CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) Version 03 - in effect as of: 22 December 2006 CONTENTS

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1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) Version 03 - in effect as of: 22 December 2006 CONTENTS A. General description of the small scale 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 proposed small scale project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring Information 1

2 Revision history of this document Version Date Description and reason of revision Number January 2003 Initial adoption 02 8 July 2005 The Board agreed to revise the CDM SSC PDD to reflect guidance and clarifications provided by the Board since version 01 of this document. As a consequence, the guidelines for completing CDM SSC PDD have been revised accordingly to version 2. The latest version can be found at < December The Board agreed to revise the CDM project design 2006 document for small-scale activities (CDM-SSC-PDD), taking into account CDM-PDD and CDM-NM. 2

3 SECTION A. General description of small-scale project activity A.1 Title of the small-scale project activity: Energocor small-scale hydro bundled project in Armenia 02/07/2009, Version 02 A.2. Description of the small-scale project activity: The proposed project activity involves implementation and operation of 5 small hydroelectric grid connected renewable energy projects with total capacity 6.81 MW. The SHPPs will be located Gegharkunik and Vayots Dzor regions of Armenia. The projects are promoted by Energocor LTD - the bundling agent for the project. The purpose of bundling the nine project activities is to reduce transaction costs and documentation preparation costs for each of the small scale power plants. The electricity generated by the small hydropower plants will be sold to the Armenian Electricity Network (AEN). The Table 1 shows the ownership, location capacity and annual generation of Small Hydropower Plants. SHPP name Location Ownership Installed Annual generation. mln 1. Ayrk-1 SHPP Gegharkunik region. irrigation canal on Ayrk river 2. Ayrk-2 SHPP Gegharkunik region. irrigation canal on Ayrk river 3. Avazan SHPP Gegharkunik region. Avazan river 4. Erik SHPP Gegharkunik region. Getik River 5. Jermuk-2 SHPP Vayots Dzor region. Arpa river Lusakunk LTD Lusakunk LTD Lusakunk LTD Erik SHPP LTD Jermuki Hydrotech LTD capacity. MW kwh Total Purpose of the project activity The main purpose of the project activity is generation of clean hydroelectric energy and contribution to climate change mitigation efforts. Contribution to sustainable development The project will generate renewable and clean electricity and thus, contributes to sustainable development which includes: 1. Social sustainability The project activity will create jobs opportunities in the area with very high unemployment level for skilled and unskilled labor during the construction and operation of the plant (about 50). 3

4 The implementation of the project will benefit the Armenia through development of additional sustainable generation capacity not dependant on the imported energy sources, which will add to the independence of the energy system of the Republic as well. Implementation of the project will also contribute to development of experience and intellectual capacity among the local construction workers that will go through a set of trainings, organized by the Project Host during the project implementation, which will help them to become a skilled work force in future as well. The trainings are not contractually considered. 2. Environmental sustainability The construction of the SHPPs will not affect the quality of the river water, as well as the well being of the local population. Moreover, the project activity will have a positive impact on the environment as it will displace part of electricity generated by the conventional power plants in the national grid, thus avoid environmental pollution caused by the burning of fossil fuel and lead to an increased sustainability in the power generation sector. Total expected CO 2 emission reduction from the proposed project is estimated to the amount of about tco2 over the ten year crediting period. 3. Economic sustainability The implementation of the project will increase funds for municipality and state budget due to tax collection. The project implementation will also generate employment possibilities for the local population which lacks available workplaces in their region. During the project implementation locally produced equipment will be used which will benefit the renewable energy technology an intellectual capacity development in Armenia. The Project complies with the Energy Strategy of Republic of Armenia which promotes the development of new renewable energy technologies and capacities. In addition, implementation of the project will also contribute to the sustainable development of Armenia through reducing the dependence on imported energy carriers, such as natural gas, thereby reducing the outflow of capital from Armenia to other countries. A.3. Project participants: Name of Party involved (*) ((host) indicates a host Party) Private and/or public entity(ies) project participants (*) (as applicable) Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) Republic of Armenia (host) Private entity: Energocor LTD, the bundling agent Republic of Armenia (host) Private entity: Lusakunk LTD No Republic of Armenia (host) Private entity: Erik SHPP LTD No Republic of Armenia (host) Private entity: Jermuki No Hydrotech LTD Germany Private entity: EnBW Trading GmbH 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. 4

