VALIDATION REPORT for the CDM Project Activity. Ban Coc Hydropower Project

Transcription

1 VALIDATION REPORT for the CDM Project Activity Ban Coc Hydropower Project in Viet Nam Report No Version No. 02.2, TÜV Rheinland Japan Ltd.

2 I. Project description: Project title: Host Country: Ban Coc Hydropower Project Viet Nam Methodology: ACM0002 version 11 Large Scale Small Scale Annual average emission 40,010 tco reductions (estimate): 2 e/yr GHG reducing measure/technology: Hydro Power Technology Party Project Participants Party considered a project participant Viet Nam (Host) Que Phong Hydropower Joint Stock Company No Viet Nam (Host) Energy and Environment Consultancy Company Limited No Sweden (Annex I party) Nordic Environment Finance Corporation NEFCO in its capacity as Fund Manager to the NEFCO Carbon Fund (NeCF) No II. Validation: Contract party: Energy and Environment Consultancy Company Limited Validation Team*: Role Full name Appointed for Sectoral Scopes Affiliation Team Leader Mr. Harold Hai 1, 13 Team Member Mr. Minglong Huang Mr. Tommy Lo 1, 5, 11 1, 5, 13 TÜV Rheinland Hong Kong Ltd. Mr. Wilfred Chan* 1, 6, 13 Trainee Mr. Feng Hu N/A Local Expert Mr. Truong Le Tien Dung N/A TÜV Rheinland Vietnam Co., Ltd. Technical Reviewer Ms. Cuiping Deng 1.2, 5.1, 11.1, 12.1 TÜV Rheinland (China) Ltd. * Mr. Wilfred Chan participated in this project until the end of September Validation Phases: Desk Review Follow up interviews Resolution of outstanding issues Validation Status: Corrective Actions / Clarifications Requested Full Approval and Submission for Registration Rejected III. Validation Report: Report No.: Current revision No.: Date of current revision: Date of first issue: Distribution: No distribution without permission from the Client or responsible organizational unit Unrestricted distribution Final approval: Released on: Designated Operational Entity (DOE): Date: By: Dr. Manfred Brinkmann TÜV Rheinland Japan Ltd. Shin Yokohama Daini Center Bldg., , Shin Yokohama Kohoku-ku, Yokohama, JAPAN Tel.: , Fax: cdm@tuv.com Version No.: 02.2 Page 2

3 Executive Summary Validation Opinion The validation team assigned by the DOE (TÜV Rheinland Japan Ltd.) concludes that the CDM Project Activity Ban Coc Hydropower Project in Viet Nam, as described in the PDD (version 2.5, 13 th December 2010), meets all relevant requirements of the UNFCCC for CDM project activities including article 12 of the Kyoto Protocol, the modalities and procedures for CDM (Marrakesh Accords) and the subsequent decisions by the COP/MOP and CDM Executive Board. The selected baseline/monitoring methodology is applicable to the project and correctly applied. The DOE therefore requests the registration of the project as a CDM project activity. The validation was executed in the following steps so far: - Desk review of preliminary PDD (version 01, 11 th January 2010) - Public stakeholder comment process (15 th January to 13 th February 2010) - On-site visit with stakeholder interviews (26 th to 28 th January 2010) - Issue of checklist with corrective action requests (CARs) and clarification requests (CLs) - and the draft validation report & protocol - Desk review of revised PDD (version 2.5, 13 th December 2010) - Review of proposed corrections and clarifications - Issue of the final validation report & protocol (with absence of the LoA from the Annex I country) - Issue of the final validation report & protocol The host country is Viet Nam. The LoA issued by the DNA of Viet Nam Ministry of Natural Resources and Environment of Viet Nam (MONRE), has been received. The voluntary project participation of Que Phong Hydropower Joint Stock Company (QPH) and Energy and Environment Consultancy Company Limited (VNEEC) and assisting Viet Nam in achieving sustainable development of the project therefore can be confirmed. The project is a bi-lateral CDM-project, with Sweden identified as the Annex I party. The LoA for confirming Nordic Environment Finance Corporation NEFCO in its capacity as Fund Manager to the NEFCO Carbon Fund (NeCF) as the project participant from the DNA of Sweden has also been received. The validation team did not reveal any information that indicates that the project can be seen as a diversion of ODA funding towards Viet Nam. The validation team has checked that the project applies ACM0002/Version 11 Consolidated baseline methodology for grid-connected electricity generation from renewable sources, in connection with the Tool for the demonstration and assessment of additionality (Version 05.2) and Tools to calculate the emission factor for an electricity system (Version 2). By utilizing hydropower resources, the project results in reductions of CO 2 emissions that are real, measurable and give long-term benefits to the mitigation of climate change. It is also demonstrated that the project is unlikely a baseline scenario. Emission reductions attributable to the project are hence additional to any that would occur in the absence of the project activity. Version No.: 02.2 Page 3

4 The total emission reductions from the project are estimated to be on the average 40,010 tco 2 e per year over the first selected 7-year renewable crediting period. The calculation is based on the best available information at the time of submission to DOE for GSP. Monitoring procedures have been planned according to the monitoring methodology ACM0002/Version 11. The training plan, technical training contract, training materials and training records have been checked. Relevant operation manuals for specific equipments are also reviewed by the validation team. From all of these, project participant shows the ability of project implementation and the ability to monitor the emission reductions if the project can be registered. In summary, for Ban Coc Hydropower Project in Viet Nam, as described in the PDD of 13 th December 2010, the validation team s opinion is positive. According to the VVM /6/ requirements in paragraph 50 (a) & (b), the DOE therefore requests the registration of the project as a CDM project activity. Version No.: 02.2 Page 4

5 Abbreviations ACPL BE y BM CAR CDM CEMI CER CL CM CO 2 DNA DOE DR EB EIA EPB ER ERPA EVN FAR FB FSR GHG GWh I IETA IM IPCC IRR kw kwh LoA LoI LRB L y MONRE MOU MoV MW MWh NEFCO NEGV NGO NO x OM O&M OSV PDD PE y PP PPA Asia Carbon Pte Ltd Baseline Emissions Build Margin Corrective Action Request Clean Development Mechanism China Equipment and Machine Import-Export Company Certified Emission Reduction Clarification Request Combined Margin Carbon Dioxide Designated National Authority Designated Operational Entity Document Review Executive Board Environmental Impact Assessment Environmental Protection Bureau Emission Reductions Emission Reduction Purchase Agreement Electricity Corporation of Viet Nam Forward Action Request Forestry Bureau Feasibility Study Report Greenhouse Gas Giga Watt Hours Interview International Emissions Trading Association Interim Measures for Operation and Management of CDM projects Intergovernmental Panel on Climate Change Internal Rate of Return Kilo Watt Kilo Watt Hours Letter of Approval Letter of Intent Land Resource Bureau Leakage Ministry of Natural Resources and Environment of Viet Nam Memorandum of Understanding Means of Validation Mega Watt Mega Watt Hours Nordic Environment Finance Corporation National electricity grid of Viet Nam Non Government Organisation Nitrogen Oxides Operating Margin Operation and Maintenance On Site Visit Project Design Document Project Emissions Project Participant Power Purchase Agreement Version No.: 02.2 Page 5

6 QPH SA SO 2 T TDR UNFCCC VAT VNEEC VVM WACC Que Phong Hydropower Joint Stock Company Sensitivity Analysis Sulphur Dioxide Tonne Technical Design Report United Nations Framework Convention on Climate Change Value-added Tax Energy and Environment Consultancy Company Limited Validation and Verification Manual Weighted average costs of capital Version No.: 02.2 Page 6

7 TABLE OF CONTENTS 1 INTRODUCTION Objective Scope 8 2 METHODOLOGY Desk Review of the Project Design Documentation Follow-up Interviews with Project Stakeholders Resolution of Outstanding Issues Internal Quality Control Validation Team 22 3 VALIDATION FINDINGS Approval and Participation Project Design Document Project Description Baseline and Monitoring Methodology Additionality Monitoring Sustainable Development Environmental Impacts Local Stakeholder Consultation Comments by Parties, Stakeholders and NGOs 51 Appendix A: Validation Protocol Appendix B: Information on the registered CDM Hydropower Projects in Viet Nam Appendix C: Certificates of Competence Version No.: 02.2 Page 7

8 1 INTRODUCTION Energy and Environment Consultancy Company Limited (VNEEC) has commissioned the DOE TÜV Rheinland Japan Ltd. to perform a validation of the CDM Project Activity Ban Coc Hydropower Project in Viet Nam (hereafter called the project ). This report summarises the findings of the validation of the project, performed on the basis of UNFCCC criteria for the CDM, as well as criteria given to provide for consistent project operations, monitoring and reporting. The term UNFCCC criteria refers to Article 12 of the Kyoto Protocol, the CDM modalities and procedures and the subsequent decisions by the CDM Executive Board. 1.1 Objective The purpose of a validation is to have an independent third party assess the project design. In particular, the project s baseline, monitoring plan, and the project s compliance with relevant UNFCCC and host Party criteria are validated in order to confirm that the project design, as documented, is sound and reasonable and meets the 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). 1.2 Scope The validation scope is defined as an independent and objective review of the project design document (PDD). The PDD is reviewed against the relevant criteria (see above) and decisions by the CDM Executive Board, including the approved baseline and monitoring methodology. The validation team has, based on the recommendations in the Validation and Verification Manual employed a rules-based approach, focusing on the requirements of the EB s VVM for project implementation and the generation of CERs. The validation is not meant to provide any consulting towards the project participants. However, stated requests for clarifications and/or corrective actions may have provided input for improvement of the project design. Version No.: 02.2 Page 8

9 2 METHODOLOGY The validation consists of the following three phases: I a desk review of the project design documents II public stakeholder comment process III on-site visit and follow-up interviews with project stakeholders IV the resolution of outstanding issues and the issuance of the final validation report and opinion. The following sections outline each step in more detail. 2.1 Desk Review of the Project Design Documentation The following table outlines the documentation reviewed during the validation: /1.1/ Project Design Document (PDD), Version 01, 11 th January 2010 /1/ /1.2/ PDD, Version 2.5, 13 th December 2010 /2/ UNFCCC, CDM-PDD-Project Design Document form, Version 03.2, EB 25 Annex 15 /3/ /4/ /5/ UNFCCC, Guidelines for Completing the Project Design Document (CDM-PDD) and the Proposed New Baseline and Monitoring Methodologies (CDM-NM), Version 07 UNFCCC, ACM0002 Consolidated baseline methodology for grid-connected electricity generation from renewable sources, Version 11, EB 52 Annex 7 UNFCCC, Tool to calculate the emission factor for an electricity system, Version 02, EB 50 Annex 14 /6/ UNFCCC, Clean Development Mechanism Validation and Verification Manual (VVM), Version 01.2, EB 55 Annex 1 /7/ UNFCCC, Tool for the demonstration and assessment of additionality, Version 05.2 /8/ /9/ /10/ /11/ /12/ UNFCCC, Glossary of CDM terms, Version 05, EB 47 Annex Para Revised 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Table 1.4, Page 1.24, Chapter 1, Volume 2 UNFCCC, Guidelines on the Assessment of Investment Analysis, Version 03.1, EB 51 Annex 58 CDM validation service contract, between Energy and Environment Consultancy Company Limited (VNEEC) and TÜV Rheinland Hong Kong Ltd., 7 th January 2010 National Resources Tax (Decision No.: 68/1998/ND-CP), in which the tax rate for water usage in hydropower is 2% /13/ The Prime Minister of Government, Approving the Strategy on Development of Viet Nam Electricity Industry in the Period, with Orientations towards 2020 Version No.: 02.2 Page 9

10 (Decision No.: 176/2004/QD-TTg), 5 th October 2004 /14/ /15/ /16/ /17/ /18/ /19/ /20/ /21/ /22/ /23/ /24/ /25/ /26/ Approval of national small hydropower scheme (Ref. No.: 3454/QD-BCN), 18 th October 2005, applicable for projects with capacities from 1MW to 30MW Table from Viet Nam Construction Code (Ref. No.: TCXDVN 285:2002) - Irrigation projects Major standards on designing The Ministry of Finance, Detailing the Implementation of the Law on Enterprise Income Tax (Decree No.: 164/2003/ND-CP), 22 nd December 2003 No.1 Electricity Construction Consultancy Company, Technical Design report (TDR, equivalent to Feasibility Study Report, i.e. FSR) of Ban Coc Hydropower Project: Volume IV-2, General Explanation, September 2004 Power Purchase Contract (Ref. No.: /IPP/QPHP-EPTC), between Electricity Corporation of Viet Nam (EVN) and Que Phong Hydropower Joint Stock Company (QPH), December 2009 Consulting and Technology Transfer Company, University of Water Resources, Inspection report on the technical design of Ban Coc Hydropower Plant (Ref. No.: 219/2004/CV-CT), 24 th November 2004 The Ministry of Finance, Resource Tax (Ref. No.: 153/1998/TT/BTC), 26 th November 1998, in which it states that the resource tax of natural water used to produce electricity is the electricity price Department of Science, Technology & Environment, Nghe An People s Committee, Certificate of Environmental Standard Registration for Ban Coc Hydropower Plant (Ref. No.: 32/KH-MTg), 5 th March 2003 EVN, Agreement on the alternative for determining connecting and metering point of Nhan Hac, Ban Coc hydropower plants to the national grid (Ref. No.: 1178/CV-EVN- TD), 14 th March 2005 Business Registration Division, Nghe An Department of Planning and Investment, Business Registration Certificate of QPH (Registration No.: ), 1 st registration on 26 th July 2005 QPH, Researching to develop Ban Coc Hydropower Project as CDM project (Ref. No.: 197/TDQP), 20 th August 2005 QPH, Minutes of the meeting for consulting people s opinions on the socio-economic impacts of Ban Coc Hydropower Project, 20 th November 2005 QPH, Develop and Register the Ban Coc Hydropower Project as CDM Project (Ref. No.: 241/TDQP), 26 th December 2005 /27/ Credit contract of Ban Coc Hydropower Project (Ref. No.: /HDTD), between QPH and Bank for Investment and Development of Viet Nam (Quang Trung Version No.: 02.2 Page 10

11 Branch), Bank for Foreign Trade of Viet Nam, Indovina Bank (Hanoi Branch) and Post and Telecommunication Finance Company, 14 th November 2006 /28/ Nghe An People s Committee, Investment License of QPH for Ban Coc Hydropower Plant (Ref. No.: ), 1 st certification on 30 th November 2006 /29/ IRR and ER spreadsheet of Ban Coc Hydropower Project /30/ Emission Reductions Purchase Agreement (ERPA), between Nordic Environment Finance Corporation NEFCO in its capacity as Fund Manager to the NEFCO Carbon Fund (NeCF) and QPH, 2 nd December 2009 /31/ QPH, Organization structure of Ban Coc Hydropower Plant /32/ /32.1/ /32.2/ The Ministry of Industry. Decision on Temporary Instruction on Contents of Investment Financial-Economic Analyses and Price Frame for Electricity Sale and Purchase from Power Generation Projects (Ref. No.: Decision 709/QD-NLDK), 13 th April 2004 The Ministry of Industry. Regulations on calculation and analysis of economy-finance-investment and electricity purchasing frame for the electricity project (Ref. No.: Decision 2014/QD-BCN), 13 th June 2007 (remark: replacement of Decision 709/QD-NLDK) /33/ /34/ /35/ /36/ /37/ No.1 Electricity Construction Consultancy Company, Registration on Environmental Standard Conformation of Ban Coc Hydropower Project, September 2002 Agreement for CDM project development and carbon asset management, between QPH and Asia Carbon Pte Ltd (ACPL, the previous CDM consultancy), 8 th January 2006 CDM Guidebook, published by TÜV Rheinland Hong Kong Ltd. and Deutsche Investitions- und Entwicklungsgesellschaft GmbH in conjunction with Research Centre for Energy and Environment, December 2004 Tender letter to the Government of Flanders for the submission of the Ban Coc hydropower project, 16 th November 2004 Metering system and diagram of Ban Coc Hydropower Project at the 110kV Truong Banh Substation, December 2007 /38/ Electricity sale records, dated from August to October 2009 /39/ /40/ Starting of project operation (i.e. project commissioning) (Ref. No.: 3565/UBND.DT), 12 th July 2009 The 1 st official letter by QHP to complain the delay in implementation and request ACPL to demonstrate the progress and implement the CDM proposed project, 15 th December 2006 Version No.: 02.2 Page 11

12 /41/ /42/ /43/ /44/ /45/ The 2 nd official letter by QHP to complain the delay in implementation and request ACPL to demonstrate the progress and implement the CDM proposed project, 23 rd September 2007 Contacting with buyer (the official letter to Asia Carbon Exchange Private Limited), 15 th January 2008 The 3 rd official letter by QHP to complain the delay in implementation and warn ACPL about the termination of the CDM contract due to the delay, 26 th November 2008 Official termination of the CDM development and registration contract with ACPL, 4 th September 2009 CDM consultation contract (Contract No.: /HDCDM/VNEEC-QuePhong), between QPH and VNEEC, 9 th September 2009 /46/ CDM monitoring training records (list of 6 attendees), January 2010 /47/ /48/ /49/ /50/ Statement of recovery land by People Committee of Que Phong district, 1 st June 2007 Compensation agreement of land acquisition (signed by 26 stakeholders), 16 th June 2005 The 1 st minute of negotiation on the electric price of Ban Coc Hydropower Project (590 VND/kWh), 25 th August 2003 The 2 nd minute of negotiation on the electric price of Ban Coc Hydropower Project (668 VND/kWh), 1 st December 2009 /51/ Topographic map of the project site (Ref. No.: TV.P TBA-01), March 2006 /52/ /53/ /54/ /55/ EVN, Letter about baseline data for preparing CDM of Song Bung Hydro Power Plant (remark: the data is also applicable for the proposed project), 16 th May 2008 Contract for supply of plant technological equipment and technical services, signed between QPH and China Equipment and Machine Import-Export Company (CEMI), 22 nd February 2006 Annual Report 2004 of the State Bank of Viet Nam, Ministry of Natural Resources and Environment (MONRE), Letter to CDM project developers - Emission factor of Vietnam national grid (Ref. No.: 427/KTTVBDKH), 29 th July 2009 /56/ Emission factor data from EVN and calculation spreadsheet /57/ Institute of Energy, EVN, Information on power plants connected to the national electricity grid in 2005, 2006 and 2007, August 2008 Version No.: 02.2 Page 12

13 /58/ /59/ /60/ Meeting minute regarding connecting the Ban Coc Hydropower Plant to the national grid on 12 th July 2009, dated 8 th July 2009 EVN, Method to export and import electricity in Ban Coc and other two power plants nearby (Ref. No.: 1315/ERTC-P5), 7 th December 2009 Alpha Securities Joint Stock Company, Analysis and assessment report on electricity generation sector in Vietnam (Ref. No.: 03/2009/APSC-LS), 17 th April 2009 /61/ Business registration of VNEEC (Ref. No.: ), 12 th June 2006 /62/ Project layout (Ref. No.: TH04) /63/ /64/ /65/ Ministry of Technology and Environment, Decision No. 65/2002/QD-BKHCNMT - the list of measurement meters to be calibrated, 19 th August 2002 Ministry of Finance and MONRE, Fee for sale or transfer of CERs abroad (Ref. No.: 58/2008/TTLT-BTC-BTN&MT), 4 th July 2008 Decision on approving the planning on national electricity development in the period, with a vision to 2025 taken into consideration (Ref. No.: 110/2007/QD- TTg), 18 th July 2007 /66/ IbbotsonAssociates, International Cost of Capital Perspectives Report 2005 /67/ QPH, Negotiation of electricity tariff (668 VND/kWh), 1 st December 2009 /68/ Financial Report of QPH in Year 2009 (draft version), March 2010 /69/ QPH, Declaration of no ODA for Ban Coc Hydropower Project, 5 th August 2009 /70/ Project information regarding three other hydropower plants, i.e. Can Don hydropower plant, Vinh Son Song Hinh hydropower plant, and Thac Mo hydropower plant /71/ Operation and emergency treatment of generator of Ban Coc plant, July 2009 /72/ Operation and emergency treatment of turbine of Ban Coc plant, July 2009 /73/ Procedure of power safety technology of Ban Coc Plant, July 2009 /74/ VNEEC, Monitoring Training Material of Ban Coc Plant, January 2010 /75/ VNEEC, Monitoring Manual of Ban Coc Plant, 18 th January 2010 /76/ Technical training contract ("knowledge of safety and operation hydropower" and "Operation the power engines in the power plant"), signed between QPH and Improvement Education Center (ACT), 19 th June 2007 /77/ UNFCCC, Tool to determine the remaining lifetime of equipment (Version 01), EB Version No.: 02.2 Page 13

14 50 Annex 15 /78/ UNFCCC, Tool to calculate project or leakage CO 2 emissions from fossil fuel combustion (Version 02), EB 41 Annex 11 /79/ Asia Commercial Bank Securities Company, List of government bond rates /80/ Spreadsheet: about Computation of Expected Return on Equity /81/ The acceptance of the metering system at the second period of Ban Coc plant and Sao Va plant after completion according to Document No. 1280/EPTC-PC-P5, 8 th February 2010, TBA 110kV Truong Banh Substation /82/ Photo of the metering system at Truong Banh Substation /83/ Employment contract (4 sets) /84/ QPH, List of employees in Ban Coc plant (in total 36 people) /85/ /86/ /87/ /88/ /89/ /90/ /91/ /92/ /93/ Ministry of Industry, Regulation on investment and construction management applicable to independent power projects (Ref. No.: Decision 30/2006/QD-BCN), 31 st August 2006 Ministry of Industry, Approval of investment of QPH on Ban Coc project (Ref. No.: 4152/CV-NLDK), 5 th August 2005 People Committee of Chau Kim commune, Invitation letter of the meeting for consulting people s opinions on the socio-economic impacts of Ban Coc Hydropower Project, 15 th November 2005 Minutes on negotiation of electric tariff of the group hydropower plants in Que Phong, between the Power Purchase Company (EPTC) and QPH, 30 th November 2009 Ministry of Finance, Regulation on management, utilization and depreciation of fixed assets (Ref. No.: Decision 206/2003/QD-BTC), 12 th December 2003 QPH and Phu Thinh An Construction & Trading JSC, Contract of concrete of chamber robin, chamber number 3 and steel reinforcement (contracted amount: 2,318,978,000 VND), 5 th December 2008 QPH and Phu Thinh An Construction & Trading JSC, Contract of drilling to construct the penstock from the vertical shaft to plant (contracted amount: 249,496,000 VND), 5 th December 2008 QPH and Construction & Mechanic JSC - HEC, Contract of supply and installation of derivation tunnel - tunnel cross land (contracted amount: 784,657,000 VND), 15 th December 2008 QPH and Ham Rong Power Construction Company, Contract of firefighting pool and pump (contracted amount: 264,560,000 VND), 30 th December 2008 Version No.: 02.2 Page 14

15 /94/ /95/ /96/ /97/ /98/ /99/ /100/ /101/ /102/ /103/ /104/ /105/ QPH and No.6 Construction Company, Contract of Head works (dam, intake gate, penstock connect to intake gate, sluicing outlet...) (contracted amount: 10,022,923,000 VND), 24 th April 2006 QPH and Thach Phat Private Company, Contract of taluy and foundation pit (contracted amount: 3,500,000,000 VND), 12 th August 2006 QPH and Construction & Electricity & Water Installation JSC, Contract of construction of power house and discharge tunnel of Ban Coc hydropower project (contracted amount: 12,424,688,000 VND), 8 th September 2006 QPH and Lung Lo Construction Company, Contract of the main tunnel and the additional tunnel HP-1, HP-2, HP-3 (contracted amount: 38,533,408,000 VND), 7 th November 2006 QPH and Mechanization, Construction & Erection JSC, Contract of construction of the 110kV transmission line from G7 (Column 1) to G28 (Column 84) (contracted amount: 6,515,123,000 VND), 26 th February 2007 QPH and K2 Construction JSC, Contract of supplied and constructed the 35kV transmission line from Ban Coc - 35/110kV Truong Banh transformer station (contracted amount: 3,873,171,000 VND), 26 th February 2007 QPH and Thien Xung Company Limited, Contract of supplied and Installed the equipment of transformer station and the technical service of Ban Coc hydropower project (contracted amount: 6,858,000,000 VND), 3 rd May 2007 QPH and Power Mechanical JSC, Contract of supply and installation of penstock and other technical service for Ban Coc hydropower project (contracted amount: 21,824,341,000 VND), 28 th May 2007 QPH and Thanh Anh Construction & Material JSC, Contract of construction of warehouse for restoring the equipments (contracted amount 5%: 504,596,000 VND), 18 th May 2007 QPH and Ham Rong Power Construction Company, Contract of bore and cast the foundation of column of 35kV transmission line from Ban Coc plant to 35/110kV Truong Banh station (contracted amount: 789,219,691 VND), 26 th May 2007 QPH and Viet Nam Industrial Construction Corporation, Contract of construction the 110kV transmission line from G28 (COLUMN 84) to G48 (Column 174) (contracted amount: 6,115,000,000 VND), 15 th March 2007 QPH and Power Company (Quy Chau Branch), Contract of construction of 500KVA KV station for servicing the construction of Ban Coc hydropower plant (contracted amount: 390,000,000 VND), 1 st June 2007 /106/ QPH and Viet Nam Industrial Construction Corporation, Contract of construction and Installation the Truong Banh 35/110kV station in Que Son commune (contracted Version No.: 02.2 Page 15

16 amount: 6,436,397,000 VND), 16 th June 2007 /107/ /108/ /109/ /110/ /111/ /112/ /113/ /114/ /115/ /116/ /117/ /118/ QPH and Thang Long Industrial Construction & Trading JSC, Contract of construction and supply the equipment for expanding the Quy Hop station, improved the 110/35/10kV Quy Hop station belongs to Ban Coc hydropower project (contracted amount: 6,116,758,000 VND), 16 th June 2007 QPH and Ham Rong Power Construction Company, Contract of supply column and construction the 35kV transmission line from Ban Coc plant to 35/110kV Truong Banh station (contracted amount: 365,912,000 VND), 10 th October 2007 QPH and Power Mechanic JSC, Contract of 35kV station after Ban Coc hydropower plant (contracted amount: 511,192,761 VND), 10 th November 2007 QPH and Lung Lo Construction Company, Contract of water tunnel cross rock and land (contracted amount: 2,376,577,000 VND), 2 nd January 2008 QPH and Power Mechanical JSC, Contract of penstock (segment cross the land) (contracted amount: 3,304,800,000 VND), 31 st March 2008 QPH and Construction & Mechanic JSC - HEC, Contract of supply and installation the pipes water (contracted amount: 832,960,000 VND), 2 nd April 2008 QPH and Construction & Mechanic JSC - HEC, Contract of supply and installation of the gate of plant (contracted amount: 167,465,000 VND), 12 th April 2008 QPH and Thach Phat Private Company, Contract of construction of operation road D1A (contracted amount: 661,460,000 VND), 11 th April 2008 QPH and Thach Phat Private Company, Contract of bund around plant (contracted amount: 2,184,239,000 VND), 11 th April 2008 Bank for Investment and Development of Vietnam (BIDV) (Quang Trung branch), Written response to the DOE questions against Ban Coc Hydropower Project (Ref. No.: 338/CV-CNQT), 12 th March 2010 UNFCCC, Guidelines for the Reporting and Validation of Plant Load Factors, Version 01, EB 48 Annex 11 No.1 Electricity Construction Consultancy Company, Letter to QPH regarding the calculation of plant load factor (the confirmed value is 47.86%), 20 th May 2010 /119/ Training plan of the Ban Coc Hydropower Project, 17 th December 2009 /120/ EVN, Master Plan VI, Chapter VI Assessment of Energy Sources /121/ Contacting new buyer ( contact with NEFCO), 17 th November 2009 /122/ Calculation spreadsheet of loss load and plant consumption according to technical specifications provided by the equipment manufacturer Version No.: 02.2 Page 16

17 /123/ Ministry of Natural Resources and Environment of Viet Nam (MONRE), Letter of Approval (LoA) (Ref. no.: 17/2010/DMHCCC-BCD), 2 nd August 2010 /124/ Modalities of Communication (MoC), 5 th August 2010 /125/ Technical manual of the supplied power system /126/ Swedish Energy Agency, LoA (Ref. no.: ), 24 th August 2010 /127/ confirmation from the DNA of Viet Nam about the LoA validity, 8 th July 2010 /128/ confirmation from the DNA of Sweden about the LoA validity, 10 th Sep /129/ /130/ /131/ /132/ /133/ Ministry of Natural Resources and Environment (MONRE), Letter to CDM project developers - Emission factor of Vietnam national grid (Ref. No.: 151/KTTVBDKH), 26 th March 2010 Decree No. 45/2001/ND-CP on Electricity Activities and Use, 2 nd August Law on State-owned Enterprises, ODA information of Ea Krong Rou hydropower project & Financial Report of Mien Trung Power Investment and Development Joint Stock Company (i.e. project owner of Ea Krong Rou hydropower project) in Quarter 2/2010 /134/ ODA Credit Contract of Suoi Sap Hydropower Project, 10th March 2005 /135/ /136/ /137/ Information from UNFCCC website about Ratification of the Kyoto Protocol, Online information showed that Hanoi Construction Corporation is one of the largest construction groups in Viet Nam, doanh-nghip-xay-dng-ln-nht-vit-nam&catid=956:top-20&itemid=188&lang=en Data of Inflation factor of Viet Nam from International Monetary Fund, World Economic Outlook Database, October 2008, &ssd=1&sort=country&ds=.&br=1&c=582&s=pcpipch&grp=0&a=&pr1.x=77&pr1.y=10 Version No.: 02.2 Page 17

18 2.2 Follow-up Interviews with Project Stakeholders The following table outlines personnel who have been interviewed and/or provided additional information to the presented documentation. Date Name Organization Title /i/ Dang Hong Hanh Deputy Executive Director /ii/ /iii/ /iv/ & to Vu Van Quang Hoang Thanh Ha Bui Thu Hieu Energy and Environment Consultancy Company Limited (VNEEC) Project Developer Chief of Project Department (as management representative of VNEEC) Project Manager /v/ /vi/ Doan Kim Dong Le Bat Hung Que Phong Hydropower Joint Stock Company (QPH) General Director (as management representative of QPH) Chief of Technical Department /vii/ Le Dang Tuan Expert of Planning and Investment Department /viii/ Nguyen Khai Giep Ban Coc Hydropower Plant Deputy Director /ix/ Lo Nga Di Chau Kim Local stakeholder /x/ Kim Phong Thuy commune Local authorities Table 3 Interview topics Date Organization Topic /1/ QPH (PP from host party) Project design Project related legal issues Project & CDM development history Technical equipment Sustainable development issues Additionality Crediting period Monitoring plan Version No.: 02.2 Page 18

19 /2/ to VNEEC (CDM consultancy) /3/ Chau Kim commune municipality & local community Training history Management system Environmental impacts Stakeholder process Approval by the host country Project design Technical equipment Sustainable development issues Baseline determination Additionality Crediting period Monitoring plan Management system Environmental impacts Stakeholder process Approval by the host country Project design Project related legal issues Project status Sustainable development issues Environmental impacts Stakeholder process Issues affecting the local community Approval by the local governments The validation team carried the on-site visit from 26 th to 28 th January 2010, which is prior to the date of GSP closure (i.e. 13 th February 2010). Considering the validation work is carried out during the public stakeholder comment process, it is possible to receive comments from global stakeholders and the response from project participant for received comments should be validated during follow-up interviews. In case of any negative comments arising, the validation team would go for a second site visit. No public comment has been received during the public stakeholder comment period. 2.3 Resolution of Outstanding Issues The objective of this phase of the validation is to resolve any outstanding issues which need be clarified prior to the validation team s on the project design. In order to ensure transparency a validation protocol is customised for the project. The protocol shows in transparent manner criteria (requirements), means of validation and the results from validating the identified criteria. The validation protocol serves the following purposes: It organises, details and clarifies the requirements a CDM project is expected to meet; It ensures a transparent validation process where the validator will document how a particular requirement has been validated and the result of the validation. Version No.: 02.2 Page 19

20 The validation protocol consists of two tables. The different columns in these tables are described in the figure below. The completed validation protocol for this project is enclosed in Appendix A to this report. Findings established during the validation can either be seen as a non-fulfilment of CDM criteria or where a risk to the fulfilment of project objectives is identified. Corrective action requests (CAR) are issued, where: i) mistakes have been made with a direct influence on project results; ii) CDM and/or methodology specific requirements have not been met; or iii) there is a risk that the project would not be accepted as a CDM project or that emission reductions will not be certified. A request for clarification (CL) may be used where additional information is needed to fully clarify an issue. A revised PDD (version 2.5, 13 th December 2010) was submitted to the validation team for final assessment. The revision was based on CARs and CLs which were raised in the draft validation report. The major amendments include: detailed technical information, CDM development milestones, supporting information for the estimation of the parameters applied in the investment analysis, and monitoring arrangement, etc. Version No.: 02.2 Page 20

21 Validation Protocol Table 1: Requirement checklist Checklist Question Reference Means of Validation (MoV) The various requirements in Table 1 are linked to checklist questions the project should meet. The checklist is organised in different sections, following the logic of the large-scale PDD template, version 03 - in effect as of: 28 July Each section is then further sub-divided. 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 validation are document review (DR) or interview (I). N/A means not applicable. Comment The section is used to elaborate and discuss the checklist question and/or the conformance to the question. It is further used to explain the s reached. Draft and/or Final Conclusion This is either acceptable based on evidence provided (), or a corrective action request (CAR) due to noncompliance with the checklist question (See below). A request for clarification (CL) is used when the validation team has identified a need for further clarification. Validation Protocol Table 2: Resolution of Corrective Action and Clarification Requests Draft report clarifications and corrective action requests Ref. to checklist question in table 2 Summary of project owner response Validation If the s from the draft Validation are either a CAR or a CL, these should be listed in this section. Reference to the checklist question number in Table 1 where the CAR or CL is explained. The responses given by the project participants during the communications with the validation team should be summarised in this section. This section should summarise the validation team s responses and final s. The s should also be included in Table 2, under Final Conclusion. Figure 1. Validation protocol tables Version No.: 02.2 Page 21

22 2.4 Internal Quality Control The validation report including the validation findings underwent a technical review before being submitted to the project participant. The technical review will be performed by a technical reviewer qualified in accordance with TÜV Rheinland s qualification scheme for CDM validation and verification. 2.5 Validation Team Role Full name Appointed for Sectoral Scopes Team Leader Mr. Harold Hai 1, 13 Team Member Mr. Minglong Huang Mr. Tommy Lo Mr. Wilfred Chan* 1, 5, 11 1, 5, 13 1, 6, 13 Trainee Mr. Feng Hu N/A Local Expert Mr. Truong Le Tien Dung N/A Technical Reviewer Ms. Cuiping Deng 1.2, 5.1, 11.1, 12.1 * Mr. Wilfred Chan participated in this project until the end of September Affiliation TÜV Rheinland Hong Kong Ltd. TÜV Rheinland Vietnam Co., Ltd. TÜV Rheinland (China) Ltd. 3 VALIDATION FINDINGS The findings of the validation are stated in the following sections. The validation criteria (requirements), the means of validation and the results from validating the identified criteria are documented in more detail in the validation protocol in Appendix A. The final validation findings relate to the project design as documented and described in the revised and resubmitted project design documentation. 3.1 Approval and Participation The project is a bilateral CDM project which involves three project participants: Que Phong Hydropower Joint Stock Company (QPH), and Energy and Environment Consultancy Company Limited (VNEEC) from the host party, Viet Nam, and Nordic Environment Finance Corporation NEFCO in its capacity as Fund Manager to the NEFCO Carbon Fund (NeCF) (hereafter, NEFCO in its capacity as Fund Manager to NeCF ) from the Annex I party, Sweden. QPH is a local investment entity, which was established on 26 th July 2005 /23/, and VNEEC is a local CDM consultancy, which signed the CDM development and registration contract with QPH on 9 th September 2009 /45/. The host party, Viet Nam, meets all relevant participation requirements in CDM. The Letter of Approval (LoA) /123/ from the DNA of Viet Nam, i.e. Ministry of Natural Resources and Environment of Viet Nam (MONRE), has been Version No.: 02.2 Page 22

23 received. The voluntary project participation and assisting Viet Nam in achieving sustainable development of the project are thus confirmed. The LoA from the DNA of Sweden /126/ has also been received for authorizing NEFCO in its capacity as Fund Manager to NeCF as a voluntary project participant. According to Annex 2 of the PDD, the project does not receive any public funding. As reported from the project participant /v/ during the on-site visit (OSV), there is no ODA for the project activity. At the very beginning, a very small amount of money (i.e. 30 USD) was received from Europe to start the project development, but it is not an ODA. The project funding is confirmed to be raised from internal accrual and bank loan. And the Declaration of no ODA /69/ is checked by the validation team. The project receives short term loan from Bank for Agriculture and Rural Development, Bank of Investment and Development (Phu Quy Branch), Lung Lo II Construction Company, Hanoi Construction Corporation and other parties, and receives long tern loan from Bank of Investment and Development (Quang Trung Branch) and Bank of Investment and Development (Phu Quy Branch). It is confirmed that the project does not receive any ODA funding. Moreover, according to the LoA from the DNA of Sweden /126/, it further confirms that any public funding for the Project activity does not result in a diversion of Sweden s official development assistance. The total investment cost is reported as billion VND in the PDD. 30% of the total investment cost will be raised internally by the project owner, which is billion VND as per the PDD and also in line with the national regulation, i.e. Decision on Temporary Instruction on Contents of Investment Financial-Economic Analyses and Price Frame for Electricity Sale and Purchase from Power Generation Projects (hereafter, Decision No. 709/QD-NLDK) /32/. The remaining project investment capital is raised from bank loan, and the credit contract dated 14 th November 2006 /27/ is provided for validation, in which the amount of loan is confirmed to be 192 billion VND, less than the amount stated in the PDD (i.e billion VND). Later, according to the financial report of QPH in Year 2009 /68/, it is clarified that billion VND is the actually received amount of bank loan and is more than the previously contracted amount. The internal accrual capital and the loan composition are further confirmed from the written reply from the Bank for Investment and Development of Vietnam (BIDV) (Quang Trung branch) to DOE s questions /116/. Please refer to discussion in Section The below table summarizes the project participant and party involved: Project participant QPH VNEEC NEFCO in its capacity as Fund Manager to NeCF Parties involved Viet Nam (host) Sweden (Annex I party) APPROVAL LoA received Yes Yes Date of LoA 2 nd August th August 2010 Reference to document 17/2010/DMHCC-BCD LoA received from PP PP Version No.: 02.2 Page 23

24 Validation of authenticity Yes. Confirmed by with Yes. Confirmed by with the DNA of Viet Nam /127/. the DNA of Sweden /128/. Validity of LoA Valid Valid PARTICIPATION Party is party to Kyoto Protocol Voluntary participation Diversion of official development aid towards host country Project contribution to SD Yes. Viet Nam ratified the Kyoto Protocol on 25 th September 2002 /135/. Yes. In statement 2 of LoA /123/ Not applicable Yes. In statement 3 of LoA /123/ Yes. Sweden ratified the Kyoto Protocol on 31 st May 2002 /135/. Yes. In statement C of LoA /126/ No /126/ Not applicable In summary, the LoA of the host country has been received to confirm the contribution of the proposed CDM project activity to the sustainable development of Viet Nam, and the LoA of the Annex I party has also been received to confirm the involved party and voluntary participation of the PP from the Annex I party. 3.2 Project Design Document The PDD /1/ is based on the currently valid PDD template and is correctly completed in accordance with the applicable guidance document /3/. 3.3 Project Description The Ban Coc Hydropower Project is a hydropower project located on the Nam Giai stream, the first branch of the Hieu River, in Chau Kim commune, Que Phong district, Nghe An province, Viet Nam, as reported in the PDD /1/. Considering the distance between the power house and the dam, separate geographic coordinates of the power house and the dam are given in revised PDD /1.2/ as below, which is confirmed to be consistent with the on-site measurement by the validation team: Coordinates Dam Conversion in decimal format Power House Conversion in decimal format North latitude East longitude The main buildings of the project consist of a dam, intakes, tunnels, pressurized wells, penstocks, a power house and discharge channels. The corresponding reservoir capacity is 21 ha as per FSR /17/. As confirmed from General Explanation of Technical Design report /17/, the height of the dam is 16.20m, the normal water level is 370m, the length of the tunnel Version No.: 02.2 Page 24

25 is m, and the length of the penstock is 30m. The project consists of 3 sets of turbines (supplier: China Equipment and Machine Import-Export Company (CEMI); model no.: HL100A-LJ-120) and 3 sets of generators with the unit capacity of 6MW. The total installed capacity is 18MW as per FSR /17/, which is further confirmed from the contract for supply of plant technological equipment and technical services /53/ and OSV. The load factor is indicated as 47.86% in PDD, with its calculation confirmed from the consultation company who designed the FSR of the proposed project /118/ and considered acceptable as per Guidelines for the Reporting and Validation of Plant Load Factors /117/. According to the PDD, the annual net electricity generation from the project activity is GWh, considering the parasitic and loss load of 1%, which is justified in Section below. The electricity generated from the project activity is expected to substitute the power supply from the national electricity grid of Viet Nam (NEGV) which is mainly from fossil fuel-fired power generation. The expected GHG emission reductions of the project activity are 40,010 tco 2 e annually during the first 7-years of a 3x7 year renewable crediting period. The Technical Design Report (TDR) was prepared by No.1 Electricity Construction Consultancy Company in September 2004 /17/ and has been checked by the validation team. It is understood during OSV that the TDR can be deemed as the feasibility study report (FSR) in the case of Viet Nam. The grid connection and metering point were agreed by Electricity Corporation of Viet Nam (EVN) on 14 th March 2005 /22/. The project is allowed to connect to the NEGV. The power purchase agreement (PPA) /18/ was signed in December The on-grid tariff will be further discussed in Section The Emission Reductions Purchase Agreement (ERPA) /30/ between NEFCO in its capacity as Fund Manager to NeCF and QPH, dated 2 nd December 2009, is checked and confirmed to be valid. According to the on-site interview with QPH s management representative /v/, it was understood that the technical training will be incorporated with the equipment supplier, i.e. CEMI, and the CDM monitoring training will be incorporated with the CDM consultancy, i.e. VNEEC. The 1 st phase of the CDM monitoring training for 6 managers was carried out in January 2010 /46/. The 2 nd phase will be organized by the trained managers to the plant staff internally. The training plan /119/, technical training contract in 2007 /76/, training materials /71/-/75/ and attendance list in January 2010 /46/ are checked and confirmed valid. As observed on-site, the construction works have been finished and the plant has been in operation since 12 th July 2009 /39/. According to the PDD, a renewable crediting period of 7 years is selected (i.e. 1 st March th February 2018). The starting date of project activity was on 22 nd February 2006, i.e. the signed date of the contract for supply of plant technological equipment and technical services, as stated in section C.1.1 of PDD. To compare the proposed starting date with other real actions of the Version No.: 02.2 Page 25

26 project, i.e. construction contracts for the dam, the power house and the tunnel, etc., documents evidences (in total 26 sets, /90/ - /115/) have been checked, all of which were signed after the date of signing the equipment contract, i.e. 22 nd February Thus the validation team is able to confirm that 22 nd February 2006, i.e. the signed date of the contract for supply of plant technological equipment and technical services, is the earliest date among these real actions of the project. The starting date of the first crediting period will be expected to be started on 1 st March 2011 or date of registration whichever is later. The annual operating time is 4,192.8 hours and the expected operational lifetime of the project activity is 35 years. This is considered appropriate according to the requirement of Tool to determine the remaining lifetime of equipment (EB 50 Annex 15), in which the project lifetime for hydro turbines is 150,000 hours, i.e. (150,000/4192.8) years 35 years. The project lifetime of 35 years is also in line with the national regulation in Viet Nam, i.e. Decision No. 709/QD-NLDK /32/, in which the project lifetime for medium hydropower plant is within the range of 30~40 years. The critical project description milestones from the PDD are thus tabulated as follows: Starting date of project Expected project operational Crediting period lifetime 22 nd February years 1 st 7-year crediting period: (i.e. the signed date of the (i.e. 1 st March th contract for supply of plant February 2018) technological equipment and technical services) In summary, under the validation by means of document review and on-site interviews with stakeholders, the validation team considers that the project description in PDD is fully accurate and complete. 3.4 Baseline and Monitoring Methodology Applicability of the selected methodology to the project activity The project applies the approved baseline and monitoring methodology ACM0002/Version 11 Consolidated baseline methodology for grid-connected electricity generation from renewable sources, which uses the build margin (BM) and operating margin (OM) approach in the Tool to calculate the emission factor for an electricity system Version 02, and makes reference to the latest approved version of the Tool for the demonstration and assessment of additionality Version Applicability criteria for the baseline methodology are assessed by the validation team by means of document review and interview. It is agreed in the validation team s opinion that the project activity fully met the criteria as described below: The project activity is to install a new hydropower plant, so it utilizes renewable energy to generate electric power and connects to grid, which meets the requirements of the methodology ACM0002; Version No.: 02.2 Page 26