PROJECT DESIGN DOCUMENT (PDD)

Transcription

1 CDM Executive Board Page 1 PROJECT DESIGN DOCUMENT FORM FOR CDM PROJECT ACTIVITIES (F-CDM-PDD) Version 04.1 PROJECT DESIGN DOCUMENT (PDD) Title of the project activity Renewable Wind Energy by Fortune Five Hydel Projects (P) Limited Version number of the PDD 02 Completion date of the PDD 15/10/2012 Project participant(s) Fortune Five Hydel Projects Private Limited Host Party(ies) India Sectoral scope and selected methodology(ies) Sectoral Scope: 01 Energy industries (renewable - / non-renewable sources) Methodology: ACM0002 Version Consolidated baseline methodology for gridconnected electricity generation from renewable Sources Estimated amount of annual average GHG emission reductions 179,474 t CO 2 e

2 CDM Executive Board Page 2 SECTION A. Description of project activity A.1. Purpose and general description of project activity Fortune Five Hydel Projects Private Limited (Fortune Five) has planned to establish a 100.8MW Wind Farm near Basavana Bagewadi Town & Taluka, Bijapur District in Karnataka State, India. The wind farm consists 63 Nos. 1.6MW Wind Turbine Generators (WTGs). The installation of WTGs are spread over in the villages Ingaleshwar, Rabinal, Dindvar, Karabantanal, Salvadgi in Basavana Bagewadi Taluka. The project activity is expected to generate about 200,090 MWh of power annually at a PLF of 22.66% and would reduce approximately 179,474 tco 2 / annum of GHG emissions. The power generated from the project activity would be exported to Southern grid. The project activity has identified the land required for the project and acquiring the same is expected to be completed by September Executed contract with GE India Industrial Private Limited on 05/01/2012 for supply, installation and commissioning services of Wind Turbine Generators of 1.6 MW each. Achieved financial closure during December, The commissioning of WTGs is expected to be between 01/01/2013 and 30/06/2013. The purpose of the project activity is generation of clean energy by tapping wind velocity, which would be exported to the Southern grid of India. Since the project activity does not consume any fossil fuels it contributes to reduction of greenhouse gases emissions, which would have otherwise been generated by the operation of grid-connected power plants and by addition of new generation sources. The electricity generated at 690V by each wind turbine would be stepped up by Unit Transformer to 33 kv voltage level and would be transmitted to wind farm pooling substation through a net work of 33 kv transmission lines. At the wind farm pooling substation, the power would be further stepped to 220 kv level and transmitted through 220 kv double circuit lines connected to Karnataka Power Transmission Corporation Limited s substation at Basavana Bagewadi, which is located at about 12 km from the wind farm. The technology employed in wind power generation is conversion of kinetic energy of wind into mechanical energy by using wind turbine and subsequently into electrical energy. No power generation facility existed at the project site prior to the start of implementation of the project activity. The scenario existing prior to the start of implementation of the project activity is same as baseline scenario identified for the project activity as described under Sec.B.4. The project activity contributes to the following sustainable development indicators: Social well being The project activity provides direct and indirect job opportunities to the local population during erection. The project helps to reduce demand-supply gap in electricity in the state. The project leads to rural upliftment and infrastructure development in the areas around the project such as improving the condition of roads connecting to the project site. Economic well being The investment on the project activity would ensure economic development of the local people.

3 CDM Executive Board Page 3 The project activity provides business opportunity to the local stakeholders such as suppliers, manufacturers, contractors etc. The project proponent desires to spend 2% of the revenue from sale of Carbon Credits towards local area development. Environmental well being The Project activity would utilize wind velocity for generating and supplying power to the grid which is dominated by power generated using fossil fuels such as coal, lignite and gas etc and hence it will result in reduction of GHG emissions and contributes to preserving and improving the environment. Technological well being: The project activity is environmentally safe that paves the way for increased interest in wind energy in the country and this in turn would push the investment into research for creating better wind turbines. As evident from the foregoing, the project activity would contribute to the sustainable development of the host country. A.2. Location of project activity A.2.1. Host Party(ies) India A.2.2. Region/State/Province etc. Karnataka State A.2.3. City/Town/Community etc. Taluka: Basavana Bagewadi Village : Ingaleshwar, Rabinal, Dindvar, Karabantanal and Salvadgi Villages District : Bijapur A.2.4. Physical/Geographical location The project activity is located near Basavana Bagewadi Town & Taluka of Bijapur District in Karnataka State. The site is approachable by NH -13 from Bijapur on the way to Mulgund. The nearest Airport to the project site is located at a distance of 230 Km at Hubli and nearest Railway Station is located at a distance of 45.Km at Bijapur. The geographical co-ordinates of the project activity is in the range of: Latitude Longitude : N N : E E Physical location of the project site is shown below.

4 CDM Executive Board Page 4 Maps depicting project location

5 CDM Executive Board Page 5 A.3. Technologies and/or measures The technology adopted in the wind power generation is conversion of kinetic energy into mechanical energy and then converted into electrical energy by the generators. In this process there would be no greenhouse gas emissions or burning of any fossil fuels. Thus, electricity would be generated through sustainable means without causing any negative impact on the environment. Therefore, the technology is environmentally safe and sound. No power generation facility existed at the project site prior to the start of implementation of the project activity. The project activity is installation of a new grid-connected renewable power plant and hence as per the methodology ACM0002 Version , the baseline scenario is Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources. No technology transfer is envisaged for the project activity. The technical specifications of the WTGs selected for the project activity are given below. Item Particulars Make GE Model 1.6 xle Rating 1600 kw Rotor Diameter 82.5 m Hub height 80 m Number of blades 3 Swept area 5346 m 2 Orientation Upwind Speed Regulation Pitch Control Type of Generator Doubly Fed Induction (DFM) Voltage 690 V Frequency 50 Hz Cut-in-wind speed 3.5 m / s Rated wind speed 11.5 m / s Cut-out wind speed 25 m / s Design Life 1 20 years 1 Fact Sheet Wind Turbine :

6 CDM Executive Board Page 6 A.4. Parties and project participants Party involved (host) indicates a host Party Private and/or public entity(ies) project participants (as applicable) Indicate if the Party involved wishes to be considered as project participant (Yes/No) Party A (host) India Private entity A Fortune Five Hydel Projects Private Limited No A.5. Public funding of project activity The project activity does not involve any public funding from Annex-1 countries. SECTION B. Application of selected approved baseline and monitoring methodology B.1. Reference of methodology Title: Consolidated baseline methodology for grid-connected electricity generation from renewable Sources Ref : ACM0002 Version Tools used: 1) Tool for the demonstration and assessment of additionality (Version ) 2) Tool to calculate the emission factor for an electricity system (Version ) B.2. Applicability of methodology In the methodology ACM0002 Version , applicability criteria for various projects are mentioned. Applicable conditions for the present activity and fulfillment of the same are mentioned below. Applicability criteria This methodology is applicable to grid-connected renewable power generation project activities that (a) install a new power plant at a site where no renewable power plant was operated prior to the implementation of the project activity (greenfield plant); (b) involve a capacity addition; (c) involve a retrofit of (an) existing plant(s); or (d) involve a replacement of (an) existing plant(s). The project activity is the installation, capacity addition, retrofit or replacement of a power plant/unit of one of the following types: hydro power plant/unit (either with a run-of-river reservoir or an accumulation reservoir), wind power plant/unit, geothermal power plant/unit, solar power plant/unit, wave power plant/unit or tidal power plant/unit Project activity The project activity is installation of new Wind power plant for generation of power utilizing wind velocity and the generated power will be exported to Southern grid. No renewable power plant was installed and operated at the proposed project location prior to the implementation of the project activity. The project activity is installation of new Wind power projects.

7 CDM Executive Board Page 7 In the case of capacity additions, retrofits or replacements (except for capacity addition projects for which the electricity generation of the existing power plant(s) or unit(s) is not affected): the existing plant started commercial operation prior to the start of a minimum historical reference period of five years, used for the calculation of baseline emissions and defined in the baseline emission section, and no capacity addition or retrofit of the plant has been undertaken between the start of this minimum historical reference period and the implementation of the project activity; In case of hydro power plants, one of the following conditions must apply: Not applicable. The project activity is installation of new Wind power projects. Not applicable. The project activity is installation of new Wind power projects. a) The project activity is implemented in an existing single or multiple reservoirs, with no change in the volume of any of reservoirs; or b) The project activity is implemented in an existing single or multiple reservoirs, where the volume of any of reservoirs is increased and the power density of each reservoir, as per definitions given in the Project Emissions section, is greater than 4 W/m 2 after the implementation of the project activity; or c) The project activity results in new single or multiple reservoirs and the power density of each reservoir, as per definitions given in the Project Emissions section, is greater than 4 W/m 2 after the implementation of the project activity In case of hydro power plants using multiple reservoirs where the power density of any of the reservoirs is lower than 4 W/m 2 all the following conditions must apply: The power density calculated for the entire project activity using equation 5 is greater than 4 W/m 2 ; All reservoirs and hydro power plants are located at the same river and where are designed together to function as an integrated project that collectively constitutes the generation capacity of the combined power plant; The Water flow between the multiple reservoirs is not used by any other hydropower unit which is not a part of the project activity; The total installed capacity of the power units, which are driven using water from the reservoirs with a power density lower than 4 W/m 2, is lower than 15MW; Not applicable. The project activity is installation of new Wind power projects.

8 CDM Executive Board Page 8 The total installed capacity of the power units, which are driven using water from reservoirs with a power density lower than 4 W/m 2, is less than 10% of the total installed capacity of the project activity from multiple reservoirs. The methodology is not applicable to the following: Project activities that involve switching from fossil fuels to renewable energy sources at the site of the project activity, since in this case the baseline may be the continued use of fossil fuels at the site; Biomass fired power plants; A hydro power plant that results in the creation of a new single reservoir or in the increase in an existing single reservoir where the power density of the power plant reservoir is less than 4 W/m 2. Applicability Conditions of Tools referred by the Methodology Tool to calculate the emission factor for an electricity system Version This tool may be applied to estimate the OM, BM and/or CM when calculating baseline emissions for a project activity that substitutes grid electricity, i.e. where a project activity supplies electricity to a grid or a project activity that results in savings of electricity that would have been provided by the grid (e.g. demand-side energy efficiency projects).in case of CDM projects the tool is not applicable if the project electricity system is located partially or totally in an Annex I country. Tool for the demonstration and assessment of additionality Version Combined tool to identify the baseline scenario and demonstrate additionality This tool is only applicable to methodologies for which the potential alternative scenarios to the proposed project activity available to project participants cannot be implemented in parallel to the proposed project activity. The project activity is a new wind power project. It does not involve switching from fossil fuels to renewable energy sources and also not fall under the category of biomass fired power plant and hydro power plant. Hence, the methodology is applicable to the project activity. The project activity is a Wind Farm which generates and supplies the electricity to grid and hence this tool is applicable to the project activity to estimate OM, BM and CM for calculating baseline emissions. The project activity is located in Karnakata State, India and does not fall under Annex I country and hence this tool is applicable to the project activity. Use of this tool is mandatory to demonstrate additionality of the project as per methodology ACM0002 Version The project activity is installation of Greenfield facility which supplies electricity generated to grid and the methodology ACM0002 Version applied for this project activity prescribed baseline scenario. Further as per Paragraph 115 of VVS (Version 2.0) where the baseline scenario is prescribed in the approved methodology, no further analysis is required. Hence, use of this tool is not necessary.

9 CDM Executive Board Page 9 Tool to calculate project or leakage CO2 emissions from fossil fuel combustion This tool can be used in cases where CO 2 emissions from fossil fuel combustion are calculated based on the quantity of fuel combusted and its properties. The project activity is a Wind Farm which generates electricity utilizing wind velocity and it does not involve combustion of fossil fuels. Hence use of this tool is not required. The project meets the criteria mentioned in the methodology ACM0002, Version and hence justifies the selection of approved consolidated baseline methodology for this project activity. B.3. Project boundary As per the methodology ACM 0002 Version , the spatial extent of the project boundary includes the project power plant and all power plants connected physically to the electricity system that the CDM project power plant is connected to. Accordingly, the project boundary encompasses the physical and geographical site of the Wind farm till the power evacuation system. As per the CO2 baseline database published by Central Electricity Authority (CEA) there are two Indian grid system viz., 1) integrated Northern, Eastern, Western and North-Eastern (NEWNE) and 2) Southern grid. Since the project activity falls under Southern grid, all the power plants connected to Southern grid are also forms part of project boundary. 220/110/33/11kV Substation at Basavana Bagewadi 33 / 220 kv pooling Substation at Ingaleshwar Metering 63 WTGs Consumers MM CM MM CM Power plants connected to grid Project Boundary

10 Project scenario Baseline scenario UNFCCC/CCNUCC CDM Executive Board Page 10 Source GHGs Included? Justification/Explanation Source 1 CO 2 emissions from electricity generation in fossil fuel fired power plants that are displaced due to the project activity CO 2 Included Main emission source CH 4 No Minor emission source N 2 O No Minor emission source Source 2 CO 2 CH 4 - Nil - N 2 O Source 1 Electricity generation by installing wind turbine generators CO 2 No Not applicable since no emissions occur from project operation CH 4 No Not applicable since no emissions occur from project operation N 2 O No Not applicable since no emissions occur from project operation Source 2 CO 2 CH 4 - Nil - N 2 O B.4. Establishment and description of baseline scenario According to the approved consolidated methodology ACM0002, version , baseline scenario for the installation of a new grid-connected renewable power plant is as under: Electricity delivered to the grid by the project activity 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 in the Tool to calculate the emission factor for an electricity system. As the proposed project activity is new renewable grid-connected power plant, the applicable baseline scenario for this project is the electricity delivered to the grid by the project activity which would have, otherwise, been generated by the operation of grid-connected power plants and by addition of new generation sources, as reflected in the combined margin (CM) calculations. B.5. Demonstration of additionality Additionality of the project activity is demonstrated using the Methodological tool Demonstration and assessment of additionality Version as specified by the approved methodology ACM0002 Version as described below: context Step 1. Identification of alternatives to the project activity consistent with current laws and regulations The methodology ACM 0002 Version states that if the project activity is the installation of a new grid-connected renewable power plant/unit, the baseline scenario will be grid connected power plant. Paragraph 115 of VVS (Version 2.0) states that where the baseline scenario is prescribed in the

11 CDM Executive Board Page 11 approved methodology, no further analysis is required. Hence, no further analysis on the alternatives is necessary. As the project activity is installation of a new grid connected renewable power plant, no further analysis on the alternatives is necessary basing on the above referred clause(s). Step 2. Investment analysis Sub-step 2.a.: Determine appropriate analysis method The tool for additionality provides the following three options for investment analysis. Option I Option - II Option III : Simple cost analysis : Investment comparison analysis : Benchmark analysis Option - I: Simple cost analysis is not applicable to the project activity as the CDM revenues are not the only means of income. Option - II: Since the alternative to the project activity is the import of electricity from the grid, investment comparison analysis is not appropriate for the project Option - III: The Benchmark analysis is considered appropriate for the project activity as the alternative to the project is supply of electricity from a grid and the choice of the project proponent is to invest or not to invest in the project activity. Therefore, the selection of benchmark analysis is in conformity with the guidance 19 of Annex 5 of EB 62. Sub-step 2b: Option III - Benchmark analysis Since the project is funded by a mix of debt and equity, post tax project IRR is considered as an appropriate financial indicator as the financial indicator accounts for both the cost of debt and return on equity. The project proponent seeks to demonstrate the addtionality of the project through Project IRR. The IRR so computed is compared with a benchmark indicator to assess the financial attractiveness of the project. As per the guidance note issued by CDM EB at its 62 nd meeting (Annex 5, item 12, selection and validation of appropriate benchmarks) In case where benchmark approach is used the applied benchmark shall be appropriate to the type of IRR calculated. Local commercial lending rates or weighted average cost of capital (WACC) are appropriate benchmarks for a project IRR. Accordingly, Weighted Average Cost of Capital (WACC) has been worked out, the details of which are furnished below: Weighted average cost of capital (WACC) is calculated as weighted average cost of equity and cost of debt as illustrated below: WACC = E/V * Re + D/V * Rd * ( 1- Tc) Where: Re Rd E D V = cost of equity = cost of debt = Equity = Debt = E + D

12 CDM Executive Board Page 12 E/V D/V Tc = percentage of financing that is equity = percentage of financing that is debt = Corporate tax rate Cost of Equity (Re) : The real cost of equity of 11.75% as provided in Appendix to the EB 62 Annex 5 Guidelines on the Assessment of Investment Analysis for India applicable to the Group I project categories (Energy Industries) is considered. Further as per the said guidelines, the cost of equity (Real term value) has been converted to the nominal value by adding inflation rate of 6% 2 (RBI projected rate). Cost of Debt (Rd) : Cost of debt is defined as the rate at which lender s agree to lend money to a project. The additionality tool and the guidance to investment analysis clarify that the benchmark for a project with more than one potential developer should not be based on project specific parameters but should represent the standard in the market. Accordingly, the bank prime lending rate prevailing at the time of investment decision (November, 2011) has been considered as the cost of debt. The prime lending rate available at the time of investment was 14.75% 3 ; it has been considered as the cost of debt. Interest costs are tax deductible; therefore, in order to arrive at the post tax cost of debt, the cost of debt is multiplied with the factor, (1- applicable marginal tax rate i.e., 20.01%). As per the Detailed Project Report the debt equity (E/V and D/V) ratio is 70:30. The envisaged Equity (E) is Rs million and Debt (D) is Rs million. Based on the above, the WACC works out to 13.58%. The selected benchmark is in conformity with guidance 12 and 13 of Annex 5, EB 62. The WACC calculation is provided in the IRR analysis worksheet. Sub-step 2.c.: Calculation and comparison of financial indicators The IRR analysis is prepared based on detailed project report available at the time of investment decision. While computing the IRR all the benefits and fiscal concessions available to the project have been taken into account. Assumptions underlying Financial Indicators Parameters Value Source for input Values Project cost (Rs.in million) Detailed Project Report /Offer from Equipment supplier and contract executed with GE India Industrial private limited. Means of Finance (Rs.in million): -Equity (30%) -Term Loan (70%) Detailed Project Report Annual Gross Energy (MWh) Detailed Project Report Plant load Factor (%) Detailed Project Report and Report on Energy Estimation prepared by CECL a third party engineering company 2 Sec.3 3

13 CDM Executive Board Page 13 Derating after 10 years (%) 5 Detailed Project Report Tariff (Rs./kWh) 3.70 Detailed Project Report / KERC order- December, 2009 Operation & Maintenance - % of Capital cost 1.3 Detailed Project Report - % of escalation per annum Generation based incentive (GBI) (in Rs.) per unit of electricity fed into the grid with a cap of Rs.62 Lakhs/MW Operational guidelines for implementation of Generation Based Incentive for grid connected wind power projects issued by Indian Renewable Energy Development Agency Ltd., (IREDA) in line with the Scheme for implementation of GBI issued by Ministry of New and Renewable Energy (MNRE) dt Administrative expenses (Rs.in million) 6 Detailed Project Report Annual escalation (%) 5 Interest on Term Loans (%) 13 Term Loan sanction letter Loan Repayment period (Years) 12 Detailed Project Report Moratorium period 1 Detailed Project Report Income Tax - MAT (%) Indian Income Tax Act ndiacr/contents/forms2010/pamphets/co MPANIES_2013_14.htm Income Tax Regular (%) Indian Income Tax Act ndiacr/contents/forms2010/pamphets/co MPANIES_2013_14.htm Life time of the project activity 20 years Detailed Project Report The PLF is based on the Report on Energy Estimation prepared by Consolidated Energy Consultants Limited (CECL), Bhopal a third party engineering consultant for wind energy and therefore conforms to Annex11, EB 48. The financial indicator has been calculated for 20 years which is the operating life of the project based on the DPR, and hence represents expert opinion, which conforms to Annex 15, EB 50. Based on the above assumptions, the project IRR works out to 7.25% in contrast to the benchmark return of 13.58% chosen to compare project IRR. Therefore, the project is not a business-as-usual scenario and hence additional. This conclusion has been tested by subjecting critical parameters to reasonable variations. Sub-step 2.d.: Sensitivity Analysis The tool for the demonstration and assessment of additionality requires that a sensitivity analysis is conducted to check weather the financial attractiveness is robust to reasonable variations in the critical assumptions. The Guidance on the Assessment of Investment Analysis issued by the EB in its 62 nd Meeting requires subjecting those variables which constitute more than 20% of project cost or total project revenue to sensitivity analysis and considering a +/- 10% variations in the selected variables. Accordingly, the variables viz., generation, tariff, project cost and O&M are selected for sensitivity analysis.

14 CDM Executive Board Page 14 The results of the sensitivity analysis for the IRR are furnished below: Sensitivity Analysis Variation % -10% 0% 10% PLF 5.56% 7.25% 8.87% Project cost 9.11% 7.25% 5.65% Tariff 5.66% 7.25% 8.77% O & M Cost 7.51% 7.25% 6.98% Bench Mark 13.58% With CDM 9.51% The sensitivity analysis proves that the project is unlikely to be financially viable even under the most optimistic conditions of generation (PLF) going up by 10% or project cost going down by 10% or tariff goes up by 10% or O & M cost going down by 10%. In either case, the project IRR remains at 8.87%, 9.11%, 8.77% and 7.51% respectively in contrast to the benchmark return of 13.58%. This proves that the project activity is not a business-as-usual scenario. The project IRR in the baseline scenario improves to 9.60% considering revenue from CDM in contrast to the benchmark return of 13.58%. Hence, the project requires CDM benefits to make it financially attractive. The Project will become non-additional only if the PLF goes up by 41.60% or the project cost drops down by 28.40% or tariff goes up by 44.70%. Even if the O&M cost reduce by 100% the IRR of the project activity does not reach the benchmark. All these scenarios are not possible as explained below: There is no possibility of PLF reaching 31.95% (increase in PLF by 9.43% from the considered PLF of 22.66%). Karnataka Electricity Regulatory Commission (KERC) in its tariff order dt.11 th Dec 2009 has approved a PLF of 26.5% for determination of tariff. The IRR works out to 9.96% considering the PLF of 26.5% as approved by KERC, which is still below the benchmark of 13.58%. As regards the project cost, the cost is firmed up at Rs.6110 million as against the estimated cost of Rs million in the DPR. The reduction in the project cost is 6.5% and there is no scope for further reduction in the project cost as the same is firmed up. As per KERC Order dt.11 th December 2009, the tariff is fixed at Rs.3.70 per kwh without any escalation for the first 10 years from the date of signing of the PPA. Any assumption on tariff applicable from 11th year onwards is highly uncertain today and do not provide a reliable basis for investment decisions. Hence the tariff applicable at the time of investment decision is considered for 11 th year to 20 th year. O & M Costs includes salaries and wages, repairs and maintenance and various other expenses required for the operation as well as maintenance of the plant and hence there is no possibility of decrease in O & M charges. The sensitivity analysis proves that the project is unlikely to be financially attractive even under the most optimistic conditions.

15 CDM Executive Board Page 15 Outcome of Step 2: The sensitivity analysis proves that the project is not financially attractive without CDM support. With the CDM support the project IRR improves to 9.51%. Therefore, CDM benefits are imperative for the project to alleviate the financial barrier. Step 3 Barrier analysis As the sensitivity analysis under Step 2 demonstrated that the proposed CDM project activity is unlikely to be the financially attractive, step 3 is skipped. Step 4 Common practice Analysis Sub-step 4a. Analyze other activities similar to the proposed project activity Common practice analysis has been conducted as per the procedure laid down in Additionality Tool (version ). As required by the Additionality Tool, the entire country has been defined as the geographical area for the purpose of common practice analysis. Step 1: The applicable output range of the designed capacity of the project (± 50% of the capacity) is 50.4 MW (50% of installed capacity) to MW (150%) of installed capacity). All the data required for the common practice analysis have been sourced from CEA - CO 2 Baseline Database (version 07) and the data of wind power projects as available in the Directory-India Wind Power 2011 published by Consolidated Energy Consultants Limited (CECL), Bhopal has been used. The registered CDM/VCS projects (2 hydro projects consisting of 7 units, 2 thermal power plants and 6 wind projects which are falling within +/-50% range) have been excluded in the analysis. There are no projects which have commissioned after the start date of the project activity. With regard to biomass power / solar power projects there is no complete data available for all the states in India, to include in the analysis. However, based on the information available in few state nodal agency websites, the biomass/solar projects already commissioned are having an installed capacity of below 25MW and these will not fall under +/- 50% of the output range of the capacity of the project activity. The following weblinks of state nodal agencies presented list of commissioned biomass / solar power projects. It is observed from these sources that the maximum capacity of each biomass / solar power projects already implemented is below 25MW. Biomass Power Projects: Solar Power Projects:

16 CDM Executive Board Page (It is appearing in the home page that the achievement with respect to Solar Power upto is 10MW) Step 2: Total number of projects (N all ) which have commenced commercial operation before the start date of the project activity and which are falls within +/- 50% of the output capacity of the project activity are 482, the details of which are furnished below: Nall - All plants of capacities ranging from 50.4MW to MW Sector Total (Nos.) Hydro 243 Wind 0 Thermal / Nuclear 239 Total 482 Step 3: The hydro and thermal power plants are identified as technology different projects since in both cases the energy source / fuel, access to technology, financial flows, promotional & regulation policies are different. Hence, projects which apply technology different from that of the project activity (N diff ) as explained above are also 482 as per the plants identified in Step 2 above. The details of which are furnished below: Ndiff - Plants operating with different technologies Sector Total (Nos.) Hydro 243 Wind 0 Thermal / Nuclear 239 Total 482. Step 4: The plants using technology similar to the technology used in the project activity in all plants that deliver same output or capacity as the project activity =

17 CDM Executive Board Page 17 F = 1 N diff /N all = 1 (482/482) = 0 & N all N diff = = 0 As per the Additionality Tool the project activity is a common practice if both the following conditions are fulfilled: (a) the factor F is greater than 0.2, and (b) N all - N diff is greater than 3 Since both conditions are not fulfilled, it is concluded that the project activity is not a common practice in the country. The soft copy of Common Practice analysis is furnished to DOE for verification. Serious consideration of CDM As per the guidelines on the demonstration and assessment of prior consideration of the CDM, Annex 13 of EB 62, the project activities with a starting date on or after 02 August 2008 must inform a Host Party DNA and the UNFCCC secretariat in writing of the commencement of the project activity and of their intention to seek CDM status. Such notification must be made within six months of the project activity start date and shall contain the precise geographical location and a brief description of the proposed project activity, using the standardized form F-CDM-Prior Consideration. The PP has signed an agreement with the WTG supplier on 05/01/2012, which is the start date of the project as per Glossary of CDM terms. The project proponent has submitted the Prior Consideration of the CDM Form duly filled and signed to the Secretariat, UNFCCC and to the Indian DNA on 28/11/2011 and the same is notified at the UNFCCC website. Since the PP has intimated both UNFCCC and DNA within 6 months from the start date of the project, the requirements of paragraph 2 of Annex 13, EB 62 is fulfilled. B.6. Emission reductions B.6.1. Explanation of methodological choices Application of baseline methodology According to the Tool to calculate the emission factor for an electricity system Version , the baseline emissions are the amount of electricity produced times the grid emission factor which is the Combined Margin (CM), calculated as the simple average of the Operating Margin (OM) emission factor and the Build Margin (BM) emission factor. The emission factor of the grid for the ex-ante approach is calculated in the following way: In accordance with the "Tool to calculate the emission factor for an electricity system, Version the grid emission factor is calculated as per the following procedure: Step 1. Identify the relevant electricity systems Step 2. Choose whether to include off-grid power plants in the project electricity system Step 3. Select a method to determine operating margin (OM) Step 4. Calculate the operating margin emission factor according to the selected method Step 5. Calculate the build margin (BM) emission factor

18 CDM Executive Board Page 18 Step 6. Calculate the combined margin (CM) emission factor Step 1 Identify the relevant electric power system The CEA of the host country has published a delineation of the project electricity system and connected electricity systems. According to data published by the CEA of India the project activity falls under Southern Grid. Step 2 - Choose whether to include off-grid power plants in the project electricity system (optional). Project participants may choose between the following two options to calculate the operating margin and build margin emission factor: Option I: Only grid power plants are included in the calculation. Option II: Both grid power plants and off-grid power plants are included in the calculation. Following the calculations of the CEA, and the statistical data available, Option I is chosen Step 3 Select a method to determine the operating margin (OM) The approved methodological tool recommends the use of one of the following for the calculation of the operating margin emission factor (EF grid,om,y ): a) Simple OM, or b) Simple adjusted OM; or c) Dispatch data analysis OM; or d) Average OM. According to the methodological tool the Simple OM can be used if low-cost/must-run resources constitute less than 50% of total grid generation in: 1) Average of the five most recent years 2) Based on long-term averages for hydroelectricity production. As per CO 2 Baseline Database Version 7.0 the average share of low-cost /must-run resources (for the five most recent years to ) of the Southern grid is amounting to 24% which is less than 50% of the grid generation and hence Simple OM method is used to determine operating margin. The data vintage option selected is the ex-ante approach, where a 3 year generation weighted average OM is calculated. The most recent three year data published by CEA on the emission factor of Southern region is considered. Step 4 Calculate the operating margin emission factor according to the selected method. The Simple OM is calculated as the generation-weighted average CO 2 emissions per unit net electricity generation (tco 2 /MWh) of all generating power plants serving the system, not including low-cost / mustrun power plants / units using the CO 2 Baseline database of the Southern Grid. The calculation is furnished below: Table 1: Operating Margin Most recent three years Net Generation (Southern) in MWh 121,471, ,716, ,387,256

19 CDM Executive Board Page 19 Operating Margin* (OM) in tco 2 e/ MWh Recent three year weighted average Simple Operating Margin (tco 2 /MWh) * including imports Source: CO 2 Baseline Data base, Version 7.0, January, 2012 ( Step 5 Calculate the build margin (BM) emission factor As per the methodological tool, the project participants can choose one of the following two options for calculating build margin: Option 1: For the first crediting period, calculate the build margin emission factor ex ante based on the most recent information available on units already built for sample group m at the time of CDM-PDD submission to the DOE for validation. For the second crediting period, the build margin emission factor should be updated based on the most recent information available on units already built at the time of submission of the request for renewal of the crediting period to the DOE. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. This option does not require monitoring the emission factor during the crediting period. Option 2: For the first crediting period, the build margin emission factor shall be updated annually, ex post, including those units built up to the year of registration of the project activity or, if information up to the year of registration is not yet available, including those units built up to the latest year for which information is available. For the second crediting period, the build margin emissions factor shall be calculated ex ante, as described in Option 1 above. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. Option 1 is considered and the Build Margin (BM) for the most recent year published in CO 2 Baseline Database, Version 7.0 available at the time of PDD development is furnished below: Build Margin (BM) tco 2 e/ MWh Source: CO 2 Baseline Data base, Version 7.0, January, 2012 ( Step 6 Calculate the Combined margin emission factor As per the methodological tool, the calculation of the combined margin (CM) emissions factor (EF grid,cm,y ) is based on one of the following methods: (a) Weighted Average CM; or (b) Simplified CM The simplified CM method (option b) can only be used if:

20 CDM Executive Board Page 20 The project activity is located in a Least Developed Country (LDC) or in a country with less than 10 registered projects at the starting date of validation; and The data requirements for the application of step 5 above cannot be met. The criteria of simplified CM is not applicable to the project activity, therefore Option (a) is chosen for calculation of Combined Margin (CM) emission factor. The combined margin emission factor is calculated as the average of the OM and BM emission factors, i.e. the defaults weights for OM and BM are each weighted at 50%. The resulting Combined Margin is fixed ex ante for the duration of the crediting period: Where: EF grid, BM, y Build margin CO 2 emission factor in year y (tco 2 /MWh) EF grid, OM, y Operating margin CO 2 emission factor in year y (tco 2 /MWh) W OM Weighting of operating margin emissions factor(%) W BM Weighting of build margin emissions factor(%) EF grid,cm,y = x 75% x 25% = tco 2 / MWh The calculated value has been fixed ex-ante for the entire crediting period. The procedure for calculating the project emissions, baseline emissions, leakage emissions and emission reductions are furnished below: Project Emissions: As per ACM0002 Version , PE,y = 0 for renewable power generation project activities. Baseline Emissions The baseline emissions in year y are calculated as: BEy = EGPJ,y EFgrid,CM,y Where: BEy = Baseline emissions in year y (tco2) EGPJ,y = Quantity of net electricity generation that is produced and fed into the grid as a result of the implementation of the CDM project activity in year y (MWh) EFgrid,CM,y = Combined margin CO2 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 (tco2/mwh) Calculation of EGPJ,y The calculation of EGPJ,y is different for (a) greenfield plants, (b) retrofits and replacements, and (c) capacity additions. The project is a Greenfield renewable energy power plant since as the project activity is the installation of a new grid-connected renewable power plant/unit at a site where no renewable power plant was operated prior to the implementation of the project activity, then:

21 CDM Executive Board Page 21 EGPJ,y = EGfacility,y Where: EGPJ,y = Quantity of net electricity generation that is produced and fed into the grid as a result of the implementation of the CDM project activity in year y (MWh/yr) EGfacility,y = Quantity of net electricity generation supplied by the project plant/unit to the grid in year y (MWh/yr) Leakage According to the ACM0002 Version methodology, no leakage emissions are considered. Emission reductions Emission reductions are calculated as follows: ERy = BEy PEy Where: ERy = Emission reductions in year y (t CO2e/yr) BEy = Baseline emissions in year y (t CO2/yr) PEy = Project emissions in year y (t CO2e/yr) B.6.2. Data and parameters fixed ex ante (Copy this table for each piece of data and parameter.) Data / Parameter Unit Description Source of data EF grid,cm,y t CO 2 /MWh Value(s) applied Choice of data or Measurement methods and procedures Combined margin CO 2 emission factor of the project electricity system in year y CO 2 Baseline Database, Version 7.0 published by Central Electricity Authority (CEA) In order to facilitate adoption of authentic baseline emissions data and also to ensure uniformity in the calculations of CO 2 emission reductions by CDM project developers, Central Electricity Authority (CEA), Government of India, Ministry of Power has compiled a database containing the necessary data on CO 2 emissions for all grid-connected power stations in India. Purpose of data Additional comment Calculated as a weighted average of Operating Margin and Build Margin emission factors as per the Tool to calculate the emission factor for an electricity system. Calculation of baseline emissions This value is fixed for the first crediting period.

22 CDM Executive Board Page 22 Data / Parameter Unit Description Source of data EF grid, OM, y t CO 2 /MWh Value(s) applied Choice of data or Measurement methods and procedures Operating Margin CO 2 Emission Factor for the project electricity system in year y (Southern Grid) CO 2 Baseline Database, Version 7.0 published by Central Electricity Authority (CEA) In order to facilitate adoption of authentic baseline emissions data and also to ensure uniformity in the calculations of CO 2 emission reductions by CDM project developers, Central Electricity Authority (CEA), Government of India, Ministry of Power has compiled a database containing the necessary data on CO 2 emissions for all grid-connected power stations in India. Purpose of data Additional comment Most recent 3 years ( , , ) net generation and Operating Margin (OM) emission factor values of Southern region have been used from the CO 2 Baseline Database published by Central Electricity Authority, Government of India, as available at the time of the PDD submission. Calculation of baseline emissions This value is fixed for the first crediting period.

23 CDM Executive Board Page 23 Data / Parameter Unit Description Source of data EF grid, BM, y t CO 2 /MWh Value(s) applied Choice of data or Measurement methods and procedures Build Margin CO 2 Emission Factor for the project electricity system in year y (Southern Grid) CO 2 Baseline Database, Version 7.0 published by Central Electricity Authority (CEA) In order to facilitate adoption of authentic baseline emissions data and also to ensure uniformity in the calculations of CO 2 emission reductions by CDM project developers, Central Electricity Authority (CEA), Government of India, Ministry of Power has compiled a database containing the necessary data on CO 2 emissions for all grid-connected power stations in India. The Build Margin emission factor data (for the year ) from CO 2 Baseline Database published by Central Electricity Authority, Government of India has been used as available at the time of the PDD submission. Purpose of data Additional comment Calculation of baseline emissions This value is fixed for the first crediting period. For the second crediting period, the build margin emission factor will be updated based on the most recent information available on units already built at the time of submission of the request for renewal of the crediting period to the DOE. B.6.3. Ex ante calculation of emission reductions Baseline emissions calculated as explained in section B.6.1 above are summarised as below. BEy = EGPJ,y EFgrid,CM,y BE y = 200,090 MWh * tco 2 /MWh BE y = 179, tco 2 or say 179,474 tco 2 Project emissions The project activity is a renewable power generation project and hence PE y = 0. Leakage: As described in part B.6.1, the leakage of the Project is 0 tco 2 e. Ly = 0 Emission reductions Emission reductions from the project activity are estimated as the difference between baseline emissions, project emissions and leakage. ER y = BE y - PE y ER y = 179,474-0 = 179,474 tco 2 e

24 CDM Executive Board Page 24 B.6.4. Summary of ex ante estimates of emission reductions It is expected that the Project will generate GHG emission reductions of about 179,474 tco 2 e annually over the crediting period. Year Baseline emissions (t CO 2 e) Project emissions (t CO 2 e) Leakage (t CO 2 e) Emission reductions (t CO 2 e) 01/06/2013 to 31/05/ , ,474 01/06/2014 to 31/05/ , ,474 01/06/2015 to 31/05/ , ,474 01/06/2016 to 31/05/ , ,474 01/06/2017 to 31/05/ , ,474 01/06/2018 to 31/05/ , ,474 01/06/2019 to 31/05/ , ,474 Total 1,256, ,256,318 Total number of crediting 7 years years Annual average over the crediting period 179, ,474 B.7. Monitoring plan B.7.1. Data and parameters to be monitored (Copy this table for each piece of data and parameter.)

25 CDM Executive Board Page 25 Data / Parameter EG import, y Unit MWh Description Grid electricity import by the project activity during the year, y Source of data Monthly statement of joint meter readings issued by the state utility Value(s) applied 0 Measurement methods and procedures Measurement : Tri-vector energy meter installed at receiving station will be used for measurement of electricity import Data Type : Measured Recording : Monthly Archiving Policy: Paper & Electronic Accuracy : 0.2s class Monitoring frequency QA/QC procedures Purpose of data Additional comment The meter reading will be recorded jointly by the representatives of project proponent and the state utility Continuous The energy meter will be sealed and will be in the custody of state utility. Measurement results will be cross checked with records of electricity sold (invoices / receipts). The energy meters will be calibrated as per PPA Calculation of baseline emissions The data monitored would be kept in electronic form and hard copy format for 2 years after the end of crediting period or the last issuance of CERs for this project activity, whichever occurs later. Data / Parameter EG export, y Unit MWh Description Electricity exported to the grid by the project activity during the year, y Source of data Monthly statement of joint meter readings issued by the state utility Value(s) applied 200,090 Measurement methods and procedures Measurement : Tri-vector energy meter installed at receiving station will be used for measurement of electricity export Data Type : Measured Recording : Monthly Archiving Policy: Paper & Electronic Accuracy : 0.2s class Monitoring frequency QA/QC procedures Purpose of data Additional comment The meter reading will be recorded jointly by the representatives of project proponent and the state utility Continuous The energy meter will be sealed and will be in the custody of state utility. Measurement results will be cross checked with records of electricity sold (invoices / receipts). The energy meters will be calibrated as per PPA Calculation of baseline emissions The data monitored would be kept in electronic form and hard copy format for 2 years after the end of crediting period or the last issuance of CERs for