1-3, DR, Yes, the project developer does make Draft Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-6

31 CHECKLST QUESTON MoV* COMMENTS training and maintenance needs? 5-7 provisions for meeting training and maintenance needs. n order to operate the turbines from GE properly, staff has attended a training course. A.3. Contribution to Sustainable Development The project s contribution to sustainable development is assessed. A.3.1. s the project in line with relevant legislation and plans in the host country? A.3.2. s the project in line with host-country specific CDM requirements? A.3.3. s the project in line with sustainable development policies of the host country? A.3.4. Will the project create other environmental or social benefits than GHG emission reductions? Yes, the project is in line with relevant legislation and plans of the P.R.China. P.R.China has published the Measures for Operation and Management of Clean Development Mechanism Projects (NDRC). According to this document renewable energy projects belong to the favoured options under the CDM. Hence, the project can currently be seen as being in line with the host country specific requirements for CDM. Yes, the enlargement of installed capacity of energy does belong to the objectives of the Chinese policy regarding a sustainable development. Yes. t can be expected that the project will create employment in the erection phase. Draft Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-7

32 CHECKLST QUESTON MoV* COMMENTS B. Project Baseline The validation of the project baseline establishes whether the selected baseline methodology is appropriate and whether the selected baseline represents a likely baseline scenario. Draft Final B.1. Baseline Methodology t is assessed whether the project applies an appropriate baseline methodology. B.1.1. s the baseline methodology previously approved by the CDM Methodology Panel? B.1.2. s the baseline methodology the one deemed most applicable for this project and is the appropriateness justified? Yes, the baseline methodology applied has been approved by the CDM Executive Board. The project proponents applies ACM002 version 06. The baseline methodology is deemed to be the one, out of the existing approved baseline methodologies, most applicable for this project by the time the PDD development started. The PDD responds convincingly to each of the applicability criteria which are outlined in the baseline methodology. * MoV = Means of Verification, DR= Document Review, = nterview Page A-8

33 CHECKLST QUESTON MoV* COMMENTS B.2. Baseline Determination The choice of baseline will be validated with focus on whether the baseline is a likely scenario, whether the project itself is not a likely baseline scenario, and whether the baseline is complete and transparent. B.2.1. s the application of the methodology and the discussion and determination of the chosen baseline transparent? Yes, the application, discussion and determination of the chosen baseline methodology are mainly transparent. The application follows the steps outlined in the methodology and answers the corresponding sections in a proper manner. The first decisive factor for the baseline determination, the capacity factor of the newly installed turbines, is not determined in a transparent manner. The second decisive factor for the baseline determination, the baseline carbon emission factor of also not determined in a transparent manner. The Operating Margin emission factor has been determined for the validation ex-ante and will not be determined for the verification ex-post. All date is derived from official statistics or other publicly available sources. As the source for this parameter is an official statistic the approach is Draft CAR 2 and 4 Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-9

34 CHECKLST QUESTON MoV* COMMENTS B.2.2. Has the baseline been determined using conservative assumptions where possible? 1-3, DR, considered to be acceptable. Regarding the Build Margin is it obvious from the statistical data that mainly coal fired power plants have been newly built. The calculation is based on installed capacity figures rather than on generation figures. This approach is accepted by the EB deviating from the original methodological approach. Corrective Action Request No. 2: The PDD refers to version 01 of the applied methodology whereas currently version 03 is valid. To be corrected. Corrective Action Request No. 4: The BM needs to be calculated according to the rules. The current approach does consider only one plant and the selection is not retraceable. Yes, the baseline is mainly established in a conservative manner. Corrective Action Request No. 3: Table 2 in the PDD (page 12) refers to the statistical data of to define the COEF. t should be elaborated why not more recent data has been used or more Draft CAR 3 and CR 4 Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-10

35 CHECKLST QUESTON MoV* COMMENTS B.2.3. Has the baseline been established on a projectspecific basis? B.2.4. Does the baseline scenario sufficiently take into account relevant national and/or sectoral policies, macro-economic trends and political aspirations? B.2.5. s the baseline determination compatible with the available data? recent data should be applied. Clarification Request No. 4: The imports and exports to and from the chosen electricity grid should be named, if any, and a source for the respective data should be given. The imports should be considered in the calculation of the OM and BM emission factor. The baseline has been based on project specific data but could also serve other renewable energy projects in the same grid as a basis for their baseline establishment. The baseline methodology applied does only foresee to take the listed developments into account by including the build margin in the baseline. This has been done also for the project assessed herewith according to the requirements formulated in the baseline methodology. Clarification Request No. 8: The choice to choose the Urumqi grid and not a regional grid should be justified as the methodology asks for a regional grid. Yes, the available data has been used to determine the baseline. Draft CR 8 CR 1 Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-11

36 CHECKLST QUESTON MoV* COMMENTS B.2.6. Does the selected baseline represent the most likely scenario among other possible and/or discussed scenarios? B.2.7. s it demonstrated/justified that the project activity itself is not a likely baseline scenario (e.g. through (a) a flow-chart or series of questions that lead to a narrowing of potential baseline options, (b) a qualitative or quantitative assessment of different potential options and an indication of why the non-project option is more likely, (c) a qualitative or quantitative assessment of one or more barriers facing the proposed project activity or (d) an indication that the project type is not common practice in the proposed area of implementation, and not required by a Party s legislation/regulations)? 1-3, 4, 9, 10, 11, 14, DR, Clarification Request No. 1: The PDD describes the load factor to be 36% resulting in an expected annual power generation of GWh. t should be explained how these figures have been calculated and what is the basis for these values. The feasibility report referred to (page 4 of PDD) should be submitted. Yes. The baseline methodology asks for the application of the tool for assessment and demonstration of additionality. The PDD elaborates on step 0 and 1 in a convincing manner. The PDD does hereby elaborate on the starting date of the project activity and hereby successfully responds to the requirements defined in step 0 of the tool for the demonstration and assessment of additionality approved by the EB. Step 2 and 3 are performed in a plausible manner but lack in parts documented evidence substantiating the arguments given. t has also been considered in step 4 that other wind power projects have been implemented before at the same region without support from CDM. To do so, it has Draft CR 6, 7 and 9 Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-12

37 CHECKLST QUESTON MoV* COMMENTS been discussed and supported by corresponding information to what extent these projects faced other barriers and why and how the other projects could be implemented without CDM. Step 5 is discussed in a plausible manner. Clarification Request No. 6: For the calculation of the RR in the project case all calculations should be submitted to the audit team to allow the checking of the correctness of the calculated data. Hereby also the following issues should be considered: The designed lifetime of 20 years is below the crediting time The tariff differs between the one announced on page 20 of the PDD and the one used in the calculation. Draft Final Clarification Request No. 7: The benchmark applied in the financial analysis should refer to a specific source which is not a company internal benchmark as the tool for demonstration of additionality does explicitly ask to use a market standard * MoV = Means of Verification, DR= Document Review, = nterview Page A-13

38 CHECKLST QUESTON MoV* COMMENTS figure. Draft Final B.2.8. Have the major risks to the baseline been identified? B.2.9. s all literature and sources clearly referenced? Clarification Request No. 9: The technological barrier is only based on the fact that 8 years ago another project which according to the PDD is not comparable has technological problems. The same is not deemed sufficient and the client should review to remove this barrier or to add further documentation. The electric price barrier is a repetition of the argumentation given in the investment analysis and is not deemed sufficient and the client should review to remove this barrier or to add further documentation. No, the baseline is based on annual statistical data. No major risks have been identified excluding the inherent risk of the statistical data used. Yes C. Duration of the Project/ Crediting Period t is assessed whether the temporary boundaries of the project are clearly defined. C.1.1. Are the project s starting date and operational Yes, the starting date as well as the * MoV = Means of Verification, DR= Document Review, = nterview Page A-14

39 CHECKLST QUESTON MoV* COMMENTS lifetime clearly defined and reasonable? operational lifetime are clearly defined and also handled in a reasonable manner. C.1.2. s the assumed crediting time clearly defined and reasonable (renewable crediting period of max. two x 7 years or fixed crediting period of max. 10 years)? C.1.3. s it assured that in case the start of the crediting period is before the registration of the project that the project activities starting date falls in the period between 1 January 2000 and the registration of the first clean development mechanism project? D. Monitoring Plan The monitoring plan review aims to establish whether all relevant project aspects deemed necessary to monitor and report reliable emission reductions are properly addressed. Yes, the crediting period is with 7 years clearly defined. During the validation process the audit team obtained the information and evidenced that the start of project activities has been before the registration date of the first clean development mechanism project. Draft Final D.1. Monitoring Methodology t is assessed whether the project applies an appropriate baseline methodology. D.1.1. s the monitoring methodology previously approved by the CDM Methodology Panel? D.1.2. s the monitoring methodology applicable for this project and is the appropriateness justified? Yes, the monitoring methodology applied has been approved by the CDM Executive Board. The monitoring methodology is deemed to be the one out of the existing approved monitoring methodologies most applicable for this project. The PDD responds * MoV = Means of Verification, DR= Document Review, = nterview Page A-15

40 CHECKLST QUESTON MoV* COMMENTS D.1.3. Does the monitoring methodology reflect good monitoring and reporting practices? D.1.4. s the discussion and selection of the monitoring methodology transparent? convincingly to each of the applicability criteria which are outlined in the monitoring methodology. Partly. Corrective Action Request No. 5: The EB decided in its 23 rd meeting (para 24 of the report) that the monitoring plan as well as the monitoring report must contains statements regarding the following items: - uncertainty levels - accuracy levels - calibration procedures Statements regarding the mentioned parameters should be added in the PDD in a quantified manner. Yes. Draft CAR 5 Final D.2. Monitoring of Project Emissions t is established whether the monitoring plan provides for reliable and complete project emission data over time. D.2.1. Does the monitoring plan provide for the collection and archiving of all relevant data necessary for estimation or measuring the The project itself does not cause any relevant emissions. Hence no project emissions become reported. * MoV = Means of Verification, DR= Document Review, = nterview Page A-16

41 CHECKLST QUESTON MoV* COMMENTS greenhouse gas emissions within the project boundary during the crediting period? D.2.2. Are the choices of project GHG indicators reasonable? D.2.3. Will it be possible to monitor / measure the specified project GHG indicators? D.2.4. Will the indicators give opportunity for real measurements of achieved emission reductions? D.2.5. Will the indicators enable comparison of project data and performance over time? See comment above. See comment above. See comment above. See comment above. Draft Final D.3. Monitoring of Leakage t is assessed whether the monitoring plan provides for reliable and complete leakage data over time. D.3.1. Does the monitoring plan provide for the collection and archiving of all relevant data necessary for determining leakage? D.3.2. Have relevant indicators for GHG leakage been included? D.3.3. Does the monitoring plan provide for the collection and archiving of all relevant data necessary for determining leakage? D.3.4. Will it be possible to monitor the specified GHG leakage indicators? The project does not cause any relevant leakage emissions. Hence, leakage emissions are not reported. See comment above. See comment above. See comment above. * MoV = Means of Verification, DR= Document Review, = nterview Page A-17

42 CHECKLST QUESTON MoV* COMMENTS D.4. Monitoring of Baseline Emissions t is established whether the monitoring plan provides for reliable and complete project emission data over time. D.4.1. Does the monitoring plan provide for the collection and archiving of all relevant data necessary for determining baseline emissions during the crediting period? D.4.2. s the choice of baseline indicators, in particular for baseline emissions, reasonable? D.4.3. Will it be possible to monitor the specified baseline indicators? The monitoring plan does contain all relevant parameters in order to monitor the baseline emissions. Yes, the choice made is reasonable. Yes, the monitoring of the specified baseline indicators will be possible. Draft Final D.5. Monitoring of Sustainable Development ndicators/ Environmental mpacts t is checked that choices of indicators are reasonable and complete to monitor sustainable performance over time. D.5.1. Does the monitoring plan provide the collection and archiving of relevant data concerning environmental, social and economic impacts? D.5.2. s the choice of indicators for sustainability development (social, environmental, economic) reasonable? D.5.3. Will it be possible to monitor the specified sustainable development indicators? No, as a monitoring of such data is not required by the applied monitoring methodology. See comment above. See comment above. * MoV = Means of Verification, DR= Document Review, = nterview Page A-18

43 CHECKLST QUESTON MoV* COMMENTS D.5.4. Are the sustainable development indicators in line with stated national priorities in the Host Country? D.6. Project Management Planning t is checked that project implementation is properly prepared for and that critical arrangements are addressed. D.6.1. s the authority and responsibility of project management clearly described? D.6.2. s the authority and responsibility for registration, monitoring, measurement and reporting clearly described? D.6.3. Are procedures identified for training of monitoring personnel? D.6.4. Are procedures identified for emergency preparedness for cases where emergencies can cause unintended emissions? 1-3, , , , 17 DR, DR, DR, DR, See comment above. Yes. The overall authority and responsibility for the project is described in annex 4 of the PDD as well as in the monitoring plan. See D.6.1 See D.6.1 See D.6.1 Draft Final D.6.5. Are procedures identified for calibration of monitoring equipment? D.6.6. Are procedures identified for maintenance of monitoring equipment and installations? D.6.7. Are procedures identified for monitoring, measurements and reporting? 1-3, , , 17 DR, DR, DR, See D.6.1 See D.6.1 See D.6.1 * MoV = Means of Verification, DR= Document Review, = nterview Page A-19

44 CHECKLST QUESTON MoV* COMMENTS D.6.8. Are procedures identified for day-to-day records handling (including what records to keep, storage area of records and how to process performance documentation) D.6.9. Are procedures identified for dealing with possible monitoring data adjustments and uncertainties? D Are procedures identified for review of reported results/data? D Are procedures identified for internal audits of GHG project compliance with operational requirements where applicable? D Are procedures identified for project performance reviews before data is submitted for verification, internally or externally? D Are procedures identified for corrective actions in order to provide for more accurate future monitoring and reporting? 1-3, , , , , , 17 DR, DR, DR, DR, DR, DR, See D.6.1 See D.6.1 See D.6.1 See D.6.1 See D.6.1 See D.6.1 Draft Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-20

45 CHECKLST QUESTON MoV* COMMENTS E. Calculation of GHG Emissions by Source t is assessed whether all material GHG emission sources are addressed and how sensitivities and data uncertainties have been addressed to arrive at conservative estimates of projected emission reductions. Draft Final E.1. Predicted Project GHG Emissions The validation of predicted project GHG emissions focuses on transparency and completeness of calculations. E.1.1. Are all aspects related to direct and indirect GHG emissions captured in the project design? E.1.2. Are the GHG calculations documented in a complete and transparent manner? E.1.3. Have conservative assumptions been used to calculate project GHG emissions? E.1.4. Are uncertainties in the GHG emissions estimates properly addressed in the documentation? E.1.5. Have all relevant greenhouse gases and source categories listed in Kyoto Protocol Annex A been evaluated? 1-3, DR, 1-3, DR, 1-3, DR, The project does not generate any emissions. Hence this question is not applicable to the project. See comment above. See comment above. See comment above. See comment above. * MoV = Means of Verification, DR= Document Review, = nterview Page A-21

46 CHECKLST QUESTON MoV* COMMENTS E.2. Leakage t is assessed whether there leakage effects, i.e. change of emissions which occurs outside the project boundary and which are measurable and attributable to the project, have been properly assessed. Draft Final E.2.1. Are potential leakage effects beyond the chosen project boundaries properly identified? E.2.2. Have these leakage effects been properly accounted for in calculations? E.2.3. Does the methodology for calculating leakage comply with existing good practice? E.2.4. Are the calculations documented in a complete and transparent manner? E.2.5. Have conservative assumptions been used when calculating leakage? E.2.6. Are uncertainties in the leakage estimates properly addressed? Relevant leakage does not occur in the project according to the current project design. Hence, this question is not applicable. See comment above. See comment above. See comment above. See comment above. See comment above. * MoV = Means of Verification, DR= Document Review, = nterview Page A-22

47 CHECKLST QUESTON MoV* COMMENTS E.3. Baseline Emissions The validation of predicted baseline GHG emissions focuses on transparency and completeness of calculations. E.3.1. Have the most relevant and likely operational characteristics and baseline indicators been chosen as reference for baseline emissions? E.3.2. Are the baseline boundaries clearly defined and do they sufficiently cover sources and sinks for baseline emissions? E.3.3. Are the GHG calculations documented in a complete and transparent manner? E.3.4. Have conservative assumptions been used when calculating baseline emissions? Yes, the chosen indicators are relevant and plausible. Yes, the baseline boundaries are with the selected grid clearly defined and cover the relevant sources for baseline emissions Partly Corrective Action Request No. 1: The emission reduction should be displayed in a proper table being the same as provided in the guidelines for completing CDM-PDD. Clarification Request No. 5: For the calculation of the OM as well as the BM the respective calculations should be submitted to the audit team to allow the checking of the correctness of the calculated data. Yes, conservative assumptions have been used. Draft CAR 1 and CR 5 Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-23

48 CHECKLST QUESTON MoV* COMMENTS E.3.5. Are uncertainties in the GHG emission estimates properly addressed in the documentation? E.3.6. Have the project baseline(s) and the project emissions been determined using the same appropriate methodology and conservative assumptions? E.4. Emission Reductions Validation of baseline GHG emissions will focus on methodology transparency and completeness in emission estimations. E.4.1. Will the project result in fewer GHG emissions than the baseline scenario? 1-3, DR, Yes, uncertainties have been addressed in a proper manner. Yes, both emissions have been determined according to the methodology applied at this project. Yes. Draft Final F. Environmental mpacts Documentation on the analysis of the environmental impacts will be assessed, and if deemed significant, an EA should be provided to the validator. F.1.1. Has an analysis of the environmental impacts of the project activity been sufficiently described? F.1.2. Are there any Host Party requirements for an Environmental mpact Assessment (EA), and if yes, is an EA approved? 1-3, , 15 DR, DR, Yes, the environmental impacts can be seen as being low. These low impacts have been sufficiently described in the PDD. Yes, these requirements for approval have been fulfilled. F.1.3. Will the project create any adverse environmental effects? 1-3, DR, No, negative environmental effects are not * MoV = Means of Verification, DR= Document Review, = nterview Page A-24

49 CHECKLST QUESTON MoV* COMMENTS F.1.4. Are transboundary environmental impacts considered in the analysis? F.1.5. Have identified environmental impacts been addressed in the project design? F.1.6. Does the project comply with environmental legislation in the host country? 15 expected to be created by the project. 1-3, , , 15 DR, DR, DR, No, but as the project site is far from national boundary, such effects are not expected. As no significant environmental impacts are expected, such impacts have not influenced the project design. Yes. Draft Final G. Stakeholder Comments The validator should ensure that a stakeholder comments have been invited and that due account has been taken of any comments received. G.1.1. Have relevant stakeholders been consulted? 1-3, 16 DR, A formal consultation process with local stakeholders has taken place and corresponding information has been submitted to the audit team. G.1.2. Have appropriate media been used to invite comments by local stakeholders? G.1.3. f a stakeholder consultation process is required by regulations/laws in the host country, has the stakeholder consultation process been carried out in accordance with such regulations/laws? 1-3, , 16 DR, DR, Meeting have been held. No stakeholder process is required according to national legislation. G.1.4. s a summary of the stakeholder comments 1-3, DR, Yes, the comments to the latest project * MoV = Means of Verification, DR= Document Review, = nterview Page A-25

50 CHECKLST QUESTON MoV* COMMENTS received provided? 16 design have been provided. G.1.5. Has due account been taken of any stakeholder comments received? 1-3, 16 DR, As all comments have been positive no need for a modification is seen. Draft Final * MoV = Means of Verification, DR= Document Review, = nterview Page A-26

51 Table 3 Resolution of Corrective Action and Clarification Requests Draft report clarifications and corrective action requests by validation team Ref. to checklist question in table 1 and 2 Summary of project owner response Validation team conclusion Corrective Action Request No. 1: The emission reduction should be displayed in a proper table being the same as provided in the guidelines for completing CDM-PDD. E.3.2 The client has revised the table now being almost in line with the template. The approach is deemed acceptable. Corrective Action Request No. 2: The PDD refers to version 01 of the applied methodology whereas currently version 03 is valid. To be corrected. B.2.1 The PDD has been updated and refers correctly to version 06. Corrective Action Request No. 3: Table 2 in the PDD (page 12) refers to the statistical data of to define the COEF. t should be elaborated why not more recent data has been used or more recent data should be applied. B.2.2 The data has been updated and includes up to 2004 data in the revised PDD. Corrective Action Request No. 4: The BM needs to be calculated according to the rules. The current approach does consider only one plant and the selection is not retraceable. B.2.1 The calculation has been revised according to the newly used version of the methodology. Hereby also a recalculation according to new weights for wind power project in ACM0002 version 06 has taken place. Page A-27

52 Draft report clarifications and corrective action requests by validation team Ref. to checklist question in table 1 and 2 Summary of project owner response Validation team conclusion Corrective Action Request No. 5: The EB decided in its 23 rd meeting (para 24 of the report) that the monitoring plan as well as the monitoring report must contains statements regarding the following items: D.1.3 The required information has been provided in the monitoring plan (para 6) of the revised PDD. - uncertainty levels - accuracy levels - calibration procedures Statements regarding the mentioned parameters should be added in the PDD in a quantified manner. Clarification Request No. 1: The PDD describes the load factor to be 36% resulting in an expected annual power generation of GWh. t should be explained how these figures have been calculated and what is the basis for these values. B.2.5 A dedicated Annex 5 regarding this issue has been attached in the revised PDD. Clarification Request No. 2: Chapter A.3 of the PDD should only refer to actual project participants and not list all companies and institutions involved in the Table 1, 8 The PDD has been revised accordingly and now clearly outlines the project participants. Page A-28

53 Draft report clarifications and corrective action requests by validation team project. To be clarified. Clarification Request No. 3: t should be demonstrated that the statement made in chapter A.4.3 of the PDD that 1.5 MW turbines of the respective type are the first time installed in China is applicable and correct. Ref. to checklist question in table 1 and 2 A.2.1 Summary of project owner response t has been clarified in A.4.3 that it is an enhanced type of the wind turbine with 1.5MW that is the first time imported and installed in China, although the earlier type of the 1.5MW wind turbine has already been imported. Validation team conclusion Clarification Request No. 4: The imports and exports to and from the chosen electricity grid should be named, if any, and a source for the respective data should be given. The imports should be considered in the calculation of the OM and BM emission factor. B.2.1 n the revised version of PDD, the chosen electricity grid has been updated from the sub-grid level of Urumqi grid to the Xinjiang Autonomous grid at provincial level. However, the Xinjiang grid has not been connected to the North-Western regional grid physically, until after 2010 as expected. So it has been clarified in the Chapter B.4 that there is no electricity import and export between the chosen Xinjiang grid and the regional grid accordingly. Naturally the import is not considered in the calculation of the OM and BM emission factor. Clarification Request No. 5: For the calculation of the OM as well as the E.3.2 n the Annex 3 of the revised version of PDD, the detailed calculations of the OM, BM and CM have been updated in The project proponent explains in a proper manner the way the data has been compiled and indicates reasons Page A-29

54 Draft report clarifications and corrective action requests by validation team BM and resulting CERs the respective calculations should be submitted to the audit team to allow the checking of the correctness of the calculated data. Ref. to checklist question in table 1 and 2 Summary of project owner response Table 1, 2, 3 and 4, according to the ACM0002 Version 06. The CERs calculation has also been updated in the Chapter E. More detailed calculation can be found in the submitted Excel sheets. Validation team conclusion for use of consistent data. During the whole process of the PDD development, especially for the baseline emission factor calculation, the most latest data sources publicly available are mainly from the China s Electric Power Yearbook 2004 Edition and China s Energy Statistical Yearbook 2004 Edition. n both 2004 editions the latest data available are for Moreover, in the Power Yearbook, the data of the installed capacity and the electricity generation are aggregated for hydro, thermal and nuclear power types only. The data for thermal power are not disaggregated further by fuel types as coal, oil and gas, etc. While the carbon emission factors are fuel specific. On the other hand, in the Energy Yearbook, the electricity Page A-30

55 Draft report clarifications and corrective action requests by validation team Ref. to checklist question in table 1 and 2 Summary of project owner response generation and their fuel consumptions are disaggregated by fuel types. So we have to use capacity data from the power yearbook and fuel related electricity generation data from the Energy yearbook in a combined manner. n such case we have to keep both data sources for the same year, the latest was for Although later on the Electric Power Yearbook, 2005 Edition was available, but the Energy Yearbook 2005 edition is not available yet, which will be published every two years. Validation team conclusion Clarification Request No. 6: For the calculation of the RR in the project case all calculations should be submitted to the audit team to allow the checking of the correctness of the calculated data. B.2.7 The financial cash flow analysis sheet has been submitted to the audit team. The rational behind the basic parameter data and the underlying documented evidence has hereby been submitted to the audit team. The calculation is deemed to be plausible. The documented evidence for basic parameter data has been verified. Clarification Request No. 7: The benchmark applied in the financial analysis should refer to a specific source B.2.7 t has been clarified in the Chapter B.3. of the revised PDD, that a company internal benchmark was replaced by the electric power sector benchmark which Page A-31

56 Draft report clarifications and corrective action requests by validation team which is not a company internal benchmark as the tool for demonstration of additionality does explicitly ask to use a market standard figure. Ref. to checklist question in table 1 and 2 Summary of project owner response is a market standard figure. The respective document has been submitted. Validation team conclusion Clarification Request No. 8: The choice to choose the Urumqi grid and not a regional grid should be justified as the methodology asks for a regional grid. B.2.2 The selected grid has been changed. The project proponent now applies the Xinjiang grid. The same is justified in a proper manner. Clarification Request No. 9: The technological barrier is only based on the fact that 8 years ago another project which according to the PDD is not comparable has technological problems. The same is not deemed sufficient and the client should review to remove this barrier or to add further documentation. B.2.7 The argumentation has been updated in the PDD accordingly. The electricity price barrier is a repetition of the argumentation given in the investment analysis and is not deemed sufficient and the client should review to remove this barrier or to add further documentation. Page A-32

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