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

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1 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 Appendices Appendix 1: Project Location Map

2 page 2 SECTION A. General description of project activity A.1 Title of the project activity: >> Grid-connected electricity generation using wind energy by Hindustan Petroleum Corporation Limited. A.2. Version: 01, Date: 23/07/2007 Description of the project activity: >> Objective of the Project The scope of the proposed CDM project activity involves generation of electricity and its transmission to the regional electricity grid. The project involves large -scale wind power harnessing to generate 25 MW of electricity to be supplied to the Maharashtra State Electricity Distribution Company Limited (MSEDCL). Under this activity, the electricity generated is from a renewable natural resource wind and as such displaces electricity produced from non-renewable resources leading to environmentfriendly sustainable economic growth. The project has been promoted by Hindustan Petroleum Corporation Limited (referred as HPCL in the subsequent sections of this document). Project Participant HPCL, a Fortune 500 company, is the second largest integrated refining and marketing oil company in India. HPCL accounts for 20.9 % of the market share and 10.3% of the nation s refining capacity with two coasta l refineries, one at Mumbai (West Coast) having a capacity of 5.5 MMTPA and the other in Vishakapatnam (East Coast) with a capacity of 7.5 MMTPA. HPCL also holds an equity stake of 16.95% in Mangalore Refinery & Petrochemicals Limited (MRPL), a state-of-the-art refinery at Mangalore with a capacity of 9 MMTPA. HPCL is well on its way towards setting up another grassroot refinery in the state of Punjab, called Guru Gobind Singh Refineries Limited. The project activity involves construction and operation of 1.25 MW capacity S70 type of Wind Turbine Generators (WTGs) manufactured by Suzlon Energy Limited. The wind farm consists of 20 nos. such wind turbine generators. The planned annual output of the wind farm is 43.8 million units. The electricity generated from the proposed wind farm will be supplied to common local substation through local transmission lines duly metered at developer s end. Contribution to Sustainable Development The following paragraphs give details on how the project activity contributes towards the four indicators of sustainable development of India: Environmental Aspects Small particles from combustion, threatening human health and property. Ash disposal requires large amount of land. Contaminate ground water. Greenhouse gas released contributes to global warming and climatic change: CO 2 abatement and reduction of greenhouse gas emission through development of renewable technology. Ecological Imbalance. Require R&R. Power station requires large and frequently valuable land areas. Depletion of Natural Resources

3 page 3 Pollution including Acid rains Conserving natural resources including land, forest, water and the ecosystem. Social Aspects Rural and infrastructural development in the areas around the project. This includes development of road network and improvement of electricity quality, frequency and availability as the electricity is fed into a deficit grid. Alleviation of poverty by establishing direct and indirect employment benefits accruing out of ancillary units for manufacturing lattice towers and blades for erecting the WTGs and for operation, maintenance, administration, security amongst other services during the operation of the project activity. Economic Aspects Contributes towards achieving the objective of the policy 1 on wind power generation of Government of India and Government of Maharashtra, which is to promote generation of energy through non-conventional sources to supplement the ever-increasing demand of the state. Contribution towards meeting the electricity supply deficit in Maharashtra. Strengthening local grid of supply company The CDM project activity should bring in additional investment consistent with the needs of the people. The project activity leads to an investment of about INR million to a developing region which otherwise would not have happened in the absence of project activity. Technological Aspects The project activity lead to the promotion of state-of-art 1250 kw WTGs into the region, demonstrating the success of large sized wind turbines, which feed the generated power into the nearest sub-station, thus increasing energy availability and improving quality of power under the service area of the substation. A.3. Project participants: >> Name of party involved (*) ((host) indicates a host Party) Govt. of India Private and/ or public entity(ies) project participants (*)(as applicable) Hindustan Petroleum Corporation Limited (HPCL) Kindly indicate if the Party involved wishes to be considered as project participant (Yes/ No) No HPCL will be the lead and nodal entity for all communication with CDM-EB and Secretariat. Contact information has been provided in Annex-I. A.4. Technical description of the project activity: A.4.1. Location of the project activity: 1 Policy reference to be provided

4 >> A >> Government of India (GoI) A >> Western region/ Maharashtra page 4 Host Party(ies): Region/State/Province etc.: A City/Town/Community etc: >> District Dhule, villages Valvhe, Pangan, Panchmauli and Rajkot A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): >> The project activity is located in Dhule District, Maharashtra, India. The latitude is North 20 Deg 58 Min and the longitude: East 74 deg 50 Min. The railway station near est to site is Dondaicha and the nearest National Highway is NH3. The machine-wise location details and location map of the project activity are attached in Appendix 1 of this document. A.4.2. Category(ies) of project activity: >> As per the scope of the project activity listed in the list for sectoral scopes and approved baseline and monitoring methodologies, the project activity will principally fall in Scope Number 1, Sectoral scope energy industries (renewable/ non-renewable sources). A.4.3. Technology to be employed by the project activity: >> The WTGs are supplied by Suzlon Energy Ltd, an offshoot of Suzlon group, and considered to be one of the leading manufacturers of site specific WTGs with strong R&D backup having R&D Centres in Germany, Netherlands & Asia. They are supplying their latest model Suzlon S70 machines for this project. The machines have 3 rotor blades of diameter 69.1 m, having swept area of 3740 sq m. the rated wind speed is 14 m/s with cut in and cut out speed ranging from 3 m/s to 18 m/s and 3 phase 50Hz 690V stepped upto 33 KV, 1500 KVA transformer capacity. The pitch regulated rotor system is connected through an integrated 3 stage (1 planetary, 2 helical) gear box to the generator of rated output 250/1250 kw. The generators used in the project activity are asynchronous with pitch control features, with gear box and three blades of GRP, machine mounted on tubular type Tower of 74.5 m meters hub height with step up transformer and protection systems. These machines are the n connected to a 690/33000 V, 3 phase transformers to the 33KV feeders supplying power to the nearby substations. The HPCL owned machines are connected to the Valve Substation, which is ~ 18 kms from the wind farm. In this substation the feeders are connected to 33/220 KV transformer which supplies power to the nearest state grid substation at Jamade. Salient features of the technology are: 20 WTGs are 690 V 3 phase 50 Hz each capacity 1250 kw

5 page 5 Asynchronous generator with pitch control features with gear box and three blades of GRP, machine mounted on tubular type tower of 74.5 m hub height with step up transformer and protection systems Designed life (years) 20 Years Generator: Make Siemens /Winergy AG/ Flender Loher OR equivalent; rated power output (kw) 250 / 1250 kw; two speed asynchronous generator, air cooled; dual speed; Voltage 690 V; Rated rpm 1006/1506; Frequency(Hz) 50 Hz; Current(Amps) 295 / 1175 Amps As supplier of wind energy converters (wind mills), Suzlon Energy is well known in the market. They have strong R&D back up and type certification by Germanischer Lloyd, Germany the world s most prestigious organization for wind turbine certification. They have ISO 9001 for internal quality control and their technology is approved by Ministry of Non-Conventional Energy Sources A.4.4 Estimated amount of emission reductions over the chosen crediting period: >> The estimated activity is expected to generate an average of 43.8 million units of electricity during each year of the crediting period. The emission rate of the selected baseline grid (Maharashtra state western grid) where the project activity will occur would displace fossil fuel based electricity generation to the extent of the electricity generated by the wind project. Therefore, the total emission reduction achieved during the 10-year crediting period aggregates to tonnes of CO 2 e. The year wise details are presented below: Years Annual estimation of Emission Reductions (tco 2 e) Total estimated reductions (tco 2 e) Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tco 2 e) A.4.5. Public funding of the project activity: >> There is no ODA financing involved in the Project.

6 page 6 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: >> The approved baseline methodology ACM0002/ version 06 dated May 19, 2006 has been used to determine the baseline emissions and emission reduction due to the project activity. The title of this baseline methodology is Consolidated baseline methodology for grid connected electricity generation from renewable sources. The PDD also refers to version 3 (EB29) of Tool for demonstration and assessment of additionality. B.2 Justification of the choice of the methodology and why it is applicable to the project activity: >> This methodology is applicable to grid -connected renewable power generation project activities under the following conditions: S.No Applicability conditions of ACM Methodology is applicable to electricity capacity additions from: 1. Run-of-river hydro power plants; hydro power projects with existing reservoirs where volume of the reservoir is not increased 2. Wind Sources 3. Geothermal Sources 4. Solar Sources 5. Wave and tidal sources 2. Methodology is not applicable to project activities that involve switching from fossil fuels to renewable energy at the site of the project activity, since in this case the baseline may be the continued use of fossil fuels at the site 3. The Methodology is applicable when the geographic and system boundaries for the relevant electricity grid can be clearly identified and information on the characteristics of the grid is available Project Under Consideration In the project under consideration Electricity capacity additions are from Wind sources In the project under consideration there is no switching from fossil fuels to renewable energy at the site of project activity In the project under consideration the geographic and system boundaries for the relevant electricity grid (Western) can be clearly identified and the information on the characteristics of the grid are available B.3. Description of the sources and gases included in the project boundary >> According to ACM0002, for the baseline emission factor, the spatial extent of the project boundary includes the project site and all power plants connected physically to the electricity system that the CDM project power plant is connected to.

7 page 7 The Indian electricity system is divided into five regional grids, viz. Northern, Eastern, Western, Southern, and North-Eastern. Each grid covers several states. As the regional grids are interconnected, there is inter-state and inter-regional exchange. A small power exchange also takes place with neighbouring countries like Bhutan and Nepal. Power generation and supply within the regional grid is managed by Regional Load Dispatch Centre (RLDC). The Regional Power Committees (RPCs) provide a common platform for discussion and solution to the regional problems relating to the grid. Each state in a regional grid meets its demand with its own generation facilities and also with allocation from power plants owned by the Central Sector such as NTPC and NHPC etc. Specific quotas are allocated to each state from the Central Sector power plants. Depending on the demand and generation, there are electricity exports and imports between states in the regional grid. The regional grid thus represents the largest electricity grid where power plants can be dispatched without significant constraints and thus, represents the project electricity system for the Project. As the Project is connected to the Western regional electricity grid, the Western grid is the project electricity system. Accordingly, the project boundary encompasses the physical extent of the Western regional electricity grid which includes the project site and all power plants connected physically to the electricity system. Baseline Project Activity Source Gas Included? Justification/ Explanation Electricity generation CO 2 Included Main emission source from power plants connected to the Western Grid Electricity generation from the Project CH4 Excluded This source is not required to be estimated for wind energy projects under ACM0002 N 2 O Excluded This source is not required to be estimated for wind energy projects under ACM0002 CO 2 Excluded Wind energy generation does not have CH 4 Excluded any direct GHG emissions. N 2 O Excluded B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: >> According to ACM0002, for project activities that do not modify or retrofit an existing electricity generation facility, the baseline scenario is the following: Electricity delivered to the grid by the project would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described below. As the Project does not modify or retrofit an existing generation facility, the baseline scenario is the emissions generated by the operation of grid-connected power plants and by the addition of new generation sources. This is estimated using calculation of Combined Margin multiplied by electricity delivered to the grid by the Project. Baseline emission rate calculation

8 page 8 The baseline methodology approach 48(a) called existing actual or historical emissions, as applicable has been applied in the context of the project activity. The approach selected in the baseline methodology checks the additionality of the project activity and determines the baseline emission factor for selected baseline scenario. Electricity delivered to the grid by the project would have otherwise been generated by the operation of grid-connected power plants operational in the Western Region Grid and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described below in section B.6.1. The baseline emission factor (EF y ) is calculated as combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM) factors using approved baseline methodology ACM0002 recommended by the CDM Meth Panel. The baseline information is provided under Annex 3. The details of the calculations are provided under section B.6.3. The baseline is the net electricity supplied to the customer by the windmills multiplied by the emission coefficient of the Western regional grid. The calculation of emission coefficient is done in a transparent and conservative manner as per ACM 0002 and presented on the next page. 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): >> De monstrating the additionality of the project Step 1: Identification of alternatives to the project activity consistent with current laws and regulations Sub-step 1a. Define alternatives to the project activity: 1. Identify realistic and credible alternative(s) available to the project participants or similar project developers that provide outputs or services comparable with the proposed CDM project activity. These alternatives are to include: The proposed project activity not undertaken as a CDM project activity; All other plausible and credible alternatives to the project activity that deliver outputs and on services (e.g. electricity, heat or cement) with comparable quality, properties and application areas; If applicable, continuation of the current situation (no project activity or other alternatives undertaken). Alternative(s) available to the project participants or similar project developers include: (a) (b) (c) The Project is not undertaken as a CDM project activity. Setting up of comparable utility scale fossil fuel fired or hydro power projects that supply to the Maharashtra grid under a PPA. Continuation of the current situation where no project activity or any of the above Alternatives are undertaken would not be applicable as Maharashtra had energy (MU) shortages of 18.1% and peak (MW) shortages of 23.2% in (Source: Western Region Power Sector Profile, January 2007, Ministry of Power).

9 page 9 Sub-step 1b. Consistency with mandatory laws and regulations 2. The alternative(s) shall be in compliance with all applicable legal and regulatory requirements, even if these laws and regulations have objectives other than GHG reductions, e.g. to mitigate local air pollution. This sub-step does not consider national and local policies that do not have legally-binding status. 3. If an alternative does not comply with all applicable legislation and regulations, then show that, based on an examination of current practice in the country or region in which the law or regulation applies, those applicable legal or regulatory requirements are systematically not enforced and that non-compliance with those requirements is widespread in the country. If this cannot be shown, then eliminate the alternative from further consideration. 4. If the proposed project activity is the only alternative amongst the ones considered by the project participants that is in compliance with all regulations with which there is general compliance, then the proposed CDM project activity is not additional. There are no legal and regulatory requirements that prevent Alternatives (a) and (b) from occurring. Proceed to Step 2 (Investment analysis) or Step 3 (Barrier analysis). (Project participants may also select to complete both steps 2 and 3.) Step 2: Investment Analysis Determine whether the proposed project activity is the economically or financially less attractive than other alternatives without the revenue from the sale of certified emission reductions (CERs). To conduct the investment analysis, use the following sub-steps: Sub-step 2a. - Determine appropriate analysis method 1. Determine whether to apply simple cost analysis, investment comparison analysis or benchmark analysis (sub-step 2b). If the CDM project activity generates no financial or economic benefits other than CDM related income, then apply the simple cost analysis (Option I). Otherwise, use the investment comparison analysis (Option II) or the benchmark analysis (Option III). Sub-step 2b. Option I. Apply simple cost analysis 2. Document the costs associated with the CDM project activity and demonstrate that the activity produces no economic benefits other than CDM related income. Sub-step 2b. Option II. Apply investment comparison analysis 3. Identify the financial indicator, such as IRR, NPV, cost benefit ratio, or unit cost of service (e.g., levelized cost of electricity production in $/kwh or levelized cost of delivered heat in $/GJ) most suitable for the project type and decision-making context. Sub-step 2b. Option III. Apply benchmark analysis 4. Identify the financial indicator, such as IRR, NPV, cost benefit ratio, or unit cost of service (e.g., levelized cost of electricity production in $/kwh or levelized cost of delivered heat in $/GJ) most suitable for the project type and decision context. Option I Simple cost analysis is not applicable as the project activity sells electricity to the grid and obtains economic benefits in the form of electricity tariffs. HPCL proposes to use Option II Investment comparison analysis and the financial indicator that is identified is the post-tax return on equity or the equity IRR. The post tax return on equity and equity IRR is used as the appropriate financial indicator because in the Indian power sector, a 14% post tax return on equity is an established benchmark for projects in

10 page 10 public or private sector based on cost-plus regulations (Source: Central Electricity Regulatory Commission, Terms and Conditions of Tariff, Regulations 2004 dated 26 March 2004) for utility scale power plants (similar to Alternative (b)). Incentives, foreign exchange variatio ns and efficiency in operations are in addition to this benchmark of 14%. For determining the tariffs for wind power projects, the electricity regulatory commissions of the state of Rajasthan and Gujarat have considered the return on equity at 14% while the electricity regulatory commissions of the state of Madhya Pradesh, Maharashtra and Karnataka have considered the return on equity at 16%. (Source: RERC Order dated 29 September 2006). There are some essential differences between the Project (whether implemented with or without CDM revenues) and the Alternatives identified in Sub-step 1(b) (utility scale fossil fuel and hydro projects). These should be taken into account while setting the appropriate level of equity IRR. The project activity tariff structure is a single -part tariff structure as compared to utility scale fossil fuel and hydro projects, which have two-part tariff structure. This implies that project activity carries a higher investment risk than the utility scale fossil fuel and hydro projects (Alternative (b)) where the investment recovery is decoupled from the level of actual generation achieved by the project due to variations in offtake. Thus, in case of the project activity, issues such as transmission unavailability, back-down of gene ration or part-load operations, which are beyond the control of the investors are likely to affect the project activity more severely and therefore the project activity investors would require higher rate of return to compensate them for these additional risks. In case of utility scale fossil fuel and hydro projects (Alternative (b)), these are by reference to cost-plus approach whereby the projects recover their full investment cost each year if they are able to reach specified level of plant availability. In case of the Project, it does not recover its full investment cost in the initial years as the tariffs are back-loaded. This increases the investment risks in the project activity compared to the alternatives. Based on the above considerations, 16% post-tax equity IRR is considered to be the appropriate posttax equity return. If the Project has a post-tax equity IRR of less than 16%, then it can be considered to be additional. Sub-step 2c. Calculation and comparison of financial indicators (only applicable to options II and III): 5. Calculate the suitable financial indicator for the proposed CDM project activity and, in the case of Option II above, for the other alternatives. Include all relevant costs (including, for example, the investment cost, the operations and maintenance costs), and revenues (excluding CER revenues, but including subsidies/fiscal incentives where applicable), and, as appropriate, non-market cost and benefits in the case of public investors. 6. Present the investment analysis in a trans parent manner and provide all the relevant assumptions in the CDM-PDD, so that a reader can reproduce the analysis and obtain the same results. Clearly present critical techno-economic parameters and assumptions (such as capital costs, fuel prices, lifetimes, and discount rate or cost of capital). Justify and/or cite assumptions in a manner that can be validated by the DOE. In calculating the financial indicator, the project s risks can be included through the cash flow pattern, subject to project-specific expectations and assumptions (e.g. insurance premiums can be used in the calculation to reflect specific risk equivalents).

11 page Assumptions and input data for the investment analysis shall not differ across the project activity and its alternatives, unless differences can be well substantiated. 8. Present in the CDM-PDD submitted for validation a clear comparison of the financial indicator for the proposed CDM activity and: (a) (b) The alternatives, if Option II (investment comparison analysis) is used. If one of the other alternatives has the best indicator (e.g. highest IRR), then the CDM project activity can not be considered as the most financially attractive; The financial benchmark, if Option III (benchmark analysis) is used. If the CDM project activity has a less favourable indicator (e.g. lower IRR) than the benchmark, then the CDM project activity cannot be considered as financially attractive. The key assumptions used for calculating the benchmark (post-tax equity IRR) are set out below: Capacity of Machines in kw 1250 Number of Machines 20 Project Capacity in MW Project Commissioning Date 31-Oct-07 Project Cost per MW (Rs. In Millions) Operations Plant Load Factor 20% Insurance % of capital cost 0.18% Operation & Maintenance Cost % of capital cost 1.25% % of escalation per annum on O & M Charges 5.0% Tariff Base year Tariff ( ) - Rs./kWh 3.50 Annual Escalation (Rs./kWh per Year) 0.15 Tariff applicable for year 13 (Rs/kWh) 5.30 Tariff applicable beyond year 13 (Rs/kWh) Cost+16% ROE Project Cost Rs Million Land and Infrastructure, Generator & Electrical Equipments, Mechanical Equipments, Civil Works, Instrumentation & Control, Other Project Cost, Pre operative Expenses, etc. Total Project Cost 1,220 Means of Finance Rs Million Own Source 100% 1,220 Term Loan 0% 0 Total Source 1,220 Income Tax Depreciation Rate (Written Down Value basis)

12 page 12 on Wind Energy Generators 80% On other Assets 10% Book Depreciation Rate (Straight Line Method basis) On all assets 7.86% Book Depreciation up to (% of asset value) 90% Income Tax Income Tax rate 30% Minimum Alternate Tax 10% Surcharge 10% Cess 2% Working capital Receivables (no of days) 45 O & M expenses 30 Working capital interest rate 12% CER Revenues CER Price in US$ 12 Exchange rate Rs./US$* * RBI reference rate as of 9 July2007 The equity IRR for the Project without CDM revenues is 9.94% and with CDM revenues is 11.05%. Sub-step 2d. Sensitivity analysis (only applicable to options II and III): 9. Include a sensitivity analysis that shows whether the conclusion regarding the financial attractiveness is robust to reasonable variations in the critical assumptions. The investment analysis provides a valid argument in favour of additionality only if it consistently supports (for a realistic range of assumptions) the conclusion that the project activity is unlikely to be the most financially attractive (as per step 2c para 8a) or is unlikely to be financially attractive (as per step 2c para 8b). Sensitivity analysis of the Equity IRR to the Plant Load Factor (the most critical assumption) has been carried out considering a plant load factor of 18% and 22% (10% variation from the CUF considered by MERC for tariff determination in its Order dated 24 November Plant Load Factor is the key variable encompassing variation in wind profile, variation in off-take (including grid availability) including machine downtime. The post tax Equity IRRs at the stated PLFs are as follows: Post tax Equity IRR PLF at 18% PLF at 22% without CER revenues 8.73% 11.13% With CER revenues 9.73% 12.36% As can be seen from above, the Project is not the most financially attractive (as per step 2c para 8a) we proceed to Step 4 (Common practice analysis). Step 4. Common practice analysis Sub-step 4a. Analyze other activities similar to the proposed project activity:

13 page Provide an analysis of any other activities implemented previously or currently underway that are similar to the proposed project activity. Projects are considered similar if they are in the same country/region and/or rely on a broadly similar technology, are of a similar scale, and take place in a comparable environment with respect to regulatory framework, investment climate, access to technology, access to financing, etc. Other CDM project activities are not to be included in this analysis. Provide quantitative information where relevant. Sub-step 4b. Discuss any similar options that are occurring: 2. If similar activities are widely observed and commonly carried out, it calls into question the claim that the proposed project activity is financially unattractive (as contended in Step 2) or faces barriers (as contended in Step 3). Therefore, if similar activities are identified above, then it is necessary to demonstrate why the existence of these activities does not contradict the claim that the proposed project activity is financially unattractive or subject to barriers. This can be done by comparing the proposed project activity to the other similar activities, and pointing out and explaining essential distinctions between them that explain why the similar activities enjoyed certain benefits that rendered it financially attractive (e.g., subsidies or other financial flows) or did not face the barriers to which the proposed project activity is subject. 3. Essential distinctions may include a serious change in circumstances under which the proposed CDM project activity will be implemented when compared to circumstances under which similar projects where carried out. For example, new barriers may have arisen, or promotional policies may have ended, leading to a situation in which the proposed CDM project activity would not be implemented without the incentive provided by the CDM. The change must be fundamental and verifiable. We analyze the extent to which wind energy projects have diffused in the electricity sector in Maharashtra. In , wind electricity generation was GWh 2 and the total electricity availability at bus -bar in the state of Maharashtra was GWh 3. This works out to 0.6%, showing that wind energy power generation is insignificant as compared to other power project generation sources in Maharashtra. The Installed capacity of wind energy generation sources stood at MW 4 as of 31 March There are approximately 181 MW wind energy projects that are currently in the CDM pipeline (UNFCCC website) and more are expected to follow. Clearly, wind power project development in Maharashtra is insignificant when compared to the power sector of Maharashtra. Further, wind power project development is substantially dependent on CDM and thus is not common practice. Sub-steps 4a and 4b are satisfied and thus, the proposed project activity is additional. B.6. Emission reductions: B.6.1. Explanation of methodological choices: 2 Source: Table No. 3.4, CEA General Review Source: Table No. 5.3, CEA General Review Source: Table No. 2.4, CEA General Review 2006

14 page 14 >> Baseline emission rate calculation: The baseline emissions (BE y in tco 2 ) are the product of baseline emissions factor (EFy in tco2/gwh)times the electricity supplied by the project activity to the grid (EG y in GWh)minus the baseline electricity supplied to the grid in the case of modified or retrofit facilities (EG baseline in GWh), as follows: BE y = (EG y EG baseline ) * EF y In the case of this project activity, EG baseline = 0 BE y = EG y x EF y The baseline information is provided under Annex 3. The details of the calculations are provided under Section B.6.3. Combined Margin Calculations The first contribution to the baseline emission calculation is the project s impacts on the operating margin (affecting the operation of power plants on the grid). The impact on the operating margin accounts for the fact that the system operator will adjust the output of other existing plants on the system in response to the output of the proposed project. The second contribution is on the build margin (delaying or avoiding the construction of future power plants). This second contribution accounts for the fact that even a small project is likely to delay the commissioning of new generation sources, if not directly displace a specific other new generating source. In fact, this delay effect is a reasonable assumption where (a) there is a planned or unplanned sequence of new facilities to be built, and (b) the timing of construction is affected by the need to balance supply and demand, either through maintaining the reserve margin above a threshold level. In fact, this delay effect can be expected to effect total emissions at the build margin to a degree that is comparable in magnitude to the effect on the project s effect on emissions at the operating margin. The baseline emission factor (EFy) has been calculated as a combine margin (CM) consisting of the combination of operating margin (OM) and build margin (BM). Therefore, OM has been calculated based on existing actual and historical emission of last 3-years average, and BM has been calculated based on power plants capacity additions in the electricity system that comprise 20% of the system. Calculations for the CM is based on data collected from authenticate official sources only (Maharashtra State Electricity Board (MSEB), and Central Electricity Authority (CEA)). All generation data collected are 3-year average based on recent statistics available at time of this PDD submission. Step 1. Calculating the Operating Margin emission factor (EF OM,y ) The Simple OM method has been selected as per guidelines provided in ACM0002, since low - cost/must run resources (hydro, wind and nuclear) constitute less than 50% of total grid generation in the five most recent years in the western grid. Further, last five years of generation data from Western grid and CEA shows that grid constitutes of only about 8.9% of low-cost must run resources (refer Annex 3 for details). Moreover power plants based on wind resources (may/may not be low cost option) are not must run as their performance is based on availability of appropriate wind speed and power density, which is uncertain.

15 page 15 Therefore, the present project activity can use Simple OM method. The simple OM is calculated following the ACM0002 methodology, using a 3 year average data, based on the most recent statistics available. This option does not call for updation based on ex post monitoring. Step 2. Calculate the Build Margin emission factor (EF BM,y ) A mix sample of plants that reasonably represents recent trends in Western electric sector expansion approximates the system build margin. The proposed mix is the power plants capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. Given this assumption regarding the build margin, the baseline build margin emissions (BM) rate is approximated as the weighted average emission rate for the identified mix of recent plants. Further, out of the given option of ex-ante and combination of ex-ante and ex-post calculation, ex-ante calculation deems fit in project case.

16 page 16 Step 3. Calculate a baseline emission factor EF y The baseline emission factor has been calculated as the weighted average of the Operating Margin emission factor (EF OM,y ) and the Build Margin emission factor (EF BM,y ) where equal weights have been provided as default. No leakage has been considered in the calculation, as per recommendations of the ACM0002. Therefore, the emission reduction are actual baselin e emission (BEy), since the project activity is based on wind resources and will not have any project emissions. B.6.2. Data and parameters that are available at validation: 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 OM,y tco2e/mwh Operating Margin Emission Factor of Western Regional Electricity Grid CO2 Baseline Database for Indian Power Sector published by the Central Electricity Authority, Ministry of Power, Government of India. The CO 2 Baseline Database for Indian Power Sector version 2.0 dated 21 June 2007 is available at Operating Margin Emission Factor has been calculated by the Central Electricity Authority using the simple OM approach in accordance with ACM0002. Data / Parameter: EFBM,y Data unit: tco 2 e/mwh Description: Build Margin Emission Factor of Western Regional Electricity Grid Source of data used: CO 2 Baseline Database for Indian Power Sector published by the Central Electricity Authority, Ministry of Power, Government of India. The CO 2 Baseline Database for Indian Power Sector version 2.0 dated 21 June 2007 is available at Value applied: Justification of the Build Margin Emission Factor has been calculated by the Central Electricity choice of data or Authority in accordance with ACM0002. description of measurement methods and procedures actually applied : Any comment: -

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18 page 18 B.6.3 Ex-ante calculation of emission reductions: >> The emission reductions ERy by the project activity during a given year y is 1 : ERy = EGy * EFy (1) where EGy is the electricity supplied to the grid, EFy is the CO 2 emission factor of the grid as calculated below. The emission factor EFy of the grid is represented as a combination of the Operating Margin and the Build Margin. Considering the emission factors for these two margins as EF OM,y and EF BM,y, then the EFy is given by: EFy = w OM * EF OM,y + w BM * EF BM,y (2) with respective weight factors w OM and w BM (where w OM + w BM = 1); as per recommendations of ACM0002 for a wind project, the weightage for operating margin has been taken as, w OM = 0.75 and that for build margin, wbm = 0.25 has been considered. The Operating Margin emission factor EF OMy is defined as the generation-weighted average emissions per electricity unit generated (tco 2 / GWh) for all sources serving the western grid, excluding zero- or low-operating cost power plants (hydro, wind and nuclear), based on the average of the five most recent year data and using the following equation (for simple operating margin calculations): EF OM,y = [? i,j Fi,j,y * COEFi,j] / [? j GENj,y] (3) where, ΣEM y and ΣGEN y are the total GHG emissions and electricity generation supplied to the grid by the power plants connected to the grid excluding zero- or low-operating cost sources. The F i,y and COEFi,j are the fuel consumption and associated carbon coefficient of the fossil fuel i consumed by power plant j in the grid. ΣGEN j,y is the electricity generation at the plant j connected to the grid excluding zero- or low-operating cost sources. The CO 2 emission coefficient COEF i,j is obtained as: COEF i,j = NCV i,j * EFCO 2,i * OXID i (4) where: NCVi,j is the net calorific value (energy content) per mass or volume unit of a fuel i, OXID i is the oxidation factor of the fuel (see page 1.29 in the 1996 Revised IPCC Guidelines for default values), EF CO2,i is the CO 2 emission factor per unit of energy of the fuel i. 1 Throughout the document, the suffix y denotes that such parameter is a function of the year y, thus to be monitored at least annually.

19 page 19 The Build Margin emission factor EF BMy (tco 2 /GWh) is given as the generation-weighted average emission factor of the selected representative set of recent power plants represented by the 5 most recent plants or the most 20% of the generating units built (summation is over such plants specified by k): 2 EF_BMy = [? i Fi,y*COEFi] / [? k GENk,y] (5) as the default method. The summation over i and k is for the fuels and electricity generation of the plants mentioned above. Ex-ante calculation of emission reductions is equal to ex-ante calculation of baseline emissions as project emissions and leakage are nil. Baseline emission factor (combined margin) = tco 2 e/gwh Annual electricity supplied to the grid by the Project = 25 MW (Capacity) x 20% (PLF) x 8,760 (hours) / 1,000 GWh = GWh Annual baseline emissions = tco 2 e/gwh x GWh = tco 2 e B.6.4 Summary of the ex-ante estimation of emission reductions: >> The emitted emission reduction achieved during the 10-year crediting period aggregates to tonnes of CO 2 e. The baseline emissions calculations are presented in the table below: Year Estimation of project activity emissions (tco 2 e) Estimation of baseline emissions (tonnes of CO 2 e) Estimation of leakage (t CO 2 e) Estimation of overall emission reductions (tonnes of CO 2 e) The project participant is to demonstrate which is appropriate for the proposed project to the Operational Entity, otherwise, more conservative one is select ed.

20 page 20 Year Estimation of project activity emissions (tco 2 e) Estimation of baseline emissions (tonnes of CO 2 e) Estimation of leakage (t CO 2 e) Estimation of overall emission reductions (tonnes of CO 2 e) Total (tonnes of CO2e) B.7 Application of the monitoring methodology and description of the monitoring plan: >> The monitoring methodology is used in conjunction with the adopted baseline methodology ACM0002/version 06 that is applicable to electricity capacity additions from wind sources. Since this is not a geothermal project, the methodology requires monitoring of the following: Electricity generation from the proposed project activity. Operating margin emission factor, if needed, based on choice of methodology. Build margin emission factor of the grid, if needed, based on choice of methodology. For the project activity to establish its creditable emission reduction, it has to record the actual electricity generation, which would displace equivalent units of electricity at the operating and build margin of the Maharashtra grid. Since the simple OM emission factor is calculated based on a 3-year average, based on the most recent statistics available at the time of PDD preparation, its updating based on ex-post monitoring is not required. For BM calculation, option 1 (refer ACM0002/version 06) has been chosen, which is calculated ex-ante based on the most recent information. Hence, its monitoring is also not required. Thus, the monitoring protocol for the project is required to monitor and record the actual units of electricity generation from wind farms. Therefore, with the given requirements of the wind farms, CDM project and the select monitoring methodology, it is justified that the applied monitoring methodology (ACM0002/version 06) for zeroemissions grid-connected electricity generation from renewable sources is the correct choice for the monitoring plan of the CDM project activity. B.7.1 Data and parameters monitored: >> The following parameter will be monitored during the project activity: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 EGy MWh (Mega -watt hour) Net electricity supplied to the grid by the Project Electricity supplied to the grid as per the tariff invoices raised on MSEDCL Annual electricity supplied to the grid by the Project = 25 MW (Capacity) x 20% (PLF) x 8,760 (hours) / 1,000 GWh = GWh

21 page 21 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: - Net electricity supplied to grid will be measured by main meters (export and import). The procedures for metering and meter reading will be as per the provisions of the power purchase agreement. Refer Annex 4 for an illustration of the provisions for measurement methods. QA/QC procedures will be as implemented by MSETCL pursuant to the provisions of the power purchase agreement. Refer Annex 4 for an illustration of the provisions for QA/QC procedures.

22 page 22 B.7.2 Description of the monitoring plan: >> The project activity will be operated and managed by project sponsors who are also the project proponent. As per Approved Consolidated Baseline Methodology for zero emissions grid connected renewable electricity generation projects (ACM0002), leakage calculation is not required for electricity generation from wind. The project activity essentially involves generation of electricity from wind, the employed WTG only converts wind energy into electrical energy and does not use any other input fuel for electricity generation. Thus no special ways and means are required to monitor leakage from the project activity. 1. The proposed project activity requires evacuation facilities for sale to grid and the evacuation facility is essentially maintained by the state power utility (MSEB). 2. The electricity generation measurements are required by the utility and the investors to assess electricity sales revenue and / or wheeling charges. 3. The project activity has therefore envisaged two independent measurements of generated electricity from the wind turbines. 4. The primary recording of the electricity fed to the state utility grid will be carried out jointly at the incoming feeder of the state power utility (MSEB). Machines for sale to utility will be connected to the feeder. 5. The joint measurement will be carried out once in a month in presence of both parties (the developer s representative and officials of the state power utility). Both parties will sign the recorded reading. The secondary monitoring, which will provide a backup (fail-safe measure) in case the primary monitoring is not carried out, would be done at the individual WTGs. Each WTG is equipped with an integrated electronic meter. These meters are connected to the Central Monitoring Station (CMS) of the entire wind farm through an Optical Fibre Network. The generation data of individual machine can be monitored as a real-time entity at CMS. The snapshot of generation on the last day of every calendar month will be kept as a record both in electronic as well as printed (paper) form. 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) >> The baseline study and application of baseline methodology was completed on 23/07/2007. PricewaterhouseCoopers (P) Limited has assisted the project proponent in determining the application of baseline methodology for the identified CDM project.

23 page 23 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: >> Date of commissioning: 15/09/2007. C.1.2. Expected operational lifetime of the project activity: >> 20 years C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period C Starting date of the first crediting period: >> Not applicable C Length of the first crediting period: >> Not applicable C.2.2. Fixed crediting period: C Starting date: >> 01/12/2007 or date of registration of project with UNFCCC whichever is later. C Length: >> 10 years

24 page 24 SECTION D. Environmental impacts >> D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: >> As per the Schedule 1 of Ministry of Environment and Forests (Government of India) notification dated January 27, 1994 and EIA Notification (S.O 1533) dated 14 th September 2006, a list of activities that require to undertake environmental impact assessment studies has been provided. 5 EIA is not a regulatory requirement in India for wind energy projects and HPCL does not expect any adverse impacts of the proposed CDM project activity on the environment. 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 impacts from the proposed CDM project activity are not considered significant. There are no trans-boundary impacts of the proposed CDM project activity. 5

25 page 25 SECTION E. Stakeholders comments >> E.1. Brief description how comments by local stakeholders have been invited and compiled: >> A public consultation meeting was held on 17 July 2007 at Dhule wind farm site with venue as the project site office of Suzlon India Limited, the manufacturer, supplier and maintenance agency of the wind units. E.2. The participants comprised of Panchayat members, local villagers, MSEB employees, local school employees among others. The villagers were from the nearby villages like Nandurbar, Chadvel, Valve, Titane and Raikot. The meeting began with the appointment of the Chaiman, Mr. Raosaheb P. Patil, Supervisor, Nutan Maratha Vidyalaya, Chadvel. A presentation on various aspects of wind energy and CDM was made by Dr. Inderjeet Singh of PwC. After the project activity and CDM presentations, concerns/ issues/ comments about the CDM activity were invited from the participants and HPCL addressed the issues/ concerns voiced in the Stakeholders Meeting. The stakeholders consultation was conducted in both Marathi and Hindi languages. Summary of the comments received: >> The questions/ concerns/ issues raised by the participants and the responses by HPCL and participants discussions are detailed in the table below: S. Concerns/ Questions Related to the No. Project 1 Are wind turbines a cause of irregularity in rainfall? 2 Does water get absorbed by earthing done in the area for wind power and lead to water level reduction in tube wells? 3 Transmission towers are built on land that belongs to various farmers, are these farmers being paid for the use of their land for the same? 4 Does erection of wind turbines have any ill effect on the fertility of farming land? 5 Can the electricity generated from the wind farm be directly supplied to the local villages at a lower rate? Comments/ Discussions Relating to the Issues Raised It was explained in detail how electricity is generated through wind and how it is not linked to rainfall. Project proponent explained that there is no linkage between the two aspects. The towers for evacuation of power are built by MSEDCL and the issue needs to be taken up with them. The stakeholders were assured by EPC contractor of all possible support to take up the same. The issue was discussed and it was explained that erection of wind farm would not effect the fertility of the farm land in any way. The distribution of electricity is in the domain of state utility authorities and village governing council could take this up directly with them.

26 page 26 E.3. Report on how due account was taken of any comments received: >> HPCL officials and its EPC contractor replied to all the queries to the satisfaction of the participants of the local stakeholder consultation meet.

27 page 27 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Hindustan Petroleum Corporation Limited Street/P.O.Box: 17, Jamshedji Tata Road, Churchgate Building: Petroleum House City: Mumbai State/Region: Maharashtra Postfix/ZIP: Country: India Telephone: FAX: sgp@hpcl.co.in URL: Represented by: S G Palnitkar Title: DGM-Central Engg. Salutation: Mr Last Name: Palnitkar Middle Name: - First Name: Suresh Department: Mobile: Direct FAX: Direct tel: Personal sgp@hpcl.co.in

28 page 28 Annex 2 INFORMATION REGARDING PUBLIC FUNDING The project activity does not involve any ODA financing.

29 page 29 Annex 3 BASELINE INFORMATION The Operating Margin data for the most recent three years and the Build Margin data for the Western Region Electricity Grid as published in the CEA database 6 are as follows: Simple Operating Margin Western Grid (tco2e/gwh) Simple Operating Margin Simple Operating Margin , Simple Operating Margin Average Operating Margin of last three years Build Margin Western Grid (tco2e/gwh) Build Margin Combined Margin Calculations Western Grid Weights (tco2e/gwh) Operating Margin Build Margin Combined Margin Detailed information on calculation of Operating Margin Emission Factor and Build Margin Emission Factor is available at 6 Baseline Carbon Dioxide Emissions from Power Sector, Baseline Carbon Dioxide Emission Database Version 2.0 dated 21 June 2007 on

30 page 30 Annex 4 MONITORING INFORMATION Metering: The generated power from HPCL WTGs (20 Nos x 1250 kw, total 25 MW) will be measured at 2 Nos of 33kV bays and these meters will be located at S/S premises (S/S 33/132 kv with 2x50MVA power transformers). At the conclusion of each meter reading, an appointed representative of MSETCL and Suzlon sign a document indicating the number of Kilowatt-hours indicated by the main meter. Metering Equipment: Metering equipment is electronic trivector meters of accuracy class 0.5% required for the Project (both main and check meters). The metering equipment is maintained in accordance with electricity standards prevalent in Maharashtra. Meter Readings: The monthly joint meter reading (both main and check meters) is taken by the representatives Suzlon and MSETCL for the last month. Inspection of Energy Meters: All the main and check energy meters (export and import) and all associated instruments, transformers installed at the Project are of 0.5% accuracy class. Each meter is jointly inspected and sealed on behalf of the Parties and is not to be interfered with by either Party except in the presence of the other Party or its accredited representatives. Meter Test Checking: There is a separate check and main meter for each 33kV bay. The Main and Check Meters are close to each other and will be tested for accuracy, with a portable standard meter, by the MSETCL s Testing Division, The MSETCL will carry out the calibration, periodical testing, sealing and maintenance of meters. All the meters will be tested at the Metering Point. The MSETCL will provide a copy of the test reports.if during any of the monthly meter readings, the variation between the main meter and the check meter is more than 0.5%, all the meters will be retested and calibrated immediately by MSETCL

31 page 31 Appendix 1 Project Location Map Project Site Sr. No. Machine No. Village R.S. No. Compartment No. 1 V-41 Valvhe V-49 Pangan B 3 V-52 Pangan A 4 V-53 Pangan B 5 V-55 Pangan