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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
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SECTION A. General description of project activity A.1 >> Title of the project activity:
Henan Changyuan Biomass Power Project Version: 06 Date: 21/10/2008
A.2.
>>
Description of the project activity:
The Henan Changyuan Biomass Power Project (hereafter, this project ) constructed by Xinmi Changyuan Power Generation Co., Ltd. is located in Xinmi City, Henan Province, East China. Purpose of this project is to generate electricity by using surplus biomass residues in the project region. Installed capacity of this project is 36MW (3*12MW) and electricity generated will be supplied to the Central China Power Grid dominated by fossil fuel fired power plants to displace equivalent electricity from the grid. Annual electricity supplied to the Central China Power Grid is estimated to be 178,000MWh. The existing scenario prior the start of the implementation of the project activity is: the electricity was generated by the former power plant fired with coal which had been shut down in June of 2006 according to the local regulation 1; and the biomass residues was dumped or left to decay or burnt in an uncontrolled manner without utilizing for energy purposes. The project scenario is: the installation of 3*12MW power plants based on biomass residues; the generation of electricity with 198,000MWh/yr and 178,000MWh/yr supplied into Central China Power Grid; and the utilization of biomass residues for cogeneration of power and heat. The baseline scenario of this project is: the electricity estimated to be generated was obtained from Central China Power Grid; and the biomass residues was dumped or left to decay or burnt in an uncontrolled manner without utilizing for energy purposes. As the scenario of this project mentioned above, the emission sources and gases of the project activity includes CO2 emissions from on-site fossil fuel and electricity consumption that is attributable to the project activity; CO2 emissions from off-site transportation of biomass residues that are combusted in the project plant; and CH4 emissions from combustion of biomass residues for electricity generation. The emission sources and gases of the baseline scenario includes CO2 emissions from fossil fuel fired power plants connected to Central China Power Grid; CO2 emissions from fossil fuel based heat generation that is displaced through the project activity; and CH4 emissions from uncontrolled burning or decay of surplus biomass residues.
1
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So, this project will achieve not only GHG emissions mitigation by replacing the equivalent electricity generated by fossil fuel fired power plants connected into Central China Power Grid but also GHG emissions mitigation derived from reduction of methane emissions from dumping or uncontrolled burning of biomass residues. As a result, 165,931 tonnes of CO2e emissions will be generated annually. The proposed biomass fired electricity generation project without utilization of fossil fuel has notable environmental and social benefits. The contributions of this project to sustainable development goal of the host country and project site are summarized as follows: Being located in Central China Power Grid dominated by fossil fuel fired power plants, this project will mitigate local environmental pollution caused by emissions from fossil fuel fired power plants and reduce the GHG emissions; This project will increase incomes for local farmers and accelerate economy development in rural areas through purchase of agricultural stalks. It will also reduce environmental pollution from dumping or uncontrolled burning of biomass residues; Ash generated from the biomass burning will be used to produce fertilizer, which has notable environmental benefits; During construction and operation of this project, direct and indirect employment opportunities will be generated; This project will promote the development of transport, stalk reclaiming, storage and other corresponding sectors and thus accelerate local economic development. A.3. >> Project participants:
Table 1: Project participants Name of Party involved (*) ((host) indicates a host Party) People’s Republic of China (host) United Kingdom A.4. Private and/or public entity(ies) project participants (*) (as applicable) Xinmi Changyuan Power Generation Co., Ltd Goldman Sachs International Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) No No
Technical description of the project activity: A.4.1. Location of the project activity:
>> A.4.1.1. >> People’s Republic of China A.4.1.2. >> Region/State/Province etc.: Host Party(ies):
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Henan province A.4.1.3. >> Xinmi City, Zhengzhou City A.4.1.4. Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): >> This project is located in Wang Village, Chaohua Town, 12 Km from the south of Xinmi City, which belongs to Zhengzhou City, the capital of Henan Province in China. The coordinates of the project site are: Longitude: 113.65o E Latitude: 34.76o N Geographical location of the project is shown in figure 1 below. Figure1. Location of the Henan Changyuan Biomass Power Project City/Town/Community etc:
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Zhengzhou
HENAN
Zhengzhou
ZHENGZHOU CITY
Xinmi
Project Site
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A.4.2. Category(ies) of project activity: >> The project activity falls under the following scope and category. Sectoral Scope: 1 Energy Industries (renewable / non-renewable sources). A.4.3. Technology to be employed by the project activity: >> Purpose of this project is to generate electricity by utilizing surplus stalks and twigs in the project region and achieve the GHG emission reductions by replacing the equivalent electricity. The existing scenario prior the start of the implementation of the project activity is: The electricity was generated by the former plants fired with coal which had been shut down in June of 2006(see Table 2 for details); The biomass residues was dumped or left to decay or burnt in an uncontrolled manner without utilizing for energy purposes. Table 2: Parameters of the existing equipments for power generation prior the start of this project Equipments Coal-fired boiler Turbine Generator Number 3 3 3 Capac ity SF-75/3.82-T 75t/h N12-35-1 12MW QF2-12-2 12MW Type Average Lifetime (yr) 20 20 20 Age (yr) 20 20 20 Efficiency Load factor 83% 95% 83% 95% 83% 95%
The baseline scenario in the absence of this project activity is: The electricity estimated to be generated was obtained from Central China Power Grid; The biomass residues was dumped or left to decay or burnt in an uncontrolled manner without utilizing for energy purposes. And the emission sources and GHG gases of the baseline scenario includes: CO2 emissions from fossil fuel fired power plants connected to the electricity system; CH4 emissions from uncontrolled burning or decay of surplus biomass residues. This project will introduce three half-suspended biomass-fired boilers of medium temperature and medium pressure with a capacity of 75t/h from Shanghai Si Fang Boiler Works, parameters of the boilers are shown in Table 3 below. And the system also includes the closed 3*12MW medium temperature and medium pressure fossil fuel fired power plants which will be reconstructed into biomass-based power plants (include turbines and generators described in Table 2). Annual electricity output of this project is estimated to be 198,000MWh out of which 178,000MWh will be supplied to the Central China Power Grid. Electricity generated from this project will be delivered to Central China Power Grid with 35kW transmission system.
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This project will build 15-20 stalk process sites in the agricultural area of Xinmi City where the stalk will be collected and processed to granular fuels with density of 0.5t/m3. These fuels will be stored in the stalk process sites for not over one year, and then transported to the project site by trucks for production need. The project scenario is: The installation of 3*75t/h boilers based on biomass residues; The generation of electricity with 198,000MWh/yr and 178,000MWh/yr supplied into Central China Power Grid; The utilization of biomass residues with 253,110t/yr for generation of electricity. In the project scenario, the electricity generated and supplied into grid will be monitored by electric meters connected to the power plants; and the biomass residues used in this project will be monitored by electronic weighting meters (see Annex 4 for details). Table 3: Parameters of the biomass-based boilers used in this project Parameter Type Capacity Rated steam pressure Rated steam temperature Water temperature Flue gas temperature Efficiency Average load factor Average life time Value SF-75/3.82-T 75t/h 3.82MPa 450°C 150°C 137°C 86% 95% 20 years
All technologies are obtained within China and no technology is transferred for the proposed CDM project. The emission sources and GHG gases of this project activity includes: CO2 emissions from on-site fossil fuel and electricity consumption that is attributable to the project activity. This includes fossil fuels co-fired in the project plant, fossil fuels used for on-site transportation or fossil fuels or electricity used for the preparation of the biomass residues; and CO2 emissions from off-site transportation of biomass residues that are combusted in the project plant; CH4 emissions from combustion of biomass residues for electricity generation A.4.4 >> This project adopts renewable crediting periods of 3*7 years. The total GHG emissions reduction is estimated to be 1,161,517 tCO2e in the first crediting period, as shown in Table 4 below. Table 4: Emission reductions in the first crediting period Estimated amount of emission reductions over the chosen crediting period:
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Years 2009 2010 2011 2012 2013 2014 2015 Total emission reductions (tCO2e) Total number of crediting years Annual average over the crediting period of estimated reductions (tCO2e)
Annual estimation of emission reductions (tCO2e) 165,931 165,931 165,931 165,931 165,931 165,931 165,931 1,161,517 7 165,931
A.4.5. Public funding of the project activity: >> No public funding from Annex I countries is involved in the project activity.
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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: >> Approved consolidated baseline and monitoring methodology ACM0006: “Consolidated methodology for electricity generation from biomass residues”, Version 6.2; Approved consolidated baseline and monitoring methodology ACM0002: “Consolidated methodology for grid-connected electricity generation from renewable resources”, Version 7; “Combined tool to identify the baseline scenario and demonstrate additionality”, Version 02.2; “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion”, Version 02; “Tool to calculate baseline, project and/or leakage emissions from electricity consumption”, Version 01; “Tool to calculate the emission factor for an electricity system”, Version 01.1 Sources: http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html B.2 Justification of the choice of the methodology and why it is applicable to the project activity: >> The methodology ACM0006 allows for development of projects falling under following conditions: No other biomass types than biomass residues (Defined as biomass that is a byproduct, residue or waste stream from agriculture, forestry and related industries), as defined above, are used in the project plant and these biomass residues are the predominant fuel used in the project plant; For projects that use biomass residues from a production process, the implementation of the project should not result in an increase of the processing capacity of raw input or in other substantial changes in process; The biomass used by project facility should not be stored for more than one year; No significant energy quantities, except from transportation or mechanical treatment of the biomass residues, are required to prepare the biomass residues for fuel combustion, i.e. projects that process the biomass residues prior to combustion. This project is a biomass fired electricity generation project and meets all requirements above, because: Fuel fired in this project plants is agricultural stalks and wasted twigs, no other biomass types are used; The biomass residues used in this project are not from a production process; All biomass used by this project facility will not be stored for more than one year; Except from transportation and process of the biomass compressing and fragmentation, there is no other biomass preparation process requiring significant energy quantities. Based on the above analysis, it can be concluded that the project meets all the requirements. Therefore
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ACM0006 is appropriate to this project. B.3. >> Description of the sources and gases included in the project boundary
As defined in ACM0006, the spatial extent of the project boundary encompasses the power plants at the project site, the means for transportation of biomass residues and the site where the biomass residues would have been left for decay or dumped and all power plants connected physically to the Central China Power Grid this project power plant is connected to. As shown in Figure 2. Figure 2: Project Boundary
CO2 emissions from offsite transportation of biomass residues that are combusted in the project Monitoring points for stalk
Stalk collection
Stalk compressor
CH4 emissions from uncontrolled burning or decay of surplus biomass residues
Trucks
Stalk
Dumping site
Stalk crusher
Stalk Steam
Biomass-fired boilers
CH4 emissions from combustion of biomass residues for electricity generation CO2 emissions from on-site fossil fuel and electricity consumption that is attributable to the project activity Monitoring points for electricity CO2 emissions from fossil fuel fired power plants connected to the electricity system Flow of steam
Project boundary
Steam turbines
Generators
Onsite consumption
Electricity
Project site
Central China Power Grid
Flow of stalk
Flow of electricity
According to methodology, sources and gases included in the project boundary are shown in the Table 5.
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Table 5: The sources and gases included in the project boundary Source Central China Power Grid electricity generation Gas Included? Justification/explanation CO2 Included Main emission source CH4 Excluded Excluded for simplification. This is conservative. N2O Excluded Excluded for simplification. This is conservative It is assumed that CO2 emissions from surplus CO2 Excluded biomass do not lead to changes of carbon pools in the LULUCF sector. As case B1and B3 has been identified as the most CH4 Included likely baseline scenario, the emission source is included in the baseline. N2O Excluded Excluded for simplification. This is conservative CO2 Included Main emission source Excluded for simplification. This emission source CH4 Excluded is assumed to be very small. Excluded for simplification. This emission source N2O Excluded is assumed to be very small. CO2 Included Main emission source Excluded for simplification. This emission source CH4 Excluded is assumed to be very small. Excluded for simplification. This emission source N2O Excluded is assumed to be very small. It is assumed that CO2 emissions from surplus CO2 Excluded biomass do not lead to changes of carbon pools in the LULUCF sector. This emission source must be included because CH4 Included CH4 emissions from uncontrolled burning or decay of biomass in the baseline scenario are included. Excluded for simplification. This emission source N2O Excluded is assumed to be very small. It is assumed that CO2 emissions from surplus CO2 Excluded biomass do not lead to changes of carbon pools in the LULUCF sector. Excluded for simplification. Since biomass CH4 Excluded residues are stored for not longer than one year, this emission source is assumed to be very small. Excluded for simplification. This emission source N2O Excluded is assumed to be very small. It is assumed that CO2 emissions from surplus CO2 Excluded biomass residues do not lead to changes of carbon pools in the LULUCF sector. There is no waste water treated under anaerobic CH4 Excluded conditions in this project activity. Excluded for simplification. This emissions source is N2O Excluded assumed to be very small.
Baseline Uncontrolled burning of surplus biomass residues
On-site fossil fuel consumption due to the project activity (stationary or mobile) Off-site transportation of biomass residues
Project activity
Combustion of biomass for electricity
Storage of biomass residues
Waste water from the treatment of biomass residues
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B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: >> According to methodology ACM0006, approved Combined Tool to Identify the Baseline Scenario and Demonstrate Additionality is used to identify the most plausible baseline scenario and demonstrate and assess the additionality of this project in the following four steps: STEP 1. Identification of alternative scenarios; STEP 2. Barrier analysis; STEP 3. Investment analysis; STEP 4. Common practice analysis. Step 1. Identification of alternative scenarios Sub-step 1a. Define alternative scenarios to the proposed CDM project According to methodology ACM0006, realistic and credible alternatives should be separately determined regarding: How power would be generated in the absence of the CDM project activity; What would happen to the biomass residues in the absence of the project activity; In case of cogeneration projects: how the heat would be generated in the absence of the project activity. Alternatives for power generation: Baseline alternatives for power generation are as follows: P1 This project activity not undertaken as a CDM project activity; P2 The continuation of power generation in an existing biomass residue fired power plant at the project site, in the same configuration, without retrofitting and fired with the same type of biomass residues as (co-)fired in the project activity; P3 The generation of power in an existing captive power plant, using only fossil fuels; P4 The generation of power in the grid; P5 The installation of a new biomass residue fired power plant, fired with the same type and with the same annual amount of biomass residues as the project activity, but with a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project plant and therefore with a lower power output than in the project case; P6 The installation of a new biomass residue fired power plant that is fired with the same type but with a higher annual amount of biomass residues as the project activity and that has a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project activity, therefore, the power output is the same as in the project case; P7 The retrofitting of an existing biomass residue fired power, fired with the same type and with the same
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annual amount of biomass residues as the project activity, but with a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project plant and therefore with a lower power output than in the project case; P8 The retrofitting of an existing biomass residue fired power that is fired with the same type but with a higher annual amount of biomass residues as the project activity and that has a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project activity. P9 The installation of a new fossil fuel fired captive power plant at the project site. Specific analysis on the nine alternatives in absence of this project is as follows: P1 Construction of a new biomass fired power plant with the same capacity without registration of as a CDM project complies with all the applicable laws and regulations in China, thus P1 can be considered as a realistic baseline alternative. P2 There are no existing biomass fired power plants at the project site, therefore, P2 cannot be even considered as a realistic baseline alternative. P3 Power plants used in this project are originally coal-fired plants which had been closed in July of 2006 as requirements of local regulations, and there are no other existing fossil fuel fired power plants around the project site, therefore, P3 cannot be considered as a baseline alternative. P4 The generation of power in the grid, which can be considered as a realistic baseline alternative. P5 This project is one of the earliest biomass based power plants in Henan province and the first one in Xinmi city, and the technology of bio-based power generation is still a kind of immature technology in China, as the proposal project is considered to be a precedent, the efficiency of this project is therefore considered to be the common practice in biomass fired power generation sector, so P5 cannot be even considered as a realistic baseline alternative. P6 As analysis in P5, the efficiency of this project is therefore considered to be the common practice in biomass fired power generation sector, installing a biomass power plant fired with higher amount of the same type of biomass but with a lower efficiency is not feasible, so P6 cannot be even considered as a realistic baseline alternative. P7 There are no existing biomass fired power plants around the project site, therefore, P7 cannot be even considered as a realistic baseline alternative. P8 There are no existing biomass fired power plants around the project site, therefore, P8 cannot be even considered as a realistic baseline alternative. P9 The installation of a new fossil fuel fired captive power plant at the project site, can be considered as a baseline alternative. Based on the analysis above, the only realistic and credible baseline alternatives for power generation is P1, P4 and P9. Alternatives for the use of biomass residues:
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It should be noticed that for this project, the biomass residues used include wasted agriculture stalks and twigs which both come from the nearby agricultural area purchased from local farmers, and have the same use in the absence of this project activity, so the stalks purchase in different seasons and the wasted twigs can be considered to be one single type of biomass residues. According to ACM0006, realistic and credible baseline alternatives for the use of biomass residues may include: B1 The biomass residues are dumped or left to decay under mainly aerobic conditions, this applies, for example, to dumping and decay of biomass residues on fields; B2 The biomass residues are dumped or left to decay under clearly anaerobic conditions, this applies, for example, to deep landfills with more than 5 meters, and it does not apply to biomass residues that are stock-piled or left to decay on fields; B3 The biomass residues are burnt in an uncontrolled manner without utilizing it for energy purposes; B4 The biomass residues are used for heat and/or electricity generation at the project site; B5 The biomass residues are used for power generation, including cogeneration, in other existing or new grid-connected power plants; B6 The biomass residues are used for heat generation in other existing or new boilers at other sites; B7 The biomass residues are used for other energy purposes, such as the generation of biofuels; B8 The biomass residues are used for non-energy purposes, e.g. as fertilizer or as feedstock in processes. Specific analysis on the eight alternative scenarios in absence of this project is as follows: B1 The biomass residues used in this project are surplus agriculture stalks and twigs, which would be left unused in the absence of this project activity, therefore, B1 is a realistic baseline alternative; B2 As there is no site or equipment for biomass dumping in anaerobic conditions in rural areas and the biomass residues used in this project are surplus agriculture stalks and twigs, which would be left unused in the absence of this project activity, thus B2 is not a realistic baseline alternative. B3 The biomass residues used in this project are surplus agriculture stalks and twigs, which would be left unused in the absence of this project activity, thus B3 is a realistic baseline alternative. B4 The biomass residues are used for heat and/or electricity generation at the project site, which can be considered as a realistic baseline alternative. B5 The biomass residues used in this project are surplus agriculture stalks and twigs, which would be left unused in the absence of this project activity; as there is no market around the project site for these biomass residues to be sold and the electricity generation with biomass residues is not a common practice in Henan province, thus B5 cannot be considered as a realistic baseline alternative. B6 The biomass residues used in this project are surplus agriculture stalks and twigs, which would be left unused in the absence of this project activity; as there is no market around the project site for these biomass residues to be sold and the heat generation with biomass residues is not a common practice in
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Henan province, thus B6 cannot be considered as a realistic baseline alternative B7 The biomass residues used in this project are surplus agriculture stalks and twigs, which would be left unused in the absence of this project activity, thus B7 is not a realistic baseline alternative for unused biomass. B8 Prior to this project, only small quantity of biomass residues are used for feedstock or fertilizer, leaving the remaining biomass residues dumped to decay or burned uncontrolled, so, the biomass consumption of this project is from the local surplus biomass residues in the area and will not be used for non-energy purposes in absence of this project, so B8 is not a realistic baseline alternative for unused biomass. In conclusion, the realistic and credible baseline scenarios for unused biomass residues are the alternative B1, B3 and B4. Alternatives for heat generation: As this project is a biomass fired electricity generation project without heat generation, this part is not considered in this project. In conclusion, the possible baseline scenario of this project is combination of: P1, and B4; P4, B1 and B3; P9, B1 and B3. Sub-step 1b. Consistency with mandatory applicable laws and regulations 1. Power generation 1) P1 This project activity not undertaken as a CDM project activity Biomass residues are renewable energy resource that the country encourages. Now The Renewable Energy Law of Peoples, Republic of China and Tentative Management Measures for Price and Sharing of Expenses for Electricity Generation From Renewable Energy Resource have appeared to encourage power generation from renewable energy resource. Therefore, P1 is in compliance with all laws and regulations. 2) P4 The generation of power in the grid It is a common practice to generate power in the Central China Power Grid, so P4 is in compliance with all regulations and laws in China. 3) P9 The installation of a new fossil fuel fired captive power plant at the project site According to Strictly Prohibiting the Installation of Fossil Fuel-fired Generators with the Capacity of 135 MW or Below 2 issued by the General Office of the Chinese State Council on Apr 15th 2002, the
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construction of fossil fuel fired power plants with capacity of less than 135 MW are prohibited in the areas which can be covered by large grids such as provincial grids. As the project has a capacity of 24 MW, which is lower than 135MW, P9 is not in compliance with all laws and regulations in China. 2. Use of biomass residues 1) B1 The biomass residues are dumped or left to decay under mainly aerobic conditions Although biomass utilization is encouraged in China, there are not mandatory requirements for the biomass utilization. It is a common practice to leave biomass residues dumped or decay on field under mainly aerobic conditions. Therefore, this alternative is in compliance with all laws and regulations. 2) B3 The biomass residues are burnt in an uncontrolled manner without utilizing it for energy purposes. Although biomass utilization is encouraged in China, there are not mandatory requirements for the biomass utilization. It is a common practice to leave biomass residues burnt in an uncontrolled manner. Therefore, this alternative is in compliance with all laws and regulations. 3) B4 The biomass residues are used for heat and/or electricity generation at the project site This alternative is in compliance with all laws and regulations. In conclusion, baseline scenario alternatives to this project consistent with current laws and regulations are: Alternative 1: This project activity not undertaken as a CDM project activity (P1, B4); Alternative 2: The same electricity output from Central China Power Grid, and biomass residues be dumped or left to decay or burnt in an uncontrolled manner without utilizing for energy purposes (P4, B1 and B3).
And as analyzed in step2 and step3 (see B.5. for details), Alternative 1 is not a financially attractive scenario, so the baseline scenario of this project is Alternative 2 which is the Scenario 2 described in Methodology ACM0006.
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): >> According to methodology ACM0006, approved Combined tool to identify the baseline scenario and demonstrate additionality is used to identify the most plausible baseline scenario and demonstrate and assess the additionality of this project: Step 1. Identification of alternative scenarios As analysed in section B.4., baseline scenario alternatives to this project include: Alternative 1: This project activity not undertaken as a CDM project activity (P1, B4); Alternative 2: The same electricity output from Central China Power Grid, the same heat output from boilers using fossil fuel, and biomass residues be dumped or left to decay or burnt in an
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uncontrolled manner without utilizing for energy purposes (P4, B1 and B3). Step3: Investment Analysis As described in Methods and Parameters for Economical Assessment of Construction Projects, the financial benchmark rate of return (after tax) is 8% in Chinese power generation sector, and this project is to generate electricity based on biomass residues, so the benchmark IRR is determined to be 8%. The total investment of this project is about 116.97 million CNY, which is totally raised by project owner themselves, and the main financial index and IRR of this project are shown in Table 6 below. Table 6 Financial index Index Value Total investment 116.97 million CNY Total operating cost 69.63 million CNY Depreciation 10.68 million CNY (including 5 million CNY of the existing assets) Years of depreciation 13 years (8 years for the existing assets) Price of electricity for sale 0.369 CNY/kWh Quantity of the electricity for sale 178000MWh Price of stalks 220CNY/t Value-added tax (VAT) 17% Construction tax 5% Educational surtax 3% Income tax 25% IRR (without CERs) Negative Price of CERs €9/CER Data resource: Feasibility Study Report of Xinmi Changyuan Biomass Power Generation Project As shown in the table, the IRR of this project is nagative without the revenue from the sale of CERs, so this project is unlikely to be financially attractive. Actually, this project may obtain a subsidy of 0.25RMB/kWh according to Regulation of Electricity Price and Management of Renewable Energy Power Generation, but this subsidy was not taken account here as this regulation can be considered to be a policy of type E-.
Sensitivity analysis
Considering the reasonable variations in the critical assumptions, the sensitivity analysis is made in allusion to the three most possible impact factors including total operating cost, price of stalks for use and price of electricity for sale, as shown in Table 7. It can be shown that this project has very low level of benefit, the IRR would just reach the benchmark only if operating cost decreased by 30% and the IRR would still lower 8% when either the price of electricity increased or the price of stalks decreased by 40%. Therefore this project is unlikely to be financially attractive. Table 7 Sensitivity analysis Range of total operating cost IRR (without CERs) -20% 1.15% -25% 4.93% -30% 8.30%
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Range of price of stalks IRR (without CERs) Range of price of electricity IRR (without CERs)
-30% 2.31% +30% 0.38%
-35% 4.87% +35% 3.98%
-40% 7.24% +40% 7.13%
Step 4: Common Practice analysis: By the time of this project began to construct, there was no similar project in operation or under construction in Henan Province. Therefore, this project is not a common practice project and is in compliance with requirements of additionality. The starting date of this project is September 5th 2006 when the contract for equipment purchase was signed. Before that, the project owner has seriously considered the incentive from CDM in the decision to proceed with the project activity. The timeline of this project activity is shown in Table 8 as below: Table 8 Timeline of this project activity Date January 20th 2006 March 10th 2006 June 2006 June 20th June 30th 2006 July 10th 2006 July 14th 2006 August 3rd 2006 September 5th 2006 September 16th 2006 November 25th 2006 December 4th 2006 June 25th 2007 August 6th 2007 September 17th 2007 February 19th 2008 March 21st 2008 July 18th 2008 September 22nd 2008 October 2008 January 2009 B.6. Events and actions Decisions about technical reform of this project was made by Board of Directors which included the consideration of CDM Engineering meeting was held by project owner for staring the technical reform in parallel with achieving CDM registration Intentions to achieve co-operation for CDM was made by project owner with two consultant companies The second engineering meeting was held to conclude the process of this project in former period The former coal-fired power plants was shut down according to local regulation The project owner applied for bank loans The Feasibility Study Report (FSR) was approved Contract for CDM consultant was signed The investment decision was made (contract for boiler purchase was signed) The project owner applied for bank loans again The third engineering meeting was held to conclude the process of this project in former period Construction work started Emission Reduction Purchase Agreement (ERPA) was signed Decisions about the CDM monitoring plan was made by Board of Directors The project owner applied for bank loan in the third time The agreement with DOE for validation service was signed The Environmental Impact Assessment (EIA) was approved Interview for this project with Chinese DNA was held by NDRC Letter of Approval (LOA) by Chinese DNA was approved The commissioning started The date of start-up (planned)
Emission reductions:
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B.6.1. Explanation of methodological choices: >> As the baseline analysis described in Part B.4., the baseline scenario of this project activity is: Scenario 2 Power P4 Baseline scenario Biomass B1, B3 Heat (if relevant) NA
Thus, according to the methodology ACM0006, the emission reductions of this project during the year y will be calculated following:
ER y = ER electricit y , y + BE biomass , y ? PE y ? L y
Where: ERy are emission reductions of project during the year y, tCO2e;
(1)
ERelectricity,y are emission reductions due to displacement of electricity during the year y, tCO2e; BEbiomass,y are emission reductions due to displacement of heat during the year y, tCO2e; PEy are project emissions during the year y, tCO2e; Ly are leakage emissions during the year y, tCO2e. 1. Project emissions (PEy) The project emissions include: CO2 emissions from transportation of biomass residues to the project site (PETy); CO2 emissions from on-site consumption of fossil fuels due to the project activity (PEFFy); CO2 emissions from consumption of electricity (PEEC,y); CH4 emissions from the combustion of biomass residues ( PE biomass ,CH 4 , y ), as this emission source is included in the project boundary and relevant in this project.
PE y = PET y + PEEF y + PE EC , y + GWPCH 4 ? PE biomass ,CH 4 , y
Where:
(2)
PETy are CO2 emissions during the year y due to transport of the biomass residues to the project plant, tCO2e; PEEFy are CO2 emissions during the year y due to fossil fuels co-fired by the generation facility or other fossil fuel consumption at the project site that is attributable to the project activity, tCO2e; PEEC, y are CO2 emissions during the year y due to electricity consumption at the project site that is attributable to the project activity, tCO2e;
GWPCH 4 is Global Warming Potential for methane valid for the relevant commitment period;
PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board
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PE biomass ,CH 4 , y are CH4 emissions from the combustion of biomass residues during the year y, tCH4.
a) Carbon dioxide emissions from combustion of fossil fuels for transportation of biomass residues to the project plant (PETy)
According to the methodology ACM0006, Option 1 has been chose, i.e. emissions are calculated on the basis of distance and the number of trips (or the average truck load):
PET y =
Where:
∑ BF
k
T ,k , y
TL y
? AVD y ? EFkm ,CO2 , y
(3)
BFT,k,y is quantity of biomass residue type k that has been transported to the project site during the year y (tons of dry matter or liter), t; TLy is average truck load of the trucks used during the year y, t; AVDy is average round trip distance (from and to) between the biomass residue fuel supply sites and the site of the project plant during the year y, km;
EFkm,CO2 , y is average CO2 emission factor for the trucks measured during the year y, tCO2e/km;
k refers to the types of biomass residues used in the project plant and that have been transported to the project plant in year y. b) Carbon dioxide emissions from on-site consumption of fossil fuels (PEFFy)
The Carbon dioxide emissions from on-site consumption of fossil fuels (PEFFy) are calculated using the latest approved version of the Tool to calculate project or leakage CO2 emissions from fossil fuel combustion, the formula is:
PEEFy = ∑ FCi , j , y ? COEFi , y
i
(4)
Where: FCi,j,y is quantity of fuel type i combusted in process j during the year y ,t; COEFi,y is CO2 emission coefficient of fuel type i in year y, tCO2e/t; i refers to the fuel types combusted in process j during the year y. And Option B is chosen, i.e. the CO2 emission coefficient COEFi,y is calculated based on net calorific value and CO2 emission factor of the fuel type i, i.e. COEFi , y = NCV i , y ? EFCO2 ,i , y As the baseline scenario of this project is defined to be Scenario 2 in methodology ACM0006, the following two combustion process j should be considered: