Overview of Overview of PresentationPresentation

Objectives and scope of the work Global assumptions used in the analysis Key attributes of each technology evaluated Striking differences across project types

– in the share of eligible credits generated during the first eligibility period

– in the cost per ton CO2

Reasons: – length of project life – profile of GHG offset generation over the project life-cycle.

Scope and approachScope and approach First-order analysis of five technologies that

may be eligible for incremental cost financing.– DSM: residential efficient lighting– Wind farm– Landfill gas collection and power generation– Bagasse cogeneration– Small hydro

Standard life-cycle cost methods. Conservative cost and technology

performance assumptions used throughout. These are average projects, not “superior” projects.

Global AssumptionsGlobal AssumptionsDiscount Rate 10%

Carbon displaced (tonnes CO2/MWh) 0.84

Avoided cost (US$/kWh) 0.035

All technologies evaluated are grid connected. As such, they displace fuels in the generation mix.

Avoided cost used to evaluate project IRR and levelized cost of energy only

Indicative Costs of Carbon Credits under Different Crediting Period Validity Conditions

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5

10

15

20

25

30

35

EfficientLighting

Wind Landfill Gaswith CH4

BagasseCogeneration

Small Hydro

$/To

nne

CO

2

Project Life 2001-2012 2008-2012

Share of Carbon Credits Generated within Different Crediting Periods

0%

25%

50%

75%

100%

Efficient Lighting Wind

Landfill Gas with CH4

Bagasse CogenerationSmall Hydro

Project Life 2001-2012 2008-2012

DSM: Efficient LightingDSM: Efficient Lighting Based on Illumex High Efficiency Lighting Pilot

Project of the GEF.– 1.7 million CFLs to replace incandescent bulbs in

two cities.– CFL lifetime (at 4 hours average daily use) is

roughly six years, making this the shortest project type evaluated here.

– Two year startup, eight year total project duration.– Analysis assumes no “free riders”, but also no “free

drivers” as all CFLs are replaced by incandescents after useful life.

50 MW Wind Farm50 MW Wind Farm With over 16 GW of installed commercial

capacity worldwide, growing at 20% per year, wind turbines are a mature power technology.– Turnkey installed costs of $1,000/kW.– Construction lead time is short (6 months – 1 year)

and turbines last for 20 years.– Financing, risk management and other soft costs

add 20% to capital costs.– Project life cycle profile (heavy capital costs with

smaller benefits over a long term shown on the next slide) is similar to that of small hydro and bagasse cogeneration.

Landfill gas collection, Landfill gas collection, flaring and power flaring and power

generationgeneration LFG projects can be very cost-effective at GHG abatement if methane collection and flaring is not part of the baseline. Even if it is part of the baseline, LFG can be a cost-effective fuel for power generation.

Installed costs average of $1,750/kW which includes wells, collection piping, filters, engine and substation.

Depending upon local conditions, LFG projects can be very long-lived, but procurement, construction and commissioning can normally be completed within one year.

The profile of the typical project used in this analysis is shown on the next slide. The project runs from 2001 through 2025.

Bagasse CogenerationBagasse Cogeneration Because these projects require detailed

engineering and construction of boilers in the field they typically have lead times of three years and useful lives of 25 years.

Installed costs vary widely from $800 - $1,000/kW in countries with domestic sources to $1,200 - $ 1,800/kW where all materials are imported. This analysis uses $1,000/kW installed.

For actual projects, detailed studies of avoided capacity and energy costs are necessary to ensure commercial viability. But for this analysis, the global assumption of the fuel displaced in the grid generation mix is sufficient to determine GHG credits generated by the project.

Small HydroSmall Hydro This analysis models a typical 1 MW small

hydro installation requiring with a three year lead time and a useful life of 40 years.

Installed costs vary widely with local resource conditions and design need, but the value of $2,000/kW installed used in this analysis is fairly typical. At this cost, the model installation includes some pondage with diversionary wier, canal and penstock.

Small hydro projects of this size rarely make economic sense at annual capacity factors of less than 65%. This analysis assumes and annual capacity factor of 75%.