5 A.4. Technical description of the small-scale project activity: 1. Ayrk-1 SHPP is planned for construction in Gegharkunik region of Armenia, on the irrigation canal on Ayrk River. The hydro-energy characteristics of Ayrk 1 SHPP are as follows: Gross head 90,4 m Designed outflow 0,50 m 3 /sec. Design capacity 0,361 MW Average annual energy production million kwh The number of units 2 2. Ayrk-2 SHPP is planned for the construction on the irrigation channel of Ayrk river and will use the energy potential of water released from Ayrk-1 SHPP. The hydro-energy characteristics of Ayrk-2 SHPP are as follows: Gross head 77,7 m Designed outflow 0,50 m3/sec. Design capacity 0,311 MW Average annual energy production 1,47 million kwh The number of units 2 3. Avazan SHPP is planned for construction in Gegharkunik region on Avazan River. The hydro-energy characteristics of Avazan 1-2 SHPPs are as follows: Gross head 72.8 m Designed outflow 0.5 m3/sec, Design capacity 0,291 MW, Average annual energy generation 1.83 million kwh, The number of units Erik SHPP is planned for construction in Gegharqunik region of Armenia on the Getik river. The hydro-energy characteristics of Erik SHPPs are as follows: Gross head m Designed outflow 3.0 m3/sec Generation capacity 3.5 MW Average annual power generation 15 million kwh The number of units Jermuk-2 SHPP is Small Hydropower Plant (SHPP) is planned for construction on Arpa River in Vayots Dzor region of Armenia. The main characteristics of the Jermuk-2 SHPP are: Gross head m, Design outflow 4.8 m3/sec, Generation capacity 2.35 MW, Average annual electric energy generation 10.2 million kwh, The number of units 2. A.4.1. Location of the small-scale project activity: A Republic of Armenia Host Party(ies): A Region/State/Province etc.: Ayrk 1-2 SHPPs - Gegharkunik Marz Avazan SHPP - Gegharkunik Marz 5

6 Erik SHPP - Gegharkunik Marz Jermuk-2 SHPP Vayots Dzor Marz A City/Town/Community etc: Ayrk 1-2 SHPPs Vardenis community Avazan SHPP - Avazan village Erik SHPP Martuni village Jermuk-2 SHPP Jermuk City A Details of physical location, including information allowing the unique identification of this small-scale project activity : Ayrk-1,2 and Avazan SHPPs Erik SHPP 6

7 Jermuk SHPP 7

8 A.4.2. Type and category(ies) and technology/measure of the small-scale project activity: The project activity utilizes the hydro potential of for power generation and exports the generated power to the grid. According to small-scale CDM modalities the project activity falls under Type I Renewable Energy Projects and Category I-D Grid connected renewable electricity generation. The project uses run-of-river hydropower technology which converts mechanical energy available in the water flow into electrical energy using hydro turbines and generators. This kind of technology is standard for the small scale hydropower and widely used in the world for many years The equipment used in the project will be developed and manufactured locally as well as imported from China.. A.4.3 Estimated amount of emission reductions over the chosen crediting period: Table A4. Ayrk-1 SHPP Year Estimation of emission reductions (tones of CO2) 01/09/ /09/ ,33 8

9 01/09/ /09/ ,33 01/09/ /09/ ,33 01/09/ /09/ ,33 01/09/ /09/ ,33 01/09/ /09/ ,33 01/09/ /09/ ,33 01/09/ /09/ ,33 01/09/ /09/ ,33 01/09/ /09/ ,33 Total estimated reductions (tonnes of CO 2 ) 3773,3 Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tonnes of CO 2 ) 377,33 Table A5. Ayrk-2 SHPP Year Estimation of emission reductions (tones of CO2) 01/09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ Total estimated reductions (tonnes of CO 2 ) Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tonnes of CO 2 ) 591 Table A6. Avazan SHPP Year Estimation of emission reductions (tones of CO2) 01/09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ /09/ Total estimated reductions (tonnes of CO 2 ) Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tonnes of CO 2 ) 569 Table A7. Erik SHPP Year Estimation of emission reductions (tones of CO2) 9

10 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 01/09/ /09/ ,95 Total estimated reductions (tonnes of CO 2 ) 46699,5 Total number of crediting years 10 Annual average over the crediting period 4669,95 of estimated reductions (tonnes of CO 2 ) Table A8. Jermuk-2 SHPP Year Estimation of emission reductions (tones of CO2) 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 01/09/ /09/ ,02 Total estimated reductions (tonnes of CO 2 ) Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tonnes of CO 2 ) A.4.4. Public funding of the small-scale project activity: Total funding required for the project does not include any public funding from Annex I countries. Hence, the project proponents hereby confirm that public funding from parties included in Annex -I is not involved in the project activity. A.4.5. Confirmation that the small-scale project activity is not a debundled component of a large scale project activity: According to the Appendix C of the Simplified Methodologies and Procedures for the small-scale CDM, this Project activity is not a debundled component of a larger project activity because there is not a registered smallscale CDM project activity or an application to register another small-scale CDM project: With the same project participants In the same project category and technology/measure; Registered within the previous 2 years; Whose project boundary is within 1 km of the project boundary of the proposed small-scale activity at the closest point. Hence, the project is eligible as a small-scale CDM project and can use the simplified modalities and procedures for small-scale CDM project activities. 10

