CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 02 - in effect as of: 1 July 2004) CONTENTS

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1 CDM Executive Board page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 02 - in effect as of: 1 July 2004) CONTENTS A. General description of project activity B. Application of a baseline methodology C. Duration of the project activity / Crediting period D. Application of a monitoring methodology and plan E. Estimation of GHG emissions by sources F. Environmental impacts G. Stakeholders comments Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring plan

2 CDM Executive Board page 2 SECTION A. General description of project activity A.1 Title of the project activity: Varahi Tail Race Small Hydro Power Project of SPCL in Karnataka, India A.2. Description of the project activity: The project activity is small containment run-of-the river project of 22.5 MW installed capacity comprising 3 units of 7.5 MW capacity each. It is located on lower reaches of western scarps of Western Ghats. The project activity contemplates utilization of tail race water of Varahi Underground Power House Station (VUGPH), available drop between tail race of VUGPH and Varahi pick-up dam and water from independent catchment up to weir on river Varahi just downstream of VUGPH tail race confluence. Maximum gross head available is about 47.5 m and minimum gross head is 44.4 m. The total of tailrace discharge from VUGPH and flows from independent catchment varies from maximum of 72.0 m3/s to minimum of about 15.0 m3/s. Design head of 38.0 m and design discharge of 23.6 m3/s per unit has been adopted. The project activity generates approximately million kwh electricity per annum and sells it to Karnataka Power Transmission Corporation Limited (KPTCL) through a Power Purchase Agreement (PPA). Project s contribution to sustainable development Sandur Power Company Limited (SPCL), owner of the project activity, believes that the project activity would greatly contribute to the sustainable development of the host country (India). Government of India has stipulated the following indicators for sustainable development in the interim approval guidelines 1 for CDM projects. Social well being Economic well being Environmental well being Technological well being The project activity has excellent contribution towards sustainable development and addresses the key issues:

3 CDM Executive Board page 3 Social well being: The project activity has resulted in the enhanced employment of the local people during the construction and operation phases. It has also helped to enhance the skills of the labour in the area by training in different technical areas. Economical well being: The project activity created business opportunities for local stakeholders such as consultants, suppliers, manufacturers, contractors etc during implementation phase. The project activity would contribute to the economic well being in the region over its entire life time. Environmental well being Since, the project activity is small run-of-river hydro project; it does not lead to any emissions in the environment. The project activity is a step towards environmental sustainability by saving exploitation and depletion of natural, finite and non-renewable resources like coal, gas etc. Technological well being The technology selected for the power project is well-established one, using Vertical Shaft Full Kaplan type turbines. A.3. Project participants: Name of Party involved ((host) indicates a host Party) Private and/or public entity(ies) project participants(as applicable) India Sandur Power Company Ltd. No Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) Contact information of the project participants involved in the project activity is provided in the Annex 1 of this document. A.4. >> Technical description of the project activity: A.4.1. Location of the project activity: A Host Party(ies): 1 Ministry of Environment and Forest web site :

4 CDM Executive Board page 4 India Karnataka A Region/State/Province etc.: A City/Town/Community etc: District Udupi A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): The project activity is located near Hosangadi village in Kundapura taluk of Udupi district of Karnataka state. The project is located immediately downstream of existing underground power house of Varahi Hydro Project of Karnataka Power Corporation Ltd. (KPCL). The project area is located approximately 125 km from Shimoga and 35 km from Kundapura by road. Shimoga Railway Station is located on Bangalore-Talaguppa section of Southern Railway. Kundapura Railway Station is located on the Konkan Railway line. The nearest Airport to project location is Mangalore. The geographical location of Udupi district is detailed in the maps below:

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6 CDM Executive Board page 6 A.4.2. Category(ies) of project activity: The project activity is a large scale CDM project which fits under the Scope Number 1: Energy Industries (renewable - / non-renewable sources) as per List of Sectoral Scopes A.4.3. Technology to be employed by the project activity: The major components of the scheme are: (a) Diversion weir across river Varahi about 40 m downstream of confluence of VUGPH tail race channel (b) Approach channel just downstream of VUGPH tail race on right bank of river to divert water to Head Race Tunnel (HRT) through intake structure (c) Straight tunnel intake structure to HRT from diversion weir to regulate the flow of water into the HRT (d) Horseshoe shaped, HRT from intake upto surge tank with concrete lining (e) Surge tank at ridge point (f) Penstock tunnel with concrete lining taking off from surge shaft (g) Steel penstock branching off to 3 nos. individual penstocks (h) Power house on right bank of river Varahi accommodating 3 units of turbines (i) Tailrace channel joining river Varahi and other allied civil works The turbine is Vertical Shaft Full Kaplan with adjustable guide vanes and adjustable runner blades. The power generated at 11 kv is stepped up to 110 kv and transmitted through 110 kv double circuit transmission line from power house to Looping In and Looping Out (LILO) point near Hosangadi. There is no transfer of technology to the host country since the technology is available in India from reputed manufacturers. A.4.4. Brief explanation of how the anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed CDM project activity, including why the emission reductions would not occur in the absence of the proposed project activity, taking into account national and/or sectoral policies and circumstances: The project activity, which utilises renewable hydraulic resources would replace conventional energy equivalent of million kwh for a period of 10 years thereby resulting in total 1,077,356 tons CO 2 emission reduction over the 10 year crediting period. No transmission and distribution losses are considered since the project activity would export power at high voltage of 110 kv at a short distance. In the absence

7 CDM Executive Board page 7 of the project activity, equivalent electricity load would have been taken up by the regional grid mix, which is mainly dominated by fossil fuel based power plants leading to CO 2 emissions. Thus the project activity would help in reducing anthropogenic GHG emissions as per the combined margin carbon intensity of the Southern region grid. The project activity would export clean electricity to the fossil fuel dominated grid, thereby resulting in continuous GHG reductions as it would avoid equivalent generation of GHG emissions. A crediting period: Estimated amount of emission reductions over the chosen Years Annual estimation of emission reductions in tonnes of CO 2 e Annual estimation of project emissions in tonnes of CO 2 e Total estimated reductions (tonnes of CO 2 e) Total number of crediting years Annual average over the crediting period of estimated reductions ((tonnes of CO 2 e) 1,077, years 107,736 A.4.5. Public funding of the project activity: No public funding as part of project financing from parties included in Annex I of the convention is involved in the project activity.

8 CDM Executive Board page 8 SECTION B. Application of a baseline methodology B.1. Title and reference of the approved baseline methodology applied to the project activity: Title: Consolidated baseline methodology for grid-connected electricity generation from renewable sources Reference: UNFCCC Approved consolidated baseline methodology ACM0002 / Version 05, Sectoral Scope: 01, 3 March B.1.1. Justification of the choice of the methodology and why it is applicable to the project activity: This methodology is applicable to grid-connected renewable power generation project activities similar to SPCL s project activity under the following conditions: 1. Project activity should be a run-of-river hydro power plant: The project activity is conceived under renewable energy power plant as a run-of-river project. 2. Project activity should not involve switching from fossil fuel to renewable energy at the site of the project activity: No fossil fuel based power project existed at site during the pre-project scenario. 3. The geographic and system boundaries for the relevant electricity grid can be clearly identified and information on the characteristics of the grid is available: Delineation of grid boundaries has not been provided by the DNA of the host country (India). India is a large country where electricity system is divided into five regional grid viz. Northern, Eastern, Southern, Western and North Eastern. These regional grids have minimal interchange of electricity between themselves because of the poor transmission and distribution infrastructure. However electricity interchange among states located in each region is quite significant. Southern region grid has been chosen for baseline calculations since Karnataka is part of the southern region grid which further consists of Andhra Pradesh, Kerala, Tamil Nadu, Pondicherry, Lakshadweep and Andaman & Nicobar Islands. Information on the power plants located in southern region, energy generation, their fuel consumption, efficiencies, calorific of fuel etc. is available.

9 CDM Executive Board page 9 B.2. Description of how the methodology is applied in the context of the project activity: As per the methodology, for the project activities that do not modify or retrofit an existing electricity generation facility, the baseline scenario is electricity delivered to the grid by the project. In absence of the project activity equivalent electricity would have otherwise been generated by the operation of gridconnected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations. Formulae used to calculate the combined margin intensity of the grid are described in section D and key parameters and data sources are defined in Annex 3. B.3. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity: As stipulated in the methodology, the additionality of the project activity is to be demonstrated and assessed using the latest version of the Tool for the demonstration and assessment of additionality agreed by the CDM Executive Board. Additionality of project activity as per the above mentioned tool is discussed below. Step 0. Preliminary Screening based on the starting date of the project activity Project proponent wishes to have the crediting period starting prior to the registration of project activity. (i) Project started in October 2002 i.e. between 1 Jan 2000 and date of registration of first CDM project (18 Nov 2004). (ii) Incentive from the CDM was seriously considered in the decision to proceed with the project activity. The project developer began exploring the possibility of sale of carbon credits generated by project activity since early stages of the project. Evidence to substantiate the same would be made available to the validator. Step 1. Identification of alternatives to the project activity consistent with current laws and regulations Sub-step 1a. Define alternatives to the project activity It is required to identify realistic and credible alternative(s) to the project activity that provide output or services comparable with the project activity. These alternatives are required to be in compliance with all applicable legal and regulatory requirements.

