CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006 CONTENTS. Annexes

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1 CDM Executive Board page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006 CONTENTS A. General description of project activity B. Application of a baseline and monitoring methodology C. Duration of the project activity / crediting period D. Environmental impacts E. 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: Project title: Fujian Zhangping Xizikou Hydropower Station Project PDD Version: 1.0 PDD completion date: 24/04/2008 Revision History: Version 1.0: First draft, submitted for validation / global stakeholder comments A.2. Description of the project activity: The Fujian Zhangping Xizikou Hydropower Station Project (hereafter referred to as project or proposed project activity ) involves the construction and operation of a hydropower station located at the main stream of the Beixi River, which is a branch of the Jiulongjiang River in Xiayangping Village of Xiyuan Town, Zhangping City of Longyang City, Fujian Province, China. The main objective of the project is to generate power from clean renewable hydropower in Fujian Province and contribute to the sustainability of power generation of the East China Power Grid. The hydropower station will install 3 turbine / generator units with an individual installed capacity of two times 10 MW and one time 2 MW, amounting to a total installed capacity of 22 MW. The project design mainly consists of an integrated dam and powerhouse type hydropower station with a dam, a water diversion system, two separate powerhouses, tailrace, and a transformer station. The expected effective operating hours are 3,582 hrs annually and annual power supply to the grid is expected to be 73,577 MWh. The total flooded reservoir surface area of the proposed project activity equals 2,770,000 m 2 and the power density of the project is 7.94 W/m 2. Power generated by the project will be routed to the Fujian Provincial Power Grid through the Heping 110 kv Transformer Station. The Fujian Provincial Power Grid is part of the East China Power Grid. The project activity s contributions to sustainable development are: Reducing the dependence on exhaustible fossil fuels for power generation; Reducing air pollution by replacing coal-fired power plants with clean, renewable power; Reducing the adverse health impacts from air pollution; Reducing the emissions of greenhouse gases, to combat global climate change; Contributing to local economic development through employment creation. Promote local fishery development utilizing the reservoir created by the proposed project activity This project fits with the Chinese government objective to reduce the dependence on exhaustible fossil fuels for power generation, make the energy sector in general and the power sector in particular more sustainable.

3 CDM Executive Board page 3 A.3. Project participants: The parties involved in the project are shown in Table A.1: Table A.1 Project participants Name of Party involved (*) Private and/or public entity(ies) project participants ((host) indicates a host (*) (as applicable) Party) People s Republic of China Fujian Zhangping Yilong Hydroelectricity Ltd. (as the (host) Federal Republic of Germany Project Entity) Deutsche Bank AG,London Branch (as the Purchasing Party) the Party involved wishes to be considered as project participant (Yes/No) No No For more detailed contact information on participants in the project activities, please refer to Annex 1. A.4. Technical description of the project activity: A.4.1. Location of the project activity: A Host Party(ies): People s Republic of China A Region/State/Province etc.: Fujian Province A City/Town/Community etc: Xiyuan Town, Zhangping City A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): The proposed project is located on the main stream of the Beixi River, which is a branch of the Jiulongjiang River in Xiayangping Village of Xiyuan Town, Zhangping City of Longyan Prefecture City, Fujian Province, China. The site s approximate coordinates are east longitude of '0.01" and north latitude of 25 17'20.01". The nearest large cities are Longyan City, approximately 68 kilometres Southwest of the project site, and Zhangping City, approximately 10 kilometres Northeast of the project site. Figure A.1 shows the location of the project.

4 CDM Executive Board page 4 Figure A.1: Map of Fujian Province and the project location Fujian Zhangping Xizikou Hydropower Station Xiayangping Village of Xiyuan Town, Zhangping City of Longyan Prefecture City, Fujian Province, China North latitude 25 16'14.24"N East longitude '17.50"E

5 CDM Executive Board page 5 A.4.2. Category(ies) of project activity: The project activity falls within Sectoral Scope 1: Energy Industries. - Electricity generation from renewable energy (hydropower) A.4.3. Technology to be employed by the project activity: The project is an integrated dam and powerhouse type hydropower station with limited water storage capabilities of less than one day. The design mainly consists of a dam structure, 2 powerhouses, tailrace, and an on-site step-up transformer station. Total installed capacity will be 22 MW and expected effective annual operating hours are 3,582 hours. Net annual power supply to the grid is estimated to be 73,577 MWh. Total flooded reservoir surface area will be 2,770,000 m 2, corresponding to a power density of 7.94 W/m 2. Average water flow available for power generation is m 3 /s and the water head available for power generation is 9.69 meters. A dam structure with a maximum height of meters will be constructed in the Beixi River and will include 7 floodgates, a water intake and discharge sluices. The water intake will lead water to the powerhouse. After passing through the turbines, the water will be returned to the river through a tailrace. At the powerhouse site a step-up transformer station will be constructed. The choice of bulb type tubular and axial-flow fixed blade turbines for the proposed project reflects the low water head and high water flow nature of the project. Two turbine / generator units with an individual capacity of 10 MW and one turbine / generator unit with a capacity of 2 MW will be installed, amounting to a total installed capacity of 22 MW. The specific technical data of the turbines and generators are listed in Table A.2. The units will be manufactured by Guangdong Shaoguan Zhongli Generation Equipment Co., Ltd. and Fujian Nanping Nandian Hydropower Equipment Manufacturing Co., Ltd. The technology consists of domestic hydropower technology, which has been used before in China and is appropriate for the proposed project.

6 CDM Executive Board page 6 Table A.2 Technical data of the turbine / generator units Main Technical Data Value (per unit) Turbine A (2 units) Type number GZ995-WP-420 Type Bulb type tubular turbine Maximum water head 9.69 m Nominal water head 8.00 m Minimal water head 4.17 m Nominal flow rate 145 m 3 /s Capacity 10 MW Nominal rotation 115 r/min Turbine B (1 unit) Type number ZDJP502-LH-230 Type Axial flow fixed blade turbine Maximum water head 9.50 m Nominal water head 8.90 m Minimum water head 4.00 m Nominal flow rate 28 m 3 /s Capacity 2 MW Nominal rotation r/min Generator A (2 units) Type number SFWG10-52/4860 Type Bulb type tubular generator Nominal voltage 6.3 kv Power factor 0.9 (lag) Nominal power 10 MW Nominal rotation r/min Frequency 50 Hz Generator B (1 unit) Type number SF /3250 Type Axial flow fixed blade generator Nominal voltage 6.3 kv Power factor 0.8 (lag) Nominal power 2 MW Nominal rotation r/min Frequency 50 Hz Power generated by the project will be routed to the Fujian Provincial Grid through Heping 110 kv Transformer Station, located 9.7 kilometres from the project site, after it has been converted from 6.3kV to 110kV. The Fujian Provincial Grid is part of the East China Power Grid. The project entity will employ experienced employees and can therefore be considered capable of constructing and operating a hydropower station. The key staff members all have extensive previous experience with hydropower stations. Table A.3 shows the implementation schedule of the project.

7 CDM Executive Board page 7 Table A.3 Main implementation schedule of the proposed project activity Start Finish Event September 3, 2004 Undetermined Start construction activities November 4, 2004 October 15,2005 Construction dam structure on the right bank November 30,2004 June 19,2006 Construction powerhouse in the right bank December 21,2005 December 23,2006 Construction dam structure and powerhouse on the left bank January, 2005 December 2006 Installation Turbine/Generator units in the right bank Undetermined Undetermined Installation Turbine/Generator units in the left bank A.4.4 Estimated amount of emission reductions over the chosen crediting period: A 7-year renewable crediting period (renewable twice) is selected for the proposed project activity. The estimation of the emission reductions in the crediting period is presented in Table A.4. Table A.4 The estimation of the emission reductions in first crediting period Year The estimation of annual emission reductions (tco 2 e) Year 1: 1 September August ,439 Year 2: 1 September August ,439 Year 3: 1 September August ,439 Year 4: 1 September August ,439 Year 5: 1 September August ,439 Year 6: 1 September August ,439 Year 7: 1 September August ,439 Total estimated reductions (tons of CO2e) 416,073 Total number of crediting years in 1st crediting period 7 Annual average reductions over the first crediting period (tco 2 e) 59,439 A.4.5. Public funding of the project activity: There is no public funding from Annex I countries available to the proposed project.

8 CDM Executive Board page 8 SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity: Approved consolidated baseline and monitoring methodology ACM0002 (Version 7). The methodology draws upon: Tool for the demonstration and assessment of additionality (version 04) Tool to calculate the emission factor for an electricity system (version 01) Tool to calculate project or leakage CO 2 emissions from fossil fuel combustion (version 01) For more information on the baseline and monitoring methodology we refer to the UNFCCC website: B.2 Justification of the choice of the methodology and why it is applicable to the project activity: The baseline and monitoring methodology ACM0002 is applicable to the proposed project, because the project meets all the applicability criteria stated in the methodology: The proposed project is a grid-connected renewable power generation project. The project is an electricity capacity addition from a hydro power plant. The project has a power density greater than 4 W/m 2 (see also section B.3.) The project does not involve an on-site switch from fossil fuels to a renewable source. The geographic and system boundaries for the relevant electricity grid can be clearly identified and information on the characteristics of the grid is available. The methodology will be used in conjunction with the tools referred to above. The latest version of ACM0002 (version 7) has been applied. B.3. Description of the sources and gases included in the project boundary The sources and gases included in the project boundary are described in Table B.1 as below:

9 CDM Executive Board page 9 Table B.1 Inclusion of gases and sources in the calculation of the emission reductions Source Gas Included? Justification / explanation Fossil fuel-fired Power plants connected to the East China CO 2 Yes Included as per the ACM0002 methodology. Power grid CH 4 No Excluded as per ACM0002. Baseline N 2 O No Excluded as per ACM0002. Project Activity Emissions from the reservoir CO 2 No Excluded as per ACM0002. CH 4 Yes Included as per the ACM0002 methodology. N 2 O No Excluded as per ACM0002. In line with the methodology, the greenhouse gasses accounted for are CO 2 emissions from electricity generation in fossil fuel fired power plants that is displaced due to the proposed project activity and CH 4 emissions from the reservoir. As will be shown in Section B.6.1, the power density is above 4 W/m2, but below 10 W/m2, and therefore reservoir emissions (and hence project emissions) have been assumed and deducted from the proposed project emission reductions, in line with the methodology. The spatial extent of the project boundary includes all power plants connected physically to the electricity system that the CDM project power plant is connected to (as defined below), including the project power plant itself, which includes: Reservoir created by the project activity Dam structure including flood gates and water intake Power houses Tailrace Switching / transformer station (owned by the project entity) Transmission lines to the grid Methodology ACM0002 refers to the Tool to calculate the emission factor for an electricity system for the definition of an electricity system. According to this tool, the relevant grid definition should be based on the following considerations: 1. Use the delineation of the project electricity system and connected electricity system as provided by the DNA of the host country if available; or 2. Use, where DNA guidance is not available and the electricity system does not have spot markets for electricity or where it is impossible to determine the operational rate of the transmission line, the following definition of boundary: In large countries with layered dispatch system (e.g. state/provincial/regional/national) the regional grid definition should be used. In accordance with the above, the regional grid is selected as the project electricity system, which includes all power plants physically connected to this system. The proposed project activity is connected to the Fujian Provincial Grid, which is part of the East China Power Grid, which is selected as the project electricity system. The East China Power Grid includes the Provinces of Shanghai, Zhejiang, Jiangsu, Anhui and Fujian. The East China Power Grid imports electricity from the Central China Power Grid and North China Power Grid (through the import of power by Jiangsu Province from the Yangcheng power plant in Shanxi Province). Accordingly, we have selected the Central and North China Power Grids as the connected electricity system. For ease of reference, when we refer throughout this PDD to the East China Power Grid, this will take account of the emissions associated

