CLP Theni PDD

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM Executive Board
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CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006 CONTENTS A. B. C. D. E. General description of project activity Application of a baseline and monitoring methodology Duration of the project activity / crediting period Environmental impacts Stakeholders comments Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring plan Appendices Appendix 1: Project Location Map Appendix 2: Local Stakeholders Consultation Meeting Minutes Appendix 3: Weighted Average Cost of Capital Appendix 4: Bloombergs screenshots of individual companies for Beta Value
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SECTION A. General description of project activity A.1. Title of the project activity: >> Title: Grid Connected Wind Energy Project in Tamil Nadu. Version number: 01 Date: 04/01/2011
A.2.
Description of the project activity:
>> The project is being implemented by CLP Wind Farms (Theni - Project II) Private Limited (CLP) in the state of Tamil Nadu. The Wind Turbine Generators (WTG) have been supplied by Vestas Wind Technology India Private Limited (Vestas). Vestas will be responsible for technology and equipment supply, as well as the operation and maintenance of the WTGs. Purpose of the project activity The proposed project activity involves generation of electric power using WTG. The objective of the project activity is to commission and operate a wind farm of 49.5 MW (the Project) in the Indian state of Tamil Nadu. The power generated from this project activity will be supplied to the state electricity grid which is a part of Southern Regional (SR) Grid of India. Distribution Licensee thereby marginally contributing towards reduction in the energy demand supply gap in the state of Tamil Nadu, diversification of grid supply and reduction of greenhouse gas emissions. The Southern regional grid comprises of 4 states, namely Andhra Pradesh, Tamil Nadu, Karnataka, Kerala and 2 union territories, namely Pondicherry and Lakshadweep. Nature of Project The project activity entails the installation and operation of 30 WTGs (Model V-82) supplied by Vestas. Each WTG is having a rated capacity of 1.65 MW. The generated power will be supplied to the high voltage electrical grid through Kamachipuram 110 kV / 33-22kV substation. The power will be sold under a power purchase agreement (PPA) to Tamil Nadu Electricity Board (TNEB). Project technology The equipments that form part of the project boundary are enlisted below: Table A.1: Project Technology S. No 1. Equipment WTG Specifications 30 WTG of 1.65 MW each supplied by Vestas. Model No. V-82
The project technology has been provided in detail under section A.4 Contribution to greenhouse gas (GHG) emissions reduction The project activity harnesses wind energy to generate and supply electricity to the SR Grid. The Project displaces non-renewable fossil fuel based electricity that would have otherwise been generated by the operation and expansion of the fossil fuel based power plants in the SR Grid. The Project thereby leads to
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reduction in emission of GHGs associated with fossil fuel based electricity generation and enables sustainable economic and environmental development. The views of the project participant on the contribution of the project activity to sustainable development The National CDM Authority (NCDMA) which is the Designated National Authority (DNA) for the Government of India (GoI) in the Ministry of Environment and Forests (MoEF) has stipulated four indicators for sustainable development in the interim approval guidelines for Clean Development Mechanism (CDM) projects from India1. The contribution of this project activity to these four indicators is provided below:
1. Social well-being: The project activity will have positive impacts through direct and indirect employment in India.
At the local level, the project activity will lead to the creation of skilled and unskilled jobs throughout the construction and ongoing operation and maintenance of the project. At a national level, employment in turbine and balance of plant component manufacturing will be promoted.
The project activity in its execution will lead to development of infrastructure in the region and at the same time promote business in the region through the improvement in electricity generation capacity of the grid.
2. Environmental well-being: The project activity will generate electricity using a zero-carbon renewable energy source. This
will avoid the air quality impacts and emissions of gaseous, liquid and/or solid effluents/wastes associated with fossil-fuel combustion.
The project will help in conserving natural resources including land, forests, minerals and ecosystems that are impacted by traditional forms of power generation. For example, unlike both fossil-fuel and nuclear generation, wind energy does not require the use of water for cooling and therefore eliminates a strain on local freshwater resources.
3. Economic well-being: Use of a renewable source of energy reduces the dependence on imported fossil fuels and
associated price variation thereby leading to increased energy security.
It will also narrow the existing electricity supply gap in the State of Tamil Nadu. The project activity requires temporary and permanent, skilled and semi-skilled manpower at the Project site; it will also create additional employment opportunities from new business development. The project activity leads to an investment in the region accompanied with business and employment benefits along with improvement of grid supply which otherwise would not have happened in the absence of project activity. The clean electricity generated through wind power by the project activity would be fed into the SR Grid thereby improving the grid frequency and availability of electricity in the region. This would provide a better scenario for local industries and businesses to improve their production capacities thereby contributing towards the overall economic development of the region.
Source: http://cdmindia.nic.in/host_approval_criteria.htm
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4. Technological well-being: Increased interest in wind energy projects will further push R&D efforts by technology providers
to develop more efficient and better machinery in future and hence encourage project investors towards investment in the sector. The project activity uses WTGs for large scale power generation thereby demonstrating the viability of wind based renewable energy generation in the region, which is fed into the nearest sub-station (part of the SR Grid), thus increasing energy availability and improving quality of power under the service area of the substation. Hence the Project leads to technological well being. The project proponent will contribute 2% of the net revenue realized from sale of Certified Emission Reductions (CERs) arising from this CDM Project towards sustainable development including initiatives towards society / community development in line with the measures indicated in the sections above. A.3. Project participants: >> Name of Party involved ((host) indicates a host Party) Government of India (host)
Private and/or public entity(ies) project participants (as applicable)
CLP Wind Farms (Theni - Project II) Private Limited (CLP) Private entity
Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) No
A.4.
Technical description of the project activity: A.4.1. Location of the project activity:
>> The geographic representation of the Project activity is provided as Appendix 1. A.4.1.1. >> India A.4.1.2. >> State: Tamil Nadu. A.4.1.3. >> Village Taluka District City/Town/Community etc.: Region/State/Province etc.: Host Party(ies):
G.Usulampatti, Mottanoothu, Kothapatti, Shanmuga Sundara Puram, Marikundu Andipatti Theni
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A.4.1.4. Details of physical location, including information allowing the unique identification of this project activity (maximum one page): >> The Project is (all 30 WTGs) located in Theni District, Tamil Nadu, India. The locational spread of the project is as follows: Table A.2: Project Location Details Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Loc No. 35 1131 526 63 1050 1422 1202 763 1064 177 26 781 64 185 645 1087 1143 488 473 293 274 542 443 694 1194 197 292 Village G.Uslampatti Mottanuthu Mottanuthu Koththapatti Mottanuthu Shanmugasundarapuram Mottanuthu Mottanuthu Mottanuthu Marikundu Mottanuthu Mottanuthu G.Uslampatti Marikundu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Mottanuthu Marikundu Taluk Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti Andipatti District Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Theni Latitude 7733'53.78" 7734'20.08" 7735'02.04" 7735'26.08" 7734'14.52" 7733'04.40" 7734'05.23" 7733'40.54" 7734'34.83" 7733'20.37" 7735'19.41" 7734'06.37" 7733'41.62" 7733'00.32" 7734'59.71" 7734'11.23" 7734'28.19" 7734'40.75" 7734'49.98" 7735'06.63" 7735'24.86" 7734'53.27" #N/A 7734'53.77" 7734'03.96" 7735'29.19" 7732'53.88" Longitude 957'02.06" 956'30.83" 957'07.75" 956'46.16" 957'20.06" 959'00.59" 955'46.90" 958'45.28" 956'58.04" 957'39.66" 958'53.99" 958'33.47" 956'30.64" 957'56.24" 958'14.94" 956'45.05" 956'19.93" 956'43.03" 956'32.52" 956'50.57" 957'01.23" 957'24.12" #N/A 958'36.03" 956'04.90" 957'27.12" 957'21.68"
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Sr. No. 28 29 30
Loc No. 1165 1149 195
Village Mottanuthu Shanmugasundarapuram Marikundu
Taluk Andipatti Andipatti Andipatti
District Theni Theni Theni
Latitude 7734'23.87" 7733'35.52" 7732'41.36"
Longitude 955'55.31" 959'27.51" 957'57.56"
The nearest railway station and airport from project activity site is Madurai, which is approximately 75 km from the project site. A.4.2. Category(ies) of project activity: >> The project activity is applicable to Scope Number 1, Sectoral Scope - Energy industries (renewable/ nonrenewable sources). This project activity involves generation of energy (electricity) using wind energy (renewable source) conversion systems, and hence conforms to category no. 1. A.4.3. Technology to be employed by the project activity: >> The project activity involves 30 WTGs of 1.65 MW capacity each of Vestas make. The WTGs are supplied by Vestas, which is considered to be one of the leading manufacturers of site-specific WTGs. The technical specifications of these 1.65 MW WTG are provided in the table below. Table A.3: Technical Specification of Vestas 1.65 MW WTG Model V-82 TECHNICAL DESCRIPTION Rotor Diameter Hub Height Power regulation Air Brake Nominal Revolutions Rated voltage Generator Type of generator Rated power output Rotor No of blades Swept area Control Type SPECIFICATION 82 m 78 m Active-Stall Full blade pitch by three separate hydraulic pitch cylinders. 14.4 rpm 690V Asynchronous water cooled 1650 kW 3 5,281 m2 Microprocessor-based monitoring of all turbine functions with the option of remote monitoring. Output regulation and optimization via Active-Stall 3.5 m/s 13 m/s
Operational Data Cut- in wind speed Nominal wind speed
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TECHNICAL DESCRIPTION Cut-out wind speed (10 minutes) Gearbox Type
SPECIFICATION 20 m/s Planetary/helical stages
These WTGs generate power at 690 V which is then stepped up to 33 kV through 3 phase transformers located near the WTG. The metering point is located near each of the 30 WTGs of the project activity. A TNEB meter is located near each WTG where the Joint Meter Reading is taken. The electricity generated by the project activity is supplied to the SR Grid through Kamachipuram 110kV/33-22kV Substation2. A.4.4. Estimated amount of emission reductions over the chosen crediting period: >> The estimated emission reductions over the 10 year fixed crediting period would be 1,151,990 tCO2e as per details on annual emission reductions provided below: Table A.4: Estimated Amount of Emissions Reductions Years 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Total estimated reductions (tonnes of CO2 e) Total number of crediting years Annual average over the crediting period of estimated reductions (tonnes of CO2 e) Annual estimation of emission reduction in tonnes of CO2e 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 1,151,990 10 115,199
A.4.5. Public funding of the project activity: >> No public funding or Official Development Assistance (ODA) has been used on this project activity.
Explained in detail in section B.3
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SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity: >> The approved consolidated baseline and monitoring methodology ACM0002 (version 12.1, EB58)3, has been used to determine the baseline emissions and emission reduction due to the project activity. The title of this baseline methodology is Consolidated baseline methodology for grid-connected electricity generation from renewable sources. The other UNFCCC documents referred are as below 1. Tool for the demonstration and assessment of additionality (version 5.2, EB 39) 2. Tool to calculate the emission factor for an electricity system (version 2, EB 50) 3. Guidance on assessment of investment analysis ( 3.1, EB 51, paragraph 12) 4. Guidelines on demonstration of and assessment of prior consideration of the CDM (version 3 EB 49) B.2. Justification of the choice of the methodology and why it is applicable to the project activity: >> This methodology is applicable to grid-connected renewable power generation project activities under the following conditions: Table B.1 Justification for the Choice & Applicability of the Methodology S.N. 1. Applicability conditions of ACM0002 The project activity is the installation capacity addition, retrofit or replacement of a power plant/unit of one of the following types: hydro power plant/unit (either with a run-of-river reservoir or an accumulation reservoir), wind power plant/unit, geothermal power plant/unit, solar power plant/unit, wave power plant/unit or tidal power plant/unit. In case of capacity additions, retrofits or replacements (except for wind, solar, wave or tidal power capacity addition projects which use Option 2: on page 10 to calculate the parameter EGPJ,y): the existing plant started commercial operations prior to the start of minimum historical reference period of five years, used for the calculation of baseline emissions and defined in the baseline emission section, and no capacity expansion or retrofit of the plant has been undertaken between the start of this minimum historical reference period and implementation of project activity Project under consideration The project activity meets this requirement as the project involves new installation of wind power plant/ unit.
2.
Not applicable as the project activity is development of new wind power generation project.
http://cdm.unfccc.int/methodologies/DB/C505BVV9P8VSNNV3LTK1BP3OR24Y5L
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S.N. 3.
4.
5.
Applicability conditions of ACM0002 In case of hydro power plants one of the following conditions must apply: The project activity is implemented in an existing reservoir, with no change in the volume of reservoir. The project activity is implemented in an existing reservoir, where the volume of reservoir is increased and the power density of the project activity, as per definitions given in the Project Emissions section, is greater than 4 W/m2. The project activity results in new reservoirs and the power density of the power plant, as per definitions given in the Project Emissions section, is greater than 4 W/m2. Project activities that involve switching from fossil fuels to renewable energy sources at the site of the project activity, since in this case the baseline may be the continued use of fossil fuels at the site; Biomass fired power plants;
Project under consideration Not applicable as the project activity involves electricity generation by development of a wind power generation project.
6.
Not applicable as there is no switching from fossil fuels to renewable energy involved in the project activity. Not applicable as the present project activity involves electricity generation from newly installed WTGs. Hydro power plants that result in new reservoirs or in the Not applicable as the project activity increase in existing reservoirs where the power density of involves electricity generation from the power plant is less than 4 W/m2. newly installed WTGs.
In light of the above discussion it can be stated that the present project activity is in compliance with the applicability condition stipulated in the approved consolidated baseline and monitoring methodology ACM0002, version 12.1. B.3. >> Description of the sources and gases included in the project boundary:
According to ACM0002, version 12.1 for the baseline emission factor, the spatial extent of the project boundary includes the project site and all power plants connected physically to the electricity system that the CDM project power plant is connected to. The Indian electricity system is divided into two regional grids, the synchronous Northern, Eastern, Western, and North Eastern (NEWNE) grid and the Southern grid (SR Grid). Each grid covers several states. The project activity is connected to SR Grid and this has been considered as the project boundary. Power generation and supply within the regional grid is managed by Regional Load Dispatch Centre (RLDC). The Regional Power Committees (RPCs) provide a common platform for discussion and solution to the regional problems relating to the grid. Each state in a regional grid meets its demand with its own generation facilities and also with allocation from power plants owned by the Central Sector such as NTPC and NHPC etc. Specific quotas are allocated to each state from the Central Sector power plants. Depending on the demand and generation, there are electricity exports and imports between states in the regional grid. A small power exchange also takes place with neighbouring countries like Bhutan and Nepal.
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The project activity is located in the state of Tamil Nadu which is connected to the Southern Regional Electricity Grid. The southern Regional Electricity Grid represents the electricity system of the project. Accordingly, the project boundary encompasses the physical extent of the Southern regional grid which includes the project sites and all power plants connected physically to the electricity system. Table B.3: Sources and Gases Included in the Project Boundary Source Electricity generation from power plants connected to the Southern Regional Grid Electricity generation from the Project Gas CO2 CH4 N2O CO2 CH4 N2O Included? Included Excluded Excluded Excluded Excluded Excluded Justification/ Explanation Main emission source This source is not required to be estimated for wind energy projects under ACM0002 This source is not required to be estimated for wind energy projects under ACM0002 Wind energy generation does not have any direct GHG emissions.
Project Activity
Baseline
Fig. B.1: Representation of The Project Boundary
30 WTGs of CLP Location of JMR TNEB main meter located near each WTG
Kamachipuram 110/33-22kV Substation
Southern Regional Electricity Grid

Project Boundary Location of JMR
B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: >> The proposed project is located in the state of Tamil Nadu, which is a part of Southern Regional Electricity Grid of the Indian electricity system. Generated power from the project activity will be exported to the Southern Regional Electricity Grid.
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Identification of the baseline scenario
In accordance with ACM0002, if the project activity is the installation of a new grid-connected renewable power plant/unit, the baseline scenario is the following: Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the Tool to calculate the emission factor for an electricity system (version 2, EB 50).
Baseline scenario description The Indian electricity system is divided into two grids, the new Integrated Central Region (CR) and the Southern Grid. Each grid covers several States. As the grids are interconnected, there is inter-state and inter- regional exchange. A small power exchange also takes place with the neighboring countries Bhutan and Nepal.
For the purpose of calculating the emission reductions achieved by any CDM project, the CDM Executive Board requires that the project electricity system is defined by the spatial extent of the power plants that can be dispatched without significant transmission constraints. This implies that the grid emission factors are most appropriately calculated at the level of the regional grids. As the project activity is in Tamil Nadu which forms part of the SR Grid hence, SR Grid is the appropriate project electricity system. B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity (assessment and demonstration of additionality): >> The project activity is generating electricity from wind for which there is no GHG emission. The generated electricity is supplied to TNEB. Thus the power generated in the project activity is actually displacing the electricity generated from the fossil fuels in the SR Grid. In case the project activity would not have been there, the same amount of electricity would have been generated from the power plants connected to the grid of which majority of the power plants are based on fossil fuels. Thus the project is replacing the anthropogenic GHG emission from the fossil fuel based power plant connected to the state electricity grid. Demonstrating the seriousness of CDM Consideration The project start date (31 August 2009) is prior to the date of validation of the project activity and to demonstrate that the incentive from the CDM was seriously considered in the decision to proceed with the project activity; the project proponent presents the following evidence: 1. Board resolution dated 28 August 2009: The document clearly mentions that the CDM benefits will be considered to improve the financial viability of the project activity. 2. Contract with CDM consultant: CLP appointed their CDM consultant vide letter dated 11 December 2009.
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Additionally to comply with CDM EB Guidelines on demonstration of and assessment of prior consideration of the CDM4 CLP within 6 months of the start date (31 August 2009) of the project activity had 3. Informed the National CDM Authority, Ministry of Environment and Forest, Government of India of CLPs intent of developing its wind energy project as CDM project vide letter dated 01 September 2009. 4. Informed United Nation Framework Convention on Climate Change (UNFCCC) of CLPs intent of developing its wind energy project as CDM project vide letter dated 01 September 2009. Demonstrating the project additionality According to decision 17/CP.7 para 43, a project will be defined additional if the anthropogenic GHG emissions from the source are reduced below that would have occurred in the absence of the registered project activity. Within the scope of the adopted baseline methodology, the additionality of the project activity has been demonstrated and assessed using the latest version of the Tool for the demonstration and assessment of additionality5 (Version 5.2 from EB 39). The tool prescribes the following steps for proving additionality of a project. Step 1. Identification of alternatives to the project activity consistent with current laws and Regulations Define realistic and credible alternatives to the project activity(s) that can be (part of) the baseline scenario through the following sub-steps: Sub-step 1a. Define alternatives to the project activity: Alternative(s) that provide outputs or services similar to that of the project activity (i.e. electricity generation) available to the project participants or similar project developers include: Alternative 1: The Project is undertaken without being considered as a CDM project activity In this alternative, the proposed project activity is implemented and connected to the TNEB Grid, which is a part of the Southern Regional Electricity Grid, and displaces an amount of electricity equivalent to the generation mix of the Southern Regional Electricity Grid. Wind power being a clean source of energy would not result in any GHG emissions due to implementation of the candidate project activity. This is a realistic and credible alternative to the project activity. Alternative 2: Continuation of the current situation where no project activity or any of the above alternatives are not undertaken This alternative would not be applicable as Tamil Nadu has energy (MU) shortages of 7.8% and peak (MW) shortages of 11.3% in December 20086 . Hence it is incorrect to assume that the project participant or any similar project developer would not undertake any project that delivers output (electricity) that is similar to that of the project activity.
4 5 6
http://cdm.unfccc.int/Reference/Guidclarif/reg/reg_guid04.pdf Source: http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v5.2.pdf Source: http://cea.nic.in/power_sec_reports/Executive_Summary/2008_12/23-24.pdf
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Sub-step 1b. Consistency with mandatory laws and regulations: All the above alternatives are consistent with current laws and regulations and there are no legal and/or regulatory requirements that prevent the Alternatives from occurring. Outcome of step 1 Alternatives to the project activity have been identified in the section above and none of these alternatives are prohibited by laws and regulations. Step 2. Investment analysis Determine whether the proposed project activity is economically or financially less attractive than at least one other alternative, identified in step 1, without the revenue from the sale of certified emission reductions (CERs). Sub-step 2a. Determine appropriate analysis method The project proponent will seek to export the electricity generated from the project activity to the TNEB under a Power Purchase Agreement (PPA). The principal source of revenue for the project activity is the sale of electricity. Methodology ACM0002 offers three possible options to perform the investment analysis, namely: Option I Not an appropriate analysis method given that the project activity generates other income not related to CDM. Investment Comparison Optional, thus not chosen. Project proponent has used Benchmark Analysis Analysis Chosen for Investment Analysis. Benchmark Analysis The post-tax internal rate of return (IRR) for the project cash flows serves as the financial indicator and compared with suitable benchmark (Weighed Average Cost ofr Capital) for assessment of the financial attractiveness of the project. Simple Cost Analysis
Option II Option III
Sub-step 2b Apply benchmark analysis (Option III) Choice of Benchmark: According to the Guidelines on the assessment of investment analysis version 03.1, EB 51, paragraph 16, If the proposed baseline scenario leaves the project participant no other choice than to make an investment to supply the same (or substitute) products or services, a benchmark analysis is not appropriate and an investment comparison analysis shall be used. If the alternative to the project activity is the supply of electricity from a grid this is not to be considered an investment and a benchmark approach is considered appropriate. Since in the case of the proposed CDM project activity, an alternative to the project activity is supply of electricity from the Grid, a benchmark analysis is appropriate. Further, paragraph 12 of the Guidelines on the assessment of investment analysis version 03.1, EB 51 state that, Local commercial lending rates (PLR) or weighted average costs of capital (WACC) are appropriate benchmarks for a project IRR.
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In line with the Guidelines on Investment Analysis the Weighted Average Cost of Capital (WACC) has been considered as appropriate benchmark for the project IRR. It is also worth while to note that the subject project is a Greenfield wind power generation project that generates and supplies electricity to the regional electricity grid, therefore the project has more than one possible developers and. The guidance under Para 13 also states that in cases where the project has more than one potential developer, the benchmark cannot be based on internal cost of equity or WACC and shall be based on publicly available data sources which can be clearly validated by a DOE. According to the EBs guidance under the addionality tool, we have not used company or project specific parameters for the calculation of benchmark (such as company WACC, project and company specific interest rates, etc.) Accordingly, the WACC has been calculated based on the parameters that are standard in the market, considering the specific characteristics of the project type. The WACC has been derived based on cost capital of listed power generating companies. WACC is calculated as illustrated below: WACC = [D/(D+E)]*[Cost of Debt] + [E/(D+E)]*[Cost of Equity] Cost of Debt: Cost of debt is defined as the rate at which the lenders agree to lend money to the project. The additionality tool and the guidance on investment analysis clarifies that the benchmark for projects with more than one potential developer should not be based on project specifc parameters but should represent the standard in the market. Prime Lending Rate (PLR) is defined as the benchmark rat for all bank loans. Historically the PLR is the rate at which banks lends to the best borrower-one who is the safest or least likely to default the loan. Accordingly PLR at the time of investment decision has been considered as the cost of debt. The PLR at the time of investment decision was in the range of 11.00% - 12.00% [Average PLR at the time of investment decision http://www.rbi.org.in/scripts/WSSView.aspx?Id=13907 ], thus average PLR or 11.50% has been considered as cost of debt. Cost of Equity: The cost of equity as been determined using the Capital Asset Pricing Model (CAPM) considering Beta values for power generating companies in India that were listed at the time of this investment. Detailed calculation of cost of Equity and WACC along with and elaboration of approach are provided in Appendix 3. The WACC for the project works out to be 12.74%. Investment Analysis: An investment analysis of the project activity was conducted considering project IRR (Post-tax) as the most suitable financial indicator. Though wind energy is a clean energy, it is a costlier option, especially in India where availability of coal is in abundance. It makes coal the most preferred fuel for power generation since it is the least cost option. Wind energy has the lowest load factor and the highest uncertainty in production since it is entirely dependent on weather conditions. Moreover, the choice of the location of the windmills is driven by the meteorological condition. Thus the investment recovery is directly coupled with availability of wind and suitable infrastructure.
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Computation of IRR: In this regard it is to be noted that the project IRR has been computed as follows: Table B.4: Data & Assumption Used in Computation of IRR Assumptions for Financial Model Capacity of Machines in kW Number of Machines Project Capacity in MW Project Commissioning Date Project Cost per MW (Rs. In Millions) Operations 20 Year Long Term Annual Energy Output from 99 MW wind farm at 90% confidence level (MWh) 20 Year Long Term Annual Energy Output from 49.5 MW wind farm at 90% confidence level (MWh) Plant Load Factor considered Insurance Charges O&M inspection charges Tariff Base year Tariff Rs./Kwh Annual Escalation (Rs./kWh per Year) Tariff applicable (Rs/kWh) Project Cost Land and Infrastructure, Generator & Electrical Equipments, Mechanical Equipments, Civil Works, Instrumentation & Control, Other Project Cost, Pre operative Expenses, etc. Total Project Cost Means of Finance I 3.39 0.00 3.39 Rs Million
http://tnerc.tn.nic.in/orders/draft%20order%20203-2009%20complete%20final.pdf (page 36 of 190) http://tnerc.tn.nic.in/orders/draft%20order%20203-2009%20complete%20final.pdf (page 36 of 190) http://tnerc.tn.nic.in/orders/draft%20order%20203-2009%20complete%20final.pdf (page 36 of 190)
1650 30 49.50 02-July-2010 60.61
Remarks As per the offer received from Vestas dated 12.05.09 To be referred from second board resolution to split the 99 MW project into 2 projects of 49.5 MW (each with 30 WTGs of 1.65 MW) Calculated value Commissioning Certificate Calculated value
241.30
Third party assessment, LTAEO Report dated 13.07.09 Third party assessment, LTAEO Report dated 13.07.09 Third party assessment, LTAEO Report dated 13.07.09 As per the offer received from Vestas dated 12.05.09 As per the offer received from Vestas dated 12.05.09
120,650 28.11% Described in O&M Schedule Described in O&M Schedule
3,000 Rs
Pro-rated project cost approved by CLP board for 99 MW project dated 28.08.09
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Assumptions for Financial Model Million Own Source Term Loan Total Source Terms of Loan Interest Rate Tenure Moratorium Income Tax Depreciation Rate (Written Down Value basis) on Wind Energy Generators On other Assets Book Depreciation Rate (Straight Line Method basis) On all assets Book Depreciation up to (% of asset value) Income Tax Income Tax rate Minimum Alternate Tax Working capital Receivables (no of days) O & m expenses (no of days) Working capital interest rate Project IRR (20-year cashflow) 12.0 6 11.50% Years Months 30% 70% 900.00 2,100.00 3,000.00
Remarks Normative Normative Pro-rated project cost approved by CLP board for 99 MW project dated 28.08.09
Average PLR at the time of investment decision http://www.rbi.org.in/scripts/WSSView.aspx?Id=1 3907
Normative Normative
80% 10%
5.28% 90% 33.99% 17.00% 45 30 11.50% 8.51% As per Income Tax Act As per Income Tax Act Normative Normative
Average PLR at the time of investment decision http://www.rbi.org.in/scripts/WSSView.aspx?Id=1 3907
Based on the assumptions presented above, the project IRR with a 20 year cash flow and without consideration of CDM revenues works out to be 8.51%. It can be seen that the Project IRR 8.51% is less than the WACC 12.74% Sub-step 2d. Sensitivity analysis (only applicable to options II and III): A sensitivity analysis has been carried out on the project IRR to determine whether the conclusion regarding the financial/economic attractiveness is robust to reasonable variations in the critical assumptions. The analysis on Project IRR is done to analyse how the financial attractiveness of the project activity varies with changes in Plant Load Factor (PLF) and capital cost. PLF and capital cost are the two most important factors which will affect the financial attractiveness of the project.