11 SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the small-scale project activity: Type I: Renewable Energy Projects AMS-I.D. ver.13 Grid connected renewable electricity generation B.2 Justification of the choice of the project category: As per the provisions of simplified modalities and procedures for small scale CDM project activities (version 13), Type I. D comprises renewable energy generation units, such as photovoltaics, hydro, tidal/wave, wind, geothermal, and renewable biomass, that supply electricity to and/or displace electricity from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired generating unit. If the unit added has both renewable and non-renewable components (e.g. a wind/diesel unit), the eligibility limit of 15 MW for a small-scale CDM project activity applies only to the renewable component. If the unit added co-fires fossil fuel, the capacity of the entire unit shall not exceed the limit of 15 MW. Project activity meets the applicability conditions of the methodology in following manner: 1. The project activity consists of 5 small-hydro power plants. Thus, the project activity does not consist of a combined heat and power (co-generation) system. The project will export the generated power to the grid with domination of fossil fuel generating units. 2. The installed capacity of the proposed project is only 6.81 MW, which is less than the qualifying capacity of 15 MW. The capacity of the project will not increase beyond 15 MW. B.3. Description of the project boundary: According to methodology AMS-ID/(ver.13), the project boundary encompasses the physical, geographical site of the renewable electricity generation source. Hence, the project boundary is the 10.5 hectare area where the powerhouse and transmission line is placed including the connection point with AEN Substation. B.4. Description of baseline and its development: According to Energy Sector Development Strategies in the Context of Economic Development in Armenia 1 adopted by the Government of Armenia in August 2005, modernizing and replacing the generating capacity is essential since: 38% of Armenian installed capacity has been in operation for more than 30 years; The primary equipment at TPPs has reached 200 thousand hours level and does not correspond to international standards in terms of technical, economic and ecologic criteria;

12 70 % of the installed equipment at HPPs has been in operation for more than 30 years, and 50% for more than 40 years. The same document indicates that the capacity additions planned for will include a mix of thermal power plants (capacity additions to the two existing Yerevan and Hrazdan plants) and new hydro and wind plants. The following additions to the grid are currently planned: gas fired addition to the Yerevan power plant 208 MW gas fired addition to the Hrazdan power plant 440 MW small hydro plants 70 MW Meghri hydro plant 140 MW wind plants 100 MW For the period the planned capacity additions are: Loriberd hydro plant 60 MW small hydro plants 65 MW wind plants 200 MW In total the plan expects the addition of 1,256 MW of thermal power plants and 635 MW of renewable energy, of which the planned addition of 300 MW wind power plants by 2016 appears to be quite optimistic, given the fact that currently no private wind farms are installed in Armenia. If the plans are implemented and the Armenian nuclear power planned is phased out as envisaged, then the Armenian energy mix would look as follows in 2016: thermal power plants would contribute to 65.05% of total capacity while carbon- free generation would contribute to 34.95%. The construction of Hrazdan-5 TPP and New Unit in Yerevan TPP has been started in and it is expected that these power plants will be operational in Identification of Baseline scenario There are only a few baseline scenarios in addition to the proposed project activity that realistic and credible in the context of the Armenian Grid. Scenario 1. The continuation of current activities This scenario represents the continuation of current practices, which includes generation of electric energy with significant domination of fossil fuel natural gas, which currently accounts to around 30% of the total energy generation mix (detailed information about generation and installed capacity in Armenian grid is presented in the table below B1). Besides, there are significant generation capacity additions through one unit of Hrazdan TPP and also on additional unit of Yerevan TPP. This scenario option is in compliance with Armenian relevant laws and regulations 3, and without financial and other barriers. Table B Energy Law of Armenia, (I-III quarters), (IV quarter) 12

13 Name Fuel Capacity, MWh Generation (2007),GWh Delivery (2007), GWh ANPP Hydro 880 2, Hrazdan TPP Gas , Yerevan TPP Gas International Hydro Energy Corporation Vorotan Cascade Hydro Dzora SHPP Hydro Small SHPPs Hydro Lori-1 Wind Power Plant Wind Imports Future capacity additions for are presented in the table B2. Table B2. 5 Name Fuel Capacity, MWh Projected generation Commission date 36 Small hydro power plants Hydro Hrazdan-5 TPP Gas New Unit in Yerevan TPP Gas Scenario 2. The proposed project activity undertaken without being registered as a CDM project activity This scenario is realistic and credible and is available for project participant. This scenario is in compliance with all applicable legal and regulatory requirements and may be a part of the baseline scenario. However the barriers discussed below in the section B.5 would restrict the implementation of the scenario. Scenario 3. Other renewable energy power plant with equivalent annual power generation. There is neither potential for wave or tidal energy in Armenia. No biomass, solar or geothermal power plants with a similar scale to the project has previously been built in Armenia. There is only one state-owned wind power plant Lori-1 with the capacity 2.64 Mw. The wind farm was built with support from a 3.5 mln US$ grant from the government of the Islamic Republic of Iran. It is state owned and operated under supervision of "High Voltage 5 Source PSRC, Ministry of Energy of RA, 13

14 Network" CJSC, Thus there are no favorable conditions for the construction of power plants based on other renewable sources. Therefore, this scenario is not a feasible scenario. Determination of Baseline emission factor: The baseline to be used in calculating the emission reductions from this project is outlined in the relevant paragraphs of AMS I.D version 13. According to AMS I.D version 13, the baseline of this project is the kwh produced by the small hydroelectric power plant multiplied by an emission coefficient (measured in kg CO2e/kwh) calculated in a transparent and conservative manner. Emission factor is calculated as a combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM) according to the procedures prescribed in the Tool to calculate the emission factor for an electricity system Version The emission factor is calculated ex-ante for estimative purposes. Nevertheless, the emission factor will be monitored ex-post. The Operating margin is calculated based on the Simple Adjusted OM method, since low-cost/must-run resources (hydro and nuclear) constitute more than 50% of total grid generation (in 2007 about 75). The Build margin emission factor is calculated based on the power generation data of most recently built power plants which comprise 20%of the system generation data. The details of baseline will be explained at Annex 3. 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 small-scale CDM project activity: Justification for application of simplified methodologies to the project activity. The installed capacity of the project is 6.81 MW, which is less than the limiting capacity of 15 MW and is thus eligible to use small-scale simplified methodologies. The project activity is generation of electricity for a grid system using hydro potential. Hence, the type and category of the project activity matches with I.D. Version 13 as specified in Appendix B of the indicative simplified baseline and monitoring methodologies for small-scale CDM project activities. Justification for additionality of the project under the UNFCCC simplified modalities is to establish the additionality of the project activity according to the Attachment A of Appendix B, which lists various barriers, out of which, at least one barrier shall be identified due to which the project can not occurred any way. The analysis of existing barriers is presented below. The following barriers are identified for the project activity. 1. Investment barriers: The project faces the following perceived investment risks and barriers. a. Lack of capital for small scale power plants The lack of capital is seen as the main barrier, as the following problems exist for small hydro projects that want to raise funds: 14

15 - The interest rates applied to loans in drams by Armenian twenty commercial banks to corporate clients are too high averaging at about 16-18% (the reference rate of the banking interest is 15% to which a commercial bank margin of 1-3% needs to be added) - The loan terms are too short for a long term investment such as a power plant - The loan amounts are too small for international capital markets - Due to the history of payment and credit problems, it will take a long time to cover the sector image for investors - Lack of collateral acceptable for the local bank>local banks require to provide at least 120% of collateral before funds disbursement, which is difficult for the project developers. It must be noted that all the projects have in fact faced large problems in attracting capital. The company had to extend or renew their construction permits, because construction works were delayed due to lack of funds. b. Table 2: Summary of Barriers Analysis The continuation of current Project activity Barriers evaluated activities Financial/Economic NO YES From the conducted analysis it is evident that the project can not succeed without the extra cash flow from Certified Emission Reductions (CERs) in hard currency as well as without additional funds that can be provided as a prepayment for the CERs by the EnBW. B.6. Emission reductions: B.6.1. Explanation of methodological choices: The project category is renewable electricity generation for a grid system, which is also fed by both fossil fuel fired generating plants and non-fossil fuel based generating plants. Hence, the applicable baseline, indicative simplified baseline and monitoring methodologies is the kwh produced by the SHPPs multiplied by an emission coefficient (measured in kg CO2e/kWh). This project baseline emissions are calculated like the below. BE y = EG y * EF grid EGy = the amount of electricity generation by the SHPPs EF y = the project baseline emission factor The project baseline emission factor is calculated in a transparent and conservative manner as a) A combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM) according to the procedures prescribed in the Tool to calculate the emission factor for an electricity system ; or b) The weighted average emissions (kg CO2e/kWh) of current generation mix. The project proponent has chosen the option (a) i.e. the weighted average of the OM and the BM for the purpose of calculation of baseline according the Tool to calculate the emission factor for an electricity system ver following six steps: Step 1. Identify the relevant electric power system. Step 2. Select an operating margin (OM) method. Step 3. Calculate the operating margin emission factor according to the selected method. 15

16 Step 4. Identify the cohort of power units to be included in the build margin (BM). Step 5. Calculate the build margin emission factor. Step 6. Calculate the combined margin (CM) emissions factor. Step 1. Identify the relevant electric power system. The hydropower power plants will be connected to the national electricity grid of Armenia, which is operated and monopolized by the Electric Networks of Armenia CJSC (ENA). This national electricity grid is the unique transmission and distribution line, to which all power plants in Armenia are physically connected. Hence the national electricity grid is the project electricity system. There are electricity imports to the national electricity grid from Iran - another host country, thus the Iranian Power Grid is the connected electricity system and the emission factor for the imported electricity is zero tons CO 2 per MWh by default. Step 2. Select an operating margin (OM) method. The Operating Margin is calculated on the basis of the option (b) Simple Adjusted OM, because as it is evident from the table 3 below, generation by low-cost/must-run power sources exceeds 50%, requiring the calculation of a lambda factor to modify the results of the Simple OM Method. Table 3 Year Percentage of low-cost/must run resources in 74.71% 75.16% 70.75% 72.91% 72% total electricity generation Average of five years % Source: PSRC For the simple adjusted OM the emissions factor can be calculated using either of the two following data vintages: Ex ante option: A 3-year generation-weighted average, based on the most recent data available at the time of submission of the CDM-PDD to the DOE for validation, without requirement to monitor and recalculate the emissions factor during the crediting period, or Ex post option: The year in which the project activity displaces grid electricity, requiring the emissions factor to be updated annually during monitoring. For the calculation of the Operating Margin (OM) Option 2 is chosen, by which the OM emission factor will be updated annually ex-post for the year in which actual project generation and associated emissions reductions occur. Justification of the ex-post calculation. According to the EB09 Annex 3 par. 8 the ex-post calculation of baseline emission rates may only be used if proper justification is provided. The project proponents have decided to choose ex-post calculations, because: 1) Two new thermal power (new units in Yerevan and Hrazdan TPPs) plants will be operational in

17 2) About 40 small HPPs has obtained the license for the construction and will be operational in ) Starting from 2009 Armenia will start export electricity to Turkey (around mln kwh/pa.). According to the Law of Energy of Armenia, this electricity will be generated in Hrazdan TPP and therefore the percentage of thermal power plants in total generation mix will increase. However, the ax-ante approach was used for the calculation of indicative operating margin. Step 3: Calculate the Operating Margin emission factor (EFOM,y) according to the selected method For the calculation of the OM official data on energy generation per power plant and energy consumption was used. The OM was calculated using the method described in the applied methodological tool, using the following equation: Where: λy = the number of hours for which low-cost/must-run sources are on the margin in year y 8760 hours per year year FCi,j,y = Amount of fossil fuel type i consumed in power units j in the project electricity system in year y (tonne) FCi,k,y = Amount of fossil fuel type i consumed in power units k in the project electricity system in year y (tonne) k = Refers to units which are either low-cost or are must-run. j = Refers to the units that are not either low-cost or are must-run. NCVi,y = Net calorific value (energy content) of fossil fuel type i in year y (GJ /tonne) EF CO2,i,y = CO2 emission factor of fossil fuel type i in year y (tonne CO2/GJ) EGk,y = Net electricity generated and delivered to the grid by power units k serving the system in year y (MWh) EGj,y = Net electricity generated and delivered to the grid by power units j serving the system, in year y (MWh) i = All fossil fuel types combusted in power sources in the project electricity system in year y λy is defined as stated in the Tool to calculate the emission factor for an electricity system v.01.1 STEP 4 - Identify the cohort of power units to be included in the build margin The sample group of power units m used to calculate the build margin consists of power units that comprises the larger annual generation, between the next options: (a) The set of five power units that have been built most recently, or (b) The set of power capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. 17

18 Following the guidance of the tool, alternative chosen was (b) considering that it comprises larger annual generation. STEP 5 Calculate the build margin emission factor The build margin emissions factor is the generation-weighted average emission factor (tonne CO2/MWh) of all power units m during the most recent year y for which power generation data is available. This emission factor will be calculated in an ex ante basis. The formula used is: 18

