CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT for. Sichuan Leshan Ebian Baxi Hydro Power Project

Transcription

1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT for Sichuan Leshan Ebian Baxi Hydro Power Project 16 July 2007

2 CDM Executive Board page 2 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

3 CDM Executive Board page 3 SECTION A. General description of project activity A.1 Title of the project activity: Sichuan Leshan Ebian Baxi Hydro Power Project Version of document: 01 Date of document: 13/07/2007 A.2. Description of the project activity: Baxi hydropower station, located on the upstream of Guanliao River which passes through Lewu Township, Ebian County, LeShan City, Sichuan Province, is a hydropower station with reservoir of 5.63ha in area. It is proposed that two generating sets with the unit installation capacity of 20MW and the total installation capacity of 40MW will be installed. The reservoir s average power density is W/ m 2 (>10), and the annually power output to the grid is 200.6GWh. After the construction of the proposed project, it will be connected to Central China Power Grid through Sichuan Power Grid. Electricity supplied to Central China Power Grid is mainly generated from coal, thus the proposed project will effectively replace fossil fuel power plants to produce electricity, and it will also avoid the CO 2 emission during the course of the substituted electricity generation and carry out the greenhouse gas (GHG) emission reduction. The proposed project can reduce an amount of 189,457t CO 2 emission annually. The construction of the proposed project is in compliance with the choice of China energy industry s prior area, it will facilitate the sustainable development in the host party country and the local place in the following aspects: Increasing power supply to meet the stressing local power demand; Increasing the employment opportunity, the proposed project will offer 54 jobs; Mitigating GHG emission comparing to the normal commercial scenario; Mitigating emission of other pollution comparing to normal power generation manner; A.3. Project participants: The participants of the proposed project include: Table1. Information of project participants

4 CDM Executive Board page 4 Name of Party involved (*) ((host) indicates a host Party) People s Republic of China (Host) Private and/or public entity(ies) project participants (*) (as applicable) Sichuan Ebian Jinguang Baxi Electricity Development Co. Ltd (project owner) Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) Netherlands MGM Carbon Portfolio, S.a.r.l No (*) In accordance with the CDM modalities and procedures, at the time of making the CDM-PDD public at the stage of validation, a Party involved may or may not have provided its approval. At the time of requesting registration, the approval by the Party(ies) involved is required. Detailed contact information on the Participants and other Parties are provided in Annex 1. No A.4. Technical description of the project activity: A.4.1. Location of the project activity: A Host Party(ies): People s Republic of China A Region/State/Province etc.: Sichuan Province A City/Town/Community etc: Ebian county, Leshan city A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): The proposed project lies on Guanliao River which passes through Haqu Township and Lewu Township, Ebian Yi Nationality Autonomous County, Sichuan Province. Its geographical coordinate is: Longitude E, Latitude N.The plant site is at the bottomland upstream from the joint of Guanliao River and Baxi Gully. Tail race of the plant is discharged into the Xihe hydropower station which has already been in use to generate electricity. Main dam and auxiliary dam are located on Guanliao River and its branch Baxi Gully respectively. The front of the main dam, about 9km upper from the joint of Baxi Gully and Guanliao River, joins with the reservoir of planed Xingfu power station. The auxiliary dam is located in Baxi Village in Haqu Township. The power station is 58km far from Ebian County, which is about 200km from Chengdu, the provincial capital city of Sichuan. Traffic in this river basin in which the project lies is convenient, with 103 provincial highway (concrete highway) from Ebian to Meigu passing through. The location of the project is shown in the map of Figure1.

5 CDM Executive Board page 5 Figure 1 Geography Location of Baxi Hydro Power Project

6 CDM Executive Board page 6 A.4.2. Category(ies) of project activity: The project falls within the sectoral scope1: Energy Industries (renewable/non-renewable sources). A.4.3. Technology to be employed by the project activity: The proposed project has a water-diversion system with the function of daily regulation. The back water in the front of the main dam is 0.98km long with the maximum depth of 13.5m. The reservoir induced by the main dam has a normal water level of 1626m, average surface width of 53m, surface area of 5.63ha and total capacity of 0.35 million m 3. The backwater in front of the auxiliary dam at its normal water level of 1631m is only 104m long with the maximum depth of 3.5m. Hence no reservoir inundation will be induced due to the auxiliary dam. The water-diversion system consists of water inlet, main water intake tunnel, auxiliary water intake tunnel, surge tank, and pressure penstock. Both the main intake tunnel and the auxiliary intake tunnel, which refer to the tunnels used to take water from the main and the auxiliary sluices respectively, are pressure penstock. The main intake tunnel is m long, with the vertical buried depth of m and the horizontal buried depth of m. The plant construction consists of main plant buildings, auxiliary plant buildings, main step-up station, switch station, tail water channel, highway and turnaround, etc. It is proposed that two francis turbines, two generating sets and one 70t/20t bridge crane will be installed. It is proposed that the project will use 10km transmission line of 110kv voltage grade to get connected to Yiwu substation which is connected to the power grid of Jinyang company. The grid of Jinyang company is connected to Sichuan Power Grid which is a part of Central China Power Grid. Hence finally the proposed project will be connected to Central China Power Grid. As the self-providing power station of JinGuang Chemical Corporation, the electricity generated by the proposed project will mainly be supplied though the existing power grid to the yellow phosphorus factory and the calcium carbide factory which need a great deal of energy in their production process. The proposed project will be operated with an operating mode of that the station will be connected to the grid but the generated electricity will not be sold to the grid. So it will replace a certain portion of electricity which will be supplied by Central China Power Grid in the absence of the proposed project. The proposed project will employ two domestic Francis turbines (HLA542-LJ-160, power rating 20W/ m 2 ) and two domestic generating sets (SF20-10/325, power rating 20W/ m 2 ). No technology will be transferred. A.4.4 Estimated amount of emission reductions over the chosen crediting period:

7 CDM Executive Board page 7 In the first 7 crediting years, GHG emission reduction of 1,326,197 tco2e will be accomplished by Baxi Hydro Power. The first crediting period (Jul.1 st, 2008-Jun.30 th,2015) Years Annual estimation of emission reductions in tonnes of CO 2 e 2008(July-December) 94, , , , , , , (January-June) 94,728 Total estimated reductions (tonnes of CO 2 e) 1,326,197 Number of the crediting years 7 Total number of crediting years 21 Annual average over the crediting period of estimated reductions (tonnes of CO 2 e) 189,457 A.4.5. Public funding of the project activity: No official funds of Parties included in Annex I have been involved in the project. SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline methodology applied to the project activity:

8 CDM Executive Board page 8 Baseline and monitoring methodology ACM0002: Consolidated baseline and monitoring methodology for grid-connected electricity generation from renewable sources (ACM0002/Version 06, Sectoral Scope: 01, 19 May 2006). The detailed information sees also on methodologies/approved. Tool for the demonstration and assessment of additionality (Version 03,EB29.) thodologies/pamethodologies/approved.html B.2 Justification of the choice of the methodology and why it is applicable to the project activity: Hydroelectricity is a substituting technical choice of fossil fuel to produce electric power. Therefore, the proposed project will adopt methodology ACM0002 approved by EB to identify the project s baseline and calculate the GHG emission reductions carried out by the project. The project meets the prescriptive utilization scope of ACM0002, because: The project utilizes renewable energy generating electric power and connects to grid; The project is a power station with its power density of W/m 2 which is greater than 10W/m 2 ; The project activity does not involve switching from fossil fuels to renewable energy at the project activity site; The geographic and system boundaries of Central China Power Grid are clearly identified and information on the characteristics of this grid at aggregate level is available 1. B.3. Description of how the sources and gases included in the project boundary The boundary of the project includes hydropower equipment and the power plants physically connected to Central China Power Grid, the power grid will be affected by the project activities. According to the notice of baseline emission factor of Chinese power grid set forth by the committee of development and reform of PRC (local DNA), central China power grid is a regional power grid in China, composed by 6 provincial power grid which include Henan province, Hubei province, Hunan province, Jiangxi province, Sichuan province and Chongqing city. Baseline Project Activities Source of Emission Gas Instruction Into-grid CO 2 Included Main emission source Power CH 4 Excluded Excluded for simplifying; being conservative Generation N 2 O Excluded Excluded for simplifying; being conservative It s a hydropower station with the power density Project CH 4 Excluded greater than 10W/m 2 Activity CO 2 Excluded The project is no emission source of CO Emission 2 N 2 O Excluded Excluded for simplifying; being conservative B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: Plausible and credible alternatives available in the absence of the proposed project that can provide outputs or services comparable to the proposed CDM project activity include: 1 Notice of baseline emission factor of Chinese power grid. National Climate Change Coordination Committee of the National Development and Reform Commission of PRC (local DNA). Dec. 15 th,

9 CDM Executive Board page 9 (1) Implementation of the proposed project not as a CDM project; (2) Construction of a fuel fired power plant with equivalent annual electricity generation; (3) Construction of a power plant using other sources of renewable energy with equivalent annual electricity generation; (4) Provision of equivalent electric power by the grid where proposed project is connected into. The following is the feasibility analysis of the above four alternatives: Among the alternatives of grid-connected renewable energy power generation techniques in China, utilization of power-generation from wind energy which is relatively better developed is limited by its comparatively high cost, solar energy utilization technology is currently still not developed enough to be used as an alternative to the proposed project, power-generation from biomass fuels is also not feasible due to the lack of abundant biomass material which is required by that technology. Therefore judging from technological feasibility, the alternative (3) is not feasible. Notice of General Office of the PRC State Council on Strictly Prohibiting Constructing Thermal Power Units with the Capacity under 135MW (state council public notice [2002] NO.6) publicly proclaimed to prohibit constructing fossil fuel power plants with the capacity under 135MW. Construction of coal-fired power plant with single unit capacity lower than 100MW (included) is also strictly controlled according to the Temporary criteria for construction of small scale coal-fired power plant. Therefore, constructing a thermal power plant with the capacity of or lower than 100MW as alternative to the proposed project is not in line with the national rules. The alternative (2) is also unaccessible. The current installation capacity and the newly installed capacity of Central China Power Grid are in compliance with the national laws and regulations, and they are economical and feasible. Therefore, alternative (4) is feasible. From the aspect of financial attractiveness, the geographic position of the project is remote, and the geological condition is comparatively bad, and the project investment risk is comparatively high. So if the project is implemented not as a CDM project its total investment IRR is 6.82%, which is much lower than the baseline IRR (10%) of small-scale hydropower project, detailed analysis is shown in the investment analysis of section B.5. So the alternative (1) is inaccessible. Hence, the provision of equivalent amount of annual power output by Central China Power Grid where the project is connected into is the project s baseline scenario. 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): Step 1. Identification of alternatives to the project activity consistent with current laws and regulations Sub-step 1a. Identify alternatives to the project activity:

10 CDM Executive Board page 10 Plausible and credible alternatives available to the project that provide outputs or services comparable with the proposed CDM project activity include: (1) Implementation of the proposed project not as a CDM project; (2) Construction of a fuel fired power plant with equivalent annual electricity generation; (3) Construction of a power plant using other sources of renewable energy with equivalent annual electricity generation; (4) Provision of equivalent electric power by the grid where proposed project is connected into. As discussed in section B.4 it is not feasible construct power plant utilizing other types of renewable energy resources, so alternative (3) is not the baseline scenario of the proposed project. Sub-step 1b. Enforcement of applicable laws and regulations: According to the electric power rules in China, fossil fuel power plant with the capacity below 135MW is prohibited to construct if the district is covered by a large power grid 2, and thermal power units with the single-unit capacity below 100MW are strictly controlled to be constructed 3. Therefore, constructing a fossil fuel power plant as a baseline alternative will violate the requirements of national laws and regulations. The alternative (2) is not feasible. Hence alternative (1), implementation of the proposed project not as a CDM project, is in compliance with current laws and regulations in China. Alternative (4), provision of equivalent electric power by the grid where proposed project is connected into, is also in compliance with current laws and regulations in China. Step 2. Investment Analysis Sub-step 2a. Determine appropriate analysis method Tools for the demonstration and assessment of additionality suggest three analysis methods, i.e. simple cost analysis (Option I), investment comparison analysis (Option II) and benchmark analysis (Option III). Since the proposed project will obtain the revenues not only from the electricity sales but also from CDM, the simple cost analysis method (Option I) is not appropriate. Investment comparison analysis method (Option II) is applicable to projects whose alternatives are also investment projects. Only on such basis, comparison analysis can be conducted. The alternative baseline scenario of the project is the Central China Power Grid rather than new investment projects. Therefore the option II is not an appropriate method for the decision-making context. The project will use benchmark analysis method based on the consideration that benchmark total investment IRR of the power sector is available. Sub-step 2b. Benchmark Analysis Method (Option III) With reference to Economic Evaluation Code for Small Hydropower Projects issued by the Ministry of water resource of PRC, the IRR of small hydropower projects total investment should not be lower than 10%. On the basis of above benchmark, calculation and comparison of financial indicators are carried out in sub-step 2c. 2 Notification from State Council on Prohibiting Constructing Thermal Power Units with the Installation Capability under135 Thousand KWh, Temporary Rules on Small-scale Thermal Power Units Construction Management (August, 1997).

11 CDM Executive Board page 11 Sub-step 2c. Calculation and comparison of financial indicators (1) Basic parameters for calculation of financial indicators Based on the feasibility study report of the Project, basic parameters for calculation of financial indicators are as follows: Installed capacity: 40MW Estimated annual grid-electricity: 200.6GWh Project lifetime duration: 33years Total static investment: RMB 230,57 million Yuan Prospective pool purchase price: RMB 0.176Yuan/kWh (excluding VAT) Taxes: VAT rate 17% (not included in pool purchase price); rate of tax for city construction and maintenance is 5% of VAT, education tax is 3% of VAT; income tax is exempted in the first 2 years of operation and levied at an favourable rate of 15% O&M costs: Depreciation rate 3.9%, overhaul cost rate 1.0%, insurance rate 0.25%, average annual salary for employee 8000 RMB Yuan per capita, sum of welfare, housing fund and labor insurance costs is 41% of the total amount of employee salary; material cost 5RMB Yuan per kilowatt per annum, reservoir maintenance cost 0.001RMB Yuan per kilowatt per annum-hour, other costs 24RMB Yuan per kilowatt per annum Crediting period: 7years (renewable) Expected CERs price: 10.3 US$/t CO 2 e (Exchange rate: 1:8) (2) Comparison of IRR for the proposed project and the financial benchmark IRR of the Project, with and without CDM revenues, are shown in Table 2. As indicated in table2, without CDM revenue, the IRR of total project investment is 6.87%, which is much lower than 8.0%.The proposed project can be considered as financially unattractive to investors. It is infeasible in business. With the CDM revenue (calculated as 10.3 US $/t CO 2 e, 7 3years crediting period), IRR of the project will be significantly improved. Total investment IRR will be brought up by more than 3 percent. Therefore, the project with CDM revenue can be considered as financially attractive to investors, and the business feasibility will also be improved. Table 2. Financial indicators of Baxi Hydro Power Project IRR (total investment, benchmark=10%) Without CDM 6.87% With CDM 10.89% Sub-step 2d. Sensitivity analysis For the proposed project, the following financial parameters were taken as uncertain factors for sensitive analysis of financial attractiveness: 1) Total static investment 2) Pool purchase price (not including VAT) 3) Annual O&M cost

12 CDM Executive Board page 12 The impacts of total investment, pool purchase price and annual O&M cost of the project on IRR of total investment were analyzed. Provided the three parameters fluctuate within the range of ±10%. The corresponding impacts on IRR of the project s total investment are shown in Table 3 and Figure 3 for details. Table 3 IRR sensitivity to different financial parameters of the project (total investment, without CDM) -10% -5% 0 +5% +10% Total static investment 7.78% 7.30% 6.87% 6.46% 6.08% Annual O&M cost 7.09% 6.98% 6.87% 6.75% 6.64% Pool purchase price (excluding VAT) 5.69% 6.29% 6.87% 7.42% 7.95% 8.0% 7.0% IRR=6.8 IRR 6.0% Total investment Annual O&M cost Pool purchase price (not VAT) 5.0% -10% -5% 0% 5% 10% Figure 3. IRR sensitivity to different financial parameters of Baxi Hydro Power Project (total investment, without CDM) When the three financial parameters above fluctuated within the range from -10% to +10%, the IRR of total investment of the project without CDM revenue is never greater than 10% which is the benchmark IRR. Therefore the conclusion of the investment analysis is not affected by the sensitivity analysis. Step 4 Common practice analysis Sub-step 4a. Analyze other activities similar to the proposed project activity: Projects completed or under construction with the installed capacity ranging from 20MW to 60MW in Sichuan Province after year of 2000 include: name Installed capacity MW Starting date comments

13 CDM Executive Board page 13 Sichuan Xingfu Hydropower Developing CDM 4 Sichuan Jinyan Hydropower Developing CDM 4 Sichuan Ejingxiang Hydropower Developing CDM 4 Sichuan Yulinqiao Hydropower Developing CDM 4 Sichuan Sankeshu Hydropower Developing CDM 4 Sichuan Yanba Hydropower Developing CDM 4 Sichuan Ganluo Kaijianqiao Hydropower Developing CDM 4 Sichuan Miyaluo Hydropower Developing CDM 4 Sub-step 4b. Discuss any similar options that are occurring: These similar hydro powers with similar scale and age will not change the additionality of the proposed project. It is because that: All the hydro power stations under construction in Sichuan province are actively seeking to be carried out as CDM projects or have been confirmed by local DNA as CDM projects. Therefore, the additionality of the proposed project is not affected. To summarize, the proposed project has additionality required as CDM project. B.6. Emission reductions: B.6.1. Explanation of methodological choices: The emission reduction ER y generated by the proposed project during a given year y is the difference between the baseline emission (BE y ) and the sum of project emission (PE y ) and emission induced by leakage (L y ), as calculated as follow: ERy = BEy PEy Ly (1) Calculating method of necessary Project Emission (PE y ), emission from leakage (L y ) and baseline emission (BE y ) for derterming emission reductions (ER y ) will be instructed as following. Step 1: Estimate the Emission of All Kinds of GHG Sources in the Project Boundary (PE y ): According to the consolidated baseline and monitoring methodology ACM0002 for the uncertainty on science, electric power density (W/m 2, electric power density = installation capacity/ area of the reservoir) is required to decide whether the hydropower project is consistent with the requirement of the CDM project. According to its feasibility report, the proposed project has an installed capacity of 40MW with the reservoir of 5.63 ha. So its average power density is W/m2 which is greater than the threshold of 10W/m2. So under the circumstance of current methodology the CH4 emission from project activity can be ignored, i.e. PE y =0. Step 2: Estimate the Leakage: According to ACM0002, leakage is not considered in the project activity, i.e. L y = 0. 4 List of CDM project approved by National Development and Reform Commission (NDRC) of China (DNA of China) till June 12 th,

14 CDM Executive Board page 14 Step 3: Estimate the Baseline Emission (BE y ): The baseline emission of the proposed project (BE y ) could be calculated by the following formula: BE = EG EF y y y (2) Where, BE y is the GHG emission generated by substitutional electric power from Central China Power Grid in the absence of the proposed project activity. EF y is the emission factor of Central China Power Grid. The detailed calculation process of EF y are as following: Substep1. Calculation of the Operating Margin Emission Factor (EF OM,y ) Methodology ACM0002 provides the following four options to calculate Operating Margin Emission Factor (EF OM,y ): (a) The Simple Operating Margin Emission Factor (S-OM); (b) The Adjusted Simple Operating Margin Emission Factor; (c) Dispatch data analysis Operating Margin Emission Factor; (d) The average Operating Margin Emission Factor. In China the detailed running dispatch data of the connected-grid power plants required for option (c) is not available. Therefore, the option (c) is unaccessible. According to the historical generating capacity data in last 5 years of Central China Power Grid into which the proposed project will be connected, power generation from hydropower and other renewable energy accounted for a proportion far less than 50%(according to China Electric Power Yearbook, average proportion of is 44%), so it meet the condition that the proportion of low-operating cost/must run power plants is less than 50% of the total grid generation. Therefore, the option (a) of Simple Operating Margin Emission Factor could be employed on calculating the project s Operating Margin Emission Factor(EF OM,y ) as following: Where, EF OM Fi, j, y COEFi, j, y, simple, y i, j = GEN (3) j j, y F i,j, y is the amount of fuel i (in a mass or volume unit) consumed by power plant sample j in year(s) y, j refers to the power sources delivering electricity to the grid, not including low-operating cost and must run power plants, and including imports to the grid; COEF i,j y is the CO 2 emission coefficient of fuel i (tco 2 /mass or volume unit of the fuel), taking into account the carbon content of the fuels used by power plant sample j and the percent oxidation of the fuel in year(s) y, and GEN j,y is the electricity (MWh) delivered to the grid by source j.

15 CDM Executive Board page 15 According to the Formula (4), CO 2 emission coefficient COEF i is obtained as: Where, COEF i = NCVi EFCO 2, i OXID i (4) NCV i is the net calorific value (energy content) per mass or volume unit of a fuel i, country-specific values is employed; OXID i is the oxidation factor of the fuel (see the 2006 Revised IPCC Guidelines for default values); EF CO2. i is the CO2 emission factor per unit of energy of the fuel i (tco 2 /TJ), the default value provided by IPCC is employed; In case of a power-grid with net power import, if the specific power providing plant can be clearly identified the emission factor of the specific power plant should be used in the calculation, and if the identification is not practical the emission factor of the exporting grid should be used. According to the calculation of DNA of China, Operating Margin Emission Factor (EF OM,y ) of Central China Power Grid with current generation structure is tCO 2 /MWh. Substep2. Calculation of the Build Margin Emission Factor (EF BM,y ) According to the methodology ACM0002, Formula (5) is adopted to calculate baseline Build Margin Emission Factor. Where, EF BM Fi, m, y COEFi, m, y, y i, m = GEN (5) m m, y F i,m,y is the amount of fuel i (in a mass or volume unit) consumed by power plant sample m in year(s) y, m refers to the power sources delivering electricity to the grid, not including low-operating cost and must run power plants, and including imports to the grid; COEF i,m,y is the CO 2 emission coefficient of fuel i (tco 2 /mass or volume unit of the fuel), taking into account the carbon content of the fuels used by power plant sample m and the percent oxidation of the fuel in year(s) y, and GEN m,y is the electricity (MWh) delivered to the grid by source m. Project participants shall choose between one of the following two options to calculate Build Margin Emission Factor (EF BM,y ): Option 1: Calculate the Build Margin emission factor EF BM,y ex-ante based on the most recent information available on plants already built for sample group m at the time of PDD submission. The sample group m consists of either the five power plants that have been built in most recent, or the power plant capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. Project participants should use from these two options that sample group that comprises the larger annual generation.

16 CDM Executive Board page 16 Option2. For the first crediting period, the Build Margin emission factor EF BM,y must be updated annually ex-post for the year in which actual project generation and associated emissions reductions occur. For subsequent crediting periods, EF BM,y should be calculated ex-ante, as described in option 1 above. Sample groups choice is similar to the Option 1. The proposed project chooses the Option 1, i.e. calculating the Build Margin emission factor EF BM,,y exante. However, under the current circumstance of China, the power plants take the Build Margin data as important business data and will not let them published. Therefore, it is difficult to get the data of five power plants that have been put into operation most recently or the newly built power plant capacity additions in the electricity system that comprise 20% of the system generation. In allusion to the situation, CDM EB approves the following methodology deviation 5 : (1) Estimating power grid s Build Margin Emission Factor according to the new increasing capacity in the past 1~3 years; (2) Substituting installation capacity with annual power generation to estimating weighted, and suggesting to take the most advanced commercial technology efficiency level of provincial/ regional/ national power grid as a kind of conservative approximation. Because it is impossible to divide the newly installed thermal capacity into that utilize coal, oil and gas as energy resources separately as they re integrated in available statistical data. Therefore the calculation is carried out using following method: first the specific proportions of CO 2 emission induced by solid, liquid and gaseous fuels in local grid are calculated according to most recently available energy balance data; second the emission factor of the thermal plants in local power grid is calculated using the emission factors of the most efficient commercially applied techniques of each fuel type and the proportion acquired above as weighting factor; finally the build margin emission factor (EF BM,y ) is calculated by multiply the emission factor of the thermal plants by the proportion of newly-installed thermal capacity in the total newly-installed capacity of the grid. The detailed procedure and formula are as the following: 1. Calculate the specific proportions of CO 2 emission induced by solid, liquid and gaseous fuels in local grid with the following formulas: λ Coal = F COEF i, j, y i, j i COAL, j Fi, j, y COEFi, j i, j (6) λ Oil = F COEF i, j, y i, j i OIL, j Fi, j, y COEFi, j i, j (7) 5 EB guidance for Request for guidance: Application of AM0005 and AMS-ID in China, : Request for clarification on use of approved methodology AM0005 for several projects in China.

17 CDM Executive Board page 17 λ Gas = i GAS, j i, j F F COEF i, j, y i, j COEF i, j, y i, j (8) Where, F is the amount of fuel i (in tce) consumed by province j in year(s) i,j,y y; COEF i,j is the emission factor of fuel i (in tco 2 /tce) as calculated from the carbon content and oxidation factor of fuel i consumed in the year(s) y; COAL, OIL and GAS refer to the solid, liquid and gaseous fuel. 2. Calculate the emission factor of thermal plants EF = λ EF + λ EF + λ EF (9) Thermal Coal Coal, Adv Oil Oil, Adv Gas Gas, Adv Where, EF Coal, Adv, EFOil, Adv and EF Gas,Adv refers to the emission factor of the most efficient commercially applied techniques utilizing coal, oil and gas to generate electricity. 3. Calculate the EF BM,y of the grid EF BM, y CAP Thermal CAP Total = EF (10) Thermal Where, CAP Total is the total newly-installed capacity and CAP Thermal is the newly install thermal capacity. According to the calculation of DNA of China the build margin emission factor of Central China Power Grid is tco /MWh. 2 Substep3. Calculate the Baseline Emission Factor (EF y ) According to methodology ACM0002, the Baseline Emission Factor (EF y ) was calculated as a combined margin (CM), consisting of the weighted average of both the resulting OM and the resulting BM as following: EF y = ωom EFOM, y + ωbm EFBM, y (11) Where, the weig hts ω OM and ω NM, by default, are 0.5, i.e. the weights of Operating Margin Emission Factor and Build Margin Emission Factor are equal. According to the formula, the Baseline Emission Factor is obtained to be:

18 CDM Executive Board page 18 EF CM, y = = tco2 / MWh. B.6.2. Data and parameters that are available at validation: The data and parameter used in the baseline calculation as follow, the detailed data are listed in Annex3. EF OM,y 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: tco 2 /MWh Operating Margin Emission Factor Data provided by DNA of China Data provided by DNA of China is adopted Update accordingly if renewed DNA data is published EF BM,y 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: tco 2 /MWh Build Margin Emission Factor Data provided by DNA of China Data provided by DNA of China is adopted Update accordingly if renewed DNA data is published EF CO2,i Data / Parameter: Data unit: Description: Source of data used: Value applied: As in Annex 3 Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: tc/tj Emission factor of fuel i IPCC report Data provided by DNA of China is adopted Update accordingly if renewed DNA data is published Data / Parameter: OXID i

19 CDM Executive Board page 19 Data unit: % Description: Carbon oxidation rate of fuel i Source of data used: IPCC report Value applied: As in Annex 3 Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: Data provided by DNA of China is adopted Update accordingly if renewed DNA data is published Data / Parameter: NCV i Data unit: MJ/t or MJ/km 3 Description: Net heat value of fuel i Source of data used: Statistical year book of Energy, China Value applied: As in Annex 3 Justification of the choice of data or description of measurement methods Data provided by DNA of China is adopted and procedures actually applied : Any comment: Update accordingly if renewed DNA data is published B.6.3 Ex-ante calculation of emission reductions: The PDD apply ex-ante calculation of emission reductions. According to B.6.1, the emission reduction of the project activity in the proposed year y is the difference between the baseline emission and the project emission and emission from leakage. The calculation formula is as following: ER y = BE y PE y Ly (12) According to B6.1, under the condition of neglecting the leakage during the construction period, the emission from project activity(pe y ) and emission from leakage within the project boundary (L y ) both equal zero. Therefore, the emission reduction of the proposed project is numerically equal to the baseline emission (BE y ), i.e.: ER (13) y = BE y = EG y EF y Where

20 CDM Executive Board page 20 BE y, which is numerically equal to the annual emission reduction of the proposed project, is the emission from Central China Power Grid in the generation course of the electricity amount equals that of the proposed project (EG y ) as baseline scenario in the absence of proposed project implemented as a CDM project induced. Accord ing to the calculation of the combined margin baseline emission factor of the power grid in section B.6. 1, the baseline emission factor in the year of 2005 is tco 2 e/mwh. According to primary designed report, the annual power generation of the proposed project is estimated to be 200.6GWh. The annual emission reduction of the proposed project, which is numerically equal to the annual baseline emission (BE y ), is estimated to be 189,457tCO 2 e. Therefore, the ex-ante estimation of the project s annual emission reductions is 189,457tCO 2 e. B.6. 4 Summary of the ex-ante estimation of emission reductions: The estimation of net emission reductions induced by the project activity s in first 7 years crediting period (Jul.1st, 2008-Jun.30th, 2015) is shown in the following table. Ex-ante Estimation of emission reduction by Baxi Hydro Power Year Estimation of baseline emissions (tco 2 e) Estimation of the project activity emissions (tco 2 e) Estimation of leakage (tco 2 e) Estimation of emission reductions (tco 2 e) , , , , , , , , , , , , , , , ,728 Total emission reductions 1,326, ,326,197 (tco 2 e) B.7 Application of the monitoring methodology and description of the monitoring plan: B.7.1 Data and parameters monitored: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: EG y MWh Total power generation produced by the proposed project annually Ammeter 224,000 Measured by ammeter The readings of ammeter, certification document can be provided by local power grid.

21 CDM Executive Board page 21 Any comment: 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 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: 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 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: Recording ammeter data EG in MWh Power consumed by the power station itself Ammeter 23,400 Measured by ammeter The readings of ammeter Recording ammeter data EG net MWh Net power generation supplied to grid annually Ammeter 200,600 Measured by ammeter The readings of ammeter; rechecking with the electric power sale invoice of the power grid into which the project connects. Rechecking the data on the purchasing party B.7.2 Description of the monitoring plan: The monitoring plan will be responsibly implemented by the project owner, it will ensure that the emission reductions of the project during crediting period are calculated correctly. 1. Monitoring organization The project owner will set up a special CDM group to take charge data collection, supervision, verification and recordation. The group director will be trained and supported in technology by CDM consultation, the organization of the monitor group as follows:

22 CDM Executive Board page 22 Represented CDM group director CDM consultation data recorder meter supervisor data check 2. Monitoring data Because the baseline emission factor is ex-ante calculated, net electricity connected to grid, clinker production and energy consumption of the project are mostly monitoring data. 3. Monitoring equipment and installation Power measurement equipment installation should be collocated according Technique Management Regulation of Power Measurement Equipment (DL/T , issued by State Economic and Trade Commission on Nov.03, 2000 and implemented on Jan.1, 2001). Before the power measurement equipment operation, the project owner and power grid company should check and accept according Technique Management Regulation of Power Measurement Equipment (DL/T ). 3 ammeters should be installed for the proposed project. The 1 st ammeter (total generation ammeter) will be installed at the power export side of the generating sets to measure the total electricity generated. The 2 nd ammeter (internal ammeter) will be installed before the transformer providing electricity to the hydro power station to measure the electricity consumed by the station itself. The 3 rd ammeter (output ammeter) will be installed to measure the net power output to the grid at the export side of project substation through which the proposed project will get connected into Sichuan Power Grid. The difference between the total generation ammeter and internal ammeter is numerically the same to the net power output of the proposed project, which can be used to check with the reading of the output ammeter as a reference. 4. Data collection The steps of monitoring electricity connected to grid as follows: (1) The project owner should record readings of every ammeters everyday; (2) The project owner and power grid company should read data from the output ammeters at the end of every month; (3) The power grid company will offer net electricity supplied to grid and offer purchase invoice;

23 CDM Executive Board page 23 (4) The project owner should offer reading record of ammeters and invoice copy piece to verification people of DOE. If the measure error of any ammeter exceeds the acceptable error range at any month or if any ammeter can t function normally, net electricity supplied to facility should be confirmed as follow: (1) The local power grid company offer data record of net output power (output ammeter reading) confirmed by both the project owner and the local power grid company. Certification document will be also required; OR (2) The project owner offer data record of total generated power (total generation meter reading) and that self-consumed by the station (internal ammeter reading) confirmed by both the project owner and the local power grid company. (3) If the data of measure ammeter reading and internal ammeter reading that can be confirmed isn t available, the project owner offer the check ammeter reading data confirmed by both the project owner and the local power grid company as the net output data. (4) If the project owner and power grid company can t compass consistent idea about the method to estimate reading, it should be arbitrated according to conventional process to confirm consistency of reading estimated. 5. Calibration The project owner should sign a agreement with power grid company that regulated quality control process of measure and adjust to ensure measure precision of electricity connected to gird. Seasonal ammeter inspection and locale check should be implemented according to standard and regulations of state electric power industry. After inspection and locale check, ammeters must be sealed. The project owner and power grid company should inspect and seal together, any one can t remove seal or modify the ammeter when other one (or its representative) is absent. All of installed ammeters should be tested by measure inspection institution entrusted by the project owner and power grid company together, after 10 days of some things happened as follow: (1) Measure error of measure ammeter and check ammeter is big than accepted error; (2) Ammeter has been repaired as parts trouble of ammeter. 6. Data management The CDM group appointed by the project owner should keep monitoring data in the electron archives at every month end, electron document should be copy by CD and printed to save as letter document. The project owner should keep electricity sell/purchase invoice. Letter documents, as map, form, EIA report etc, should use with monitoring plan to check authenticity of data. In order to expediently obtain involved document and information of the project by verification people, the project owner should offer index of project document and monitoring report. All of the letter data and information should be keep in the archives by CDM group, all of the document should have one copy backup. All of the data should be saved after 2 years of crediting period.

24 CDM Executive Board page 24 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 study of the baseline and the monitoring methodology was completed on 16 July The key individuals involved in the baseline study include: 1. Mr. Li Ming, Leshan Science and Technology Bureau of Sichuan Province. Shizhong District, No.176, East Road of Boyang, Leshan City, Sichuan Province, Tel: (86833) Mr. Li Wangfeng, Urban Planning & Design Institute of Tsinghua University. Room 407, Block B, Xueyan Building, Tsinghua University, Beijing, Tel:(8610) Mr. Yang Yongsen, Urban Planning & Design Institute of Tsinghua University. Room 407, Block B, Xueyan Building, Tsinghua University, Beijing, Tel:(8610) The above individuals or organizations are not the project participants.

25 CDM Executive Board page 25 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: 30/6/2008 C.1.2. Expected operational lifetime of the project activity: 33 years C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period 1/7/2008 C C years C.2.2. Fixed crediting period: Starting date of the first crediting period: Length of the first crediting period: Not applicable Not applicable C C Starting date: Length:

26 CDM Executive Board page 26 SECTION D. Environmental impacts D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: The environmental impact assessment report of the proposed project has been confirmed by Environmental Protect Agency of Sichuan Province. The environmental impacts induced in the construction phase and the operation phases of the proposed project are analyzed respectively as following: Construction Phase Soil erosion Certain degree of soil erosion may occur during the course of the construction of the proposed project.in order to avoid increased soil loss from the project construction, appropriate and efficient prevention measures are taken. Engineering measure and biologic measure are combined to revive vegetation and natural sight, and to prevent soil loss. Impact on the Quality of Surface Water A small quantity of waste water will be discharged during the construction period in low pollutant concentration. The proposed project takes the approach of treating production waste water with the settling ponds and discharging it after reach the discharging standard. Waste water from daily life will be treated with III grade cesspool and used for irrigation of dry-land nearby and antiseptic will be applied if possible. Therefore no significant impact on surface water quality will be induced during the construction period. Air pollution A little air pollutant will be emitted into the air during the construction period. Measures to reduce dust, remove dust and restrict exhaust emission of the equipment will be taken to reduce the air pollutant emission during the construction period. Therefore no significant impact on local air quality will be induced and the limited impact will not last after the construction. Noise During the period of construction, the noises mainly come from construction activities. Due to that the construction area will be far enough from the residential area nearby. Almost no impact will be caused by the noise during the construction period upon local citizen. Solid Waste Solid waste produced in the construction period mainly comes from construction waste and living waste of construction workers. All kinds of living waste will be collected in time and be buried after being burnt in appropriate area, so it will not affect much on surrounding environment. Dumping sites will be set up, at the same time, the run-off pollution-proof in dumping sites during the construction period will also be cared. After the dumping sites have been eliminated, the area will be renovated and the vegetation will be recovered. Dumped soils from construction will be reused as useful resource.

27 CDM Executive Board page 27 Operation Phase Ecological impact The proposed project, which is a run-off hydro power station, will utilize tail water from upstream for electricity generation. The water level of the river will be elevated to a small extent as a result of the project. Almost no impact will be put upon local natural ecological environment and no impact will be induced on the living condition of local resident. Impact on the Quality of Surface Water After the construction is finished, there will not be any industrial pollution source near site of the proposed project. And the amount of waste water from daily living of local resident is not going to increase. So amount of pollutant discharged into local water body will not be increased due to the proposed project and consequently surface water quality will not get worse. Impact on Aquatic animals After the construction of the reservoir, the dam will obstruct the backtrack to the upstream for some fish. But on the other hand the reservoir area will be enlarged which will be beneficial for fish living. Special zones for fish to live in will also be set in the reservoir. So fishes adapted to the river condition can go on living in the river and no impact will be induce for aquatic animals. Impact on terrestrial animals and plants The proposed project will not substantially affect the types, amount and composition structure of the wildlife in the reservoir area during the operation period. Waste water The proposed project itself will not lay any impact on water quality due to that it only utilize clean energy resource. The waste water from daily living of the employee working for the project will just be in small quantity and it will be treated and disinfected before it s discharged on the condition that it meets the standard required. So the proposed project will not induce impact on surface water quality during the operation period. In conclusion, environmental impacts arising from the proposed project are considered insignificant. The insignificant impacts on local environment and residents living condition could be solved by sorts of protection measures. 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: According to the report of environment impact assessment and the ratification of relative government departments, the project s environment impacts are not considered significant. No instruction is needed. SECTION E. Stakeholders comments