cdm-sri lanka's perspective

8/8/2019 CDM-Sri Lanka's Perspective

1/26

2010-11-27

Clean Development Mechanism Sri Lankas Perspective

CLEAN DEVELOPMENT MECHANISM SRI LANKASPERSPECTIVE

ABSTRACT

Nature always prefers the balance in every aspect and there are natural mechanisms tomaintain this balance such as wind which balances the difference in pressure,photosynthesis and respiration to harmonize the CO2 and O2 levels. This harmony wasdrastically affected by manmade processes and nature balances them out with adverseeffects such as floods, melting the glaziers, increasing sea levels ect.

Understanding this better truth, Kyoto Protocol was established as a mechanism to reduce

Green House Gasses (GHG). As a developing country, Sri Lanka can actively participate inthis mission by reducing emissions by turning to renewable power sources, adoptingenergy efficient technologies and moving to the industries which reduce the emissions.

This study investigates about the Kyoto protocol putting special focus on CleanDevelopment Mechanism (CDM), and discusses about the methodologies that Sri Lankacan participate in this mission by selecting an actual small hydro power project as a casestudy.

Keywords: CDM, Small Hydro, Sri Lanka, Kyoto Protocol, Green House gas, CO2 Emission


2/26

2010-11-27


TABLE OF CONTENTS

ABSTRACT .......................................................................................................................... 1

Table of Contents ................................................................................................................. 2

List of Figures ....................................................................................................................... 3

List of Tables ........................................................................................................................ 31 Introduction .................................................................................................................... 4

1.1 Objectives ................................................................................................................ 5

2 METHODOLOGY .......................................................................................................... 7

2.1 Information Gathering .............................................................................................. 7

2.2 Definition of Parameters .......................................................................................... 8

2.3 Baseline Methodology Procedures .......................................................................... 8

3 Waltrim Hydro Power Project Case Study .................................................................. 8

3.1 Introduction to the Project ........................................................................................ 83.2 Socio-Environmental Impacts of the Project .......................................................... 12

3.3 Applicability for CDM ............................................................................................. 13

3.4 Baseline Scenario .................................................................................................. 15

3.5 Demonstration of Additionality ............................................................................... 15

3.5.1 Investment Analysis ........................................................................................ 17

3.5.2 Barrier Analysis ............................................................................................... 18

3.6 Calculation of the Emission Factor ........................................................................ 19

3.7 Calculation of the Leakage .................................................................................... 20

3.7.1 Assumptions and Data .................................................................................... 20

3.8 Calculation of reduction in emission ...................................................................... 22

3.9 Financial Benefit .................................................................................................... 22

3.10 Establishing Monitoring Method ......................................................................... 23

4 Results and discussion ................................................................................................ 24

5 Conclusion ................................................................................................................... 25

6 Reference .................................................................................................................... 26


3/26

2010-11-27


LIST OF FIGURES

Figure 1-1 Illustration of CDM .........................................................................................................5Figure 3-1. 50% Probable Flow Duration Curve at the Diversion at Kothmala Oya ...........................9 Figure 3-2. Project Layout Waltrim SHP ...................................................................................... 10Figure 3-3. Innundation Area of the project ..................................................................................... 14Figure 3-4. Methodology for demonstrate and assessment of additionality (UNFCCC, 2008b) ........ 16Figure 3-5. Annual Rainfall from 1980-2007 .................................................................................. 19

LIST OF TABLES

Table 3-1. Emission Factor for Diesel generators (EB 50 I.D. /Version 15, October 2009) .............. 15Table 3-2.Details of the Transportation of the Materials and Other Items ........................................ 20Table 3-3.Operation hours of the site generator and construction machinery ................................... 20Table 3-4.The Average Emmissions fom Fuel (USDOE 2009) ....................................................... 21Table 3-5.CO2 Emissions by Transportation ................................................................................... 21Table 3-6.CO2 CO2 Emissions by Generator and Heavy Machinery ............................................... 22Table 3-7. Motoring Procedure ....................................................................................................... 23


4/26

2010-11-27


1 INTRODUCTION

Planet Earth is one of a Natural system that is intelligently designed and fine tuned tosupport the life forms. Any disturbance to the natural system will destabilize the entiresystem and consequently leads to fiasco. The natural environment has been exploited byhuman being to meet their need primarily energy need. Our ancestors used limited amountof energy to meet their heating and lighting requirements but modern society uses energy

for many purposes. Industrial revolution in the 18th

century paves the way for technological,economical and social developments at a rate that had never been experienced before inthe history. It is obvious that any development is closely related with energy; new forms ofenergy sources have been discovered, developed and utilized to meet the ever increasingenergy demand since the industrial revolution.

Among the energy sources, fossil fuels have been the most economical and effectivesource to meet the energy demand for various purposes such as industrial, transport,heating and amusement in the form of electricity and heat. The fossil fuels need to beburned to release the energy stored in but burning process is the major anthropogenicsource for emitting many Green House Gases (GHS) into atmosphere. Unprecedented

emission of GHS shifted the equilibrium of earths atmosphere from its original positionconsequently changed the hydrology and meteorology cycles which are in contact with theatmosphere. This phenomenon is called as Climate Change and became a hot topic inpolitical and economical and technological arenas.

Impact of Climate Change is not limited to local or regional scale but to global scale thatswhy it is important to all. There are various mechanisms are in place to reduce and stabilizeemission of GHG. Clean Development Mechanism is one of a mechanism adopted bymany countries as a tool for reducing GHG. In this project, we are going to briefly analyzehow Sri Lanka can contribute to abate the impacts of climate change and in return thebenefits it can receive.

What is Clean Development Mechanism?

In 1997, Member countries of United Nation gathered at Kyoto conference to discuss aboutstabilization of Green House Gases (GHG) in atmosphere which induced global warmingand consequently changed the climate. At the end of the conference, most of the membercountries conceptually agreed to reduce the GHG level 5% below the level at 1990 byaccepting a protocol called Kyoto Protocol. Kyoto protocol is a protocol to the UnitedNations Framework Convention on Climate Change (UNFCC). UNFCC is an internationaltreaty with primary objective of stabilizing GHG in the atmosphere by reducing

anthropogenic emission of GHG. There are six GHG and these are translated into CO2

equivalent to calculate the GHG emission reduction.

The Clean Development Mechanism (CDM) is a mechanism under the Kyoto Protocol forpromoting and enhancing technology transfer and investment from industrialized countriesto the developing world for projects focused on mitigating emissions of greenhouse gases.It provides tool and strategies for industrialized countries to invest in emission-reducingprojects in developing countries.

There are 4 gases CO2, CH4, NOx, SF6 and 2 groups of gases hydrofluorocarbons and perfluorocarbons.


5/26

2010-11-27


The resulting Certified Emissions Reductions (CER) credits (1 CER equivalent to 1 ton ofCO2) can be used by industrialized countries towards their own compliance with theemission limitation targets set forth by the Kyoto Protocol. Green House potential of thegases is expressed in terms of Green House potential of CO2.

CDM is a tool that stimulates both emission reduction and sustainable development. Inorder to calculate the amount of carbon emission reductions for these projects, it isnecessary to compare emissions with those in a baseline scenario representing thesituation that would have occurred in absence of the project activity. This not a simple taskas the nature of the project changes from to another. In this project, we are going toanalyze how and where this tool can be used and impact of this tool in national economyand sustainable development.

Being a developing country, Sri Lanka can contribute to this mechanism and in return it canhave economical benefits introduced by Kyoto protocol. Sustainable power generation is amajor area that Sri Lanka can focus with related to CDM. Small hydro power industry is awell established industry in Sri Lanka and has huge potential in participating in CDM.

1.1 Objectives

The first objective of this project is to get an overview about Kyoto Protocol and its deferentmechanisms for reducing GHG. Kyoto Protocol is an international agreement under the

EMI

SSI

ON

E

MIS

S

IO

N

BASELINE CDM

EMISSIONREDUCTION

(CREDITS)

PROJECT IN HOST COUNTRY

E

MIS

S

IO

N

CDM

EMISSIONCAP

INCREASES

E

MIS

S

IO

N

EMISSION

CAP

EMISSION CAP INDUSTRIALISED COUNTRIES

Figure 1-1 Illustration of CDM


6/26

2010-11-27


UNFCC. Under this agreement, the industrial countries (Annex 1) are committed to reduceGHG to set targets. The protocol was adopted on 11 December 1997 and came into forceon 15 February 2005. The emission targets should be achieved during the period of 2008-2012. Many countries those who signed the protocol have ratified it but United States of

America, the highest emitter of the GHG, has withdrawn from the protocol and has nointension to ratify it.

Under this protocol, the countries shall meet their targets primarily by implementing nationalmeasures. However there are three additional market-based mechanisms are offered tomeet the targets. The mechanisms are:

1. Emission Trading

2. Joint Implementation

3. Clean Development Mechanism

According to Article 17 of the protocol, the emission trading is a market-based mechanismto trade the spare emission units. The trading can take place among intra-company,domestic or international level. According to Article 4.2 and 6 of the Kyoto Protocol, theJoint Implementation (JI) is a market-based implementation mechanism, allowing Annex Icountries to implement projects jointly that limit or reduce emissions, or enhance sinks, andto share the Emissions Reduction Units (ERU).As defined in Article 17 of the protocol, CDMenable the countries in Annex-1 to finance the sustainable development projects in non-

Annex 1 countries (Host Countries) in order to meet their emission reduction targets.

The second objective of this project is to obtain thorough understanding about CleanDevelopment Mechanism and its procedures. The CDM is supervised by the CDMExecutive Board (CDM EB), international authority acting under the supervision of the

UNFCCC. The CDM EB is responsible for issuing emissions reduction units for approvedCDM project activities, known as Certified Emissions Reductions (CERs).

The project activity has to be met the following criteria to eligible under the CDM:(i) be carried out voluntarily with the approval of both Parties involved;(ii) produce real, measurable results, and long-term benefits related to the mitigation

of climate change;(iii) result in reductions that are additional to those that would have occurred in the

absence of the project activity; and(iv) help the host country to achieve its sustainable development goals.

CDM projects can only be carried out with the involvement of the designated nationalauthorities (DNAs) of the Annex I Party and the Host Country involved and having beenvalidated, verified and certified by a Designated Operational Entity (DOE) accredited by theCDM EB.

The CDM Process

Step 1 - Project IdentificationStep 2 - Project Formulation


7/26

2010-11-27


Step 3 - National ApprovalStep 4 - ValidationStep 5 - RegistrationStep 6 - MonitoringStep 7 - Verification and CertificationStep 8 - Issue of CERs

The third objective of this project is to find the ways that Sri Lanka can participate in CDM.Studies show that small scale CDM projects are most suitable one for Sri Lanka. Thefollowing type of projects has been taken into consideration.

1. Renewable energy projects under 15 MW2. Energy efficient projects that reduce consumption up to 15 GWh per year3. CO2 abatement of 15 kTon

Among these three projects the first option is the most suitable one for Sri Lanka becauseof high potentials to develop small hydro power plants. The baseline scenario for theseprojects will be diesel fired power plant.

The forth object of this project is to get an overview about small hydropower sector andrelated GHG emissions. This is very vital for estimating emission reduction.

The fifth objective is to identify the methodology for small hydropower project to participateCDM using a case study. Approved streamlined procedures and standardized baseline forsmall scale projects will be used.

The sixth and final objective is to identify the difficulties to obtain the CDM as far as SriLanka concern.

Scope of the project:

For the sake of simplicity the scope is limited to grid connected small hydro (renewable)electricity generation in Sri Lanka.

2 METHODOLOGY

2.1 Information Gathering

y CDM Almost all the information and methodologies are clearly described inUNFCCC web site and information related to CDM and small hydro power isgathered from the web site. The methodologies that are considered for this projectare: Simplified modalities and procedures for small-scale CDM project activities,


8/26

2010-11-27


combined tool to identify the baseline scenario and demonstrate additionality andtool to calculate the emission factor for an electricity system.

2.2 Definition of ParametersParameter SI Unit Description

EFgrid,CM,y tCO2/MWhCombined margin CO2 emission factor for the project electricity system inyeary

EFgrid,BM,y tCO2/MWhBuild margin CO2 emission factor for the project electricity system inyeary

EFgrid,OM,y tCO2/MWhOperating margin CO2 emission factor for the project electricity system inyeary

2.3 Baseline Methodology Procedures

Project participants shall apply the following six steps:STEP 1: Identify the relevant electricity systems.STEP 2: Choose whether to include off-grid power plants in the project electricity system

STEP 3: Select a method to determine the operating margin (OM).STEP 4: Calculate the operating margin emission factor according to the selected method.STEP 5: Identify the group of power units to be included in the build margin (BM).STEP 6: Calculate the build margin emission factor.STEP 7: Calculate the combined margin (CM) emissions factor.

y Small hydro power industry in Sri Lanka Interviews from the experts in theindustries, referring project reports, and current and historical data of hydro powergeneration.

(UNFCCC 2009C)

3 WALTRIM HYDRO POWER PROJECT CASE STUDY

An actual small hydro project which is going to be constructed in the future will be studiedas a case study. Eligibility of the CDM activities, relevant methodologies and tools specifiedby UNFCCC will be used to calculate the emission factor and establishing the additionality.Further monitoring method for emission reduction will be established in this study.

3.1 Introduction to the Project


9/26

2010-11-27


0

2

4

6

8

10

12

14

16

0 10 20 30 40 50 60 70 80 90 100

Precentage tim e o f the Year

Flow/[m3/s]

This project is developed by private party in Sri Lanka and has been granted with a Letterof Provisional Approval by The Sri Lanka Sustainable Energy Authority (SEA) which is theproject approval body and a Letter of Intent (LOI) awarded by The Ceylon Electricity Boardthe power trader presently holds the monopoly in electrical power trading to constructionand operation of a Grid connected Small Hydro power Project of 1622 kW capacity.

This project will harness the energy of the water flowing in the Kothmala Oya. Acording tothe topology of the area this project can enjoy 25 meter gross head. Design discharge is8.5 cubic meters per second. At the diversion point the stream has 175 km2 of catchment.

Average annual rain fall is 1900mm/year. The flow duration curve is given is F3-1.

Figure 3-1. 50% Probable Flow Duration Curve at the Diversion at Kothmala Oya

The project features an ogee type gravity weir spanning 55 meters across the river, with a 2meters high weir having a base width of 3 meters reducing to 1 meter at weir crest level.The weir will be fitted with a scour gate at the base to release accumulated mud and siltand will also incorporate a regulatory opening at the base in order to release the minimumquantity of water to downstream of the weir as directed by the Central Environment

Authority of Sri Lanka. This will be a run-of river type project where there is no reservoirinvolved in this project.

On the extreme right edge of the weir, the intake structure will be constructed incorporatingthe usual trash racks and intake gates which is virtually the start of the headrace channel.


10/26

2010-11-27


The open, on ground headrace channel will be made of reinforced grade 25 concrete andwill be 1600 meters long. The channel will have a bed width of 3 meters and the wall heightincluding the free board will be 1.7 meters. Although the channel construction will be onground, in order to minimize slope excavations, the channel will be designed in such a wayto cross gullies on aqueduct sections where ever possible. The 1600 meter channel willconvey water to the fore-bay tank, made of grade 25 reinforced concrete, half embeddedon ground for better stability.

Water from the fore-bay tank will be routed to the turbines installed at the power house, viaa 340 meters long 1450 mm diameter twin penstock line and the penstock pipes will bemade of 8 mm thick carbon steel. The twin turbines installed in the power house made tothe highest standards as per the machinery suppliers designs and specifications, will bedirect coupled to the matching electrical generators delivering 1,622 kW of electricity to thenational grid. The water thru the turbines will be released back to the river via a tail racechannel to be excavated. Layout of the project the project is given in F3-2.

Figure 3-2. Project Layout Waltrim SHP


11/26

2010-11-27


The generated electrical power will be first fed to the national grid at 33kV level. An outdoorswitchyard will be used for this purpose. Protection will be as per G59 standards as definedin IEE regulations.

Design Details & Energy Waltrim SHP

Design flow 8.500 m3/sec

Exceedence 22%Catchment 175 km2Gross Head 25.0 m

Channel length 1,800 m

Effective head 23.2 m

Gravitational force 9.81 kg/ms2Penstock length 140 mPenstock diameter M 01 1.425 mPenstock diameter M 02 1.425 mFlow speed in penstock @ design flow 2.66 m/sPenstock major head loss 0.376 mPenstock minor head loss 0.217 mNet Head 22.6 m

Site installed capacity 1,935 kW

no. of machines 2

Turbine power out no. 1 841 kW

Turbine power out no. 2 841 kW

Generator power out no. 1 811 kW

Generator power out no. 2 811 kW


12/26

2010-11-27


Plant Design capacity 1623 MW

Plant factor 48.1%

Energy produced per year 6,830,518 kWh

6.83 GWh

3.2 Socio-Environmental Impacts of the Project

Major environmental impacts associated with this hydropower project can be analyzed in

several aspects. Short-term negative impacts are the main anticipated impacts, whichmainly arise during the construction of the project. Anticipated short-term impacts are soilerosion, dust and noise pollution, aquatic pollution and health hazards. Adoptingappropriate mitigation measures such as careful movement of materials, maintaininggazetted pollution levels and educating construction workers can effectively mitigate suchshort-term impacts. These shortterm impacts are typical in any construction activity.Further project layout has been finalized in a way that no resettlements are involved in thisproject.

Short-term positive impacts include creation of new jobs and income generationopportunities for local people.

Long-term negative impacts are mainly related to reduction of water flow between theintake and the tailrace. But a small stream joins the main river along the affected riversegment between the weir and powerhouse. Therefore the reduction of water flow is notsignificant but it is proposed to maintain a minimum base flow as per CEA regulationsthroughout the year for better environmental healthiness.

Long-term positive impacts are reduction of emissions of green house gasses especiallyCO2, creation of permanent jobs for local people and localized supply of energy to meet thegrowing demand. Also, the project company aims to develop activities with regard to thesocial welfare among the plantation workers. The net benefits of these activities cannot beunder estimated due to the present socio-economic conditions generally prevailing in estatelabor communities.


13/26

2010-11-27


3.3 Applicability for CDM

Considering the project type and the capacity this project is eligible for Small Scale CDMand the all the criteria are given in Indicative simplified baseline and monitoringmethodologies for selected small-scale CDM project activity categories (I.D. /Version 15,October 2009). Hydro Projects are classified in this section and all the run-off-the-river

projects where the capacity is less than 15MW is eligible for this criterion. If the project hasa reservoir then it should be tested for power density as below.

2.Hydro power plants with reservoirs that satisfy at least one of the following conditions are

eligible to apply this methodology:

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.

(EB 50 I.D. /Version 15, October 2009)

As Waltrim SHP is a run-of-river project there is no reservoir involved and the capacity isless than 15 MW, this project is eligible to apply for Small Scale CDM without consideringthe power density. Figure F3-3 shows the inundation area due to the construction of theweir.


14/26

2010-11-27


Figure 3-3. Innundation Area of the project


15/26

2010-11-27


3.4 Baseline Scenario

This project is identified as a substitute for power generation from fossil fuel. Energysource mix for electrical generation is given in table T.3.X which is published by CEB.Emission factor can be calculated by the data using below table.

Table 3-1. Emission Factor for Diesel generators (EB 50 I.D. /Version 15, October 2009)

Emission Factor for Diesel generators (EB 50 I.D. /Version 15, October 2009)

Table I.D.1

Emission Factors for diesel generator systems (in kg CO2e/kWh*) for three different levels of

load factors**

Case : Mini-Grid with 24

hour Service

i) Mini-grid withtemporary service (4-

6 hr/dayii) Productive

applications

iii) Water Pumps

Mini-gird with storage

Load Factors[%] 25% 50% 100%

=15=35=135200kW 0.8 0.8 0.8

*A conversion factor of 3.2 kg CO2 per kg of diesel has been used (following revised 1996 IPCCGuidelines for National

Greenhouse Gas Inventories)**Values are derived from fuel curves in the online manual of Retscreen lnternationals PV 2000

model, downloadablefrom http://retscreen.net/

***Default values

3.5 Demonstration of Additionality

To be qualified in CDM activities project should be additional. In other words the projectparticipants should prove that without CDM activity, the project is not likely to implementedbecause there can be other alternatives to this project which are more likely to beimplemented but the emission for those alternatives are higher than the above said project.This is done by identifying alternative to the project, investment analysis, barrier analysisand common practice analysis. This methodology is clearly described in Figure 3-4 below.


16/26

2010-11-27


Figure 3-4. Methodology for demonstrate and assessment of additionality (UNFCCC,2008b)

Step 01: Identification of the

project activity consistentwith mandatory laws and

regulations

Step 2: Investment AnalysisDoes sensitivity analysis

concluded that the proposed

CDM project activity isunlikely to be the most

financially attractive or isunlikely to be financially

attractive?

Step 3: Barrier Analysis(1)Is there at least one

barrier preventing theimplementation of the

proposed project activitywithout the CDM;

(2) Is at least one alternativescenario, other than

proposed by any of the

identified barriers?

Step 04: Common Practice

Analysis(1) No Similar activities can

be observed?(2) If similar activities are

observed, are they essentialdistinctions between the

proposed CDM projectactivity and similar

activities that can

reasonably be explained?

Project is

AdditionalProject is not

additional

No

Optional

No

No

Yes

YesYes


17/26

2010-11-27


In this study, diesel powered electricity generation is considered as the alternative to theproject.

3.5.1 Investment Analysis

This is done to demonstrate the additionality of the project by determining whether the

proposed project is not the most economically/financially attractive or the project iseconomically/financially feasible without the sales of certified emission reductions.

Several guidelines for the investment analysis are given below.

y Investment analysis should not be limited to the proposed CDM crediting period and itshould be the technical life time of the project. In general it should be minimum 10 yearand maximum 20 years. Both project IRR and equity IRR are preferred.

y Fair value of the assets should be included in the end of the assessment period.

y Depreciation reductions used for taxation calculations should be added again whencalculation of IRR and NPV.

y Cost of finance is not included in IRR calculationsy In the calculation of equity IRR only the portion of investment costs which is financed by

equity should be considered as the net cash outflow

y Local commercial lending rate of Weighted average of Cost of Capital can be used as abench mark for the analysis

y If there is only one possible project developer, internal benchmarks of the company orexpected rate of return can be used as a benchmark. In this case this should provethose benchmarks.

y Sensitivity analysis should be done for the variables that can change the project cost orproject revenue by 20%

After investment analysis if the project participant can demonstrate that the project is notfinancially viable with comparing specified benchmarks project is considered as Additionaland eligible for the CDM activities.

Actual investment analysis is not done in this study because it is out of the scope of studyarea.


18/26

2010-11-27


If the project is not additional according to the investment analysis barrier analysis can bedone.

3.5.2 Barrier Analysis

The barrier is defined by UNFCCC is as below

If this Step is used, determine whether the proposed project activity faces barriers that:

(a) Prevent the implementation of this type of proposed project activity; and(b) Do not prevent the implementation of at least one of the alternatives.

The identified barriers are only sufficient grounds for demonstration of additionality if theywould prevent potential project proponents from carrying out the proposed project activity

undertaken without being registered as a CDM project activity.If the CDM does not alleviate the identified barriers that prevent the proposed project

activity from occurring, then the project activity is not additional

(UNFCCC, 2008b)

Barrier Analysis is categorized to 4 sectors as below

y Investment BarrierSimilar activities are done by private parties because of the support of grants or noncommercial finance terms.No capital is available domestically or internationally because of the risks prevailing in thecountry. Credit rating can be a good example.

y Technological BarrierLack of skilled labor which leads to a risk in malfunctions or under performanceLack of infrastructureRisk of technological failureLess awareness of the technology in the region

y Barriers due to prevailing practiceRisk of being first of its kind

y Other barriers

Considering above barriers and their relationship to Waltrim SHP, technological barrier andthe barriers due to prevailing practice is not relevant because Small hydro power in not anew concept for Sri Lanka. Further there are lot of skilled workforce in this country andSmall hydro power is established industry in the country.

However, barrier analysis can be done with reference to the thermal power purchase priceand other benefits enjoyed by thermal power producers in Sri Lanka. Further, uncertainty of


19/26

2010-11-27


the rainfall expected by hydrological study is also can be considered as another risk thatcan be seen as a barrier for the project implementation. Hydrological predications are donebased on 30 year rainfall and flow data. However, there is a clear trend in reduction inrainfall in the area and the moving average for annual rain fall for ten years is plotted infigure 3-5.

Figure 3-5. Annual Rainfall from 1980-2007

3.6 Calculation of the Emission Factor

With reference to the Table 3-1 the emission factor can be taken as 0.8 kg CO2e/kWh.Hydropower being renewable power source, it can be considered as there is no emission

Annual Rainfall from 1980-2007

500

1000

1500

2000

2500

3000

1975 1985 1995 2005

Year

Rainfall/[

Annual Rainfall/[mm]

10 per. Mov. Avg. (Annual

Rainfall/[mm])


20/26

2010-11-27


except for reservoir. Waltrim SHP, being a run-off-river type project where there is notemission related to reservoir.

3.7 Calculation of the Leakage

Project leakage is the emission from the fossil fuel due to activities of the project. At thetime of the operation of the project there will be no emissions due to project activities.

However, at the construction period lot of material transportation is involved and this emitsCO2 and need to be quantified.

3.7.1 Assumptions and Data

To calculate the CO2 leakage following assumptions were made after discussions withindustry experts.

Average fuel consumption of a heavy duty truck = 4km/Liter Diesel Average fuel consumption of a 350kVA Generator = 10 Litre/ Hour Average fuel consumption of a Excavator = 10 Litre/ Hour

Further Materials and the machinery will be transported from below locations; traveldistance and no of trucks are as below.

Table 3-2.Details of the Transportation of the Materials and Other Items

Item/Material

No of

Containers

Transport

From

TravelDistance (Upand

down)/[km]Sand 50 Mahianganaya 100

Metal 50 Nanuoya 30

Steel 7 Colombo 350

Cement 10 Colombo 350

Penstock 20 Colombo 350

Machinery 5 Colombo 350

Total 142

Operation hours of the site generator and construction machinery are as below

Table 3-3.Operation hours of the site generator and construction machinery

No. of hours

Generator 300HeavyMachinery 150

Total 450


21/26

2010-11-27


Table 3-4.The Average Emmissions fom Fuel (USDOE 2009)

The amount of carbon dioxide released into the atmosphere by a vehicle is

primarily determined by the carbon content of the fuel. However, there is

a small portion of the fuel that is not oxidized into carbon dioxide when the

fuel is burned. The Environmental Protection Agency (EPA) has publishedinformation on carbon dioxide emissions from gasoline and diesel which

takes the oxidation factor into account and is based on the carbon content

used in EPAs fuel economy analyses.

Table 11.11

Carbon Dioxide Emissions from a Gallon of Fuel

Grams Kilograms Pounds

per gallon per gallon per gallon

Gasoline 8,788 8.8 19.4

Diesel 10,084 10.1 22.2

Source:

U.S. Environmental Protection Agency, Emission Facts: Average Carbon

Dioxide Emissions Resulting from Gasoline and Diesel Fuel,

February 2009. (Additional resources: www.epa.gov/OMS)

Therefore CO2 emission from a litre of fuel is taken as 2.61 kgCO2/liter.

Table 3-5.CO2 Emissions by Transportation

Item/MaterialNo ofContainers

TransportFrom

TravelDistance (Upanddown)/[km]

No.Liters/[lt]

CO2emission/[kg]

Sand 50 Mahianganaya 100 1,250 3,263

Metel 50 Nanuoya 30 375 979

Steel 7 Colombo 350 613 1,599

Cement 10 Colombo 350 875 2,284

Penstock 20 Colombo 350 1,750 4,568

Machinery(E&M) 5 Colombo 350 438 1,142

Total 142 5,300 13,833


22/26

2010-11-27


Table 3-6.CO2 CO2 Emissions by Generator and Heavy Machinery

No. of hoursused

No. Liters/[lt]

CO2emission/[kg]

Generator 300 3,000 7,830

Heavy

Machinery 150 1,500 3,915Total 450 11,745

Total Emissions during the project construction = 25,578 kgCO2= 26 tCO2e/y

3.8 Calculation of reduction in emission

ERy = BEy PEy LEy

Where:ERy Emission reductions in year y (t CO2e/y)BEy Baseline Emissions in year y (t CO2e/y)PEy Project emissions in year y (t CO2/y)LEy Leakage emissions in year y (t CO2/y)

In this project the base line emission, is taken as 0.8 kg CO2e/kWh and the annual energygeneration is estimated as 6.83 GWh/year. Further project emission is zero as there is noemission in hydro power projects.

Even though the leakage emission is calculated for construction period it happens once in

the project life time and at the time of operation there will be no leakage emissions. Furthercomparing the annual emission reduction with the leakage it can be considered asnegligible. Therefore LEy is also considered as negligibly small.

ERy = 0.8 * 6.83 * 1000 - 0 - 0

ERy = 5464 (t CO2e/y)

3.9 Financial Benefit

Present market price of CER is proximately 20 Euro/CER (Reference).

Assuming that Waltrim SHP would find a buyer to sell CER at 17 Euro

Revenue per year from CER = 17 Euro * 5,464 (t CO2e/y)= 92,888 Euro/Year

Present Power Purchase Price = 0.0858 Euro/kWh


23/26

2010-11-27


Revenue from Power sales = 0.0858 Euro/kWh * 6.83 * 106 kWh/year

= 585,773 Euro/year

CER revenue as a percentage ofPower sales revenue = 92,888/585,773 * 100 %

= 15.85 %

3.10 Establishing Monitoring Method

Monitoring procedure has to be established to ensure the certified emission is done as perthe project development document and below procedure is suggested to Waltrim SHP.

Table 3-7. Motoring Procedure

Data/Parameter Power Generation

Data Unit kWhDescription This is the total no. of units generated for particular time period

Source of Date Energy meter installed by CEB and the E&M equipment supplier

MeasurementProcedure(If any)

Meter reading should read at 00:00 hours of the every first day ofthe month and that meter reading should subtract from the nextmonths meter reading which is taken at the same time of the firstday of the next month.The balance is the Power Generation for the month.

Monitoring

Frequency

Monthly

QA/QC As the reading is taken from the two meters it should be comparedand make sure there is not discrepancies between them. Furthermeasurement can be crosschecked with the sold energy.Daily meter reading should be noted for the propose of identifyingany malfunction of the meters

Comments -

In addition to above following procedure should be followed to ensure the proper monitoringof the emission reduction.

y

All the data has to be achieved at least for 2 years from the end of the crediting periody As the power generation is highly related to emission reduction is should be recoded

continually. Hourly readings are most preferred.

y All the measuring equipments and related equipment should be national or IEC certifiedand should be calibrated according to the manufactures recommendations or at leastonce in 3 years


24/26

2010-11-27


4 RESULTS AND DISCUSSION

Following finding of the study is summarized as below.

Waltrim SHP can apply for CDM activities under Small Scale CDM methodology. Further, itcomes under the Grid Connected Renewable Electricity Generation. Being run-off-river

scheme it is eligible for this criteria without considering the power density.

Fossil fuel based power generation can be used as a baseline. Additionality may be provedby demonstrating that the project is financially not viable. However investment analysis isnot included in this study.

In case of failure of demonstrating additionality after investment analysis barrier analysiscan be done. Technological barrier and barriers due to prevailing practice is not applicablefor this project. Risk of investment and the uncertainty of the hydrological prediction can bedemonstrated as investment barriers and can be used for proving additionality.

Important Parameters

Emission Factor for Waltrim Power Project - 0.8 kg CO2e/kWhLeakage Emission -Emission Reduction - 5,464 (t CO2e/y)Revenue per year from CER - 92,888 Euro/YearCER revenue as a percentage ofPower sales revenue - 15.85 %

According to the results, Waltrim small hydro power project can be a good candidate for theCDM project activities. Eligibility and the emission reduction is pretty straight forward and

all the methodologies are fully described in the UNFCC documentation.

In this case, being well established industry in Sri Lanka, having subsidized powerpurchase and other benefits like tax exemptions, proving the additionality by investmentanalysis will be tricky.

However, demonstrating the risk involved in the investment or the uncertainty of thehydrological predictions can be used to prove the additionally.

As there is no hard and fast rule for demonstrating this risks and inability of quantifyingthose risk is disadvantage and one can argue about the significance of those risks. Theservice of a specialized carbon trader may be required in this juncture.

Considering the financial benefits as per the calculations will convert lot of financially notviable of marginally viable projects to financially attractive projects. Investors will considerlot of high risk ventures in this field because of the benefit that they can get form CDMactivities.

Even though there are highly attractive benefits by participating in CDM activities, only 2small hydro projects in Sri Lanka which have participated in the CDM activities and


25/26

2010-11-27


presently enjoying the benefits in return of reduction of emission of GHG. Following factorscan be the reason for this situation.

y Less awareness of the CDM and its benefits

y Less expertise in CDM activities available in Sri Lanka

y As the foreign expertise needed in this matter the initial cost is very high

y

No validator (DOE) is available in Sri Lanka and there for the cost of validation is alsohigh

5 CONCLUSION

As per the study, Waltim SHP has good potential to participate in CDM activities. Mostimportant and the trickiest step would be demonstrating the Additionality. According to thepercent market rates, one CER can sell at approximately 20 Euros. Considering that factthis as additional financial benefit which is 16% of the power purchase revenue.

Considering the small hydro power industry, CDM activities can be used to implement lot ofprojects which are not viable, marginally viable or projects that involve high risks.

Awareness of the CDM activities should increase in the country.

Finally, Kyoto protocol will successful only if there is a significant benefits to the Greenindustries because they should be attractive to the investors who initiate the projects.Knowledge about the mechanisms like CDM is also a critical factor where they should be apart of company strategies in private sector.


26/26

2010-11-27

6 REFERENCE

UNFCCC (2008a), Combined tool to identify the baseline scenario and demonstrateadditionality(Version 02.2), United Nations Framework Convention on Climate Change,Germany, available at www.unfccc.int , Last modified 26.08.2008, as accessed 10.11.2009

UNFCCC (2008b), Tool for the demonstration and assessment of additionality (Version05.2), United Nations Framework Convention on Climate Change, Germany, available atwww.unfccc.int , Last modified 26.08.2008, as accessed 10.11.2009

UNFCCC (2008c), Tool to calculate baseline, project and/or leakage emissions fromelectricity consumption (Version 01), United Nations Framework Convention on ClimateChange, Germany, available at www.unfccc.int , Last modified 16.05.2008, as accessed10.11.2008

UNFCCC (2009a), Indicative simplified baseline and monitoring methodologies for selectedsmall-scale CDM project activity categories (I.D. Version 15), United Nations FrameworkConvention on Climate Change, Germany, available at www.unfccc.int , Last modified16.10.2009, as accessed 10.11.2009

UNFCCC (2009b), Indicative simplified baseline and monitoring methodologies forselected small-scale CDM project activity categories (Version 12.1), United NationsFramework Convention on Climate Change, Germany, available at www.unfccc.int , Lastmodified 16.10.2009, as accessed 10.11.2009

UNFCCC (2009c), Tool to calculate the emission factor for an electricity system (Version02), United Nations Framework Convention on Climate Change, Germany, available atwww.unfccc.int , Last modified 16.10.2009, as accessed 10.11.2009

USDOE (2009), Transportation Energy Data Book, U.S. Department of Energy, EnergyEfficiency and Renewable Energy,1000 Independence Ave., SW, Washington, DC 20585,available at http://cta.ornl.gov/, last modified 29.06.2009, and accessed 21.11.2009

Feasibility Report -Waltrim Small Hydropower Project, Sunshine Power (Pvt) Limited

Initial Environmental Examination Report Waltrim Small Hydro Power Project, SunshinePower (Pvt) Limited

Mr. Prabath Wickramasinghe, Sunshine Power (Pvt) Limited, Consultant, Personalcommunication at 17thNovember 2009

cdm-sri lanka's perspective

Documents