19 Where: EF grid,bm,y = Build margin CO 2 emission factor in year y (tco 2 /MWh) EG m,y = Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) EF EL,m,y = CO 2 emission factor of power unit m in year y (tco 2 /MWh) m = Power units included in the build margin y = Most recent historical year for which power generation data is available STEP 6 Calculate the Combined Margin (CM) emission factor The CM emission factor is calculated using the following equation: 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 ( %) Following the guidance of the methodological tool, the values for the weighting factors are 0.5 each, considering the proposed project activity is a hydro project. w OM =0.5 w BM =0.5. B.6.2. Data and parameters that are available at validation: Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: FCi,m,y 1000 m 3/ year Amount of fossil fuel type i consumed by power plant / unit m in year y ArmRosGazprom All data are available to the DOE for validation (See Annex3) Dispatch data is not available in Armenia. PSRC provides the most actually updated data relevant to the power generation in Armenia that could be accessed by public. Data / Parameter: NCVi,y Data unit: GJ /1000 m 3 Description: Net calorific value (energy content) of fossil fuel type i in year y Source of data used: Default value of the IPCC 2006 Guidelines Value applied: All data are available to the DOE for validation (See Annex 3) 19

20 Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: With reference to Version 01.1 of Tool to calculate the emission factor for an electricity system Data / Parameter: EF CO2,i,y and EF CO2,m,i,y Data unit: tco 2 /GJ Description: CO 2 emission factor of fossil fuel type i in year y Source of data used: Default value of the IPCC 2006 Guidelines Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the With reference to Version 01.1 of Tool to calculate the emission factor for an choice of data or electricity system description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: EGm,y MWh Net electricity generated and delivered to the grid by power plant/unit m in year y Public Service Regulatory Commission of Armenia Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the Dispatch data is not available in Armenia. PSRC provides the most actually updated choice of data or data relevant to the power generation in Armenia that could be accessed by public. description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: EF grid,cm,y tco 2 /MWh Combined Margin (CM) emission factor Public Service Regulatory Commission of Armenia, Armrosgazprom Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the With reference to the approved methodology AMS I.D ver.13. and Version 01.1 of choice of data or Tool to calculate the emission factor for an description of electricity system measurement methods and procedures actually 20

21 applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: Identification of power source plants for the OM Name of plant The operating margin includes all generating power plants serving the system, not including low-cost / must-run power plants / units and imports PSRC Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the With reference to the approved methodology AMS I.D ver.13. and Version 01.1 of choice of data or Tool to calculate the emission factor for an description of electricity system measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: Identification of power source plants for the BM Name of plant The build margin includes either the newest five power plants or newest power plants that have been built more recently and contributed to 20% of electricity generation of a certain year, whichever definition includes the largest generation. PSRC Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the With reference to the approved methodology AMS I.D ver.13. and Version 01.1 of choice of data or Tool to calculate the emission factor for an description of electricity system measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: EF grid,om,y tco 2 /MWh Operating Margin (CM) emission factor Public Service Regulatory Commission of Armenia, Armrosgazprom Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the With reference to Version 01.1 of Tool to calculate the emission factor for an choice of data or electricity system description of measurement methods and procedures actually 21

22 applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: EF grid,bm,y tco 2 /MWh Build Margin (CM) emission factor Public Service Regulatory Commission of Armenia, Armrosgazprom Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the With reference to the approved methodology AMS I.D ver.13. and Version 01.1 choice of data or of Tool to calculate the emission factor for an description of electricity system measurement methods and procedures actually applied : Any comment: Data unit: Description: Source of data used: Electricity imports MWh Electricity transfers from connected electricity systems Public Service Regulatory Commission of Armenia Value applied: All data are available to the DOE for validation (See Annex 3) Justification of the With reference to the approved methodology AMS I.D ver.13. and Version 01.1 of choice of data or Tool to calculate the emission factor for an electricity system description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Lambda factor of the grid Data unit: Description: Fraction of time during which low-cost / must run sources are on the Margin. Source of data to be PSRC, Electric Networks of Armenia used: Value of data All data are available to the DOE for validation (See Annex 3) Description of With reference to the Version 01.1 of Tool to calculate the emission factor for measurement methods an and procedures to be electricity system applied: Any comment: B.6.3 Ex-ante calculation of emission reductions: This project is generating electricity by small hydroelectric power plant and connecting to grid instead of 22

23 using fossil fuel for abating greenhouse gas (GHG) emissions. The amount of GHG emissions are calculated according to the methodology AMS I.D ver.13. Baseline emissions Baseline emissions of this project are calculated by multiplying the amount of this project electricity generation by the electricity Carbon Emission Factor which is calculated through the methodology BE electricity,y =EG y x EF electrcity,y BE electricity,y the amount of baseline emissions in in year y (tco 2 ) EG y - the amount of Total net electricity generation in year y (MWh) EF electrcity,y - the Baseline Electricity CO2 Emissions Factor in year y (tco2/mwh) The Electricity Emissions Factor will be updated annually. In the current version of the PDD the emission factor is calculated ex-ante for 2007 for estimative purposes. The detail about Baseline Electricity CO 2 Emissions Factor will be described in Annex 3 The amount of total net electricity generation by small hydroelectric power project. Ayrk-1 SHPP MWh Ayrk-2 SHPP MWh Avazan SHPP MWh Erik SHPP 15 MWh Jermuk-2 SHPP MWh Baseline emissions Annual electricity generation * Emission Factor = MWh * tco2/mwh = tco2 Total baseline emissions tco2. Project emissions Because of there is no emission through small hydroelectric power project activity, amount of the emission is 0. Leakage This is not applicable as the renewable energy technology used is not equipment transferred from another activity. There for, as per the Simplified Procedures for SSC Project Activities no leakage calculation is required. The amount of Leakage is 0. Emission Reductions Baseline emissions Project emissions Leakage = = tco2 23

24 B.6.4 Summary of the ex-ante estimation of emission reductions: Bundled project Year Estimation of baseline emissions (tonnes of CO 2 e) Estimation of project activity emission reductions (tonnes of CO 2 e) Estimation of Leakage (tonnes of CO 2 e) Estimation of emission reductions (tonnes of CO 2 e) 01/04/ /03/ ,01 01/04/ /03/ ,01 01/04/ /01/ ,01 01/04/ /01/ ,01 01/04/ /01/ ,01 01/04/ /01/ ,01 01/04/ /01/ ,01 01/04/ /01/ ,01 01/04/ /01/ ,01 01/04/ /01/ ,01 Total (tonnes of CO2) 93960, , , , , , , , , , , ,1 B.7 Application of a 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 Description of measurement methods EG y MWh Net electricity supplied to the grid by the bundled project The electric meter installed SHPPs will measure the electricity supplied to the grid. The projected electricity generation by the bundled project SHPPs is presented in the section A.4 For the monitoring of electricity generation inspected and certified (according to national regulations) monitoring equipment (electric meter) will be installed in 24

25 and procedures to be applied: QA/QC procedures to be applied: Any comment: place. The data will be monitored and recorded by qualified engineers according to the monitoring plan. Electric meter readings will be double-checked with the records of the AEN. The Energocor LTD will appoint a designated engineer on site who will be responsible for collecting and compiling the necessary data for the monitoring plan. The data will be collected in a transparent way and provided to the third party audit entity for the DOE validation and certification. Data / Parameter: FCi,m,y Data unit: 1000 m 3/ year Description: Amount of fossil fuel type i consumed by power plant / unit m in year y Source of data to be ArmRosGazprom used: Value of data All data are available to the DOE for validation (See Annex 3) Description of The data on fossil fuel consumption is available in Armenia and can be provided measurement methods by Armrosgazprom upon request. and procedures to be applied: QA/QC procedures to be applied: Any comment: The Energocor LTD will appoint a designated engineer on site who will be responsible for collecting and compiling the necessary data for the monitoring plan. The data will be collected in a transparent way and provided to the third party audit entity for the DOE validation and certification. Data / Parameter: NCVi,y Data unit: GJ /1000 m 3 Description: Net calorific value (energy content) of fossil fuel type i in year y Source of data to be Default value of the IPCC 2006 Guidelines used: Value of data All data are available to the DOE for validation (See Annex 3) Description of IPCC default values at the lower limit of the uncertainty at a 95% confidence measurement methods interval as provided in Table 1.2 of Chapter 1 of Vol. 2 (Energy) of the 2006 and procedures to be IPCC Guidelines on National GHG Inventories will be used as it is prescribed applied: in the Tool to calculate the emission factor for an electricity system Version QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be See Annex 4, EF CO2,i,y tco 2 /GJ CO 2 emission factor of fossil fuel type i in year y Default value of the IPCC 2006 Guidelines 25

26 used: Value of data All data are available to the DOE for validation (See Annex 3) Description of IPCC default values at the lower limit of the uncertainty at a 95% confidence measurement methods interval as provided in Table 1.2 of Chapter 1 of Vol. 2 (Energy) of the 2006 and procedures to be IPCC Guidelines on National GHG Inventories will be used as it is prescribed applied: in the Tool to calculate the emission factor for an electricity system Version QA/QC procedures to See Annex 4, be applied: Any comment: Data / Parameter: Identification of power source plants for the OM Data unit: Name Description: The operating margin includes all generating power plants serving the system, not including low-cost / must-run power plants / units and imports Source of data to be PSRC used: Value of data See Annex 3 Description of For the identification of power plants for the OM official publications of PSRC measurement methods on energy sector in the relevant year will be used. and procedures to be applied: QA/QC procedures to See Annex 4. be applied: Any comment: Data / Parameter: EGm,y Data unit: MWh Description: Net electricity generated and delivered to the grid by power plant/unit m in year y Source of data to be PSRC used: Value of data See Annex 3 Description of For the identification of power plants for the OM official publications of PSRC measurement methods on energy sector in the relevant year will be used. and procedures to be applied: QA/QC procedures to See Annex 4. be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be used: Value of data Lambda factor of the grid Fraction of time during which low-cost / must run sources are on the Margin. PSRC, Electric Networks of Armenia 26

27 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: For the calculation of the lambda factor of the grid Energocor LTD will use the data from PSRC on electricity generation and delivery and will request chronological load data for each hour of the year from the Electric Networks of Armenia. See Annex 4. Data / Parameter: EF grid,cm,y Data unit: tco 2 /MWh Description: Combined Margin (CM) emission factor Source of data to be used: Value of data See Annex 3 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: Public Service Regulatory Commission of Armenia, Armrosgazprom, Electric Networks of Armenia Combined margin will be calculated as With reference to the approved methodology AMS I.D ver.13. and Version 01.1 of Tool to calculate the emission factor for an electricity system See Annex 4. Data / Parameter: EF grid,om,y Data unit: tco 2 /MWh Description: Operating margin (OM) emission factor Source of data to be Public Service Regulatory Commission of Armenia, Armrosgazprom used: Value of data See Annex 3 Description of Operating margin will be calculated with the to Tool to calculate the emission factor measurement methods for an and procedures to be electricity system applied: QA/QC procedures to See Annex 4. be applied: Any comment: Data / Parameter: EF grid,bm,y Data unit: tco 2 /MWh Description: Operating margin (OM) emission factor Source of data to be Public Service Regulatory Commission of Armenia, Armrosgazprom used: Value of data See Annex 3 Description of Build margin will be calculated with the to Tool to calculate the emission factor for measurement methods an and procedures to be electricity system applied: QA/QC procedures to See Annex 4. be applied: 27

28 Any comment: B.7.2 Description of the monitoring plan: Name: Monitoring methodology for Project activity I.D Grid connected renewable electricity generation Reference: Article 9 Type I.D. Appendix B of the simplified modalities and procedures for smallscale CDM project activities., ver. 13 The project activity is generation of electricity for a grid system using water potential. Hence, the type and category of the project activity matches with I.D. ver. 13 as specified in Appendix B of the indicative simplified baseline and monitoring methodologies for small-scale CDM project activities. All power plants will appoint a designated engineer on site who will be responsible for collecting and compiling the necessary data for the monitoring plan. The data will be collected in a transparent way and provided to the third party audit entity for the DOE validation and certification. No leakage is expected. The electronic system calculates the amount of generated electricity by each plant each 30 minutes. The generated amounts are then recorded at the end of each month. For the monitoring of electricity generation inspected and certified (according to national regulations 6 ) monitoring equipment (electric meter) with accuracy of 0.2% will be installed in place. The meters will be calibrated yearly. The measurement interval is 30 minutes. The data will be monitored and recorded by qualified engineers according to the monitoring plan. Electric meter readings will be double-checked with the records of the AEN. The data will be electronically archived. Receipts of electricity sales will be obtained. The data necessary for the calculation of the emission factor of the grid is available in Armenia and can be provided by PSRC, ArmrosGazprom and Electric Networks of Armenia upon request. The current data on Armenian power plants will be used prior to the point at which the first new plant will be added to the grid and start producing electricity. Each year before verification the project proponent will update the information on and recalculate emission factor. The Managing Director of Energocor LTD will be responsible for the full implementation of the monitoring methodology outlined in the PDD for their respective. 6 GOST and GOST

29 B.8 Date of completion of the application of the baseline and monitoring methodology and the name of the responsible person(s)/entity(ies) Date of completing the final draft of the baseline and monitoring methodology: 12/01/2009 Name of person/entity determining the baseline and monitoring methodology: Mr. Karen Arabyan Energocor Ltd Energocor LTD is not a project participant. 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: As per the guidance of EB41 meeting report, the project activity is deemed to have started on September 2008 as this is when the project proponent committed to expenditures related to the implementation of the project activity (equipment purchase). Prior consideration of the CDM The project developer has seriously considered the benefits from CDM prior to the starting date. In particular, in February 2008 the Board of Directors of the company has decided to develop the project as CDM project and signed the contract with Energocor LLC (the company engaged in the development of CDM project in Armenia) for the development of the PDD. Energocor LLC has presented the project to the potential CER s buyers during CDM conference in Georgia in March, In November 2008 the project proponent has signed Letter of Intent with EnBW. C.1.2. Expected operational lifetime of the project activity: 20 years C.2 Choice of the crediting period and related information: N/A N/A C.2.1. Renewable crediting period C Starting date of the first crediting period: N/A C Length of the first crediting period: 29