10 CDM Executive Board page 10 Plausible project options are identified, which include all possible courses of actions that could be adopted in order to produce equivalent electricity for the end users. There are five plausible options available to meet the power requirement equivalent to 22.5 MW. Project Option 1 Present Grid Mix In this scenario the end user would get electricity from the current grid mix which consists of a mix of thermal (coal and diesel), hydro, nuclear and other renewable energy based power plants and an equivalent amount of carbon dioxide would be generated at the thermal power generation end. Project Option 2 Equivalent capacity (22.5 MW) Coal (fossil fuel) based power plant, supplying power to the present grid mix. In this scenario the end user would get power from the grid mix consisting of the project option 2 along with the present generation mix. With an increased thermal capacity addition of 22.5 MW coal based power plant, there would be an increase in the amount of carbon dioxide generated by regional grid mix for equivalent electricity. Such small capacity coal based independent power plants to supply electricity to the grid are not a common practice due to the techno-economic circumstances that cannot be overcome. There is no small size coal based power plant supplying power to the grid. Therefore, project option 2 is not an option available with SPCL as developer of small size independent power project and hence excluded. Project Option 3 Equivalent capacity (22.5 MW) Gas (fossil fuel) based power plant, supplying power to the present grid mix. In this scenario the end user would get power from the grid mix consisting of the project option 3 along with the present generation mix. With an increased thermal capacity addition of 22.5 MW gas based power plant, there would be an increase in the amount of carbon dioxide generated by the regional grid mix for equivalent electricity. The gas based power plants are possible only if the gas is available as fuel. Due to its locational disadvantage, gas as fuel for power generation to the plant is not available. Hence, this project option 3 is not available with SPCL and may be excluded. Project Option 4 Equivalent capacity (22.5 MW) Diesel (fossil fuel) based power plant, supplying power to the present grid mix. In this scenario the end user would get power from the grid mix consisting of the project option 4 along with the present generation mix. With an increased thermal capacity addition of 22.5 MW diesel based power plant, there would be an increase in the amount of carbon dioxide generated by the regional grid mix

11 CDM Executive Board page 11 for equivalent electricity. There are diesel based power plants supplying electricity to grid. Hence, this project option 4 is available with SPCL. Project Option 5 Project activity not undertaken as CDM project activity In this scenario the end user would get power from the grid mix consisting of the project option 5 along with the present generation mix. This option is not available to SPCL due to barriers faced by the project activity as discussed in Step 3. From the above assessment we may conclude that SPCL project activity has two other project options available Project Option 1 Present Grid Mix Project Option MW fossil fuel (diesel) based power plant, supplying power to the present grid mix Sub-step 1b. Enforcement of applicable laws and regulations All the credible options available to SPCL are in compliance with legal and regulatory requirements of the host country. Step 2. Investment analysis OR Step 3. Barrier analysis. SPCL proceeds to establish project additionality by conducting the Step 3: Barrier Analysis. SPCLL is required to determine whether the project activity faces barriers that: (a) Prevent the implementation of the project activity; and (b) Do not prevent the implementation of at least one of the alternatives through the following substeps: Sub-step 3a. Identify barriers that would prevent the implementation of type of the proposed project activity

12 CDM Executive Board page 12 Investment barrier One of the major criteria s to access financing is that prospective financiers look for reliable, creditworthy, and firm sources of revenue for the project. Being a small market player, SPCL did not have an easy access to the project finance. Before 2002, PPAs for renewable energy projects in Karnataka were signed at base price applicable for year at the rate of INR 2.87/kWH with annual escalation of 5 %. From 2002 KPTCL refused to sign PPA at this rate, rather it insisted on base price applicable for year of commercial operation at rate of INR 2.90/kWh only with fixed annual escalation of INR SPCL had approached KPTCL in the year 2002 for signing the PPA at earlier rate, however, KPTCL did not agree to their request. In absence of a fixed price for purchase of power, the banks were not willing to provide loan for the project activity. Finally after 2 years of delay SPCL was forced to sign the PPA at the rates as proposed by KPTCL since, by this time SPCL had already pumped in huge amount of promoter s money to implement the project and it was imperative for them to get loan from the banks to carry ahead the project. The project activity is not based on conventional thermal power technology with proper fuel linkage, where the availability of fuel is not a constraint. In hydro power projects the availability of water as per design discharges in always uncertain, which immediately raises the level of perceived risk by prospective financers. Also the domestic financial market in Karnataka has been characterized by high interest rates. After signing PPA with KPTCL, SPCL approached IDFC for loan. Interest rates offered by IDFC were very high compared to other financial institutions. Andhra Bank and State Bank of Mysore were not willing to provide the total amount of loan required. Finally part loans from IDFC, Andhra Bank and State Bank of Mysore had to be taken for achieving the financial closure. The prospect of registering the project activity as a CDM activity has helped to establish the project sustainability; it also helped to reduce the project financing risk of the financers and helped the project developer to proceed further. Other Barriers (i) Institutional Barriers (a) SPCL has signed Power Purchase Agreement (PPA) with KPTCL. For their earnings, the project proponents depend on the payment from KPTCL against the sale of electricity to the grid. It is known that the condition of electricity boards in India is not very healthy and it is likely that there would be problems with cash flows of SPCL. Total outstanding dues against Karnataka payable to

13 CDM Executive Board page 13 Central Power Sector Utilities (CPSUs) as on 30 th November 2004 were crores 2. SPCL had to take this risk and face this institutional barrier on which they have limited or no control. This situation makes CDM funds even more critical for SPCL to maintain cash flow. (b) The PPA entered between SPCL and KPTCL does not provide for deemed generation charges and any minimum guaranteed off take level of power. Although PPA identifies that off-take of power made available by SPCL would be obligatory on KPTCL, however, in absence of deemed generation clause, SPCL does not hold the right to claim for losses which would occur in case backing down instructions are received from control centre of KPTCL or KPTCL's grid system fails. Therefore a permanent risk to the project activity exists wherein the project has to be shutdown in case of surplus power or off-peak situation. The situation has already been experienced by few project developers in Karnataka where KPTCL issued orders to stop generation due to low demand of power across the state during particular time. It is estimated that, of the total project proponents who get approval from state government to establish small hydro power projects in Karnataka, only a few are successful in commissioning and operation of the projects due to some of the above mentioned barriers. The data on the Common Practice Analysis (given below) of the small hydro power projects suggests that the barriers discussed are strong enough to hinder growth of the sector. CDM funding would help to mitigate the anticipated financial losses due to various institutional barriers and help to improve the sustainability of the project so that project can generate emission reductions over a greater period of time. Sub-step (3b). Show that the identified barriers would not prevent a wide spread implementation of at least one of the alternatives (except the proposed project activity): It has been observed in Sub-step 3a that the - project activity has its associated barriers to successful implementation. The barriers mentioned above are directly related to venturing into a new business of export of power to grid through construction of hydro power project and do not inhibit option 1 discussed above. Step 4 Common Practice Analysis Sub-step 4a. Analyze other activities similar to the proposed project activity: 2

14 CDM Executive Board page 14 The state of Karnataka has vast potential for development of small hydro power projects. The state has allotted MW equivalent of small hydro power projects out of which only 180 MW potential has been commissioned and only MW is exported to the grid through private parties. Out of the remaining 145 MW only 25 MW is generated by state government and exported to grid. Table B.3 (a) Plants owned by private parties which export electricity to grid in Karnataka S.No Project Capacity (MW) 1. Shivpura Shahpur Madhavamantri Narayanpur 6.6 Total 34.2 This substantiates the fact that the project activity without CDM benefits is not a widespread proposition for the private parties in similar socio-economic environment of the state. In absence of the CDM project activity there would be lesser private sector participation in construction of small run-of-river hydro power projects exporting power to the grid due to the identified barriers. The project activity occurs in only 5 % 5 of the similar industries (Independent Power Producers, IPP) and is therefore not a common practice. Sub-step 4b. Discuss any similar options that are occurring: There is significant difference between the circumstances faced by SPCL and the other IPPs who are supplying power to grid by similar project activities. The PPAs for other IPPs were signed on basis of base price applicable for year at the rate of INR 2.87/kWH with annual escalation of 5 %. This makes the price as INR 3.66/kWH as in PPA for SPCL has been signed on basis of base price applicable for year of commercial operation at rate of INR 2.90/kWh only with fixed annual escalation of INR Karnataka Renewable Energy Development Limited 4 Central Electricity Authority, Energy generation, programme and plant load factor: an overview, March Karnataka Renewable Energy Development Limited-80 small hydro power projects were allotted by Govt. of Karnataka

15 CDM Executive Board page 15 only. The comparatively higher returns against the sale of power made these projects financially more viable and attractive. Also these projects have been set-up by large industrial groups which are financially prosperous and securing the project funding has been quite easy for them as compared to the adversity faced by SPCL. Step 5. Impact of CDM registration The benefits and incentives expected due to approval and registration of the project activity as a CDM activity would certainly improve the sustainability of the project activity and would help to overcome the identified barriers (Step 3). For instance the additional revenues through CDM funding could compensate financial losses arising out of reduction in power purchase by KPTCL or non-payment of money by KPTCL against sale of electricity. Further, with registration of CDM project activity, many more private parties in Karnataka would take up similar initiatives under CDM resulting in higher quantum of anthropogenic greenhouse gas emissions reductions. B.4. Description of how the definition of the project boundary related to the baseline methodology selected is applied to the project activity: As per the definition of project boundary of ACM0002, the spatial extent of the project boundary includes the project site and all power plants connected physically to the electricity system that the CDM project power plant is connected to. The project boundary is from the project site to the point of power supply to nearest substation where the project proponent has a full control. Thus, boundary covers weir, HRT, surge tank, penstock tunnel, penstock, power house and all other accessory equipments. For the purpose of determining the Build Margin and Operating Margin emission factor the project electricity system includes the Southern region grid. Flow chart and project boundary is illustrated in the following figure:

16 CDM Executive Board page 16 Project Boundary Varahi Tail Race Small Hydro Project Electricity to grid Auxiliary consumption Electricity to end-user

17 CDM Executive Board page 17 B.5. Details of baseline information, including the date of completion of the baseline study and the name of person (s)/entity (ies) determining the baseline: Detailed baseline information has been presented in Annex 3. Date of completion of baseline study: 22/12/2005 Sandur Power Company Limited has determined the baseline for the project activity. The entity is a project participant listed in Annex-I where the contact information has also been provided.

18 CDM Executive Board page 18 SECTION C. Duration of the project activity / Crediting period C.1 Duration of the project activity: C.1.1. Starting date of the project activity: 01/10/2002 C.1.2. Expected operational lifetime of the project activity: 30 years and 0 months C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period >> >> C C C.2.2. Fixed crediting period: Starting date of the first crediting period: Length of the first crediting period: C /07/2006 C years and 0 months Starting date: Length:

19 CDM Executive Board page 19 SECTION D. Application of a monitoring methodology and plan D.1. Name and reference of approved monitoring methodology applied to the project activity: Title: Consolidated monitoring methodology for zero-emissions grid-connected electricity generation from renewable sources Reference: UNFCCC Approved consolidated baseline methodology ACM0002 / Version 05, Sectoral Scope: 01, 3 March D.2. Justification of the choice of the methodology and why it is applicable to the project activity: The monitoring methodology is used in conjunction with the approved baseline methodology ACM0002- Consolidated baseline methodology for grid-connected electricity generation from renewable sources. The applicability criteria for the approved baseline methodology ACM0002 and approved monitoring methodology ACM0002 are identical and have been justified in section B.1.1 The methodology requires the project participant to monitor power generation units exported to the grid. Since the project activity is a grid connected renewable hydro power project, emission reduction quantity is dependent on the net units exported to the grid, which would avoid generation of equivalent power by the carbon intensive grid mix. Therefore the project activity s monitoring requirements are in line with the Approved monitoring methodology ACM002 which is suitable monitoring methodology applicable for the project activity.

20 CDM Executive Board page 20 D Option 1: Monitoring of the emissions in the project scenario and the baseline scenario D Data to be collected in order to monitor emissions from the project activity, and how this data will be archived: ID number (Please use numbers to ease crossreferencing to D.3) Data variable Source of data Data unit Measured (m), calculated (c) or estimated (e) Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment Not applicable equ.) Not applicable D Description of formulae used to estimate project emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 D Relevant data necessary for determining the baseline of anthropogenic emissions by sources of GHGs within the project boundary and how such data will be collected and archived : ID number (Please use numbers to ease crossreferencing to table D.3) Data variable Source of data Data unit Measured (m), calculated (c), estimated (e), Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment

21 CDM Executive Board page EG y Net electricity supplied to the grid by the project 2. EF electricity,y 3. EF OM,Simple,y activity CO 2 emission factor of the grid CO 2 operating margin emission factor of the grid 4. EF BM,y CO 2 build margin emission factor of the grid 5. F i,j,y Amount of fossil fuel i, consumed by each power source/ plant in year y KPTCL MWh M Hourly measuremen t and monthly recording Grid reports tco 2 / MWh t CO 2 / MWh t CO 2 / MWh C C C Once at the beginning of a crediting period Once at the beginning of a crediting period Once at the beginning of crediting period Tons M Once at the beginning of crediting period a a 100% Electronic The archived data would be kept for at least 2 years after end of crediting period. 100% Electronic Calculated as weighted sum of OM and BM emission factors 100% Electronic Calculated as Step 1 of ACM % Electronic Calculated as Step 2 of ACM % Electronic - 6. COEF i,j,y CO 2 emission factor of each fuel type i, IPCC/Grid reports t CO 2 / ton of fuel C Once at the beginning of crediting period a 100% Electronic Calculated based on the IPCC default value of the Emission Factor, Net Calorific Value and Oxidation Factor of the Fuel used by the power plants of Southern grid

22 CDM Executive Board page GEN j,y Electricity delivered to the grid by power source j in year y Grid reports MWh/ annum M Once at the beginning of crediting period a 100% Electronic - 8. Identificatio n of power source / plant for the OM 9. Identificatio n of power source / plant for the BM Grid reports Grid reports - E Once at the beginning of crediting period - E Once at the beginning of crediting period a a 100% of set of plants 100% of set of plants Electronic - Electronic - D Description of formulae used to estimate baseline emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.) With reference to ACM0002 baseline emissions are estimated as under Calculation of electricity baseline emission factor The electricity baseline emission factor (EF y ) is calculated as a combined margin (CM), consisting of the combination of Operating Margin (OM) and Build Margin (BM) factors according to the following three steps. Calculations for this combined margin is based on data from an official source and made publicly available. STEP 1. Calculate the Operating Margin emission factor(s)

23 CDM Executive Board page 23 Out of the four methods mentioned in ACM0002, simple OM approach has been chosen for calculations since the low-cost/must run resources constitute less than 50% of the total grid generation in the Southern region grid mix. Simple OM factor is calculated as under., / EF OM simple, y = F i, j, y COEF i, j GEN j, y i, j j Where COEF i, j - is the CO 2 emission coefficient of fuel i (t CO 2 / mass or volume unit of the fuel), calculated as given below and GEN j, y - is the electricity (MWh) delivered to the grid by source j F i, j, y j - is the amount of fuel i (in a mass or volume unit) consumed by relevant power sources j in year(s) y, calculated as given below - refers to the power sources delivering electricity to the grid, not including low-operating cost and must-run power plants The CO 2 emission coefficient COEF i is obtained as COEF i = NCV i EF CO, i 2 OXID i Where NCV i -is the net calorific value (energy content) per mass or volume unit of a fuel i EFCO 2,i -is the CO 2 emission factor per unit of energy of the fuel i OXID i -is the oxidation factor of the fuel The Simple OM emission factor (EF OM,simple,y ) has been calculated separately for the most recent three years ( , and ) and an average value has been considered as the OM emission factor for the baseline (EF OM,y ). EF = EF OM, y OM, simple, y y / 3

24 CDM Executive Board page 24 where y represents the years. STEP 2. Calculation of the Build Margin emission factor (EF BM, y ) It is calculated as the generation-weighted average emission factor (t CO 2 /MWh) of a sample of power plants m of grid, as follows:, / EF BM y = Fi, m, y COEF i, m GEN m, y i, m m Where F i, m, y, COEF i,m and GEN m, y - are analogous to the variables described for the simple OM method above for plants m. Calculations for the Build Margin emission factor EF BM, y has been done as ex ante based on the most recent information available on plants already built for sample group m of Southern region grid at the time of PDD submission. The sample group m consists of the 20 % of power plants supplying electricity to grid that have been built most recently, since it comprises of larger annual power generation. (Refer Annex 3) Further, none of the power plant capacity additions in the sample group have been registered as CDM project activities. STEP 3. Calculate the electricity baseline emission factor (EF y ) It is calculated as the weighted average of the Operating Margin emission factor (EF OM, simple, y ) and the Build Margin emission factor (EF BM, y ): EF y = WOM EFOM, Simple, y + W BM EFBM, y where the weights w OM and w BM, by default, are 50% (i.e., W OM = W BM = 0.5), and EF OM, Simple, y and EF BM, y are calculated as described in Steps 1 and 2 above and are expressed in t CO 2 /MWh.

25 CDM Executive Board page 25 BE = EF EG y y y Where BE y - are the baseline emissions due to displacement of electricity during the year y in tons of CO 2 EG y - is the net quantity of electricity generated by the project activity during the year y in MWh, and EF y- is the CO 2 baseline emission factor for the electricity displaced due to the project activity in during the year y in tons CO 2 /MWh. D Option 2: Direct monitoring of emission reductions from the project activity (values should be consistent with those in section E). D Data to be collected in order to monitor emissions from the project activity, and how this data will be archived: ID number (Please use numbers to ease crossreferencing to table D.3) Data variable Source of data Data unit Measured (m), calculated (c), estimated (e), Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment Not applicable equ.): Not applicable D Description of formulae used to calculate project emissions (for each gas, source, formulae/algorithm, emissions units of CO 2

26 CDM Executive Board page 26 D.2.3. Treatment of leakage in the monitoring plan activity ID number (Please use numbers to ease crossreferencin g to table D.3) D If applicable, please describe the data and information that will be collected in order to monitor leakage effects of the project Data variable Source of data Data unit Measured (m), calculated (c) or estimated (e) Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment Not applicable D Description of formulae used to estimate leakage (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.) Not applicable D.2.4. Description of formulae used to estimate emission reductions for the project activity (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.) Formula used for estimation of the total net emission reductions due to the project activity during a given year y is as under. ER y = BEelectricity, y PE y L y where ER y - are the emissions reductions of the project activity during the year y in tons of CO 2

27 CDM Executive Board page 27 BE electricity, y - are the baseline emissions due to displacement of electricity during the year y in tons of CO 2 PE y - are the project emissions during the year y in tons of CO 2 L y are leakage emissions during the year y in tons of CO 2 Since PE y and L y are equal to zero ER =, y BE electricity y D.3. Quality control (QC) and quality assurance (QA) procedures are being undertaken for data monitored Data (Indicate table and ID number e.g ; 3.2.) 1. EG y Net electricity supplied to the grid by the project activity 2. EF electricity,y - CO 2 emission factor of the grid 3. EF OM,Simple,y - CO 2 operating margin emission factor of the grid 4. EF BM,y - CO 2 build margin emission factor of the grid Uncertainty level of data (High/Medium/Low) Low Low Low Low Explain QA/QC procedures planned for these data, or why such procedures are not necessary. Electricity meters would be properly maintained with regular testing and calibration schedules developed as per the requirements of Power Purchase Agreement to ensure accuracy. This is calculated This is calculated This is calculated

28 CDM Executive Board page F i,j,y / F i,m,y - Amount of fossil fuel i, consumed by each power source/ plant in year y 6. COEF i,j,y / COEF i,m,y - CO 2 emission factor of each fuel type i, 7. GEN j,y / GEN m,y - Electricity delivered to the grid by power source j/m in year y 8. Identification of power source / plant for the OM 9. Identification of power source / plant for the OM Low Low Low Low Low This is based on authentic grid data. This is calculated This is based on authentic grid data. This is based on authentic grid data. This is based on authentic grid data. D.4 Please describe the operational and management structure that the project operator will implement in order to monitor emission reductions and any leakage effects, generated by the project activity SPCL has implemented an operational and management structure in order to monitor emission reductions generated by the project activity. The Shift Incharge has been assigned the responsibility of monitoring and recording of electricity supplied to the grid as per the monitoring plan. In case of any irregularity observed, necessary action is taken immediately. On monthly basis, energy generation reports are being prepared and forwarded to the management.

29 CDM Executive Board page 29 The Project Manager is a qualified engineer with years experience in power industry and all the Shift Incharges are qualified engineers with 5-6 years of experience in power industry. Shift in-charges have undergone an exhaustive training programme, including plant operations, data monitoring, report generation etc. D.5 Name of person/entity determining the monitoring methodology: Sandur Power Company Limited has determined the monitoring plan for the project activity. The entity is a project participant listed in Annex-I where the contact information has also been provided.

30 CDM Executive Board page 30 SECTION E. Estimation of GHG emissions by sources E.1. Estimate of GHG emissions by sources: Being run-of-river hydro power project, no direct anthropogenic emissions by sources of greenhouse gases within the project boundary are identified. E.2. Estimated leakage: Being run-of-river hydro power project, no anthropogenic emissions by sources of greenhouse gases outside the project boundary are identified. E.3. The sum is zero E.4. The sum of E.1 and E.2 representing the project activity emissions: Estimated anthropogenic emissions by sources of greenhouse gases of the baseline: Baseline emissions would result if equivalent electricity would be generated by the Southern region grid mix. Baseline emissions (BE electricity, y) would be calculated using the formula: E.5. BE EG electricity, y = EFelectricity, y where EG y = million kwh/annum EF electricity, y = kg CO 2 /kwh The net annual baseline emissions are = 98,641 t CO 2 y Difference between E.4 and E.3 representing the emission reductions of the project activity: Emissions reductions (ER y ) are calculated using formula: ER y = BEelectricit y, y PE y L y Since project emissions (PE y ) and leakages (L y ) are zero, the emission reductions are equal to baseline emissions as given in table below.

31 CDM Executive Board page 31 E.6. Table providing values obtained when applying formulae above: Year Estimation of project activity emission (tonnes of CO2 e) Estimation of baseline emission (tonnes of CO2 e) Estimation of leakage (tonnes of CO2 e) Estimation of emission reductions (tonnes of CO2 e) Total (tones of CO2 e) 0 1,077, ,077,356

32 CDM Executive Board page 32 SECTION F. Environmental impacts F.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: Assessment of Environmental Impact due to the project activity as per Environment Impact Assessment (EIA) notification of 27 Jan 1994 of Ministry of Environment and Forest, Govt. of India has been carried out. A brief summary of the Environmental Impact Assessment (EIA) study is given below. Environment Impact Assessment-summary Submersion of land The project activity does not involve construction of a dam hence; submergence of land is not involved. Seismicity The project area comes under Zone-III as per IS 1893:1984 Criteria for Earth Quake Resistant Design of Structures. The geological report said that the site does not have any adverse geological features. However, during detailed engineering a suitable factor of safety has been adopted. Quarry operation No rubble quarries and mining/minerals occur in and around the project site and catchment area. Archaeological monuments No archaeological monuments, historical place or place of worship etc. is present in the project area. Surface water and air quality Surface water and ambient air quality in the surrounding area of project site is not affected, as there is no industrial activity. Solid waste generation Solid waste in form of rock and hard stone was generated at project site due to drilling activities. This waste was stored in areas, which were earmarked for same purpose. Some quantity of waste was utilised as coarse aggregate during construction. The remaining waste was stored as dumps which were vegetated with local species. Flora and fauna

33 CDM Executive Board page 33 No floral of faunal species is threatened as there is no submergence of land. Impact on human settlement The project does not involve any resettlement or rehabilitation of the people. F.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: As discussed above, the project activity would not have any adverse environmental impacts. Environment Impact Assessment study has been carried out as per EIA notification of 27 Jan 1994 of Ministry of Environment and Forest, Govt. of India.

34 CDM Executive Board page 34 SECTION G. Stakeholders comments >> G.1. Brief description how comments by local stakeholders have been invited and compiled: The important stakeholders identified for the project activity are: Karnataka State Pollution Control Board (KSPCB) Ministry of Environment and Forest, Govt. of India Water Resources Secretariat (WSC), Government of Karnataka Karnataka Renewable Energy Development Limited (KREDL) Karnataka Power Transmission Corporation Ltd. Karnataka Power Corporation Ltd. Local people These stakeholders were involved in the project activity at various stages. At the appropriate stage of the project development, SPCL consulted stakeholders / relevant bodies to get the comments. To inform the local people on the environmental and social impacts of the project activity and discuss their concerns regarding the project activity, notification through regional and national newspapers for public hearing was brought out by KSPCB requesting the stakeholders to participate and communicate any suggestions/objections regarding the project activity in writing. The brief summary of the project was circulated to all the stakeholders before the hearing. On the day of hearing, SPCL representatives presented the salient features of the company and the project activity to the stakeholders and requested their suggestions/objections. The opinions expressed by the stakeholders were recorded by KSPCB and minutes of the public hearing are available with SPCL. G.2. Summary of the comments received: Local people have expressed no objection for implementation of the project activity. Ministry of Environment and Forest, Govt. of India has diverted the forest land in favour of SPCL for establishing the project and has given Environmental clearance as per the EIA notification of Govt. of India.

35 CDM Executive Board page 35 Water Resources Secretariat, Government of Karnataka has accorded approval for establishment of the project activity. Karnataka State Pollution Control Board has accorded Consent for Establishment and Clearance from Water and Air Pollution Control point of view. Karnataka Renewable Energy Development Limited has accorded technical clearance for establishing the project activity. Karnataka Power Transmission Corporation Ltd. has accorded the approval for evacuation of power. Karnataka Power Corporation Ltd. has given the No Objection Certificate (NOC) to implementation of the project activity. G.3. Report on how due account was taken of any comments received: No major concerns were raised during the consultation with stakeholders. Important clauses mentioned in the project documents, clearances, power purchase agreement etc., were considered by the SPCL.

36 CDM Executive Board page 36 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Sandur Power Company Limited Street/P.O.Box: 16 th Cross, 14 th Main, IV Sector, H.S.R. Layout Building: H. No. 84 City: Bangalore State/Region: Karnataka Postfix/ZIP: Country: India Telephone: , FAX: URL: - Represented by: Title: Executive Director Salutation: Mr. Last Name: Kamarthy Middle Name: C First Name: Harish Department: - Mobile: - Direct FAX: - Direct tel: - Personal harish1127@hathway.com

37 CDM Executive Board page 37 Annex 2 INFORMATION REGARDING PUBLIC FUNDING No public funding as part of project financing from parties included in Annex I of the convention is involved in the project activity.

38 CDM Executive Board page 38 Annex 3 BASELINE INFORMATION As given in section B.1.1, the southern region grid has been chosen for baseline grid emission factor calculation. Key parameters with their data sources S No. Key parameters Data sources 1. Generation data for all plants for the year Annual Report of Southern Region Electricity Board for Generation data for all plants for the year Central Electricity Authority (CEA) 04 and Coal consumption Annual Performance Review of Thermal Power Plants; CEA ( 4. Calorific value of diesel IPCC 5. Calorific value of lignite 6. Calorific value of gas IPCC 7. Calorific value of coal Chapter 2-India's NATCOM to UNFCCC 8. Oxidation factors IPCC Emission factors The emission factors are based on IPCC Guidelines for National Greenhouse Gas Inventories and are given below. Fuel Emission factor (tc/tj) Emission factor (tco 2 /TJ) Natural gas Sub-bituminous coal

39 CDM Executive Board page 39 Power generation Mix of Southern Region for five years Total Power Generation (MU) Total Thermal Power Generation Total Low Cost Power Generation Thermal % of Total grid generation Low Cost % of Total grid generation % of Low Cost generation out of Total grid generation - Average of the five most recent years Generation details (million kwh) for Andhra Karnataka Kerala Tamil Nadu and Total Pradesh Pondicherry Thermal Coal Based-State Thermal Coal Based-Central IPP-Coal Based Lignite based power plant IPP-Gas (Naphtha) Based IPP-Diesel Based Hydro-State Nuclear Based-Central IPP-Co-Generation+Biomass IPP-Wind