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The base case for the PLF of 28.11% is based on a study conducted by an independent consultant7 for CLP for the specific project location. A copy of this due diligence report will be shared with DOE at the time of validation. The impact of +/- 10% variation in the values of the PLF and Capital cost has been presented in the table below: Table B.5: Result of Sensitivity Test Parameter Variation -10% Base case 10% -10% Base case 10% Project IRR without CDM revenue 6.92% 8.51% 10.02% 9.96% 8.51% 7.29%
Plant Load Factor
Capital cost
It can be inferred from the sensitivity analysis that the project IRR in the 2 optimistic scenarios of (a) PLF being 10% more than that of base case PLF and (b) Capital Cost being 10% less than that of the base case capital cost is still lower than the WACC at the time of investment decision which makes the project financially unattractive for the project proponent. Outcome of step 2: The project activity is not most financially attractive (as per step 2c para 8a) we proceed to step 4 common practice analysis Step 4. Common practice analysis Sub-step 4a. Analyze other activities similar to the proposed project activity: Wind electricity diffusion in Tamil Nadu We analyze the extent to which wind energy projects have diffused in the electricity sector in Tamil Nadu. In 2004 05, electricity generation from wind sources was 2,4268 GWh and the total electricity available at bus bar in the state of Tamil Nadu was 51,4869 GWh. Thus wind generation works out to 4.7% of total electricity available to the state of Tamil Nadu. Clearly, electricity generation from wind is not a common practice in Tamil Nadu. Analysis of similar projects within comparable regulatory regime and investment climate Over the years there have been two different regulatory / investment regimes in the state of Tamil Nadu for wind power projects.
Source: CLP has appointed independent Australian Agency to conduct the PLF assessment of the project site. The Long Term Annual Energy Output (LTAEO) assessment report provided by the consultant will be made available to the DOE for validation.
8
Table 3.4 titled Gross Electrical Energy Generation (Utilities Only) Primemoverwise, Regionwise / Statewise During 2004-05 in chapter 3 of the CEA general review 2006 available at http://www.cea.nic.in/power_sec_reports/general_review/index_general_Review.html
9
Table 5.3 titled Statewise System Losses During 2004-05 in chapter 5 of the CEA General review 2006 available at http://www.cea.nic.in/power_sec_reports/general_review/index_general_Review.html
page 18
Regime 1 Central regime (MNES policy) Projects installed prior to September 2001 Wind power projects were governed by MNES policy with tariff set at Rs. 2.25 per unit for the base year 1994-95 with a 5% annual escalation, wheeling and banking charges of 2%, etc. Regime 2 State regime (TNEB and TNERC policies / orders) Projects installed after September 2001 Wind power projects were governed by (a) TNEB order of 2001 with fixed tariff of Rs. 2.70 per unit, wheeling and banking charged of 5%, etc. (b) TNERC order of 2006 with fixed tariff of Rs. 2.9 per unit, (c) TNERC order of 2009 with fixed tariff of Rs. 3.39 per unit etc. The different tariffs under regime 1 and regime 2 are presented below: Table B.6: Tariffs Under Regime 1 & Regime 2
Electricity tariff (Rs/kWh) REGIME 1 MNES Policy10 REGIME 2 TNEB order 200111 TNERC Order 200612 TNERC Order 200913 2006 -07 3.60 2.70 2.90 3.39 2007 -08 3.72 2.70 2.90 3.39 2008 -09 3.83 2.70 2.90 3.39 2009 -10 3.94 2.70 2.90 3.39 2010 -11 4.05 2.70 2.90 3.39 2011 -12 4.17 2.70 2.90 3.39 2012 -13 4.28 2.70 2.90 3.39 2013 -14 4.39 2.70 2.90 3.39 2014 -15 4.50 2.70 2.90 3.39 2015 -16 4.62 2.70 2.90 3.39 Averag e 4.11 2.70 2.90 3.39
Wind projects prior to September 2001 were governed by the MNES policy. However this regime was superseded by the state policy and post September 2001 all project fell into the state regime (regime 2). As can be seen above, Regime 1 projects are of a different regulatory and investment environment and hence cannot be compared to the proposed project activity which falls under the Regime 2. The candidate CDM project activity is a large scale project and hence an analysis of all private wind farm owners with an installed capacity of 15 MW or above, in the state of Tamil Nadu, under the Regime 2 i.e. after September 2001, has been presented below. Table B.7: Common Practice Analysis
10 11 12 13
Rs.2.25 for 1994-95 and 5% annual escalation thereafter Rs.2.70 for 2001 fixed for next 10 years Rs. 2.90 for 2006, fixed for next 10 years Rs. 3.39 for 2009, fixed for the next 20 years
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Name of Owner14
Capacity MW in the Regime 215
CDM16
Web-links and Explanation
Madras Cement Ltd.
142.350
Yes
Simran wind power project
51.600
Yes
Super wind power project
36.000
Yes
DLF Home developers
34.500
Yes
Soundararaja Mills Ltd.
33.850
Yes
Installations under the 3 CDM PDDs titled 1) "41.6 MW grid connected electricity generation project by Madras Cements Limited in Tamil Nadu." http://cdm.unfccc.int/UserManagement/FileStorage/8VW717YLM 7QAINAKXV3USR446DSWZX 2 ) 46.2 MW wind energy project in Tamilnadu, India. http://cdm.unfccc.int/UserManagement/FileStorage/Y6B79J5VND MS80OLGQ4IXRTCAZFE2P 3 ) 74 MW wind energy project in Tamilnadu, India. http://cdm.unfccc.int/UserManagement/FileStorage/QKS35DUH7 M1L86BOYX20TA9GJEWPCF Installations under 2 PDDs 1) Grid connected wind energy project in Tamil Nadu by Simran Wind Project Private Ltd. http://cdm.unfccc.int/UserManagement/FileStorage/GEVSCPXKM HDY9FQ42ZNJI1RAU6BO85 2 ) 33.9 MW bundled wind power project in states of Karnataka and Tamil Nadu. This is a VCS project. PDD titled "Grid connected wind energy project in Tamil Nadu by Super Wind project private ltd" http://cdm.unfccc.int/UserManagement/FileStorage/WKRL8XZM9 Q03VES6ICJF7YOG42B1TA PDD titled "Wind Power based electricity generation project in India by DLF Home Developers Limited" http://cdm.unfccc.int/Projects/Validation/DB/34CAG54CUL49MIL W9S0SKWCWU38SSX/view.html Installations are under the CDM PDDs titled 1) 10.005 MW captive grid connected wind power project by the members of IWPA at Coimbatore. http://cdm.unfccc.int/UserManagement/FileStorage/3COOHDRDG 8SZBFGC437328KXEIBKCV 2) 40.68 MW grid connected electricity generation project by Indian Wind Power Association at Tirunelveli in Tamil Nadu. http://cdm.unfccc.int/UserManagement/FileStorage/J9R5JA7N8U1 SS5YVOAT77VR38US32P 3) Bundled Wind power project in Tamil Nadu, India, co-ordinated by Tamil Nadu Spinning Mills Association (TASMA-II) http://cdm.unfccc.int/UserManagement/FileStorage/6QDL0CJW95 NYIX8U14H3STGKAF2BEV 4) 21.00 MW grid connected electricity generation project by Indian Wind Power Association at
14
The data on private wind farm owners with greater than 15 MW installed capacity has been taken from http://www.windpowerindia.com/statpriv.html.
15
The capacity of installations under the Regime 2, i.e. commissioned after September 2001 and before the project start date, in the state of Tamil Nadu, has been sourced from the Directory of Indian Windpower 2009.
16
The CDM status of the projects has been taken from the CDM pipeline in http://cdm.unfccc.int, MoEF site and other publicly available sources.
page 20
Name of Owner14
CDM16
Tirunelveli in Tamil Nadu. http://cdm.unfccc.int/UserManagement/FileStorage/UMHY7TQXX EBNNYBUIC017UDWWZXTCT
KPR Mill Pvt. Ltd. Grace Infrastructure (P) Ltd.
32.250
Yes
31.000
Yes
Vishal Export Overseas Ltd
29.275
Yes
Shanmugavel Group
25.500
Yes
Best & Co.
25.000
Yes
Bannari Amman Spinning Mills Ltd. Lakshmi Machine Works Ltd
23.400
Yes
23.000
Yes
The installations are under two CDM PDDs 1) 19.27 MW Grid connected wind electricity generation project by KPR Mills in Tamil Nadu. http://cdm.unfccc.int/Projects/Validation/DB/YKCHA6D5FCSEO3 JMVP8UXJWRMDBCH8/view.html, 2) 19.8 MW grid connected Wind farm project by KPR Mill Private Limited, Tamil Nadu, India http://cdm.unfccc.int/Projects/Validation/DB/AB7TO0OZGUKE6 HYPB4TWCP5536AGVF/view.html Installations under CDM PDD titled "31 MW Wind energy project in, India by Grace Infrastructure Pvt Ltd" http://www.globalwarming.de/files/new_mediagallery/2008-05-09Grace.pdf All the installations were envisaged to be CDM projects as reported publicly http://www.projectsmonitor.com/detailnews.asp?newsid=9284 as well as in the company's annual report Page 18 http://vishalexports.co.in/annual%20reports/Annaul%20Report2005-06.pdf The installations are under the PDD titled "Bundled Wind power project in Tamilnadu, India co-ordinated by the TamilNadu Spinning Mills Association (TASMA)" http://cdm.unfccc.int/UserManagement/FileStorage/AE2042RXII1 2SBXNF29XDKVT2BCEWG The installations are all under the CDM PDD titled "Bundled Wind power project in Tamil Nadu, India, co-ordinated by Tamil Nadu Spinning Mills Association (TASMA-II)" http://cdm.unfccc.int/UserManagement/FileStorage/6QDL0CJW95 NYIX8U14H3STGKAF2BEV The installations are under the CDM PDDs titled 1) "STL Wind Power Project" http://www.dnv.com/focus/climate_change/upload/version%202%2 0-%20pdd%20%20sept%2005.pdf 2 ) Eco Friendly Electricity Export to Grid http://cdm.unfccc.int/UserManagement/FileStorage/5YH92G186J W12SR91FFB9RC302T651 3) Bannari Amman Spinning Mills Wind Power Project managed by Enercon (India) Ltd. https://cdm.unfccc.int/Projects/Validation/DB/FYPAQ52NJB35JZ RDUIC0GVD36E6S33/view.html Installations under PDD titled "27.95 MW wind energy project in Coimbatore district in Tamilnadu, India." http://cdm.unfccc.int/UserManagement/FileStorage/7LXZLFECVX
page 21
Name of Owner14
CDM16
R5YBOJ5TH8J6XNHIPOCN The installations are under the PDD "Grid connected renewable electricity generation project by M/s. Premier Mills Pvt Ltd in Tamilnadu, India" http://cdm.unfccc.int/Projects/Validation/DB/J0J2B6K3O92EEUA FD3OGYLE03TNZ7I/view.html 2) Bundled wind power project in Tamil Nadu managed by Enercon India Limited-II http://cdmindia.nic.in/cdmindia/projects/PCN_785_07.pdf The installations are under CDM project titled "53.75 MW Bundled wind Power project in Tamil Nadu and Karnataka by KBD Group, India" http://cdm.unfccc.int/UserManagement/FileStorage/QN0BCHDRZ 8PI17S2JEMLVW9TYFGO65 The installations are under the PDD titled 1) "Bundled Wind power project in Tamilnadu, India co-ordinated by the TamilNadu Spinning Mills Association (TASMA)" http://cdm.unfccc.int/UserManagement/FileStorage/AE2042RXII1 2SBXNF29XDKVT2BCEWG2 ) 19.80 MW bundled wind energy project in Tirunelveli and Coimbatore districts in Tamilnadu, India http://cdm.unfccc.int/UserManagement/FileStorage/F6UP274DD1 DCT3XJTKRJCJZDZNPZY7 The installations are under the PDD titled "22.25 MW Captive Wind Power Project in Tamil Nadu" http://cdm.unfccc.int/UserManagement/FileStorage/TPAONMX73 CHPZ69AQ5CSP9BI1UKU99 The installations are in the CDM PDD titled "56.25 MW bundled wind energy project in Tirunelveli and Coimbatore districts in Tamilnadu, India." http://cdm.unfccc.int/Projects/Validation/DB/37X42BG16GG63V K5L84D6WZ0UM8YGG/view.html The installations are under the PDDs titled 1) "16.45 MW bundled grid connected renewable energy project in Tamil Nadu, India" http://www.tuvdotcom.com/pi/web/PinDownload.xml?strUrlId=3& strUserId=&TUVdotCOMID=9105043814&strType=UserManual Download&strDocumentID=19694&strTypeID=8&menuOption=p rocess&isManualNeeded=true&isPictureNeeded=false&isRatingNe eded=false&isSecureNeeded=false&isIDNeeded=false&isTypeNee ded=true&isHolderNeeded=true 2 ) 37.6 MW Bundled Wind Power Project in Nagercoil, Tamilnadu http://www.dnv.com/focus/climate_change/Upload/Nagercoil%20P DD.pdf Installations are under the CDM PDDs 1) Wind based bundled renewable energy project, Tamilnadu, India. http://www.dnv.com/certification/climatechange/upload/pdd%20%2020.15%20mw.pdf 2 ) Emissions free electricity generation using wind energy http://cdm.unfccc.int/UserManagement/FileStorage/QIOVC8LXW
Premier Fine Yarns Pvt. Ltd.
22.850
Yes
Sapthagiri Distilleries
21.000
Yes
TCS Textiles Ltd.
20.750
Yes
Loyal Textile Mills Ltd
20.450
Yes
Ashok Leyland Fin. Ltd
20.025
Yes
Arvind A Traders
19.350
Yes
Muthoot Fincorp Ltd.
18.750
Yes
page 22
Name of Owner14
CDM16
CPCL
17.600
Yes
Suzlon Infrastructure Limited
17.500
Yes
Premier Spg & Wvg Mills Pvt. Ltd
16.250
Yes
Rasi Seeds (P) Ltd.
16.250
Yes
Ambika Cotton Mills Ltd.
15.400
Yes
S06YB91FZ5R3E4KTJGUPA 3 ) 23.75MW grid connected electricity generation project at Tirunelveli in Tamil Nadu. http://www.sgsqualitynetwork.com/tradeassurance/ccp/projects/512 /PDD%2023.75MW%20grid%20connected%20electricity%20gene ration%20project%20at%20Tirunelveli%20in%20Tamil%20Nadu.. pdf Installations are under PDD titled "17.6 MW captive grid connected electricity generation from wind energy project by Chennai Petroleum Corporation Limited." http://cdm.unfccc.int/Projects/DB/BVQI1257245548.54/view The installations are under the PDDs 1) "16.25 MW grid connected electricity generation project at Coimbatore in Tamil Nadu" http://cdm.unfccc.int/UserManagement/FileStorage/FM6BIMO4FT LNNUKVLSTLYJLM14NRCM 2) "38.75 MW grid connected electricity generation project at Tirunelveli in Tamil Nadu" http://cdm.unfccc.int/UserManagement/FileStorage/Y5UO445ZIR7 VMGE34PQUDGRTHCKRSB 4 ) "23.75MW grid connected electricity generation project at Tirunelveli in Tamil Nadu" http://www.sgsqualitynetwork.com/tradeassurance/ccp/projects/512 /PDD%2023.75MW%20grid%20connected%20electricity%20gene ration%20project%20at%20Tirunelveli%20in%20Tamil%20Nadu.. pdf The installations are under the PDD "Grid connected renewable electricity generation project by M/s. Premier Mills Pvt Ltd in Tamilnadu, India" http://cdm.unfccc.int/Projects/Validation/DB/J0J2B6K3O92EEUA FD3OGYLE03TNZ7I/view.html 2 ) Bundled wind power project in Tamil Nadu managed by Enercon India Limited-II http://cdmindia.nic.in/cdmindia/projects/PCN_785_07.pdf The installations arel under the CDM PDDs titled 1) "Bundled Wind power project in Tamil Nadu, India, co-ordinated by Tamil Nadu Spinning Mills Association (TASMA-II)" http://cdm.unfccc.int/UserManagement/FileStorage/6QDL0CJW95 NYIX8U14H3STGKAF2BEV 2 ) "Bundled Wind power project in Tamilnadu, India co-ordinated by the TamilNadu Spinning Mills Association (TASMA)" http://cdm.unfccc.int/UserManagement/FileStorage/AE2042RXII1 2SBXNF29XDKVT2BCEWG The installations are under CDM PDDs 1) Bundled Wind power project in Tamilnadu, India co-ordinated by the TamilNadu Spinning Mills Association (TASMA) http://cdm.unfccc.int/Projects/DB/TUEVSUED1173364563.43/view 2) Bundled Wind power project in Tamil Nadu, India, co-ordinated by Tamil Nadu Spinning Mills Association (TASMA-II) http://cdm.unfccc.int/Projects/Validation/DB/4R4NBZ8HU31NRZ MNQAMH37GJN07926/view.html
page 23
Name of Owner14
CDM16
Jayajyoti & Co. Ltd NEG Micon India Private Limited
15.000
Yes
25.70
Yes
Powerica Limited
16.5
Yes
The installations are under the PDD titled "Bundled Wind power project in Tamilnadu, India co-ordinated by the TamilNadu Spinning Mills Association (TASMA)" http://cdm.unfccc.int/UserManagement/FileStorage/AE2042RXII1 2SBXNF29XDKVT2BCEWG The installations are under the PDD titled 25.70 MW Bundled Wind Power Project in Udumalpet, Tamilnadu http://cdm.unfccc.int/Projects/Validation/DB/YIOSPG6G30Z9OO0 80TSBRCI9THZ8HG/view.html The installations are under the PDD titled Wind power project at Tamilnadu by Powerica Limited http://cdm.unfccc.int/UserManagement/FileStorage/F2VB36X574L WJ0TUHZQG18YKRIPED9
It can be seen all private wind farm installations, in the similar regulatory and investment climate as that of the project activity and with capacity of over 15 MW in the state of Tamil Nadu, are CDM projects. The analysis presented in the table above, shows that almost all similar project activities (except one) are CDM projects, i.e. and non-CDM large scale wind energy investments is not a common practise in the region. Sub-step 4b. Discuss any similar options that are occurring: From sub-step 4a it is clear that similar activities are not widely observed or commonly carried out and that all similar projects have been undertaken only as CDM projects. Therefore Sub-step 4b is not applicable. Based on the above considerations, the project activity is considered to be additional. B.6. Emission reductions:
B.6.1. Explanation of methodological choices: >> According to the approved methodology ACM0002 (version 12.1) Emission Reductions are calculated as ERy = BEy PEy --------------------------------------------------------------------------------------------------- Equation 11 of ACM0002 Where: BEy PEy Baseline Emissions in year y (t CO2e/yr) Project Emissions in year y (t CO2e/yr)
page 24
Estimation of Baseline Emissions Baseline emissions only include CO2 emissions from electricity generation in fossil fuel fired power plants that are displaced by the project activity due to displacement of grid-electricity is calculated as the product of the Baseline Emissions Factor (EFgrid,CM,y in tCO2/MWh) calculated as described below, times the electricity supplied by the CLPs project activity to the grid (EGPJ,y in MWh/yr), over the crediting period. BEy = EGPJ,y X EFgrid,CM,y----------------------------------------------------------------------------------------Equation 6 of ACM0002 Where: BEy EGPJ,y EFgrid,CM,y Baseline emissions in year y (tCO2/yr) Quantity of net electricity generation that is produced and fed into the grid as a result of implementation of the CDM project activity in year y (MWh/yr) Combined margin CO2 emission factor for grid connected power generation in year y calculated using the latest version of the Tool to calculate the emission factor for an electricity system (tCO2/MWh)
Since the project activity is grid connected green-field renewable (wind) energy generation project at a site where no renewable power plant was operated prior to implementation of the project activity therefore: EGPJ,y = EGfacility,y--------------------------------------------------------------------------------------------------Equation 7 of ACM0002 Where EGPJ,y EGfacility,y Quantity of net electricity generation that is produced and fed into the grid as a result of implementation of the CDM project activity in year y (MWh/yr) Quantity of net electricity generation supplied by the project plant/unit to the grid in year y (MWh/yr)
Estimation of Project Emissions: Wind being a zero emission source PEy =0 Leakage No leakage emissions are considered. Determination of baseline emission factor (EFgrid,CM,y) According to the tool to calculate the emission factor of an electricity system; the baseline emission coefficient will be determined using the following steps: STEP 1: Identify the relevant electricity system The Indian electricity system is divided into two regional grids, NEWNE and SR Grid. Each grid covers several states. As the regional grids are interconnected, there is inter-state and inter-regional exchange. A small power exchange also takes place with neighboring countries like Bhutan and Nepal.
page 25
Power generation and supply within the regional grid is managed by Regional Load Dispatch Centre (RLDC). The Regional Power Committees (RPC) provides a common platform for discussion and solution to the regional problems relating to the grid. Each state in a regional grid meets its demand with its own generation facilities and also with allocation from power plants owned by the Central Sector such as NTPC and NHPC etc. Specific quotas are allocated to each state from the Central Sector power plants. Depending on the demand and generation, there are electricity exports and imports between states in the regional grid. The regional grid thus represents the largest electricity grid where power plants can be dispatched without significant constraints and thus, represents the project electricity system for the Project. As the Project is located in state of Tamil Nadu which is connected to the SR Grid is the project electricity system. STEP 2. Choose whether to include off-grid power plants in the project electricity system (optional). In accordance with the Option I of step 2 of the latest Tool to calculate the emission factor for an electricity system 17, only grid power plants have been included in the calculation of the to calculate the operating margin and build margin emission factor.
STEP 3: Select a method to determine the operating margin (OM) According to the tool the calculation of the operating margin emission factor is based on one of the following methods: (a) Simple OM, or (b) Simple adjusted OM, or (c) Dispatch data analysis OM, or (d) Average OM. Any of the four methods can be used, however, the simple OM method (option a) can only be used if low cost/ must-run resources constitute less than 50% of total grid generation in: 1) average of the five most recent years, or 2) based on long-term averages for hydroelectricity production. The Share of Low Cost / Must-Run (% of Net Generation) in the generation profile of the two grids in India for the last five years is as follows18: Table B.8: Generation Profile of NEWNE & SR Grid NEWNE SR India 2004-05 17.05% 16.2% 17.1% 2005-06 18.0% 27.0% 20.1% 2006-07 18.5% 28.3% 20.9% 2007-08 19.0% 27.1% 21.0% 2008-09 17.3% 22.8% 18.6%
The above data clearly shows that the percentage of total grid generation by low cost/must run plants (on the basis of average of five most recent years) for the SR Grid is less than 50 % of the total generation. Hence the Simple OM method can be used to calculate the Operating Margin Emission factor.
17
for http://cdm.unfccc.int/EB/050/eb50_repan14.pdf
CO2 Baseline Database for the Indian Power Sector Central Electricity Authority version 5
18
http://cea.nic.in/planning/c%20and%20e/database_publishing_ver5.zip
page 26
The project proponents choose an ex ante option for calculation of the OM with a 3-year generationweighted 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. STEP 4: Calculate the operating margin emission factor according to the selected method The simple OM emission factor is calculated as the generation-weighted average CO2e emissions per unit net electricity generation (tCO2e/MWh) of all generating power plants serving the system, not including low-cost / must-run power plants / units. It may be calculated: Based on data on fuel consumption and net electricity generation of each power plant / unit (Option A), or Based on data on net electricity generation, the average efficiency of each power unit and the fuel type(s) used in each power unit (Option B), or Based on data on the total net electricity generation of all power plants serving the system and the fuel types and total fuel consumption of the project electricity system (option C) The Central Electricity Authority, Ministry of Power, Government of India has published a database of Carbon Dioxide Emission from the power sector in India based on detailed authenticated information obtained from all operating power stations in the country. This database i.e. The CO2 Baseline Database provides information about the Combined Margin Emission Factors of all the regional electricity grids in India. The Combined Margin in the CEA database is calculated ex ante using the guidelines provided by the UNFCCC in the Tool to calculate the emission factor for an electricity system. We have, therefore, used the Combined Margin data published in the CEA database, for calculating the Baseline Emission Factor. The CEA database uses the option B i.e. data on net electricity generation, the average efficiency of each power unit and the fuel type(s) used in each power unit, to calculate the OM of the different regional grids. The simple OM emission factor is calculated based on the electricity generation of each power unit and an emission factor for each power unit, as follows: EFgrid,OMsimple,y = (EGm,y x EFEL,m,y) / EGm,y Where: EFgrid,OMsimple,y Simple operating margin CO2 emission factor in year y (tCO2/MWh) EGm,y Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) EFEL,m,y CO2 emission factor of power unit m in year y (tCO2/MWh) m All power units serving the grid in year y except low-cost / must-run power units y Either the three most recent years for which data is available at the time of submission of the CDM PDD to the DOE for validation (ex ante option) or the applicable year during monitoring (ex post option), following the guidance on data vintage in step 2 The emission factor of each power unit m has been determined using Option B1
page 27
EFEL,m,y = ( FCi,m,y x NCVi,y x EFCO2,I,y ) / EGm,y Where: EFEL,m,y FCi,m,y NCVi,y EFCO2,I,y EGm,y m i y CO2 emission factor of power unit m in year y (tCO2/MWh) Amount of fossil fuel type i consumed by power unit m in year y (Mass or volume unit) Net calorific value (energy content) of fossil fuel type i in year y (GJ / mass or volume unit) CO2 emission factor of fossil fuel type i in year y (tCO2/GJ) Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) All power units serving the grid in year y except low-cost / must-run power units All fossil fuel types combusted in power unit m in year y Either the three most recent years for which data is available at the time of submission of the CDM-PDD to the DOE for validation (ex ante option) or the applicable year during monitoring (ex post option), following the guidance on data vintage in step 2
STEP 5: Identify the group of power units to be included in the build margin (BM) The sample group of power units m used to calculate the build margin consists of either: (a) The set of five power units that have been built most recently, or (b) The set of power capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. Project participants should use the set of power units that comprises the larger annual generation. Accordingly, the CEA database calculates the build margin as the average emissions intensity of the 20% most recent capacity additions in the grid based on net generation. The build margin emission factor has been calculated ex-ante based on the most recent information available on units already built for sample group m at the time of CDM-PDD submission to the DOE for validation. This option does not require monitoring the emission factor during the crediting period. STEP 6: Calculate the build margin emission factor The build margin emissions factor is the generation-weighted average emission factor of all power units m during the most recent year y for which power generation data is available, calculated as follows: EFgrid,BM,y = ( EGm,y x EFEL,m, ) / EGm,y Where: EFgrid,BM,y EGm,y EFEL,m,y m Build margin CO2 emission factor in year y (tCO2/MWh) Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) CO2 emission factor of power unit m in year y (tCO2/MWh) Power units included in the build margin
page 28
Most recent historical year for which power generation data is available
The CO2 emission factor of each power unit m (EFEL,m,y) is determined as per the procedures given in step 3 (a) for the simple OM, using options B1 using for y the most recent historical year for which power generation data is available, and using for m the power units included in the build margin. STEP 7: Calculate the combined margin (CM) emissions factor The emission factor EFgrid,CM,y of the grid is represented as a combination of the Operating Margin (OM) and the Build Margin (BM). Considering the emission factors for these two margins as EFgrid,OM,y and EFgrid,BM,y then the EFgrid,CM,y is given by: EFgrid,CM,y= wOM * EFgrid,OM,y + wBM * EFgrid,BM,y Where: EFgrid,BM,y EFgrid,OM,y wOM wBM Build margin CO2 emission factor in year y (tCO2/MWh) Operating margin CO2 emission factor in year y (tCO2/MWh) Weighting of operating margin emissions factor (%) Weighting of build margin emissions factor (%) (where wOM + wBM = 1).
According to ACM0002 the weights for OM and BM are 0.75 and 0.25 respectively. Using the values for operating and build margin emission factor provided in the CEA database and their respective weights for calculation of combined margin emission factor, the baseline carbon emission factor (CM) is 945.1 tCO2e/GWh or 0.9451 tCO2e/MWh. Details of Baseline data: Data of Operating and Build Margin for the three financial years from 2006-07 to 2008-09 has been obtained from The CO2 Baseline Database for the Indian Power Sector19 Ministry of Power: Central Electricity Authority (CEA) Version 5 Dated: November 2009 Key baseline information is reproduced in Annex 3. Estimation of Project Emissions The project activity involves harnessing of wind energy and its conversion to electricity. Hence according to ACM0002 version 12.1, there will be no project emissions in the project activity PEy = 0 Estimation of Leakage Emissions As per ACM0002 version 12.1, no leakage has been considered for the calculation of emission factor. The details on OM, BM and CM estimates as provided by the CEA are shown in Annex-3.
19
The detailed excel sheet is available at:
http://cea.nic.in/planning/c%20and%20e/database_publishing_ver5.zip
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B.6.2. Data and parameters that are available at validation: (Copy this table for each data and parameter) Data / Parameter: Data unit: Description: Source of data used: EFgrid,OM,y tCO2e/MWh Operating Margin (OM) Emission Factor of Southern Regional Electricity Grid The CO2 Baseline Database for the Indian Power Sector - Ministry of Power: Central Electricity Authority (CEA) Version 5. Also refer Annex 3 0.9991 2006-07 0.9906 2007-08 0.9729 2008-09 Operating Margin Emission Factor has been calculated by the Central Electricity Authority using the simple OM approach in accordance with "Tool to calculate the emission factor for an electricity system
Value applied:
Justification of the choice of data or description of measurement methods and procedures actually applied : 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 : Data / Parameter: Data unit: Description: Source of data used:
EF grid,BM,y tCO2e/MWh Build Margin (BM) Emission Factor of Southern Regional Electricity Grid The CO2 Baseline Database for the Indian Power Sector - Ministry of Power: Central Electricity Authority (CEA) Version 5. Also refer Annex 3 0.8179 tCO2/MWh for the year 2008-09 The Build Margin Emission Factor has been calculated by the Central Electricity Authority using the simple OM approach in accordance with "Tool to calculate the emission factor for an electricity system
Ratio OM:BM Ratio of Operating margin to build margin used for calculation of combined margin for wind energy project The CO2 Baseline Database for the Indian Power Sector - Ministry of Power: Central Electricity Authority (CEA) Version 5. Also refer Annex 3 75:25
Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied :
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B.6.3. Ex-ante calculation of emission reductions: >> The project activity reduces carbon dioxide through displacement of grid electricity generation with fossil fuel based power plants by renewable-wind electricity. The emission reduction ERy due to project activity during a given year y is calculated as the difference between baseline emissions (BE y) and project emissions (PEy) as per formula given below. As per ACM0002, version 12.1, there are no leakage emissions. : ERy = BEy PEy Since PEy is zero, the emission reductions by the project activity during a given year y is: ERy = BEy -0 ERy=BEy Where BEy is calculated as BEy = EGPJ,y X EFgrid,CM,y Where, EGPJ,y EFgrid,CM,y is the electricity supplied to the grid in year y is the CO2 emission factor (combined margin) of the grid as calculated below.
As described above, the emission factor EFgrid,CM,y of the grid is represented as a combination of the Operating Margin and the Build Margin. Considering the emission factors for these two margins as EFgrid,OM,y and EF grid,BM,y, then the EFgrid,CM,y is given by: EFgrid,CM,y = wOM * EFgrid,OM,y + wBM * EFgrid,BM,y With respective weight factors wOM and wBM (where wOM + wBM = 1); as per the Tool to calculate the emission factors for an electricity system (version 01.1) for a wind project, the weightage for operating margin has been taken as, wOM = 0.75 and that for build margin, wBM = 0.25 has been considered. The details of the values to arrive into combined margin emission factor are provided in Annex-3 (baseline information) Ex-ante calculation of emission reductions is equal to ex-ante calculation of baseline emissions as project emissions and leakage are nil. Table B.9: Ex-ante Calculation of Emission Reductions Annual electricity supplied to the grid by the Project Baseline emission factor (combined margin) Data parameter EGPJ,y Value = 49.5MW (Capacity) x 28.11% (PLF) x 8760 (hours) / 1000 GWh =121.891 GWh/year 945.1 Unit GWh/year
EFgrid,CM,y
tCO2e/GWh
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Annual baseline emissions
Data parameter BEy
Value = 945.1 tCO2e/GWh GWh/year = 115,199 115,199
Unit 121.891 tCO2e/year
Emission Reductions
ERy
tCO2e/year
B.6.4 Summary of the ex-ante estimation of emission reductions: >> The estimated emission reduction to be achieved during the 10 - year crediting period aggregates to 1,151,990 tCO2e. Table B.10: Summary of Ex-ante Estimation of Emission Reductions Year Estimation of project activity emissions (tonnes of CO2e) 0 0 0 0 0 0 0 0 0 0 0 Estimation of baseline emissions (tonnes of CO2e) 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 1,151,990 Estimation of leakage (tonnes of CO2e) 0 0 0 0 0 0 0 0 0 0 0 Estimation of overall emission reductions (tonnes of CO2e) 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 1,151,990
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Total (tonnes of CO2e)
B.7.
Application of the monitoring methodology and description of the monitoring plan:
Name of the monitoring methodology: Consolidated monitoring methodology for zero-emissions gridconnected electricity generation from renewable sources. Reference is taken from the available UNFCCC document available for approved consolidated baseline methodology ACM0002, Version 12.1. B.7.1 Data and parameters monitored: Electricity generation (EGPJ,y) MWh (Mega-watt hour) Net electricity supplied to the grid by the Project The electricity supplied to the grid would be taken from the Joint Meter
1. Data / Parameter: Data unit: Description: Source of data used:
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Reading Report carried out at the TNEB meter located near each WTG (30 TNEB meters for 30 WTG). Value applied: Annual electricity supplied to the grid by the Project = 49.5 MW 28.11% 8,760 (hours) MWh = 121,891 MWh Justification of the The net electricity supplied to the grid is measured by the main meters (export choice of data or and import values) installed by TNEB at the metering point near each WTG. description of The Total Net Electricity supplied to TNEB grid by the project activity is the measurement methods summation of Net Electricity supplied by individual 30 WTG of the project and procedures actually activity applied : QA/QC procedures to The quantity of net electricity supplied will be cross-verified from the invoice be applied: raised to TNEB by the project proponent. Also refer Section B.7.2 below. Any comment: The data will be archived for crediting period + 2 years. B.7.2. Description of the monitoring plan: >> The approved large scale methodology ACM0002 (version 12.1), stipulates the monitoring of the net electricity generation supplied by the project plant/unit to the grid. Project proponent has signed an Operation and Maintenance contract with the supplier, Vestas to operate the wind mills for a period of 20 years from the date of commissioning of each WTG. The performance of the mills, safety in operation and scheduled /breakdown maintenances are organized and monitored by the contractor. Vestas will monitor the generation of the WTG daily on a regular basis and will maintain a log book recording daily generation details for each WTG comprising the project as metered at the wind farm. Vestas will also provide daily generation data to CLP through website. A power purchase agreement has been signed with TNEB. The project proponent has installed Real Time TOD Meters with online reading features at the Metering Point (the Main Meter). As a cross check measure, CLP has also installed a check meter close to the main meter for each WTG. The metering equipments (main and check) are duly approved, tested and sealed by TNEB in the presence of the parties involved (TNEB and Vestas). The metering equipment (consisting of the Main Meter and the Check Meter) is identical in make and technical standards and is of 0.5 accuracy class and calibration. They comply with the requirements of the Electricity Rules. The meter readings at the Metering Point are undertaken every month jointly by the representatives of the State Grid/ TNEB and Vestas representative for the previous month. The meter readings are jointly certified by representatives of the State Grid/ TNEB and Vestas. The TNEB carries out the calibration, periodical testing, sealing and maintenance of meters in the presence of Vestas representative. The frequency of meter testing is once in a year. All meters are tested at the Metering Point. Metering procedure The generated electricity is measured through a two step procedure wherein the first metering is carried out at the micro-processor based controller (Local Control System) specially designed to control the WEG. The primary function of the LCS is to ensure that all the components of the WEG remain fully operational under all conditions. In order to meet this requirement, it is necessary to monitor wind speed, wind direction, temperature, rotational speeds, electricity generated, voltage etc. The LCS display and keyboard enable control of all WEG functions. The electricity generation details will be displayed in the LCS. The monitoring of all these wind turbines is done from a common monitoring station as a part of
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central monitoring system. The system consists of a state- of- the- art controlling and monitoring and well trained staff personnel of O&M contractor, Vestas, are always present on site to monitor various parameters of power generation and deal with any problems related to generation, transmission or maintenance. The second metering is carried out at TNEB meter located near each WTG (30 TNEB meters for 30 WTG of the project activity). This is the metering point wherein the Joint Meter Reading (JMR) is carried out every month in presence of the representatives of the project proponent & the state electricity utility (TNEB). This JMR is used for calculation of the amount of electricity supplied to the grid against which the utility makes the payment to the project proponent. The JMR gives both the export and import of the electricity to/ from the southern grid. There is a single meter which gives both the export and import values, this metered reading would give value net of line losses (negligible since metering/JMR point is very close to the WTG) and auxiliary consumption. The details of the metering equipment, metering, inspection and meter test checking are presented in the Annex 4 Monitoring Information. Action Plan for Monitoring of 2% CER Revenue Committed Towards Sustainable Development Introduction CLP Wind Farms (Theni - Project II) Private Limited (CLP) is a 100% subsidiary of Gujarat Paguthan Energy Corporation Private Limited owned by CLP Holdings, Hong Kong. CLP Holdings is listed in the Global Dow a 150-stock index of the worlds leading blue-chips, the Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific), and the Dow Jones Sustainability Asia Pacific 40 Index (DJSI Asia Pacific 40). CLP is setting-up a 49.5 MW wind power Project in Theni District, Tamil Nadu state (Project). The Project comprises 30 turbines of 1.65 MW capacity each and involves a total investment of 300 Crores. One of the most common definitions of sustainability is consumption today in a manner that one does not compromise the ability of future generations to consume the same. To meet the growing energy needs of India, it is but inevitable that the country will continue to add generation capacity using conventional fossil fuel sources of energy. As one of the main stream power sector investors in India, CLP will continue to participate in this capacity addition endeavor. However, in the spirit of developing and operating a truly sustainable business from a climate and shareholders perspective, CLP has been pursuing investments in viable Renewable Energy Projects and has been on the forefront of adding capacity on the clean energy arena in India. The Project is a step in this direction and is at the outset a large scale investment on a sustainable electricity generation initiative. Background The National CDM Authority has mandated the Project to commit a minimum of 2% earning (net realization value) of proceeds from sale of Carbon Credits towards sustainable development activities including society and community development activities. In addition to investment in the subject Renewable Energy Project, which in itself is a significant contribution to the cause of Sustainable Development, the company proposes to enhance its contribution further by identifying and contributing towards suitable community initiatives in and around the wind farm and the state / country in general.
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Approach Contribution to community initiatives is a part of the fabric of the CLP Group of which the project company is a subsidiary. Economic & Social well being of the community in which CLP operates is one of the mission statements of the CLP Group. The Company already has a Trust in operation in India, which leads the companys efforts on the community front. The company is also evaluating the prospects of enhancing the activities on this front at a pan India level through suitable structuring of the Trust. In order to ensure that the contribution by the Project is deployed in a professional and optimal manner, it is envisaged that the Project will invest in community initiatives directly, through companys central Trust or such other centralized structure evolved by the company going forward. On a case to case basis depending on the potential positive impact on the target community, the company may also consider contributing to any other public trusts active in the target areas or carry out joint initiatives with the overall Developer and Operation & Maintenance Contractor at the site, Vestas Wind Technology India Private Limited, or such other means. The ultimate objective would be to ensure that the funds are deployed efficiently and the target community benefits in the ultimate analysis. Target activities Based on the preliminary understanding of issues plaguing societies in general, it is expected that healthcare, sanitation, education could be potential focus areas. The scope of activities could include but not be limited to organizing medical camps, providing amenities to village schools such as furniture, stationary, buildings, toilets, mid-day meal program, etc, assisting in construction of village roads and such other activities. However, as part of the companys assessment of prevailing local requirements, the nature and scope of work would be modified suitably and taken-up suitably going forward. Demonstration The Project will endeavor to spend a minimum of 2% of net proceeds from sale of carbon credits on community initiatives in and around the wind farm and the state / country in general after netting of share retained by the UNFCC, sharing prescribed by the electricity regulators as per the terms of the Power Purchase Agreement / regulations, any other statutory costs and applicable taxes. The Project proposes to tabulate this expenditure over the entire crediting period and not on a year on year basis suggesting that it is possible that in some years the expenditure would be more than 2% and in some years less than 2% but on a net basis by the end of the crediting period, the project would have incurred 2% of the total net proceeds on community initiatives. This option of demonstrating expenditure to the DOE is proposed as against a year or year approach to take care of issues such as non sale of credits in a given year due to poor global demand for carbon credits, poor market prices, accrual of substantially large proceeds in a given year owing to a market upswing or sale of aggregated credits stifling the ability to spend a large amount efficiently in one year, etc. This apart, given the nature of the Companys Mission statement, it is possible that the Project may voluntarily choose to spend money on community initiatives pending sale of CERs or registration, which would be demonstrated to the DOE during the verification process to enable the DOE keep track of the cumulative expenditure as a percentage of the net sale proceeds over the entire crediting period. The expenditure incurred by the Project would be demonstrated to the DOE either through a CA certificate and/or receipts received or such other means.
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In addition, as part of the annual submission, the following table is proposed to be provided to the DOE for the purposes of verification: Years Annual estimation of emission reduction in tonnes of CO2e 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 115,199 1,151,990 Contribution to Sustainable Development 2,303 2,303 2,303 2,303 2,303 2,303 2,303 2,303 2,303 2,303 2,303 23,030 Price of CER in EURO 12 12 12 12 12 12 12 12 12 12 12 Euro Exchange rate 65 65 65 65 65 65 65 65 65 65 65 Total Contribution
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Total Contribution for sustainable development
1,796,340 1,796,340 1,796,340 1,796,340 1,796,340 1,796,340 1,796,340 1,796,340 1,796,340 1,796,340 1,796,340 17,963,400
Project management structure The operation and maintenance team consists of representatives of technology supplier, Vestas, who will record the readings and prepare daily generation reports of all the WTGs. The primary recording of the electricity fed to the electricity grid will be carried out jointly at the TNEB meter located near each WTG. The operations and maintenance structure for the project activity is as follows:
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Area Site Manager
Taking corrective action against major problems Checking of the collected data Uploading data in website and storing data in Microsoft Access Data Collection from WTGs
Senior Engineers
Data Entry Operators
Site Engineers
The Project Management team of CLP receives the data from both the sources and keeps track of project activity which reduces the carbon emission reductions. Further background information on measurement equipment, procedures etc. are provided in Annex -4 B.8. Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies): >> Date of completion of baseline study and monitoring methodology: 16/12/2010 Name of responsible person/entity: The project participant, CLP Wind Farms (Theni - Project II) Private Limited (CLP), and their CDM advisors. Contact Details of CLP have been given in Annex 1. 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: >> 31/08/2009
C.1.2. Expected operational lifetime of the project activity:

>> The project activity is expected to be operational for a period of 20 Years
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C.2. >>
Choice of the crediting period and related information:
10 Year Fixed C.2.1. Renewable crediting period: C.2.1.1. >> Not opted for. C.2.1.2. >> Not opted for. C.2.2. Fixed crediting period: C.2.2.1. Starting date: Length of the first crediting period: Starting date of the first crediting period:
>> 01/06/2011 or date of registration of the project activity whichever is earlier. C.2.2.2. >> 10 years 0 months Length:
SECTION D. Environmental impacts >> D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: >> As per the Schedule 1 of the EIA notification 2006, given by the Ministry of Environment and Forests under the Environment (Protection) Act 1986, the proposed project does not fall under the list of activities requiring EIA. D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: >> The project activity involves implementation and operation of wind energy generators to generate electrical energy. The implementation of project activity does not result in burning of fossil fuel and will thus not contribute towards environmental degradation or any other such adverse impact on environment. SECTION E. Stakeholders comments >> E.1. Brief description how comments by local stakeholders have been invited and compiled: >> CLP invited the local stakeholder for the local stakeholder meeting by inviting local stakeholders through notices 15 days in advance to the date of the meeting. The notices were sent to the stakeholders on 03 February 2010. The stakeholder meeting was organised on 18 February 2010 from 4:30 pm
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onwards at Middle school in the village nearby to the project site, in presence of representatives of Vestas and project proponent CLP as per the requirements of the CDM modalities. E.2. Summary of the comments received: >> Around 35 stakeholders from nearby villages were present for the meeting. No adverse comment was received from the local stakeholders. The queries raised by stakeholders during the meeting and the response given by project proponent in the following table: S.N. 1. Name of stakeholder Answer by CLP and Vestas / Village What are the factors affecting Mr. S. Suresh Kumar, The major factors causing global Global warming and the bad effects Poomalaikundu warning is increase in CO2 and thereon? Village other greenhouse gases level in the atmosphere. The major ill effects of the global warming are the increase in the average ambient temperature level, increase in the sea water level, changes in the weather conditions etc. Will the project help in improving Mr.Karuppiah, The electricity generated by the the electricity supply to the Poomalaikundu project activity is fed into the villagers/ village school? Tamil Nadu State Electricity grid Village which is then distributed across the state. Do the wind turbines cause any Mrs. Thavamani, The intensity of sound generated sound pollution by the wind turbines is maximum Poomalaikundu at the hub height but it is not Village threatening to humans or other living beings, as the noise generated is within permissible limits. There are also adequate sound dampeners provided in each wind turbine. Will other projects like this also be Mr.Velusamy, The project site at Theni district erected in this region in Tamil Nadu is a very good site Poomalaikundu for development of wind power Village projects, Vestas would be developing similar wind projects for other companies apart from CLP. Will the installation of wind farm Mrs. P. Vasuki, It has been scientifically proven Questions raised
2.
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S.N.
Questions raised affect the rainfall in the region?
Name of stakeholder / Village Poomalaikundu Village
Answer by CLP and Vestas that wind turbines have no impact on rainfall pattern. Wind turbines only extract energy from running wind and cause no other side effect. No, the wind farm installed in the region does not affect either ground water level or drinking water quality of area nearby to the project site. The representative of Vestas explained that Wind Turbine are bought by investors for the reason that they are inclined towards their commitment to produce green / pollution free energy. It does not affect the cattle grazing as, wind farms are located which is far away from Village. There was no prohibition by the project officials in allowing villagers for taking their domestic animals for grazing.
Does the installation of wind farm Bhaskar, affect the ground water level in the Kandamannur Village nearby villages?
Why & who buys the wind turbine generators?
Mrs. T. Anitha, Teacher, NPV School
Does the project affect the grazing of cattle?
E.3. Report on how due account was taken of any comments received: >> Please refer section E.2 above, for project proponent response to local stakeholder queries. The detailed minutes of meeting are attached as Appendix 2 to this PDD.
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Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Street/P.O.Box: Building: City: State/Region: Postcode/ZIP: Country: Telephone: FAX: E-Mail: URL: Represented by: Title: Salutation: Last name: Middle name: First name: Department: Mobile: Direct FAX: Direct tel: Personal e-mail: CLP Wind Farms (Theni - Project II) Private Limited Oberoi Garden City, Off. Western Express Highway, Goregaon East 15th Floor, Oberoi Commerz, International Business Park Mumbai Maharashtra 400 063 India +91 22 67588888 +91 22 67588811/ 8833 mahesh.makhija@clpindia.in www.clpgroup.com Director Mr. Makhija Mahesh Renewables +91 22 67588811/ 8833 +91 22 67588888 mahesh.makhija@clpindia.in
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Annex 2 INFORMATION REGARDING PUBLIC FUNDING No ODA is involved in the project activity.
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Annex 3 BASELINE INFORMATION
Grid Emission Factors20: The Operating Margin data for the most recent three years and the Build Margin data for the Southern Regional Electricity Grid as published in the CEA database are as follows: Simple Operating Margin Southern Regional Grid (tCO2e/MWh) 0.9991 0.9906 0.9729 0.9876
Simple Operating Margin - 2006-07 Simple Operating Margin - 2007-08 Simple Operating Margin - 2008-09 Average Operating Margin of last three years
Build Margin Southern Regional Grid (tCO2e/MWh) 0.8179
Build Margin Combined Margin Calculations Weights Operating Margin Build Margin Combined Margin 0.75 0.25
Southern Regional Grid (tCO2e/MWh) 0. 9876 0.8179 0.9451
20
CO2 Baseline Database for the Indian Power Sector version 5 published by the Central Electricity Authority, Ministry of Power, Government of India on http://cea.nic.in
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Annex 4 MONITORING INFORMATION The points given below detail the monitoring plan and are for the TNEB meter: The general conditions set out for metering, recording, meter readings, meter inspections, Test & Checking and communication are as per the PPA (power purchase agreement) with TNEB. Metering: The electricity supplied to the state grid is metered through the two way export meter installed by TNEB at the high voltage side of the step up transformer installed at the project Site. Metering Equipment: The metering equipment is electronic trivector meter of accuracy class 0.5 required for the project. The meters are owned and operated by TNEB. The metering equipment is maintained in accordance with the electricity standards prevalent in Tamil Nadu. Meter Readings: The monthly meter reading will be taken jointly by the TNEB and Vestas for the last month. At the conclusion of each meter reading an appointed representative of the TNEB and Vestas sign a document indicating the number of kWh indicated by the main meter. The project participant has also installed the check meter. The check meter reading shall be considered when main meter is found to be defective or stopped. Apart from the main meter and the check meter, every WEG is equipped with an inbuilt meter which continuously records the electricity generated by each WEG. Inspection of Energy Meters: The two-way export meter and all associated instruments, transformers at the project site are of 0.5 accuracy class. The meter is jointly inspected and sealed on behalf of the parties and is not to be interfered with by either party except in the presence of the other party or its accredited representative. Meter Test Checking: sThe meter is tested for accuracy with reference to a portable standard meter owned by TNEB. The meter is deemed to be working satisfactorily if the errors are within specifications for meters of 0.5accuracy class. The consumption registered by the main meter alone holds good for the purpose of metering electricity supplied to the grid as long as the error in the meter is within the permissible limits. If during the meter test checking, both the main meter and the check meter are found to have errors beyond the permissible limits, the electricity supplied to the grid shall be revised for the previous 3 (three) months or for the exact period if known and agreed upon by both the parties (TNEB and Vestas) by applying correction as determined by the meter testing wind of the state transmission utility to the consumption registered by the meter with the lesser error.
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Appendix 1: Project Location Map
Location of the project activity
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Appendix 2: Local Stakeholders Consultation Meeting Minutes
Clean Development Mechanism (CDM) Project by CLP

Venue Date Time : Sri Narasingha Permal Vidyalaya Middle School Poomalaikundu Village, Theni District, Tamil Nadu : 18 February 2010, Thursday : 4:30pm onwards
Background: CLP India is setting up wind farms for power generation at Theni district in the state of Tamil Nadu. These farms will generate 99 MW power and the electricity generated from this wind farm is used for supplying the power to the state grid. The project installs the 1.65 MW capacity, V-82 type of Wind Turbine Generators (WTGs) manufactured by Vestas Wind Technology India Private Limited (Vestas). The Vestas V-82 class of wind turbines is the latest in the megawatt series. The project activity comprises of supply, erection, commissioning & operation of 60 numbers of these turbines. The local stakeholders from the nearby villagers, state electricity board officials were invited for the local stakeholders meetings through the individual letters. The stakeholder meeting was conducted on 18 February 2010, Thursday and was arranged at the Middle school in the village nearby to the project site. The meeting was attended by the local villagers, representatives of village, teachers of the nearby school and representatives of state electricity boards. The list of participants has been attached with this minute of meeting. Agenda for the meeting: The agenda for the meeting is as follow: 1. Welcome Speech 2. Election of the chair of the meeting and approval of the proposed agenda 3. Presentation about the project undertaken by CLP 4. Introduction to Kyoto protocol and CDM and the role of stakeholders 5. Discussion and articulation of concerns 6. Vote of thanks Election of Chair of Meeting and approval of proposed agenda Mr. Ashwin Kumar David, Senior Executive, Vestas India proposed Mr. R. K. Ashokan, Headmaster - Sri Narasingha Permal Vidyalaya Middle School to chair the meeting. Mr.Karuppiah, Local Panchayat Head, Poomalaikundu Village supported the proposal. Mr. Ashokan welcomed the participants and adopted the proposed agenda for the meeting. Welcome Speech:
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Mr. B. Ramaswamy Pillai, Senior Engineer, Vestas India started with the brief introduction about the Vestas and welcomed all the attendees. He explained that meeting has been convened for discussing the opinions, concerns and benefits from the wind power project established in this region by CLP. He informed the local stakeholders about the functioning of the wind turbines. He also explained in brief about the various components of the wind turbine to the local stakeholders. Introduction about CLP and the project undertaken by CLP: Mr. Sanjay Pawar, Manager - Commercial (Renewables), introduced about the CLP and explained about its initiatives in development of the wind farms in the country. He explained that CLP is committed to protect the environment and to be part of this process; the organization has developed the wind farm in the region which generates pollution free power. It also adds to national resources and above all it generated employment to the local villagers and helps in increasing the standard of living of the society. He also said that wind farm helps in economic well being of the society through various job opportunities i.e. civil construction, drivers, security personnel, technicians and casual labors etc. He also informed about the purpose of organizing the meeting. Introduction to Kyoto Protocol and CDM: Mr. Nashib Kafle, Consultant representative to the project proponent, explained about the Kyoto protocol and CDM to all the stakeholders and in his speech. He explained the modalities and procedures of the Clean Development Mechanism. He further added how carbon levels and greenhouse gases in the atmosphere is increasing and its impact to the global warming. He further explained how wind farm project generated pollution free energy and helps in creating employment opportunities to the villagers. He explained wind power projects also helps in catering the power shortage faced by the nation. Discussion and Articulation of Concerns: After the presentation by CLP and their consultant representative the interactive session with the stakeholders was held. The detail of the interactive session is presented below: S.N. Questions raised Name of stakeholder Answer by CLP and Vestas / Village 1. What are the factors affecting Mr. S. Suresh Kumar, The major factors causing global Global warming and the bad effects Poomalaikundu warning is increase in CO2 and thereon? Village other greenhouse gases level in the atmosphere. The major ill effects of the global warming are the increase in the average ambient temperature level, increase in the sea water level, changes in the weather conditions etc. 2. Will the project help in improving Mr.Karuppiah, The electricity generated by the the electricity supply to the Poomalaikundu project activity is fed into the villagers/ village school? Tamil Nadu State Electricity grid
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S.N.
Questions raised
Name of stakeholder / Village Village
Answer by CLP and Vestas which is then distributed across the state. The intensity of sound generated by the wind turbines is maximum at the hub height but it is not threatening to humans or other living beings, as the noise generated is within permissible limits. There are also adequate sound dampeners provided in each wind turbine. The project site at Theni district in Tamil Nadu is a very good site for development of wind power projects, Vestas would be developing similar wind projects for other companies apart from CLP. It has been scientifically proven that wind turbines have no impact on rainfall pattern. Wind turbines only extract energy from running wind and cause no other side effect. No, the wind farm installed in the region does not affect either ground water level or drinking water quality of area nearby to the project site. The representative of Vestas explained that Wind Turbine are bought by investors for the reason that they are inclined towards their commitment to produce green / pollution free energy. It does not affect the cattle grazing as, wind farms are located which is far away from Village. There was no prohibition by the
Do the wind turbines cause any Mrs. Thavamani, sound pollution Poomalaikundu Village
Will other projects like this also be Mr.Velusamy, erected in this region Poomalaikundu Village
Will the installation of wind farm Mrs. P. Vasuki, affect the rainfall in the region? Poomalaikundu Village
Does the installation of wind farm Bhaskar, affect the ground water level in the Kandamannur Village nearby villages?
Why & who buys the wind turbine generators?
Mrs. T. Anitha, Teacher, NPV School
Does the project affect the grazing of cattle?
page 48
S.N.
Questions raised
Name of stakeholder / Village
Answer by CLP and Vestas project officials in allowing villagers for taking their domestic animals for grazing.
Vote of thanks:
The representative of CLP and their consultant along with the people from Vestas India at the project site thanked the local villagers, school teachers and state electricity board representatives who participated in the meeting. They thanked the villagers for their time and effort taken to come to the venue of the meeting and for sharing the opinion about the project. The meeting concluded at 6:00pm with light refreshment.
page 49
Appendix 3: Weighted Average Cost of Capital
Weighted Average Cost of Capital: WACC = [D/ (D+E)]*[Cost of Debt] + [E/ (D+E)]*[Cost of Equity] Cost of Debt: In order to reflect the standard rate in the market the bank prime lending rate prevailing at the time of project start date has been considered as the cost of debt. The Prime Lending Rate (PLR) at the time of investment was in the range of 11.00% 12.00%21. The average PLR of 11.50% has been considered as the cost of debt. Interest costs are tax deductible, therefore in order to arrive at the post tax cost of debt, the cost of debt is multiplied with marginal tax rate. The loan tenure of the project is 10 years, it may be noted that for the first 10 years, all power projects in India are required to pay tax @ 17% (as per section 80 IA of Income Tax Act). Accordingly the marginal tax rate has been considered as 17%. The post tax cost of debt therefore works out to: 11.5% * (1-17%) = 9.55% Calculation of Cost of Equity: The expected return on equity has been determined using the Capital Asset Pricing Model (CAPM)22. The CAPM economic model is used worldwide to determine the required/expected return on equity based on potential risk of an investment. The CAPM framework is the Nobel award winning work of financial economist Dr. William Sharpe. Ke = Rf + B x (Rm - Rf) where: Ke = Rate of return on equity capital; Rf = Risk-free rate of return; B = Beta; Rm Rf = Market risk premium;
Risk free rate: The risk free rate is understood as the rate of return on an asset that is theoretically free of any risks, therefore the rate of interest on government bonds are considered as risk free rates. Page 191 of text book on Corporate Finance Theory and Practice by Dr. Aswath Damodaran23 of Stern School of Business,
21
http://www.rbi.org.in/scripts/WSSView.aspx?Id=13907 The Capital Asset Pricing Model (CAPM) was published in 1964 by William Sharpe, for his work on CAPM Sharpe received the Nobel Prize in 1990. http://www.investopedia.com/articles/06/CAPM.asp
22 23
Dr. Damodaran is one of the foremost authorities in the world in the field of Investment Analysis
page 50
New York University describes that the long term government bond rates are suitable indicators of risk free rates since the time horizon for this investment is long term. Accordingly the risk free rate has been taken from long dated Indian government bond rates prior to the project investment decision. The data on government bond rates is published by Reserve Bank of India24.
The applicable risk free rate is 8.12 %. Risk Premium: The most common approach for estimating the risk premium is to base it on historical data, in the CAPM, the premium is estimated by looking at the difference between average return on stocks and average return on government securities over an extended period of history [page 190, Corporate Finance Theory and Practice, Dr. Aswath Damodaran.25]. It is preferred to use long term premiums, i.e. over a period of 25 years, since considering shorter time periods can lead to large standard errors because volatility in stock returns [page 191, Corporate Finance Theory and Practice, Dr. Aswath Damodaran.] It is also preferred to calculate the risk premium based on geometric mean of the returns since arithmetic mean overstates the risk premium. Geometric mean is defined as the compounded annual return over the same period [page 191, Corporate Finance Theory and Practice, Dr. Aswath Damodaran]. Therefore the risk premium has been calculated as the difference in compounded annual return between the BSE-Sensex and the Government bond rates since the year of inception of BSE Sensex, i.e. 1979 80. The detailed calculations are presented in the attached excel sheet. Source: BSE Stock Exchange (www.bseindia.com) The applicable risk premium is 7.74 %. Beta: Beta (B) indicates the sensitivity of the company to market risk factors. For companies that are not publicly listed, the beta is determined by referring beta values of publicly listed companies that are engaged in similar types of business. The project activity type is wind power generation; the approach therefore should be to base the beta for the project on the beta values of listed wind power generation companies in India. However, there was only one wind energy or renewable energy power generation company (BF Utility) listed on any stock exchange in India (both BSE- Bombay Stock Exchange and NSE-National Stock Exchange) in year 200726. Therefore, in the absence of adequate data on companies which are exclusively into the exactly same type of business (i.e wind power projects), the next best option for assessing the risk of these projects is to consider the data available on companies which are involved in similar businesses. Therefore, we have considered beta values of all electricity generating companies in India. The group of companies considered includes renewable as well as conventional power generating companies. Investors demand a higher return from renewable energy projects than from conventional energy ones, given the higher risks in renewable, including risks of technology, risks from significantly varying and
24
25
(Web-link: http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/80303.pdf)
All such related sources would be submitted to the DOE during validation. This can be verified from the database available at the web-link www.securities.com (This website is owned by a Euromoney Institutional Investor Company and It delivers hard-to-get information on more than 80 emerging markets through its award-winning online Emerging Markets Information Service.)
26
page 51
unpredictable resource availability (e.g. wind), and a lower established support base for such projects relative to that for conventional power (e.g. grid connections, bank finance, suppliers, etc.). The use of this Beta value is therefore considered conservative, as it does not add for the higher risk of non conventional energy. The applicable Beta value has been determined on the basis of the Beta values of all power generating companies in India which were listed on the stock exchange at the time of this investment. Beta values of individual companies have been sourced from Bloomberg and screenshots are available in appendix - 4. The table below summarises the beta values: Beta Values of all Lised Power Generating Companies in India at the time of Project Investment Bloomberg Symbol Company Name Beta GVK IN Equity GVK Power & Infrastructure 1.456 GMR IN Equity GMR Infrastructure Ltd. 1.284 Lanco IN Equity Lanco Infratech Ltd. 1.899 JPA IN Equity JAIPRAKASH ASSOCIATES 1.751 NLC IN Equity NEYVELI LIGNITE 1.241 RELI IN Equity RELIANCE INFRASTRUCTUTE 1.735 Average 1.561
Source:Bloomberg27
For calculation of WACC, a debt : equity ratio of 70:30 has been considered, as typical for the project Type28. WACC = 70%* 11.50%*(1-17.0%) + 30%*(8.12 % +1.561 * 7.94%) Therefore, WACC = 70% * 9.55% + 30% * 20.2% = 12.74%
27
The beta value used, are the regression betas calculated by Bloomberg based on periodic stock returns. Bloomberg also provides an adjusted beta value after making the following adjustments: Adjusted Beta=Regression Beta (denoted as Raw beta) *(0.67) +1.00*(0.33) Bloomberg states that this is a default adjustment on the assumption that in future, over a period of time all betas may tend towards the average beta i.e. one. The approach outlined in corporate finance states: the conventional approach to estimate the beta of an investment is a regression of return on investment against returns on a market index (please see attached page no. 196 from Corporate Finance Theory and Practice by Aswath Damodaran). Accordingly, the regression beta (and not the adjusted beta) value has been considered.
28
Several regulations and orders refer this as the normative debt equity ratio for wind power projects.
page 52
Appendix 4: Bloombergs screenshots of individual companies for Beta Value GVK Power & Infrastructure
page 53
GMR Infrastructure Ltd.
page 54
Lanco Infratech Ltd.
page 55
JAIPRAKSH ASSOCIATES
page 56
NEYVELLI LIGNITE
page 57
RELIANCE INFRASTRUCTURE