10 CDM Executive Board page 10 with the imports of power from the connected electricity system (i.e. the Central and North China Power Grids). B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: The baseline scenario is prescribed by the ACM0002 methodology as follows. The baseline scenario of the proposed project activity is the continued operation of existing grid-connected power plants and the addition of new generation sources on the East China Grid to meet electricity demand, as reflected in the combined margin (CM) calculations described in the Tool to calculate the emission factor for an electricity system. B.5. 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 (assessment and demonstration of additionality): The additionality of the project activity is demonstrated using the steps described in the Tool for the demonstration and assessment of additionality (version 04). See UNFCC website: Step 1. Identification of alternatives to the project activity consistent with current laws and regulations Sub-step 1a: Define alternatives to the project activity The methodology requires a number of sub-steps to provide realistic and credible alternatives to the project activity. There are only a few alternatives that are prima facie realistic and credible in the context of the East China Power Grid: Fossil fuel-fired power generation Wind power The proposed hydropower activity, without the support of CDM The same service of power supply is provided from grid These are credible and realistic alternatives and these alternatives are in accordance with the description of the methodology (the additionality tool requires that the proposed project activity be included as an alternative, without the benefit from CDM). Continuation of the present situation (no capacity addition to the project electricity system) is not realistic in the context of this project, because power demand has been increasing rapidly over the last few years. China has experienced severe power shortages, spurned by fast demand for power; and hence the grids have been expanding rapidly. For example, the total supply to the East China Grid (including imports from Central and North Power Grids) grew by 85% between 2003 and 2005 (385,310,464 MWh in 2003 to 714,971,698 MWh in 2005). 1 This increase was largely due to increased imports from the Central and North China Grids, which increased from 13,756 MWh in 1 China Statistical Press (2006) China Electric Power Yearbook and China Statistical Press (2004) China Electric Power Yearbook.

11 CDM Executive Board page to 160,410 MWh in 2005, respectively 10,705 MWh in 2003 to 77,244 MWh in 2005, illustrating the power shortage of the East China Grid. Sub-step 1b: Enforcement of applicable laws and regulations The second sub-steps involve the confrontation of the alternatives with China s applicable laws and regulations. All four alternatives identified above are in compliance with China s relevant laws and regulations. 2 This may be demonstrated by referring to statistics, which show that each of these power supply options is used in China. The proposed project activity is consistent with national policies for environmental protection, energy conservation and sustainable development. However, there are no binding legal and regulatory requirements for this project type. The Renewable Energy Law adopted by the National People s Congress on 28 February, 2005 encourages and supports renewable-based power generation, but does not stipulate specific goals for local air quality improvement. Conclusion: We conclude that each of the alternatives is in compliance with the relevant Chinese laws and regulations. As there are alternatives to the project activity that are in compliance with the relevant Chinese laws and regulations, the project may be additional. Step 2. Investment analysis Sub-step 2a: Determine appropriate analysis method The analysis will be analyzed through Option III of the additionality tool, i.e. benchmark analysis. This method is applicable because: Option I: Simple cost analysis, does not apply as the project generates economic returns through the sales of electric power to the grid. Option II: Investment comparison analysis is not used as the project entity is not considering to invest in the construction of one of the other identified alternatives. Option III: Benchmark analysis is used as the return on investment relative to the industry benchmark was crucial for the decision to go ahead with the project. Conclusion: We conclude that option III is applicable to the project activity. Sub-step 2b Option III: Apply benchmark analysis The project faces a barrier to implementation due to the poor returns on investment. To illustrate this, we performed a benchmark analysis in which calculate the Internal Rate of Return (IRR) of the project and compare this with the industry benchmark for hydropower projects, which in China is set at 8%, and which is consistent with the benchmark used in the Feasibility Study Report. 2 Conventional coal-fired power plants are consistent with regulations although the construction of small-scale power plants with a capacity under 135 MW has been prohibited, see General Office of the State Council (2002), Notice of the General Office of the State Council concerning the Strict Prohibition of the Construction of Thermal Power Units with a Capacity of 135MW or Below, Guo Ban Fa Ming Dian (2002) Document No.6.

12 CDM Executive Board page 12 Sub-step 2c: Calculation and comparison of financial indicators For the calculation of the financial indicators for the proposed hydropower project, we used the parameters listed in Table B.2. The data listed are all consistent with the date mentioned in the Feasibility Study Report, with the exception of the expected power price, which equals the price as agreed upon in the Power Purchase Agreement. Table B.2 Parameters used in the calculation of the IRR Proposed Project Activity Installed capacity 22 MW Static total investment 201,280,000 RMB Annual power supply 73,577 MWh Annual O & M Cost 2,930,000 RMB Investment horizon 23 years (including 2.5 years construction) Expected Power price 0.28 RMB/kWh (including 6% VAT) Income Tax 33% Source; Feasibility Study Report and Power Purchase Agreement The investment analysis compares the internal rate of return (IRR) of the project with the benchmark defined in sub-step 2b. The main results of the investment analysis are presented in Table B.3, where the IRR for the proposed project has been calculated without taking into consideration CDM revenues. Table B.3 Main results of the IRR calculations Scenario IRR Project without revenues from the sale of CERs 4.71% Industry Benchmark IRR 8% From the results in Table B.3 it is clear that the return on investment for the proposed project activity without the revenues from the sales of CERs is considerably below the 8% industry benchmark that applies to hydropower stations of this scale. This demonstrates that the proposed project activity is not a commercially viable option to supply power. The detailed spreadsheet calculations are available to the validator. Sub-step 2d: Sensitivity analysis The Tool for the demonstration and assessment of additionality requires that a sensitivity analysis is conducted to check whether the financial attractiveness remains unaltered for reasonable variations in the critical assumptions. For the IRR (without CDM revenues), the following parameters were used as critical assumptions: Total investment Annual power supply Annual operation and maintenance cost Annual revenues In the sensitivity analysis, variations of ±10% have been considered in the critical assumptions. The results of the sensitivity analysis for the IRR without CDM revenues are shown in Table B.4, while Figure B.1 provides a graphic depiction.

13 CDM Executive Board page 13 Table B.4 Sensitivity analysis; impact of variations in assumptions on the IRR without CDM revenues Percentage Variation -10% -5% 0% +5% +10% Critical assumption Total investment cost 5.43% 5.06% 4.71% 4.39% 4.10% Annual power supply 3.91% 4.32% 4.71% 5.10% 5.47% Annual O&M cost 4.83% 4.77% 4.71% 4.65% 4.59% Grid power price 3.91% 4.32% 4.71% 5.10% 5.47% Figure B.1 Results of the sensitivity analysis The sensitivity analysis of the Internal Rate of Return confirms that the proposed project after realistic modifications to the critical assumptions remains commercially non viable without CDM revenues. The Internal Rate of Return of the proposed project activity without CDM revenues remains well below the 8% benchmark. The conclusion may be clear that with reasonable modifications in the critical assumptions, the main results remain unaltered. The results of the sensitivity analysis therefore confirm that the project faces significant economic barriers without CDM revenues. The result of taking CDM revenues into consideration would lead to a significantly higher Internal Rate of Return, alleviating the lack of profitability of the proposed project activity. Step 3. Barrier analysis The project does not face other barriers besides the low economic returns. Therefore step 3 of the additionality tool is skipped.

14 CDM Executive Board page 14 Step 4. Common practice analysis Sub-step 4a. Analyze other activities similar to the proposed project activity: For the common practice analysis, we have analyzed all hydropower projects located in Longyan Prefecture City of Fujian Province, with an installed capacity between 15MW and 50MW that have completed construction after 2003 and/or are still under construction. According to the tool for the demonstration and assessment of additionally, projects are considered similar in case they are located in the same county/region, are of similar scale, and take place in a comparable environment with respect to regulatory framework, investment climate, access to technology, access to financing, etc. Projects that completed construction in the year 2003 or before are excluded as they were developed under a market environment that is substantially different from the current market environment, which is, for independent power producers at least, considerably less attractive. 3 We have selected projects with an installed capacity between 15 MW and 50MW because the Chinese government considers hydropower stations above 50MW as large-scale projects. The selected geographical area is Longyan Prefecture City region. We have listed the projects within our criteria in table B.5 Table B.5 Similar hydropower stations constructed in Longyan Prefecture City region since 2003 Project name Investment per Capacity Start construction Remark Unit (RMB/kW) (MW) year Zhangping Nanpanshi 6, Developed under a different market regime Liancheng Daguan 8, Zhangping Xiaoqi 7, Developed under a different market regime Changting Tingzhou 9, Developed under CDM Zhangping Huakou 9, Developed under CDM Data source: Fujian Longyan Water Resource Administration Sub-step 4b. Discuss any similar options that are occurring: Of the 5 hydropower stations listed in table B5, the Changting Tingzhou and Zhangping Huakou hydropower stations are currently applying for CDM and can therefore be excluded from the analysis. The projects Zhangping Nanpanshi, Liancheng Gaguan, and Zhangping Xiaoqi are further examined for the common practice analysis. There are essential distinctions between the proposed project activity and the three projects listed in the above table, and we will list the following aspects: Firstly, an extension was proposed to the downstream Zhangping Hydropower Station during the construction period of the project. As a result, Zhangping government required that the project should be subjected to the water supply for cooling purposes to the extended system and revise the original design, resulting in an increased minimum waterflow and a small additional system. It was concluded by the Design Institute that, based on benefit analysis, it is economically unfeasible to include the additional system to the project, however, after taking into consideration the compliance with the governmental policy, the benefits to the society and environment, as well as the expected CDM 3 Economist Intelligence Unit (2003), China Hand, page

15 CDM Executive Board page 15 revenues, the project entity decided to add a 2 MW powerhouse on the left base of the river. As a result, the investment of the project increased with million RMB. Secondly, due to the above reason, an adjustment in a state policy (inundation compensation was higher) the investment to the project during its construction was increased with million RMB, an increase of 27% in comparison with its original investment. As a result, the unit investment per kw amounts to 9,149 RMB/kW, which is significantly higher than those of the other three projects. Thirdly, the price offered by the Power Gird is set at 0.28 RMB/kWh, which is lower than the prices for the other three projects. Fourthly, the three occurrences of the once-in-a-dozen-year flood caused considerable economic damage to the project during its construction. The project owner paid 3.8 million RMB to the construction company in addition to the original total investment. Finally, the project s ownership belongs to two individual shareholders with limited financial capacity. The above-mentioned situations added to the financial barriers of the project. As a result, the installation of a generator system in the additional powerhouse has been delayed. Considering the above reasons, the project entity is taking active part in seeking CDM support. The additional CDM revenues will make a significant difference to the project s financial situation, increasing the IRR significantly above the 4.71% level without CDM revenues. With CDM support, the financial feasibility of the project will be realized. We therefore conclude that the Xizikou Hydropower Station Project is additional compared to the other projects listed in table B5. Impact of CDM registration Registration of the project as a CDM project would result in additional revenues for the project, significantly improving the economic attractiveness of the project. This is the most important contribution of CDM to the project realization, removing the crucial barrier towards its realization. The start of the main construction activities of the project activity was in September 3, At this time, the main shareholders of the project entity were very knowledgeable about the possibilities offered by CDM. This is evidenced by the fact that Xiamen Pengliqing Environmental Technology Development Ltd. (Pengliqing) consulted with Longyan Bureau of Water Resources about the promotion of CDM. Through the recommendation of Longyan Bureau of Water Resources, Pengliqing contacted with the project entity, introduced the relevant situation about CDM, the project entity was very interested and decided to apply for CDM to help overcome the investment barrier of the proposed project activity, and the two parties signed a Letter of Intent before the construction activities for the project were started, which clearly shows that the shareholder considered the potential of the CDM revenues when they decided to invest in the proposed project activity. An overview of key events is given in table B.6.

16 CDM Executive Board page 16 Table B.6: Overview of key events in the development of the project Date Key Events July 23, 2004 Discussion between project entity and Pengliqing regarding CDM development. August 24, 2004 Signing Letter of Intent on CDM project development between project entity and Pengliqing. September 3, 2004 Start of project construction. November 25, Environmental Impact Assessment report approval obtained from Fujian Longyan 2004 Environmental Protection Bureau. March 15, 2005 Feasibility Study report approval obtained from Fujian Province Development and Reform Commission. April 22, 2005 The local government required a revised design to increase the minimum flow in order to meet the water demand by the 3 rd extension of Zhangping Power Plant. April 29, 2006 The scheme relating to a revised design and an adjustment to budgetary estimation obtained approval, and investment was increased by RMB 43,060,000. January 8, 2007 Power Purchase Agreement signed with the Power Grid company and a tariff was agreed of RMB /kwh. March 12, 2007 Administration of Commodity Price of Fujian Province approved the tariff of RMB 0.28/kwh for the power purchase. June 29, 2007 Purchasing entity was identified for the CERs of the proposed project activity November 5, 2007 Term sheet was signed between the project entity and the purchasing entity. The above events clearly demonstrate that the project entity was aware about the potential for CDM before the start of the CDM activity, and that it played a crucial role in overcoming the barriers towards the implementation of the proposed project activity. B.6. Emission reductions: B.6.1. Explanation of methodological choices: In accordance with the ACM0002 methodology (version 07), baseline emissions for the year y are calculated as: BE y ( EGy " EGbaseline )! EFgrid, CM, y = (B.1) Where: BE y are the baseline emissions in year y (tco 2 /yr); EG y is the the electricity supplied by the project activity to the grid (MWh); EG baseline is the baseline electricity supplied to the grid in the case of modified or retrofit facilities (MWh), and; EF grid,cm,y is the Combined Margin CO 2 emission factor for grid connected power generation in year y, calculated using the latest version of the Tool to calculate the emission factor for an electricity system. As the project involves the construction of a new hydropower station, EG baseline is zero and formula B.1 can be simplified as: BE y EGy! EFgrid, CM, y = (B.2) For the calculation of Combined Margin CO 2 emission factor, EF grid,cm,y, the methodology refers to the Tool to calculate the emission factor for an electricity system (Version 01). In accordance with this

17 CDM Executive Board page 17 tool, the baseline emission factor is calculated as a combined margin: a weighted average of the operating margin emission (OM) factor and the build margin (BM) emission factor. Both the OM and BM emission factors are calculated ex ante and will not be updated during the first crediting period. This PDD refers to the Operating Margin (OM) Emission Factor and the Build Margin (BM) Emission Factor published by the Chinese DNA on 09 August We will refer to these emission factors as the published emission factors. For more information on the published OM and BM emission factors, please refer to: -Baseline emission factors: -Calculation of OM: -Calculation of BM: We calculate the OM and BM Emission Factors on the basis of the published emission factors but deviate at some points by using the original data sources. Our calculation results in a slightly lower combined margin emission factor as can be calculated based on the published OM (0.9421) and BM (0.8672). We have therefore used our calculated combined margin emission factor for the calculation of emission reductions in this PDD. The description below focuses on the key elements in the calculation of the published emission factors and the subsequent calculation of emission reductions. The full process of the calculation of the emission factors and all underlying data are presented in English in Annex 3 to this PDD. Selection of values for net calorific values and CO 2 emission factors of various fuels. As mentioned above, the Chinese DNA has entrusted key experts with the calculation of the grid emission factors. In these calculations choices have been made for the values of net calorific values and CO2 emission factors. In the calculation files of the published emission factors, the net calorific values are based on the China Energy Statistical Yearbook, and the CO 2 emission factors are based on IPCC 2006 default values. The following table summarizes the values used. Note that the table lists the carbon emission factor of the fuels, while the CO 2 emission factor has been obtained by multiplying with 44/12. Rounded figures have been reported but exact figures have been used in the calculations in this PDD. The IPCC 2006 default carbon emission factors assume as a default value 100% oxidation in the combustion process. The calculation by the Chinese DNA and the calculations presented here follow the same approach by assuming complete combustion of the fuels. The Tool to calculate the emission factor for an electricity system does not take into account oxidation rates which is equivalent to assuming 100% oxidation.

18 CDM Executive Board page 18 Table B.7. Default values used for net calorific values and CO 2 emission factors of fuels Fuel Unit NCV Carbon emission factor CO 2 emission factor (TJ/unit) (TC/TJ) (TCO 2 /TJ) Raw coal 10 4 Tons Clean coal 10 4 Tons Other washed coal 10 4 Tons Coke 10 4 Tons Coke oven gas 10 8 m Other gas 10 8 m Crude oil 10 4 Tons Gasoline 10 4 Tons Diesel 10 4 Tons Fuel oil 10 4 Tons LPG 10 4 Tons Refinery gas 10 4 Tons Natural gas 10 8 m Other petroleum products 10 4 Tons Other coking products 10 4 Tons Other E (standard coal) 10 4 Tce Data source: All data are from the files mentioned above, and have been crosschecked against the original sources cited, as follows: Net calorific values: China Energy Statistical Yearbook, 2004 p. 302; Carbon emission factors: IPCC default values; see 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 (energy); CO 2 emission factors: calculated from carbon emission factors. Description of the calculation process The key methodological steps according to the Tool to calculate the emission factor for an electricity system are: 1. Identify the relevant electric power system; 2. Select an operating margin (OM) method; 3. Calculate the operating margin emission factor according to the selected method; 4. Identify the cohort of power units to be included in the build margin (BM); 5. Calculate the build margin emission factor, and; 6. Calculate the combined margin (CM) emission factor. Step 1. Identify the relevant electric power system According to the Tool to calculate the emission factor for an electricity system, step 1 involves the identification of the relevant electric power system which is described in section B.3 of this PDD. In accordance with the tool the East China Power Grid has been selected as the relevant electric power system and the Central and North China Power Grid as the connected electricity system. See for details section B.3. Step 2. Select an operating margin (OM) method The Tool to calculate the emission factor for an electricity system offers several options for the calculation of the OM emission factor. Of these, dispatch analysis, cannot be used, because dispatch

19 CDM Executive Board page 19 data, let alone detailed dispatch data, are not available to the public or to the project participants. For the same reason, the simple adjusted OM methodology cannot be used. The average OM does not take into account the non-dispatchable nature of low-cost/must-run resources and as low-cost/must-run resources constitute less than 50% of total grid generation (see table B.8), we have selected the Simple OM method as the most appropriate method. Table B.8 Installed capacity and electricity generation of the East China Grid, Year Installed capacity (MW) Hydro Thermal Nuclear Others Total Electricity generation (GWh) % Low cost/must run Hydro Thermal Nuclear Others Total % Low cost/must run ,555 59, , , ,436 2, , ,165 61,120 1, , , ,204 5, , ,603 65,037 2, , , ,112 14, , ,418 79,424 3, , , ,292 21, , , ,077 3, , , ,663 22, , Source: China Electric Power Yearbook (editions 2002, 2003, 2004, 2005 and 2006). Data vintage selection In accordance with the Tool to calculate the emission factor for an electricity system, the OM is calculated according to the ex ante option : A three-year generation-weighted average, based on the most recent data available at the time of submission of the CDM-PDD to the DOE for validation, without the requirement to monitor and recalculate the emissions factor during the crediting period. Step 3. Calculate the operating margin emission factor according to the selected method According to the Simple OM method, the OM emission factor is calculated as the generation-weighted average tco 2 emissions per unit of net electricity generation (tco 2 /MWh) of all generating power plants serving the system, excluding the low-cost/must-run power plants/units. We calculate the OM emission factor according to option C of the Simple OM method, as data required for option A and B (i.e. electricity generation, fuel consumption data, etc for specific power plants/units serving the grid) is not available to the public or to the project participants. Where option C is used, the simple OM emission factor is calculated based on the net electricity supplied to the grid by all power plants serving the system, not including low-cost/must-run power plants/units, and based on the fuel type(s) and total fuel consumption of the project electricity system, as follows: EF grid, OMsimple, y = " i FC i, j! NCV EG i, y y! EF CO2, i, y (B.3) Where: EF grid,omsimple,y is the simple operating margin CO 2 emission factor in year y (tco 2 /MWh); FC i,y is the amount of fossil fuel type i consumed in the project electricity system in year y (in a mass or volume unit); NCV i,y is the Net Calorific Value (energy content) of fossil fuel type i in year y (GJ/mass or volume unit); EF CO2,i,y is the CO 2 emission factor of fossil fuel type i in year y (tco 2 /GJ); EG y is the net electricity generated and delivered to the grid by all power sources serving the system, not including low-cost / must-run power plants / units, in year y (MWh);

20 CDM Executive Board page 20 i are all fossil fuel types combusted in power sources in the project electricity system in year y, and; y is the three most recent years for which data is available. Choice of aggregated data sources The published OM emission factor calculates the emission factor directly from published aggregated data on fuel consumption, net calorific values, power supply to the grid and IPCC default values for the CO 2 emission factor. Calculation of the OM emission factor as a three-year full generation weighted average On the basis of these data, the Operating Margin emission factors for 2003, 2004 and 2005 are calculated. The three-year average is calculated as a full-generation-weighted average of the emission factors. For details we refer to the publications cited above and the detailed explanations and demonstration of the calculation of the OM emission factor provided in Annex 3. We calculate the Operation Margin Emission Factor as tco 2 e/mwh. 4 The calculation of the OM emission factor is done once (ex ante) and will not be updated during the first crediting period. This has the added advantage of simplifying monitoring and verification of emission reductions. Step 4. Identify the cohort of power units to be included in the build margin (BM) According to the Tool to calculate the emission factor for an electricity system, the sample group of power units m used to calculate the build margin consists of either: (a) The set of five power units that have been built most recently, or (b) The set of power capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently A direct application of this approach is difficult in China. The Executive Board (EB) has provided guidance on this matter with respect to the application of the AMS-1.D and AM0005 methodologies for projects in China on 7 October 2005 in response to a request for clarification by DNV on this matter. The EB accepted the use of capacity additions to identify the share of thermal power plants in additions to the grid instead of using power generation. The relevance of this EB guidance extends to the Tool to calculate the emission factor for an electricity system. The calculation in step 5 and the calculation of the published BM Emission factor by the Chinese authorities are based on this guidance. The approach is explained below in step 5 and is the one that has been followed in numerous PDDs using the similar ACM0002 methodology since the EB decision. Data vintage selection In accordance with the Tool to calculate the emission factor for an electricity system, the BM is calculated according to option one: For the first crediting period, the build margin emission factor is calculated ex-ante based on the most recent information available. For the second crediting period, the build margin emission factor will be updated based on most recent data available at the time of submission of the request for registration. For the third crediting period, the build margin emission factor calculated for the second crediting period will be used. 4 The published Operating Margin Emission Factor is tco 2 /MWh.

21 CDM Executive Board page 21 Step 5. Calculate the build margin emission factor The Build Margin Emission Factor is, according to the Tool to calculate the emission factor for an electricity system, calculated as the generation-weighted average emission factor (measured in tco 2 /MWh) of all power units m during the most recent year y for which data is available: EF grid! EGm, y " EFEL, m, y m, BM, y = (B.4) EG! m m, y Where: EF grid,bm,y is the build margin CO 2 emission factor in year y (tco 2 /MWh); EG m,y is the net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh); EF EL,m,y is the CO 2 emission factor of power unit m in year y (tco 2 /MWh); m are the power units included in the build margin, and; y is the most recent historical year for which power generation data is available. The sample m, according to the methodology, should be over the latest 5 power plants added to the grid, or over the last added power plants accounting for at least 20% of power generation. We apply an indirect approach based on the EB decision as mentioned in step 4. First we calculate the newly added installed capacity and the share of each power generation technology in the total capacity. Second, we calculate the weights of each power generation technology in the newly-added installed capacity. 5 Third, emission factors for each fuel group are calculated on the basis of an advanced efficiency level for each power generation technology and a weighted average carbon emission factor on the basis of IPCC default carbon emission factors of individual fuels. Since the exact data are aggregated, the calculation will apply the following method: We calculate the share of the CO 2 emissions of solid fuel, liquid fuel and gas fuel in total emissions respectively by using the latest energy balance data available; the calculated shares are the weights. Using the emission factor for advanced efficient technology we calculate the emission factor for thermal power; the BM emission factor of the power grid will be calculated by multiplying the emission factor of the thermal power with the share of the thermal power in the most recently added 20% of total installed capacity. Detailed steps and formulas are as below: First, we calculate the share of CO 2 emissions of the solid, liquid and gaseous fuels in total emissions respectively. 5 Newly added capacity is determined as follows. First, the latest year (2005) for which data on total installed capacity is available is identified. Then, the last year is identified in which the total installed capacity was below 80% of the total installed capacity in This defines newly added capacity. Note that this approach does not follow the EB decision in response to the DNV request as mentioned in the main text to the letter, but the approach taken is the one that has been followed in numerous PDDs since the EB decision.

22 CDM Executive Board page 22! i, j, y i = # COAL, j $ Coal (B.5) F " COEF!! i, j! F i, j, y i, j, y i = # OIL, j " COEF " COEF i, j i, j $ Oil (B.6) F " COEF i, j!! F i, j, y i, j, y i = # GAS, j i, j i, j " COEF $ Gas (B.7) F " COEF i, j F i, j, y i, j i, j Where: F i,j,y the amount of the fuel i consumed in y year of j province (measured in tce); COEF i,j,y the emission factor of fuel i ( measured in tco 2 /tce) while taking into account the carbon content and oxidation rate of the fuel i consumed in year y, and; COAL,OIL and GAS subscripts standing for the solid fuel, liquid fuel and gas fuel. Second, we calculate the emission factor of the thermal power: EF Thermal = Coal! EFCoal, Adv + " Oil! EFOil, Adv + " Gas! EFGas, Adv " (B.8) While EF Coal,Adv, EF Oil,Adv and EF Gas,Adv represent the emission factors of advanced coal-fired, oil-fired and gas-fired power generation technology, see detailed parameter and calculation in Annex 3. Third, we calculate BM of the power grid: CAP EF =! EF Thermal grid, BM, y Thermal (B.9) CAPTotal Where CAP Total represents the total newly-added capacity and CAP Thermal represents newly-added thermal power capacity. The λs are calculated on the basis of the weight of CO 2 emissions of each type of fuel in the total CO 2 emissions from thermal power. Subsequent calculation of the Build Margin emission factor yields a baseline emission factor of tco 2 e/mwh. 6 For details we refer to Annex 3. The calculation of the BM emission factor for the first crediting period is done once (ex ante) and will not be updated during the first crediting period. This has the advantage of simplifying monitoring and verification of emission reductions. 6 The published Build Margin Emission Factor is tco2/mwh.

23 CDM Executive Board page 23 Step 6. Calculate the combined margin (CM) emission factor The Baseline Emission Factor is calculated as a Combined Margin, using a weighted average of the Operating Margin and Build Margin. EF! grid, CM, y = EFgrid, OM, y! Wom + EFgrid, BM, y WBM (B.10) The Tool to calculate the emission factor for an electricity system provides the following default weights: Operating Margin, W OM = 0.5; Build Margin, W BM = 0.5 Applying the default weights and the calculated emission factors, we calculate a combined margin Baseline Emission Factor of tco 2 e/mwh. 7 Calculation of Baseline Emissions Baseline Emissions are calculated by multiplying the Baseline Emission factor by the net quantity of electricity supplied to the cement production facility by the project according to formula B.2 repeated below for convenience: BE y = EG y! EFgrid, CM, y The estimated baseline emissions (see Section A4.4) are based on expected net power supply to the gird and an ex ante calculation of the emission factor in the first crediting period, and will hence be revised during the implementation of the project activity on the basis of actual net power supply to the grid. Calculation of emission reductions Emission reductions are calculated in accordance with methodology ACM0002 as follows: ER = BE! PE! LE (B.11) y y y y Where: ER y are emission reductions in year y (tco 2 /yr); BE y are baseline emissions in year y (tco 2 /yr); PE y are project emissions in year y (tco 2 /yr), and; LE y are leakage emissions in year y (tco 2 /yr). In accordance with the methodology, project emissions from the reservoir have to be taken into account in case the power density of the project is between 4 and 10 W/m 2. The power density can be calculated as follows: PD Cap PJ BL = (B.12) A PJ! Cap! A BL 7 Applying the published OM and BM results, we calculate a CM emission factor of tco2/mwh.

24 CDM Executive Board page 24 Where: PD is the power density of the project activity, in W/m 2 ; Cap PJ is the installed capacity of the hydro power plant after the implementation of the project activity (W); Cap BL is the installed capacity of the hydro power plant before the implementation of the project activity (W); A PJ is the area of the reservoir measured in the surface of the water, after the implementation of the project activity, when the reservoir is full (M 2 ), and; A BL is the area of the reservoir measured in the surface of the water, before the implementation of the project activity, when the reservoir is full (M 2 ). For new reservoirs, this value is zero. As the proposed project activity does not involve the retrofitting or modification of an existing hydropower plant and the project involves the creation of a new reservoir, we can simplify the calculation by assuming Cap BL and A BL as zero and calculate the power density as follows: Surface area of the reservoir at full capacity: 2,770,781 m 2 Total installed capacity after implementation: 22,000,000 W Power Density (Installed capacity / Surface area) 22,000,000 / 2,770,781 = 7.94 W/m 2 From above calculation it is clear that the power density is greater than 4 but below 10, and therefore, in accordance with the ACM0002 methodology, emissions from the reservoir are taken into account in the calculation of emission reductions. In accordance with the methodology the calculation formula fort he project emissions is as follows: PE y Where: EF = Re s! TEG 1000 y PE y = Emission from reservoir expressed as tco 2 e/year (B13) EF Res = is the default emission factor for emissions from reservoirs, and the default value as per EB23 is 90 Kg CO2e /MWh. TEG y = Total electricity produced by the project activity, including the electricity supplied to the grid and the electricity supplied to internal loads, in year y (MWh). In agreement with the methodology, other leakage (arising from power plant construction, fuel handling, land inundation, etc.) is ignored. The project participants also do not claim emission reductions resulting from a reduction of these emissions under the baseline level. Consequently, the only greenhouse gas accounted for in the calculation of the emission reductions is CO 2. Using the results of the preceding sections, we conclude that emission reductions are equal to baseline emissions and calculate the emission reductions using formula B.14: ER y = EG y! " PE y " L y (B.14)

25 CDM Executive Board page 25 B.6.2. Data and parameters that are available at validation: Data / Parameter: Power generation by source Data unit: GWh (per annum) Description: Provincial level power generation data by source Source of data used: China Electric Power Yearbook (Editions 2004, 2005 and 2006) Value applied: For detailed values: see Annex 3 Justification of the These data are the best data available, and have been published by the choice of data or Chinese authorities. description of measurement methods and procedures actually applied: Any comment: Data / Parameter: Internal power consumption of power plants Data unit: Percentage (%) Description: Internal consumption of power by source Source of data used: See the downloadable files mentioned above for the full data set. Original data are from China Electric Power Yearbook (Editions 2004, 2005 and 2006) Value applied: For detailed values, see Annex 3 Justification of the These data are the best and most recent data available, and use the same data choice of data or publication as the calculation of the emission factors published by the description of Chinese authorities. measurement methods and procedures actually applied: Any comment: Data / Parameter: Amount of each fossil fuel consumed by each power source Data unit: 10 4 tons, 10 8 m 3, 10 4 tce, depending on the specific fuel. We refer to Annex 3 for details. Description: Physical amount of fuel input, for 17 different fuels Source of data used: China Energy Statistical Yearbook 2006, 2005 and 2004 Editions Value applied: For detailed values, see Annex 3 Justification of the These data are the best data available, and have been published by the choice of data or Chinese authorities. description of measurement methods and procedures actually applied: Any comment: Data / Parameter: Efficiency of advanced thermal power plant additions Data unit: Percentage (%) Description: Source of data used: See the downloadable files mentioned above for the full data set. Data are based on the best technologies available in China.

26 CDM Executive Board page 26 Value applied: Coal: 35.82%; Oil: 47.67%; Gas: 47.67% Justification of the These data are the best data available, and have been published by the choice of data or Chinese authorities. description of measurement methods and procedures actually applied: Any comment: Data / Parameter: Capacity by power generation source Data unit: MW Description: For the different power generation sources, installed capacity in 2003, 2004 and 2005 in the East China Grid. Calculated by summing provincial data. Source of data used: China Electric Power Yearbook (Editions 2004, 2005 and 2006) Value applied: For detailed values, see Annex 3 Justification of the These data are the best data available, and have been published by the choice of data or Chinese authorities. description of measurement methods and procedures actually applied: Any comment: Data / Parameter: Fuel Emission Coefficients Data unit: Tons C/TJ Description: Carbon emission factors for 17 different fuels Source of data used: Data used are IPCC default values. See 2006 IPCC Guidelines for National Greenhouse Gas Inventories. Value applied: For detailed values see Annex 3 Justification of the These are the most recent data. choice of data or description of measurement methods and procedures actually applied: Any comment: Data / Parameter: Electricity imports from connected grids Data unit: MWh (per annum) Description: Electricity imports of power from other grids Source of data used: Original data are from China Electric Power Yearbook (Editions 2004, 2005 and 2006) and the China State Power Information Network online at: Value applied: For detailed values: see Annex 3 Justification of the These data are the best data available, and have been published by the choice of data or Chinese authorities. description of measurement methods and procedures actually

27 CDM Executive Board page 27 applied: Any comment: Data / Parameter: Net Calorific Value Data unit: TJ/10 4 tons; TJ/10 4 tce; TJ/10 8 m 3 Description: Net calorific values of 17 different fuels in TJ per unit. Source of data used: See the downloadable files mentioned above for the full data set. Original data are from China Energy Statistical Yearbook, (2004) p Value applied: For detailed values: see Annex 3 Justification of the These data are the best data available, and have been published by the choice of data or Chinese authorities. description of measurement methods and procedures actually applied: Any comment: Data / Parameter: Surface area reservoir Data unit: m 2 Description: Surface area at full reservoir level Source of data used: Feasibility study report Value applied: 2,770,781 m 2 Justification of the This is the best data available choice of data or description of measurement methods and procedures actually applied: Any comment: The surface area of the project activity is calculated (as described in Section B.3) as the difference between A PJ (the surface area of the full reservoir after the implementation of the project activity) and A BL (the surface area of the full reservoir before the implementation of the project activity; for new reservoirs, this value is zero) Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied: Any comment: EF Res tco 2 e/mwh Default emission factor for emissions from reservoirs. EB23 90kgCO 2 e/mwh According to ACM0002 (version 07), using the default value from 2006 Revised IPCC Guidelines.

28 CDM Executive Board page 28 B.6.3 Ex-ante calculation of emission reductions: The annual net power supply to the East China Grid is estimated to be 73,577 MWh. Application of the formulae presented in Section B to the baseline data presented yields the following results: EFOM = t CO2/MWh EFBM = t CO2/MWh EFy = 0.5* * = tco2/mwh The baseline emission values obtained during the first crediting period are provided in Table B.9: Table B.9 The estimation of baseline emissions during the 1 st crediting period Year Year Annual net power supply to the grid (EGy) (MWh) Baseline emission factor (tco 2 /MWh) Baseline emissions (tco 2 e) 1 01/09/ /08/ , , /09/ /08/ , , /09/ /08/ , , /09/ /08/ , , /09/ /08/ , , /09/ /08/ , , /09/ /08/ , ,532 Total 465,724 Average 66,532 In a given year, the emission reductions realized by the project activity (ER y) are equal to baseline GHG emissions (BE y ) minus project direct emissions and leakages during the same year: ER y = BE y - PE y - L y Leakage and project emissions: The project does not involve any leakage and therefore this value is set at zero for the emission reductions calculations. The project involves project emissions of 7,093 8 tco2e per year and therefore this amount is deducted per year from the emission reduction calculations in accordance with formula B(14). B.6.4 Summary of the ex-ante estimation of emission reductions: Table B.10 provides the annual emission reductions in tabular form. 8 The calculation of the project emission using the formula B13 results in emissions of 7, tco2e per year. This figure is rounded up to 7,093 tci2e, to be conservative.

29 CDM Executive Board page 29 Table B.10 Ex ante estimate of emission reductions due to the project Year Project Emissions (tco2) Baseline emissions (tco2) Leakage (tco2) Emission Reductions (tco2) Year 1: 01/09/ /08/2009 7,093 66, ,439 Year 2: 01/09/ /08/2010 7,093 66, ,439 Year 3: 01/09/ /08/2011 7,093 66, ,439 Year 4: 01/09/ /08/2012 7,093 66, ,439 Year 5: 01/09/ /08/2013 7,093 66, ,439 Year 6: 01/09/ /08/2014 7,093 66, ,439 Year 7: 01/09/ /08/2015 7,093 66, ,439 Subtotal 49, , ,073 Average 7,093 66, ,439 B.7 Application of the monitoring methodology and description of the monitoring plan: B.7.1 Data and parameters monitored: Data / Parameter: Data unit: Description: Source of data: Measurement procedures: Monitoring frequency: QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: Source of data: Measurement procedures: Monitoring frequency: QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: EG y MWh Electricity supplied to the grid by the project (net) Project activity site The net supply of power to the grid by the proposed project is measured through national standard electricity metering instruments. The metering instruments will be calibrated annually in accordance with the Technical administrative code of electric energy metering (DL/T ). Hourly measurement and monthly recording These data will be directly used for calculation of emission reductions. Sales record to the grid and other records are used to ensure the consistency. The measured electricity supply will be double checked by receipts of sales to the grid. (see also Section B.7.2 for more details) TEG y MWh Total electricity produced by the project activity, including the electricity supplied to the grid and the electricity supplied to internal loads, in year y. Project activity site Generation of power is measured through national standard electricity metering instruments. The metering instruments will be calibrated annually in accordance with the Technical administrative code of electric energy metering (DL/T ). Hourly measurement and monthly recording No further QA/QC procedures are considered necessary. The measured electricity generated will be used to check the plausibility of EG y. (see also Section B.7.2 for more details) EF grid,,cm,y tco2/mwh Combined margin CO2 emission factor for the grid connected power

30 CDM Executive Board page 30 Source of data: Measurement procedures: Monitoring frequency: QA/QC procedures to be applied: Any comment: generation in year y calculated using the latest version of the Tool to calculate the emission factor for an electricity system. Calculated ex-ante as per the above-mentioned tool. The combined margin emission factor is calculated ex-ante and will hence not be updated during the first crediting period. N.A. No further QA/QC procedures are considered necessary. The combined margin emission factor is calculated ex-ante and will not be updated during the first crediting period. Data / Parameter: Cap pj Data unit: W Description: Installed capacity of the hydro power plant after implementation of the project activity. Source of data: Project activity site Measurement procedures: The installed capacity of the proposed project is measured in accordance with national and international standards. Photographic evidence will be made available to the validator. Monitoring frequency: Yearly QA/QC procedures to No further QA/QC procedures are considered necessary. be applied: Any comment: - Data / Parameter: A PJ Data unit: m 2 Description: Area of the reservoir measured in the surface of the water, after the implementation of the project activity, when the reservoir is full. Source of data: Measured at the project site Measurement The surface area will be calculated using the design schematics and area procedures: maps. Photographs of the reservoir at several key locations will be taken when the project becomes operational to check whether the actual reservoir does not deviate substantially for the design. Monitoring frequency: Yearly QA/QC procedures to be applied: Any comment: - B.7.2 Description of the monitoring plan: This monitoring plan outlines the principles, which shall be followed in the monitoring of the parameters listed in section B.7.1. A monitoring manual with detailed procedures will be prepared on the basis of the principles outlined below. The monitoring manual may be updated to reflect the actual implementation of the project will not deviate from the monitoring plan as presented in this section. Monitoring of net electricity supplied by the project to the grid The proposed project activity is connected to the Fujian Provincial Power Grid through one or more on-site transformer stations. The project is connected to the Fujian Provincial Power Grid by a 110 kv

31 CDM Executive Board page 31 line to the Zhangping Heping 110 kv Transformer Station and might in the future also connect to the grid through other main power lines. The project will furthermore be connected to at least one back-up power line to provide emergency power in case the project is not operational. An indicative grid connection diagram is provided in figure B.1. The grid connection diagram indicates the principles for positioning of metering instruments that will be used in the monitoring of emission reductions. A separate monitoring manual is prepared with detailed procedures and a detailed grid connection diagram which is updated on the basis of the actual implementation of the project s grid connection and which will serve as the basis for periodic verification. The project entity will ensure that the actual implementation of grid connection will not deviate from the procedures outlined in this section. Figure B.1 Indicative grid connection diagram M2a M2b M3a M3b M2c M3c M1a M4a M1b M4b Powerhouse I. M1c M4c Powerhouse II. Project / Grid Boundary Internal power line Main power supply line Back-up power line The project entity will meter electric power according to the following principles: Power supplied to the grid through main power lines: As indicated in Figure B.2 the project is connected by one or multiple main power supply lines (indicated in red), which will deliver power generated by the project to the grid. Net power supplied to the grid is metered as below: o Project entity: The power supplied to the grid is metered by the project entity at a point after power has been transformed to high voltage at the Zhangping Heping transformer station. Therefore, no further transformer losses will occur before the project is connected to the grid. The power supply of the project to the grid will be metered with standard electricity meters in accordance with national regulations. The

32 CDM Executive Board page 32 o o metering instruments should record the net supply as the main power supply lines can transfer power in both directions. The metering instruments may record either a net figure of power delivered to the grid or two readings, i.e. power delivered to the grid and power received from the grid. Grid company: The grid company, Fujian Longyan Bureau of Electricity, will meter the power supply also at the high voltage side of the on-site transformer station with its own metering equipment. The regulations of the grid company require annual calibrations of both metering instruments. Calibration: Calibrations are carried out by the grid company or by a certified company appointed by the grid company. If there are any substantial discrepancies between the readings of the metering instruments throughout the year, both instruments will be recalibrated. Power received through back-up power lines: As indicated in Figure B.3 the project is connected by one or multiple back-up emergency power lines (indicated in brown) which will deliver power from the grid to the project in case of emergencies or when the turbines of the proposed project activity are not in operation. Net power received from the grid is metered as below: o Project entity: The power supplied to the project through the back-up emergency power lines will be metered by the project entity with standard metering instruments in accordance with national regulations. o Grid company: The grid company will meter the power supplied to the project with the same metering equipment in accordance with national regulations. o Calibration: Calibrations are carried out by the grid company or by a certified company appointed by the grid company. Total electricity produced by the project activity Electricity generation will be measured by the project entity with standard metering instruments in accordance with national regulations and will be used to check the plausibility of electricity supply. Calibration are carried out by the grid company or by a certified company appointed by the grid company. Installed capacity of the hydropower plant: In addition to the above, the installed capacity of the hydropower plant will be monitored yearly. The project entity will annually prepare photographic evidence of the installed equipment on the basis of the nameplates, which will be in accordance with domestic and international standards. The project entity will collect internal records, sales receipts for power supplied to the grid and billing receipts for power received from the grid as evidence. The net supply (i.e. gross supply minus supply by the grid to the project) will be used in the calculations. In case of discrepancies between the readings of the grid company and the project entity, the readings of the grid company will prevail. All records of generation, power delivered to the grid, sales receipts and the results of calibration will be collated in a central place by the project entity.

33 CDM Executive Board page 33 An overview of detailed information on minimum accuracy requirements of the metering instruments, measuring intervals, recording form, calibration and available documentation is provided in Table B.11. Determination of net power supply: Net electricity supplied to the grid by the project (EG y in section B.7.1.) is calculated on a monthly basis as: EG = ES! ED y y y With: ES y, electricity supplied by the project through the main power line(s) (in MWh) metered by the grid company (evidenced by monthly sales receipts) and cross-checked against the readings of metering instruments of the project entity. ED y, electricity delivered to the project through back-up power line(s) metered by the grid company (evidenced by monthly billing receipts).

34 CDM Executive Board page 34 Monthly Grid Table B.11 Details of metering instruments Meter Operated by Electronic measurement Manual logging M1 x Project Hourly Daily entity (optional) 9 Company (Annually) M2 x M3 x M4x Grid company Grid company / Project entity Project entity - - Monthly Grid Company (Annually) - - Monthly Grid Company (Annually) Hourly Daily (optional) Recording Calibration Accuracy Documentation Monthly Grid Company (Annually) Accuracy Class 1 or more accurate Accuracy Class 1 or more accurate Accuracy Class 1 or more accurate Accuracy Class 1 or more accurate Print out of electronic record and optional paper log. Data will consist of two readings, i.e. power delivered to the grid and power received from the grid or combined as net supply. Monthly sales receipts (for power delivered to grid) and billing invoices (for power received from the grid), or alternatively a single receipt which shows net power received. -Monthly billing invoices (for power received from the grid) provided by the grid company. -Print out of electronic record from by the project entity Print out of electronic record and optional paper log. 9 The project entity intends to log the readings of meters M1x and M4x manually in daily logs, but these logs will not form a formal requirement during verification. The ACM0002 methodology only requires hourly electronic measurement and these manual log records will only be maintained for back-up purposes. The project entity may deviate from this procedure during actual operation of the project.

35 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 35 Reporting, archiving and preparation for periodic verification The project entity will in principle report the monitoring data annually but may deviate to report at intervals corresponding to agreed verification periods and will ensure that these intervals are in accordance with CDM requirements. The project entity will ensure that all required documentation is made available to the verifier. Data record will be archived for a period of 2 years after the crediting period to which the records pertain. PROCEDURES IN CASE OF DAMAGED METERING EQUIPMENT / EMERGENCIES Damages to metering equipment: In case metering equipment is damaged and no reliable readings can be recorded the project entity will estimate net supply by the proposed project activity according to the following procedure: 1. In case metering equipment operated by project entity is damaged only: The metering data logged by the grid company, evidenced by sales receipts will be used as record of net power supplied to the grid for the days for which no record could be recorded. 2. In case metering equipment operated by the grid company is damaged only: The metering data logged by the project entity, evidenced by a print out of electronic records, will be used as a record of net power supply to the grid for the days for which no sales receipts/billing invoices could be provided. 3. In case both metering equipment operated by project entity and grid company are damaged: The project entity and the grid company will jointly calculate a conservative estimate of power supplied to the grid. A statement will be prepared indicating the background to the damage to metering equipment the assumptions used to estimate net supply to the grid for the days for which no record could be recorded the estimation of power supplied to the grid The statement will be signed by both a representative of the project entity as well as a representative of the grid company. The project entity will furthermore document all efforts taken to restore normal monitoring procedures. Emergencies: In case of emergencies, the project entity will not claim emission reductions due to the project activity for the duration of the emergency. The project entity will follow the below procedure for declaring the emergency period to be over: 1. The project entity will ensure that all requirements for monitoring of emission reductions have been re-established. 2. The monitoring officer and the head of operations of the hydropower station will both sign a statement declaring the emergency situation to have ended and normal operations to have resumed.

36 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 36 OPERATIONAL AND MANAGEMENT STRUCTURE FOR MONITORING The monitoring of the emission reductions will be carried out according to the scheme shown in Figure B.2. The Supervisor will hold the overall responsibility for the monitoring process, but as indicated below parts of the process are delegated. The first step is the measurement of the electrical energy supplied to the grid and reporting of daily operations, which will be carried out by the plant operation staff. The project owner will appoint a monitoring officer who will be responsible for verification of the measurement, collection of sales receipts, collection of billing receipts of the power supplied by the grid to the hydropower plant and the calculation of the emissions reductions. The monitoring officer will prepare operational reports of the project activity, recording the daily operation of the hydropower station including operating periods, power delivered to the grid, equipment defects, etc. The selection procedure, tasks and responsibilities of the monitoring officer are described in detail in Annex 4. Finally, the monitoring reports will be reviewed by the Supervisor. Figure B.2. Management structure in order to monitor emission reductions Plant operation staff: Measurement of electrical power produced Monitoring officer: Verification of measurement & calculation of emission reductions Supervisor Review Internal audit Support by Xiamen Pengliqing and Caspervandertak Consulting B.8 Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies) Date of completion of the baseline study and monitoring methodology: 09/04/2008 Name of persons determining the baseline study and the monitoring methodology: Caspervandertak Consulting Tel: / Fax: Edward Weinberg Consultant Edward@caspervandertakconsulting.com -Casper van der Tak: General Director: Info@caspervandertakconsulting.com

37 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 37 Xiamen Pengliqing Environmental Technology Development Ltd. Tel: / Fax: xmplq2002@163.com Caspervandertak Consulting and Xiamen Pengliqing Environmental Technology Development Ltd. are both not project participants.

38 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 38 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: 03/09/2004 (This date marked the start of the construction activities) C.1.2. Expected operational lifetime of the project activity: 23 years 0 months C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period A renewable crediting period will be used C Starting date of the first crediting period: 01/09/2008 (the expected date of registration) C Length of the first crediting period: 7 years 0 months C.2.2. Fixed crediting period: C Starting date: Not applicable C Length: Not applicable

39 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 39 SECTION D. Environmental impacts D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: An Environmental Impact Assessment (EIA) was carried out by Fujian Longyan Design Institute of Environment and Research and was accepted by the Fujian Provincial Environmental Protection Bureau. A summary of the main findings of the EIA is provided below. SUMMARY OF ENVIRONMENTAL IMPACT ASSESSMENT The following summary provides an overview of the potential environmental impacts and mitigation measures during the construction and operational periods. I. During Construction Wastewater Wastewater and sewage material, generated by construction workers, will be collected in standard toilets to be set up temporarily at the construction site and treated inside a septic tank before being discharged. Wastewater generated by on-site construction activities will be treated with an oil-separator and sedimentation tank. Air Main air pollutants are particles derived from dusty roads and fuel and coal burning. During periods of warm and dry weather, water will be sprayed to wet the construction site and dusty roads. The maintenance will be enhanced with fuel-fired machines to ensure sufficient burning of fuel and fewer pollutants released by oil burning. Canteen facilities will be set up, providing centralized heating and thus reduce the pollutants emissions. Noise Noise pollution will be generated by explosions, rock exploitation, sandstone sieving, concrete mixing, vehicles, machine maintenance, equipment installation and woodworker machining. The activities creating noise pollution, such as explosion and piling activities, transportation of construction materials and waste earthwork will be scheduled so that they are not performed during general resting times. Solid waste The main solid waste consists of: refuse generated at the construction site and waste generated by construction workers. The impact of earthwork will be reduced by filling lands with as much earthwork as possible to reduce residues. And the refuse will be classified and collected in the residue field. Ecology Impacts on the ecology include vegetation deterioration and water and soil loss. A reasonable layout of the site will be implemented to reduce the amount of expropriated and temporarily occupied land and thus reduce the total area of land occupied and impacted as well as the damage to vegetation. A dividing wall will be erected along the residue margin slope and the residues will be collected and tamped down to prevent water and soil loss caused by rains, such as landslides, which would affect the water quality in the river.

40 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 40 II. During Operation Waste Water The project owner will clean the reservoir sufficiently and periodically to prevent impacts to the water quality by both the impurities at the bottom of the reservoir and the decay of water plants in the initial stage. Wastewater generated by the employees will be treated in a septic tank before being discharged. Noise The generators and turbines in the powerhouse will create noise pollution to a certain extent, but as a result of the insulation by the hydropower station, the noise at the boundary of the site will reach the IV criterion under the Industrial Boundary Noise Criteria. There are no residents in the vicinity, so the environmental impacts at night are limited. Solid Waste The solid waste during the operation consists of debris accumulated at the foot of the dam, consisting of decomposed vegetation and waste resulting from aquatic animals. The accumulated debris will be brought to the surface and dried at a temporary site before carried to Zhangping Landfill together with the solid waste collected in the septic tank. The aquatic vegetation will be removed and disposed periodically by the project owner according to the relevant disposal requirements. Ecology The main impacts on the ecology include hydrology changes, water ecology changes and deterioration, decline of the water s self-purification ability, and geologic hazards along the reservoir boundary. Occupation of forestland will be brought to a minimum as much as possible. Rehabilitation of vegetation will be conducted after completion of the construction work in the vacated station site area, the slopes aside the roads leading to the station site, the temporary occupied land and the residues field. Long-term Investigation will be conducted on the quality of water in the reservoir after the construction has finalized. D.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: The Environmental Impact Assessment report has been approved by the Fujian Environmental Protection Bureau. Meanwhile, to prevent the loss of soil and water during the project construction and operation, the project owner has prepared an independent Scheme of Water and Soil Conservation (SWSC) for Zhangping Xizikou Hydropower Station, which as been approved by the Fujian Water Resources Bureau. According to both the approved Environmental Impact Assessment report and Scheme of Water and Soil Conservation, no significant environmental impacts were identified for the project.

41 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 41 SECTION E. Stakeholders comments E.1. Brief description how comments by local stakeholders have been invited and compiled: Stakeholder Consultation Report for Zhangping Xizikou Hydropower Station During the preparations for Zhangping Xizikou Hydropower Station, the local government authorities held several meetings to discuss the impact of the project on stakeholders and agree on compensation. The project entity carried out a separate stakeholder consultation to confirm the impacts of the project on the relevant stakeholders. The consultation lasted for one month, from March 12 to April 12, 2008 and consisted of the following elements: Establishment of a website: The website contained information on the project, CDM, the stakeholder consultation process and provided an opportunity to post comments by or by telephone. Organization of a stakeholder consultation meeting near project site: Date/time: March 26, 2008, from 14:00 till 17:30. Location: Zhangping Hotel, Zhangping City, Fujian Province. Agenda of the meeting: - Opening of the meeting - Introduction of the project - Introduction of the Clean Development Mechanism - Explanation of the stakeholder consultation process - Round of comments by each participant - Further questions and answers - Closing of the meeting To ensure wide participation of stakeholders, announcements of the stakeholder consultation meeting and website were made through the following channels: - Newspaper announcement published on March 19, 2008 in the Longyan Minxi Daily, which is a commonly read newspaper in the local area. - - Online announcements on the web sites of CVDT: In addition to the above announcements, important stakeholders received personal invitations to attend the meeting. The attendants of the stakeholder consultation meeting are listed in an attachment available to the validator. A report of the main comments and outcomes of the meeting is provided in section E.2. Please find a complete overview of all attendants to the meeting in table E.1.

42 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 42 Table E.1 List of stakeholders that attended the stakeholder consultation meeting No. Organization Name Position / occupation 1 Xiyuan Township Zhu Huaqin Secretary of the Party 2 Xiyuan Township Huang Jiansheng Deputy Secretary of the Party 3 Construction Bureau Wu Hongwei Official 4 PDRC Huang Shaoyang Official 5 Hydropower Bureau Chen Yaoxing Official 6 Environmental Protection Bureau He Wei Offical 7 Land Resources Bureau Chen Zhenlong Official 8 Resettlement Management Bureau Wei Heyuan Official 9 Zhongxiu Village Su Fuquan Resident 10 Kerengou Kerentou Village Ye Tianming Resident 11 Dingban Village Huang Shanjing Resident 12 Xiyuan Village Yu Xiaobing Resident 13 Zhongxiu Village Su Limeng Resident 14 Qianyangping Village Huang Binjian Resident 15 Jinzhuang Village Lin Peicheng Resident 16 Suilin Village Zhu Jianqiang Resident 17 Jitai Village Ye Jianhua Resident 18 Jitai Village Ye Bingmu Resident 19 Xiyuan Bureau of State Land Qiu Shumin Official 20 Xiyuan Village Fan Fuqing Resident 21 Dingban Village Shi Changhuang Resident 22 Fujian Zhangping Yilong Hydroelectricity Ltd. Lin Youren General Manager 23 Fujian Zhangping Yilong Hydroelectricity Ltd. Guo Kaiyuan General Engineer 24 Fujian Zhangping Yilong Hydroelectricity Ltd. Lin Longwang Head of Xizikou Hydropower Station 25 Fujian Zhangping Yilong Hydroelectricity Ltd. Chen Heqing Deputy General Manager 26 Zhangping Political Consultative Conference Wu Yuwang Vice Chairman Committee 27 Xiamen Pengliqing Environmental Technology Lin Jiacong General Manager Development Ltd. 28 Xiamen Pengliqing Environmental Technology Zou Xuexian Deputy General Manager Development Ltd. 29 Xiamen Pengliqing Environmental Technology Lu Yeqing Translator Development Ltd. 30 Casper van der Tak Consulting Casper v/d Tak Director 31 Casper van der Tak Consulting Sun Cuicui Consultant E.2. Summary of the comments received: Mr. Lin Jiacong, General Manager of Xiamen Pengliqing hosted the meeting. Comments and opinions received at stakeholder consultation meeting: Name: Zhu Huaqin Position / Affiliation: Secretary of the Party, Xiyuan Township Comments: Mr. Zhu indicates that construction of the project and related issues have been dealt with in consistent with relevant laws and regulations, such as compensation on land expropriation and resettlement. The project company does periodic safety check and waste cleaning.

43 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 43 Name: Wu Hongwei Position / Affiliation: Official, Construction Bureau Comments: Mr. Wu says compensation has been made in cash to the relevant residents. Name: Huang Shaoyang Position / Affiliation: Official, local NRC Comments: Planning and construction of the project have been in accordance with the government planning. Application procedures are complete and standard. Name: Chen Yaoxing Position / Affiliation: Official, Water Buearu Comments: Mr. Chen expressed his support on CDM application of the proejct. He thinks the project has a large investment with long construction and payback periods. Mr. Chen also thinks social benefits of this project are larger than its ecomonic benefits. Name: He Wei Position / Affiliation: Official, Environmental Protection Bureau Comments: The project company has invested a lot in environmental protection issues. Hydropower is in general a clean energy. They reconstructed the water intake which was moved 10 KM upward where there is a better water quality. The project has no violation in environmental protection. Name: Chen Zhenlong Position / Affiliation: Land Resources Bureau Comments: Land expropriation has been done in accordance with related laws and regulations with complete procedures. Name: Wei Heyuan Position / Affiliation: Official, Resettlement Management Bureau Comments: The project company has paid great attention on the resettlement issue. Compensation on houses and lands has been made. Certain constructions have been reconstructed such as the dock, water service system etc.. Bridges have been or to be built by the joint efforts of the government, the project company and the villagers. Name: Su Fuquan Position / Affiliation: Villager, Zhongxiu Village Comments: In case there is sliding along the banks, Mr. Su suggests the project owner to check frequently village by village about the bank condition, so that timely measures can be taken once danger is detected. Response by the PO: This a good suggest. The PO will take it into consideration. Name: Ye Tianming Position / Affiliation: Villager, Kerengou Kerentou Village Comments: Mr. Ye confirmed the officials speeches. He thinks positive impacts are larger than the negative ones. He indicates at the very beginning he had the concerns that the project activity may lead to water and soil loss. But later he found out that water and soil are well protected. The project company also helped build bridges which made the trasportation much more convenient for the villagers. There are also issues to be further dealt with, for instance, heightened water level may lead to sliding. Mr. Ye suggested some warning boards should be set up to make people aware of potential danger.

44 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 44 Name: Huang Shanjing Position / Affiliation: Villager, Dingban Village Comments: Mr. Huang suggested waste cleaning upstream should be done more frequently. Drinking water used to be from underground and now changed to spring water which is more hygeian. The bridge over the dam which is 200m long and 3.5m wide made transportation much more convenient for the villagers. Name: Yu Xiaobing Position / Affiliation: Villager, Xiyuan Village Comments: An old small road was partially damaged due to the water storage. Name: Su Limeng Position / Affiliation: Villager, Zhongxiu Village Comments: The old electrical irrigation system has been reconstructed. New water system has been made channelling spring water. Name: Huang Binjian Position / Affiliation: Villager, Qianyangping Village Comments: The project activity has been carried out in accordance with related laws and regualtions. The villagers are not against it. The reservoir area becomes more beautiful after water storage. The villagers can do fishing in the reservoir. Name: Lin Peicheng Position / Affiliation: Villager, Jinzhuang Village Comments: Road to Mr. Lin s village has been built. Compensation has been made. No other comments. Name: Zhu Jianqiang Position / Affiliation: Villager, Suilin Village Comments: The project owner built steps at the reservoir for the villagers convenience of clothes washing. Name: Ye Jianhua Position / Affiliation: Villager, Jitai Village Comments: New roads and bridges are built. Water system is to be built. The project owner built for the villagers a channel for transportation under the railway after an old small road across the railway was flooded. Name: Ye Bingmu Position / Affiliation: Villager, Jitai Village Comments: Mr. Ye s sand farm was flooded and afterwards the project company built a new one for him. After water storage the capacity of the sand farm has been enlarged. There are altogether 4 bridges built for the 9 villages, among which there is one bridge connecting Zhongxiu Village to Jitai Village where Mr. Ye is from. Name: Qiu Shumin Position / Affiliation: Official, Xiyuan Bureau of State Land Comments: Compensation on land expropriation and plants has been made. Compensation has partially been used for infrastructure of the village.

45 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 45 Name: Fan Fuqing Position / Affiliation: Villager, Xiyuan Village Comments: No comments. Name: Shi Changhuang Position / Affiliation: Villager, Dingban Village Comments: There is one small section of the road between the dam and the village path that are not well connected with each other. Hope the project company can spend more money to fix it. The project owner and government officials responded to the above concerns of the villagers. For outstanding issues they would first check and confirm whose responsibility it is and then try to work it out by joint efforts of the government, the project owner and the villagers. Mr. Wu Yuwang, official from Zhangping City concluded the meeting. Comments received through website: No comments were received by through the stakeholder consultation website or by telephone. E.3. Report on how due account was taken of any comments received: Response to comments: The attendants of the stakeholder consultation meeting are listed in Table E.1. The overall comments with regards to the project were positive as the project will benefit the local residents and displace fossil fuel fired power generation with clean renewable hydropower. The environmental and social impact is limited, the project entity provided satisfactory explanations and answers to the questions / comments.

46 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 46 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY The Project Entity: Organization: Fujian Zhangping Yilong Hydropower Ltd. Street/P.O.Box: Xiyuan County, Dingban Village Building: Xizikou Hydropower Station, Dingban Village of Xiyuan County, Zhangping City City: Longyan Prefecture City State/Region: Fujian Province Postfix/ZIP: Country: China Telephone: FAX: fjhljt-38@163.com URL: Represented by: Title: General Manager Salutation: Last Name: Lin Middle Name: First Name: Youren Department: Mobile: Direct FAX: Direct tel: Personal fjhljt-38@163.com

47 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 47 The Purchasing Party: Organization: Deutsche Bank AG,London Branch Street/P.O.Box: 1 Great Winchester Street Building: Winchester House City: London State/Region: Postfix/ZIP: EC2N 2DB Country: United Kingdom Telephone: FAX: milena.lopez@db.com URL: Represented by: Milena Lopez Title: Vice President Salutation: Miss Last Name: Lopez Middle Name: First Name: Milena Department: Environmental Financial Products Mobile: Direct FAX: Direct tel: Personal milena.lopez@db.com

48 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 48 Annex 2 INFORMATION REGARDING PUBLIC FUNDING The project does not receive any public funding from Annex I countries.

49 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 49 Annex 3 BASELINE INFORMATION Our baseline calculation follows the methodology used in the OM and BM emission factors baseline calculation published by the office of national coordination committee on climate change on the Internet. Full information on this can be found at their website: For more detailed information, please see: -Baseline emission factors: -Calculation of OM: -Calculation of BM: Note: Below we provide the main data used in the calculation of the baseline emission factor. Please note that all primary data are from the files downloaded and mentioned above, crosschecked against the data sources mentioned in these documents. For example, if we cite below the China Energy Statistical Yearbook, then that is the primary data source used in the published calculations. Where the primary data source differed from the data used in the calculation of the published emission factor, we have relied on the primary data source. Our calculation results in a slightly lower combined margin emission factor as can be calculated based on the published OM (0.9421) and BM (0.8672) emission factors. We have used our own calculated combined margin emission factor in the calculation of emission reductions, this is conservative. Below we provide the main data used in the calculation of the baseline emission factor. Table A1. Calculation of the Combined Margin Emission Factor Emission factor Value and Source Weight Weighted value A B C D = B * C 1 EF OM Table A2 2 EF BM Table A12 3 CM D1 + D2

50 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 50 Table A2. Calculation of the Operating Margin Emission Factor Variable Total A B C D 1 Supply of thermal power to East China grid (MWh) 2 Imports of power from Central China grid (MWh) 3 Imports of power from North China Grid (Yangcheng Power plant) (MWh) 4 Total power supply for 360,848, ,795, ,317,698 1,252,961,514 Table A3c, C6 Table A3b, C6 Table A3a, C6 D1 = A1 + B1 + C1 13,756,040 26,933, ,410, ,099,890 Files cited above Files cited D2 = A2 + B2 + Files cited above above C2 10,705,870 11,649,610 77,244,000 99,599,480 Files cited above Files cited above Files cited above D3 = A3 + B3 + C3 385,310, ,378, ,971,698 1,553,660,885 calculation EF OM (MWh) A4 = A1 + A2 + B4 = B1 + B2 C4 = C1 + C2 + D4 = D1 + D2 + A3 + B3 C3 B4 5 CO2 emissions associated 347,449, ,785, ,834,887 1,213,070,234 with thermal power generation on East China D5 = A5 + B5 + Table A4c, E Table A4b, E Table A4a, E grid (tco2) C5 6 CO2 emissions associated with power imports from Central China grid (tco2) 7 CO2 emissions associated with power imports from North China Grid (Yangcheng power plant) (tco2) 8 Total CO2 emissions for 10,968,320 22,283, ,862, ,113,776 Table A9c, E Table A9b, E Table A9a, E D6 = A6 + B6 + C6 10,168,216 11,000,045 72,509, Table A10 Table A10 Table A10 D7 = A7 + A8 + A9 368,586, ,068, ,206,183 1,463,861,477 calculation EF OM (tco2) A8 = A5 + A6 + B8 = B5 + B6 C8 = C5 + C6 + D8 = D5 + D5 + D7 A7 + B7 C7 7 EFOM (tco2/mwh) A8/A4 B8/B4 C8/C4 D8/D4 Table A3a. Calculation of thermal power supply to East China Grid, Grid Thermal Power generation (MWh) Losses (%) Thermal power supply (MWh) A B C = A * (100 - B) / Anhui 62,918, ,205,838 2 Fujian 48,600, ,378,980 3 Jiangsu 211,429, ,827,832 4 Shanghai 74,606, ,838,397 5 Zhejiang 108,110, ,066,651 6 East China 477,317,698 C6 = C1 + C2 + C3 + C4 + C5 Source: Files mentioned above, original data are from China Electric Power Yearbook 2006, p , 568.

51 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1 CDM Executive Board page 51 Table A3b. Calculation of thermal power supply to East China Grid, 2004 Grid Thermal Power generation (MWh) Losses (%) Thermal power supply (MWh) A B C = A * (100 - B) / Anhui 59,875, ,264,538 2 Fujian 50,490, ,425,257 3 Jiangsu 163,545, ,846,782 4 Shanghai 71,127, ,414,171 5 Zhejiang 95,255, ,844,516 6 East China 414,795,263 C6 = C1 + C2 + C3 + C4 + C5 Source: Files mentioned above. Original data are from China Electric Power Yearbook 2005, p Table A3c. Calculation of thermal power supply to East China Grid, 2003 Grid Thermal Power generation (MWh) Losses (%) Thermal power supply (MWh) A B C = A * (100 - B) / Anhui 54,156, ,874,146 2 Fujian 42,146, ,009,198 3 Jiangsu 133,277, ,413,657 4 Shanghai 69,444, ,874,578 5 Zhejiang 83,089, ,676,974 6 East China 360,848,554 C6 = C1 + C2 + C3 + C4 + C5 Source: Files mentioned above. Original data are from China Electric Power Yearbook 2004, p. 670, p.709.

52 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 52 Table A4a. Calculation of CO2 emissions from fuels for thermal power production, East China Grid, Fuel Unit Anhui Fujian Jiangsu Shanghai Zhejiang East China NCV Oxidation factor Carbon coefficient CO2 emissions Grid (TJ/unit) (Fraction) (TC/TJ) (tco2) A B C D E = A*B*C*D*44/12 Raw coal 10 4 Tons 3, , , , , ,526, Clean coal 10 4 Tons Other washed coal 10 4 Tons Coke 10 4 Tons Coke oven gas 10 8 m , , Other gas 10 8 m ,217, Crude oil 10 4 Tons , Gasoline 10 4 Tons Diesel 10 4 Tons , Fuel oil 10 4 Tons ,546, LPG 10 4 Tons Refinery gas 10 4 Tons , Natural gas 10 8 m , , Other petroleum products 10 4 Tons ,805, Other coking products 10 4 Tons Other E (standard coal) 10 4 Tce Total 464,834, Σ(E i ) Data source: Fuel consumption data are from China Energy Statistical Yearbook Net calorific values are from the files mentioned above and crosschecked against China Energy Statistical Yearbook, 2004 p. 302; Oxidation factors and fuel emission coefficients are from the files mentioned above and crosschecked against IPCC default values, see 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 (energy).

53 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 53 Table A4b. Calculation of CO2 emissions from fuels for thermal power production, East China Grid, Fuel Unit Anhui Fujian Jiangsu Shanghai Zhejiang East China NCV Oxidation factor Carbon coefficient CO2 emissions Grid (TJ/unit) (Fraction) (TC/TJ) (tco2) A B C D E = A*B*C*D*44/12 Raw coal 10 4 Tons 2, , , , , ,300, Clean coal 10 4 Tons Other washed coal 10 4 Tons , Coke 10 4 Tons Coke oven gas 10 8 m , , Other gas 10 8 m ,680, Crude oil 10 4 Tons Gasoline 10 4 Tons Diesel 10 4 Tons ,140, Fuel oil 10 4 Tons ,991, LPG 10 4 Tons Refinery gas 10 4 Tons , Natural gas 10 8 m , , Other petroleum products 10 4 Tons ,335, Other coking products 10 4 Tons Other E (standard coal) 10 4 Tce Total 400,785, Σ(E i ) Data source: Fuel consumption data are from China Energy Statistical Yearbook Net calorific values are from the files mentioned above and crosschecked against China Energy Statistical Yearbook, 2004 p. 302; Oxidation factors and fuel emission coefficients are from the files mentioned above and crosschecked against IPCC default values, see 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 (energy).

54 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 54 Table A4c. Calculation of CO2 emissions from fuels for thermal power production, East China Grid, Fuel Unit Anhui Fujian Jiangsu Shanghai Zhejiang East China NCV Oxidation factor Carbon coefficient CO2 emissions Grid (TJ/unit) (Fraction) (TC/TJ) (tco2) A B C D E = A*B*C*D*44/12 Raw coal 10 4 Tons 2, , , , , , ,300, Clean coal 10 4 Tons Other washed coal 10 4 Tons Coke 10 4 Tons Coke oven gas 10 8 m , , Other gas 10 8 m ,538, Crude oil 10 4 Tons Gasoline 10 4 Tons Diesel 10 4 Tons , Fuel oil 10 4 Tons ,369, LPG 10 4 Tons Refinery gas 10 4 Tons , Natural gas 10 8 m , Other petroleum products 10 4 Tons ,104, Other coking products 10 4 Tons Other E (standard coal) 10 4 Tce Total 347,449, Σ(E i ) Data source: Fuel consumption data are from China Energy Statistical Yearbook Net calorific values are from the files mentioned above and crosschecked against China Energy Statistical Yearbook, 2004 p. 302; Oxidation factors and fuel emission coefficients are from the files mentioned above and crosschecked against IPCC default values, see 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 (energy).

55 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 55 Table A5. Calculations of emissions associated with imports from Central Grid Year Imports (MWh) Average emission factor (tco 2 /MWh) Associated CO 2 emissions (tco 2 ) A B C = B * A ,410, ,862,090 Table A ,933, ,283,366 Table A ,756, ,968,320 Table A6 Table A6. Calculation of average emission factors of Central China Power Grid Total power supply (MWh) 346,613, ,261, ,644,030 Table A7 Table A7 Table A7 2 Total CO 2 Emissions (tco 2 ) 276,371, ,043, ,323,575 Table A9c Table A9b Table A9a 3 = 2/1 Average emission Factor (tco 2 /MWh) Table A7. Calculation of total power supply on Central China Power Grid Thermal power supply (MWh) 225,987, ,074, ,203,305 Table A8c Table A8b Table A8a 2 Non-thermal power supply (MWh) 120,626, ,187, ,440,725 Table A8f Table A8e Table A8d 3 = Total power supply (MWh) 346,613, ,261, ,644,030 Table A8a. Calculation of thermal power supply to Central China Grid, 2005 Grid Thermal Power generation Losses (%) Thermal power supply (MWh) (MWh) A B C = A * (100 - B) / Jiangxi 30,000, ,056,000 2 Henan 131,590, ,957,612 3 Hubei 47,700, ,502,730 4 Hunan 39,900, ,905,000 5 Chongqing 17,584, ,168,488 6 Sichuan 37,202, ,613,475 7 Central China 286,203,305 C7 = C1 + C2 + C3 + C4 + C5 + C6 Source: Files mentioned above, original data are from China Electric Power Yearbook 2006, p. p , 568.

56 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 56 Table A8b. Calculation of thermal power supply to Central China Grid, 2004 Grid Thermal Power generation Losses (%) Thermal power supply (MWh) (MWh) A B C = A * (100 - B) / Jiangxi 30,127, ,006,059 2 Henan 109,352, ,396,071 3 Hubei 43,034, ,202,363 4 Hunan 37,186, ,408,206 5 Chongqing 16,520, ,692,888 6 Sichuan 34,627, ,368,599 7 Central China 249,074,186 C7 = C1 + C2 + C3 + C4 + C5 + C6 Source: Files mentioned above, original data are from China Electric Power Yearbook 2005, p Table A8c. Calculation of thermal power supply to Central China Grid, 2003 Grid Thermal Power generation Losses (%) Thermal power supply (MWh) (MWh) A B C = A * (100 - B) / Jiangxi 27,165, ,418,291 2 Henan 95,518, ,182,218 3 Hubei 39,532, ,025,831 4 Hunan 29,501, ,149,854 5 Chongqing 16,341, ,875,212 6 Sichuan 32,782, ,336,314 7 Central China 225,987,719 C7 = C1 + C2 + C3 + C4 + C5 + C6 Source: Files mentioned above, original data are from China Electric Power Yearbook 2004, p. 670, p.709. Table A8d. Calculation of non-thermal power supply to Central China Grid, 2005 Grid Hydropower generation (MWh) Other generation (MWh) Total non-thermal Generation (MWh) Losses (%) Total non-thermal supply (MWh) A B C D E = C * (100 - D) / Jiangxi 5,000, ,000, ,676,000 2 Henan 6,700,000 10,000 6,710, ,218,828 3 Hubei 81,400, ,400, ,356,860 4 Hunan 24,100, ,100, ,895,000 5 Chongqing 6,036, ,036, ,550,102 6 Sichuan 64,498, ,498, ,743,935 7 Central China 180,440,725 E7 = E1 + E2 + E3 + E4 + E5 + E6 Source: Files mentioned above, original data are from China Electric Power Yearbook 2006, p , 568.

57 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 57 Table A8e. Calculation of non-thermal power supply to Central China Grid, 2004 Grid Hydropower generation (MWh) Losses (%) Hydropower supply (MWh) Other supply (MWh) Total nonthermal power supply E = C + D A B C = A * (100 B) / 100 D 1 Jiangxi 3,890, ,843, ,843,320 2 Henan 6,884, ,854, ,854,399 3 Hubei 69,512, ,428, ,428,586 4 Hunan 24,236, ,112, ,112,396 5 Chongqing 5,670, ,551, ,000 6,276,497 6 Sichuan 58,902, ,672, ,672,282 7 Central China 168,462, ,187,480 C7 = C1 + C2 + C3 + D7 = D1 + D2 + D3 C4 + C5 + C6 + D4 + D5 + D6 Source: Files mentioned above, original data are from the China Electric Power Yearbook 2005, p Table A8f. Calculation of non-thermal power supply to Central China Grid, 2003 Grid Hydropower generation (MWh) Other generation (MWh) Total non-thermal Generation (MWh) Losses (%) E7 = E1 + E2 + E3 + E4 + E5 + E6 Total non-thermal supply (MWh) A B C D E = C * (100 - D) / Jiangxi 3,864, ,864, ,615,545 2 Henan 5,457, ,457, ,037,902 3 Hubei 38,775, ,775, ,297,673 4 Hunan 24,401, ,401, ,283,434 5 Chongqing 3,951, ,951, ,596,595 6 Sichuan 50,000, ,000, ,795,000 7 Central China 120,626,149 E7 = E1 + E2 + E3 + E4 + E5 + E6 Source: Files mentioned above, original data are from the China Electric Power Yearbook 2004, p. 670, p.709.

58 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 58 Table A9a. Calculation of CO 2 emissions from fuels for thermal power production, Central China Grid, Fuel Unit Jiangxi Henan Hubei Hunan Chongqing Sichuan Central China NCV Oxidation factor Carbon coefficient CO2 emissions Grid (TJ/unit) (Fraction) (TC/TJ) (tco 2) A B C D E = A*B*C*D*44/12 Raw coal 10 4 Tons 1, , , , , , ,614,497 Clean coal 10 4 Tons Other washed coal 10 4 Tons ,804,669 Briquettes 10 4 Tons Coke 10 4 Tons ,986,695 Coke oven gas 10 8 m ,054 Other gas 10 8 m ,897 Crude oil 10 4 Tons ,185 Gasoline 10 4 Tons ,194 Diesel 10 4 Tons ,798 Fuel oil 10 4 Tons ,959 LPG 10 4 Tons Refinery gas 10 4 Tons ,572 Natural gas 10 8 m ,209 Other petroleum products 10 4 Tons Other coking products 10 4 Tons ,349 Other E (standard coal) 10 4 Tce Total 360,323,575 Σ(E i ) Data source: Fuel consumption data are from China Energy Statistical Yearbook Net calorific values are from the files mentioned above and crosschecked against China Energy Statistical Yearbook, 2004 p. 302; Oxidation factors and fuel emission coefficients are from the files mentioned above and crosschecked against IPCC default values, see 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 (energy).

59 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 59 Table A9b. Calculation of CO 2 emissions from fuels for thermal power production, Central China Grid, Fuel Unit Jiangxi Henan Hubei Hunan Chongqing Sichuan Central China NCV Oxidation factor Carbon coefficient CO 2 emissions Grid (TJ/unit) (Fraction) (TC/TJ) (tco 2) A B C D E = A*B*C*D*44/12 Raw coal 10 4 Tons 1, , , , , , ,092,605 Clean coal 10 4 Tons ,316 Other washed coal 10 4 Tons ,921,441 Briquettes 10 4 Tons ,476 Coke 10 4 Tons ,337,011 Coke oven gas 10 8 m ,900 Other gas 10 8 m ,527 Crude oil 10 4 Tons ,118 Gasoline 10 4 Tons ,089 Diesel 10 4 Tons ,627 Fuel oil 10 4 Tons ,893 LPG 10 4 Tons Refinery gas 10 4 Tons ,506 Natural gas 10 8 m ,775 Other petroleum products 10 4 Tons Other coking products 10 4 Tons Other E (standard coal) 10 4 Tce Total 346,043,286 Σ(E i ) Data source: Fuel consumption data are from China Energy Statistical Yearbook Net calorific values are from the files mentioned above and crosschecked against China Energy Statistical Yearbook, 2004 p. 302; Oxidation factors and fuel emission coefficients are from the files mentioned above and crosschecked against IPCC default values, see 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 (energy).

60 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 60 Table A9c. Calculation of CO 2 emissions from fuels for thermal power production, Central China Grid, Fuel Unit Jiangxi Henan Hubei Hunan Chongqing Sichuan Central China NCV Oxidation factor Carbon coefficient CO 2 emissions Grid (TJ/unit) (Fraction) (TC/TJ) (tco 2) A B C D E = A*B*C*D*44/12 Raw coal 10 4 Tons 1, , , , , , ,971,540 Clean coal 10 4 Tons Other washed coal 10 4 Tons ,169,146 Briquettes 10 4 Tons Coke 10 4 Tons ,142 Coke oven gas 10 8 m ,013 Other gas 10 8 m Crude oil 10 4 Tons ,490 Gasoline 10 4 Tons Diesel 10 4 Tons ,016 Fuel oil 10 4 Tons ,229 LPG 10 4 Tons Refinery gas 10 4 Tons ,285 Natural gas 10 8 m ,223 Other petroleum products 10 4 Tons Other coking products 10 4 Tons Other E (standard coal) 10 4 Tce Total 276,371,085 Σ(E i ) Data source: Fuel consumption data are from China Energy Statistical Yearbook Net calorific values are from the files mentioned above and crosschecked against China Energy Statistical Yearbook, 2004 p. 302; Oxidation factors and fuel emission coefficients are from the files mentioned above and crosschecked against IPCC default values, see 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 (energy).