CLP Theni PDD

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PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM Executive Board

Description of the project activity:

Private and/or public entity(ies) project participants (as applicable)

G.Usulampatti, Mottanoothu, Kothapatti, Shanmuga Sundara Puram, Marikundu Andipatti Theni

Loc No. 1165 1149 195

Village Mottanuthu Shanmugasundarapuram Marikundu

Taluk Andipatti Andipatti Andipatti

District Theni Theni Theni

Latitude 7734'23.87" 7733'35.52" 7732'41.36"

Longitude 955'55.31" 959'27.51" 957'57.56"

Operational Data Cut- in wind speed Nominal wind speed

TECHNICAL DESCRIPTION Cut-out wind speed (10 minutes) Gearbox Type

SPECIFICATION 20 m/s Planetary/helical stages

Explained in detail in section B.3

Fig. B.1: Representation of The Project Boundary

Kamachipuram 110/33-22kV Substation

Southern Regional Electricity Grid

Identification of the baseline scenario

http://cdm.unfccc.int/Reference/Guidclarif/reg/reg_guid04.pdf Source: http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v5.2.pdf Source: http://cea.nic.in/power_sec_reports/Executive_Summary/2008_12/23-24.pdf

Option II Option III

1650 30 49.50 02-July-2010 60.61

120,650 28.11% Described in O&M Schedule Described in O&M Schedule

Plant Load Factor

Capacity MW in the Regime 215

Web-links and Explanation

Madras Cement Ltd.

Simran wind power project

Super wind power project

DLF Home developers

Soundararaja Mills Ltd.

Capacity MW in the Regime 215

Web-links and Explanation

Tirunelveli in Tamil Nadu. http://cdm.unfccc.int/UserManagement/FileStorage/UMHY7TQXX EBNNYBUIC017UDWWZXTCT

KPR Mill Pvt. Ltd. Grace Infrastructure (P) Ltd.

Vishal Export Overseas Ltd

Best & Co.

Bannari Amman Spinning Mills Ltd. Lakshmi Machine Works Ltd

Capacity MW in the Regime 215

Web-links and Explanation

Premier Fine Yarns Pvt. Ltd.

TCS Textiles Ltd.

Loyal Textile Mills Ltd

Ashok Leyland Fin. Ltd

Muthoot Fincorp Ltd.

Capacity MW in the Regime 215

Web-links and Explanation

Suzlon Infrastructure Limited

Premier Spg & Wvg Mills Pvt. Ltd

Rasi Seeds (P) Ltd.

Ambika Cotton Mills Ltd.

Capacity MW in the Regime 215

Web-links and Explanation

Jayajyoti & Co. Ltd NEG Micon India Private Limited

The detailed excel sheet is available at:

Annual baseline emissions

Data parameter BEy

Value = 945.1 tCO2e/GWh GWh/year = 115,199 115,199

Unit 121.891 tCO2e/year

Application of the monitoring methodology and description of the monitoring plan:

1. Data / Parameter: Data unit: Description: Source of data used:

Area Site Manager

Data Entry Operators

C.1.2. Expected operational lifetime of the project activity: