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UNFCCC/CCNUCC CDM – Executive Board

PROGRAMME DESIGN DOCUMENT FORM FOR CDM PROGRAMMES OF ACTIVITIES (F-CDM-PoA-DD)

Version 02.0

PROGRAMME OF ACTIVITIES DESIGN DOCUMENT (PoA-DD)

PART I. Programme of activities (PoA)

SECTION A. General description of PoA A.1. Title of the PoA >> (a) RE2Grid PoA (b) Version number 1 (c) 13/07/2012 A.2. Purpose and general description of the PoA >> The RE to Grid PoA aims to promote the utilization of renewable energy (RE) resources by supporting the development of a number of greenfield renewable energy projects (wind, hydroelectric, geothermal, solar PV, wave and tidal energy) that feed electric power into an interconnected or isolated grid. The Coordinating and Managing Entity (CME), Carbonergy Business Consultancy Services, has created a platform that enables developers of such projects to overcome financial and other barriers to developing and implementing their projects, by harnessing the financial support made available through the sale of carbon credits. This PoA platform will initially be utilized in the Republic of the Philippines. Expansion to additional host countries is anticipated. The PoA will contribute to reducing developing countries’ heavy and increasing dependence on fossil fuels for electricity generation while helping to mitigate global climate change. (a) Policy/measure or stated goal that the PoA seeks to promote The development objective of the PoA is to facilitate the implementation of renewable energy projects. There are no legal requirements to implement RE projects in the Philippines. However, there are a number of legislative instruments that have been put in place to support the development of the sector in general. Our intent is to support the goals set in two of those instruments, namely the National Renewable Energy Program (NREP) 1 and the National Climate Change Action Plan (NCCAP) 2011-2028.2 The NCCAP calls for “enhancement in the development of sustainable and renewable energy”. NREP has set goals to add the following PoA-eligible RE technology capacity by 2030:

5,394MW hydropower (ca. 90% to come from large hydro, i.e. over 10MW facilities3); 2,345MW wind power; 1,495MW geothermal 284MW solar power; and 70.5MW ocean energy.

1 http://www.doe.gov.ph/nrep/index.asp?opt=nrepbook, page 23, table 3 2 http://www.climate.gov.ph/index.php/en/nccap-technical-document-draft, Section 6, pages 23-26 3 Large hydro is classified by the PDOE as more than 10MW while mini-hydro is 1.01-10MW

UNFCCC/CCNUCC CDM – Executive Board However, current conditions in the Philippines with respect to RE present a number of barriers to the economically feasible implementation of such projects. The objective of this PoA is therefore to establish a platform for entrepreneurs/ new market entrants that will enable them to take advantage of the benefits resulting from participation in the carbon market through the issuance of Certified Emission Reduction credits (CERs). The additional financing thereby mobilized for projects that are included as CPAs under this PoA will: provide an additional incentive for the developers to overcome these barriers; encourage investors, engineering, procurement and construction (EPC) and technology companies to participate in the projects; help to achieve the goals set in the policy directives. At the same time, the PoA platform will provide domestic financial institutions with a critical mass of operating/ demonstration projects that, over time, should help to mitigate the access to finance barrier that is largely due to their lack of understanding of RE technologies, lack of faith in RE developers that do not have a significant resource base, and to perceived risks associated with the technology. (b) Framework for the implementation of the proposed PoA The Philippines is an archipelago with over 7,000 islands. The main islands are connected to two grids: the interconnected grid covering Luzon and Visayas, and the isolated grid on Mindanao. These two grid systems are not connected (see figure 1). Many of the smaller and a few of the larger islands are not connected to either of these grids. Electricity is commonly supplied through isolated grids on such islands.

Figure 1: Primary Philippine grids

Until the entry into force of Republic Act 9136 in 20014, all electric power facilities were owned and operated by government bodies. The policy goals of this Republic Act were:

a) To ensure and accelerate the total electrification of the country; b) To ensure the quality, reliability, security and affordability of the supply of electric power; c) To ensure transparent and reasonable prices of electricity in a regime of free and fair competition

and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market;

4 Philippine Republic Act 9136, 2001, The Electric Power Industry Reform Act (EPIRA),

http://www.doe.gov.ph/Laws%20and%20Issuances/RA%209136.pdf


d) To enhance the inflow of private capital and broaden the ownership base of the power generation, transmission and distribution sectors in order to minimize the financial risk exposure of the national government;

e) To ensure fair and non-discriminatory treatment of public and private sector entities in the process of restructuring the electric power industry;

f) To protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power;

g) To assure socially and environmentally compatible energy sources and infrastructure; h) To promote the utilization of indigenous and new and renewable energy resources in power

generation in order to reduce dependence on imported energy; i) To provide for an orderly and transparent privatization of the assets and liabilities of the National

Power Corporation (NPC). j) To establish a strong and purely independent regulatory body and system to ensure consumer

protection and enhance the competitive operation of the electricity market; and k) To encourage the efficient use of energy and other modalities of demand side management.

Since then a large portion of the mostly large-scale government-owned power facilities, several of which employ renewable energy technologies (largely hydropower and geothermal), have been privatized by the Power Sector Assets and Liabilities Management Corporation (PSALM). More recently, Republic Act 95135 ‘harmonized’ a number of hitherto disparate regulations for different renewable energy technologies. This Act declared that the Philippines aimed to:

Accelerate exploration and development of renewable energy resources; Adopt sustainable energy development strategies; Reduce dependence on imported fossil fuels; Reduce exposure to fluctuations in prices of fossil fuels; Increase RE utilization; Provide fiscal and non-fiscal incentives; and Reduce harmful emissions.

Currently, the installed capacity in the Luzon-Visayas grid is 85.40% fossil fuel (coal, oil-based and natural gas) and 14.60% RE (geothermal, hydro and new small additions of wind and biomass). The Mindanao grid roughly reverses these figures with 58.08% RE installed capacity (mostly large hydro and geothermal with a new small addition of solar) and 41.92% fossil fuel (coal and oil-based)6. Isolated grids are currently most commonly supplied with diesel gensets. The Mindoro isolated grid is no exception to this rule, with 95.5 percent of all power generation over the past five years supplied with diesel gensets, and the remaining 4.5 percent supplied with small-scale hydropower.7 Due to increasing demand from a growing population and economy, there is an impending shortage of power in all regions of the Philippines and several coal-fired power plants are being built or are in advanced stages of planning (600MW came on-grid in 2010-2011 in the Visayas)8. The Philippine government through the Department of Energy (PDOE) has set a target to double RE capacity between

5 Philippine Republic Act 9513, 2008, The Renewable Energy Act of 2008,

http://www.doe.gov.ph/Laws%20and%20Issuances/RA%209513.pdf 6 http://www.doe.gov.ph/ep/ExistingPlants.htm 7 Provided to the DOE for validation 8 Op. cit Ref 6

UNFCCC/CCNUCC CDM – Executive Board 2010 and 20309; RE plants have averaged close to 27% of total capacity for the last three years in the Luzon-Visayas grid, which accounts for close to 85% of on-grid power generated in the country10. The majority of RE developers in the Philippines are confronted with significant barriers to reaching financial closure of their projects that, despite the expectations raised by the Renewable Energy Act, continue to be major contributing factors that are delaying the emergence of a vibrant RE sector in the country. While power generation from renewable resources is incentivized under the Renewable Energy Act, the expectations it has raised have not been realized at the time of preparing this document (42 months after the Act’s passage) and all proposed wind, geothermal, large-scale hydropower, solar and ocean power facilities remain in limbo. This is partly due to the lengthy processes required to complete the details of the Act’s Implementing Rules and Regulations (IRR) such as the Renewable Portfolio Standard (RPS) and the Feed-in-Tariffs (FiTs). It is expected that several more months will be required just to finalize the FiTs. There are several other RE Act instruments that also need to be completed. In addition, legislators are now considering changes to the way in which initial permits will be allocated,11 so additional delays can be expected. Also, despite lengthy discussions with RE project developers preceding the National Renewable Energy Board’s (NREB) petition to the Energy Regulatory Committee (ERC), the FiT proposals are generally deemed insufficient to provide the developers with their hoped-for levels of return12,13. At the same time, the public and non-governmental organizations (NGOs) are voicing their opposition to the increased power bills that consumers will have to bear from the pass through charges under the FiT Allowance (FiT-All)14 and one government agency has threatened to remove mandated tax holidays once FiTs are in place.15 Consequently, there is increasing doubt among RE developers that the Act will ever deliver the returns they were expecting. Therefore, additional incentives, such as financial flows that can be derived from the CDM, are again receiving attention by developers and investors/ financiers alike. RE project developers that have already been or soon will be awarded pre-development contracts by PDOE are taking a risk by investing in the initial studies and activities to flesh out their projects as they may not be able to complete all requirements in time to be awarded FiTs anyway due to the proposed first phase RE installation target of 830MW16 that includes the following caps for PoA-eligible technologies:

250MW for run-of-river hydro; 220MW for wind power; 100 for solar PV; and 10MW for ocean (thermal).

However, Philippine legislators are now considering introducing a bidding system17 for some projects that will be accepted under these installation caps and the Department of Energy has been asked to review the draft policy directive.

9 Op. cit. Ref 1 10 Op. cit Ref 6 11 http://www.mb.com.ph/articles/352919/congress-lays-down-policy-direction-for-auction-of-re-installations 12 Provided to the DOE for validation 13 Provided to the DOE for validation 14 http://www.philstar.com/Article.aspx?articleId=782072&publicationSubCategoryId=66 15 http://www.mb.com.ph/articles/338762/domingo-rejects-ith-to-re 16 http://www.erc.gov.ph/pdf/NREB(Petition-FIT).pdf 17 Op cit. Ref 11

UNFCCC/CCNUCC CDM – Executive Board This recent development and the proposed caps create a non-transparent environment and uncertainty among investors on whether their project will be awarded a FiT. The PDOE has received many more applications for pre-development contracts (a pre-condition for being awarded a FiT) than can possibly be accepted under the caps for all but hydro. This, together with the pending legislative change, means that many developers will have to wait to develop their projects if they are dependent on a FiT or take a risk by investing in the required pre-development activities. In either case, the developers could offset these risks by applying for CERs for their projects. There are also many projects under development that are located in isolated grid areas that are not eligible for FiTs where the decision to invest will have to rely even more on additional revenue streams such as from CERs to become more interesting to the investors.

The proposed PoA is a voluntary action taken by the CME. Individual RE project developers mostly in the private sector (CPA owners), will plan, design, construct and operate their projects that will be included in the PoA as single CPAs. This PoA addresses the challenges to increased implementation of renewable energy technologies and intends to promote their contribution to electricity supply in the national and isolated grids of CPA countries. Among the overall macro development benefits of the PoA are:

Reduced use of fossil fuels that have various negative effects on the local and global environment;

Improved balance of payments/ foreign currency reserves (fossil fuel prices are increasing and the domestic currencies are becoming stronger against the US$);

Utilization of nationally-available, renewable, zero-carbon and zero-cost feedstock; Increased share of RE in the energy mix; Promotion of rural electrification objectives and improved infrastructure for rural development.

In addition, at the micro level, CPAs will:

Contract domestic companies and workers for planning, engineering design, construction and operation of facilities;

Contribute new financial resources to host communities in the form of taxes (e.g. real property, local business and special privilege taxes);

Contribute to improving the power supply to the communities served by the local electric cooperatives;

Improve the local road network by building/ improving all-weather roads to facilitate access to plant sites;

Provide livelihoods, jobs & income o During construction (office staff & personnel, engineers, technicians, drivers, labourers,

guards, medical staff) o In the completed plant (plant manager, plant operators, security guards, bookkeeper/secretary,

maintenance staff) and related service jobs (repair & maintenance, professional services, health support) during operation

o Through enabling new & alternative productive activities; Provide ancillary benefits (technical visitors, overnight stays, servicing meetings/ conferences) to

the local community.

UNFCCC/CCNUCC CDM – Executive Board A.3. CMEs and participants of PoA >> (a) Coordinating/ Managing Entity: Carbonergy Business Consultancy Services

(b) Project participants to the PoA: Carbonergy Business Consultancy Services, Bulalacao Wind Power

Corp.

A.4. Party(ies)

Name of Party involved (host) indicates a host Party

Private and/or public entity(ies) project participants

(as applicable)

Indicate if the Party involved wishes to be considered as

project participant (Yes/No)

Republic of the Philippines (host)

Private entity a): Carbonergy Business Consultancy Services Private entity b): Bulalacao Wind Power Corp.

No

A.5. Physical/ Geographical boundary of the PoA >> The geographical boundary of the PoA is defined as the geographical area within which all the implemented CPAs included in the PoA will be physically installed. All CPAs under this PoA will be within the borders of the PoA Host Parties. A.6. Technologies/measures >> The detailed technical characteristics of the individual CPAs will differ. However, the following general conditions will apply for typical CPAs. A typical CPA will consist of the construction of a greenfield renewable energy project utilizing either wind, hydroelectric 18 , solar PV, wave, tidal (CPA types 1-5) or geothermal (CPA type 6), power technology (PoA-eligible projects) utilizing new equipment. The CPA will feed electric power into an interconnected or isolated grid, avoiding grid-based greenhouse-gas emissions. The construction of such RE projects usually includes the following common components:

Connection lines to the feed-in point of the grid; Transformer station; Electricity meters.

The specific technologies will, depending on the solution chosen, usually include the following components:

CPA type 1 Wind: turbines and towers/ masts; CPA type 2 Hydro: diversion facilities (canal or penstock for run-of-river) , with turbines and

generator(s); CPA type 3 Solar PV: photovoltaic panels (direct to electricity); CPA type 4 Wave: wave-power systems vary significantly by design, but can include point

absorbers or buoys, hydraulic or mechanical pumps, offshore reservoirs, turbines or generators;

18 This PoA is not applicable to hydro power plants that result in the creation of a new single reservoir or increases

the volume of an existing single reservoir where the resulting power density is less than 4 W/m2. See Eligibility criteria for inclusion of a CPA in the PoA, Part I Section B.2.


CPA type 5 Tidal: tidal-power systems vary significantly by design, but can include tidal stream generators or tidal barrage structures and turbines;

CPA type 6 Geothermal: steam turbines, generators, steam/water separators, heat exchangers. A.7. Public funding of PoA >> The PoA does not receive public funding.

SECTION B. Demonstration of additionality and development of eligibility criteria B.1. Demonstration of additionality for PoA >>

In accordance with the Standard for Demonstration of Additionality, Development of Eligibility Criteria and Application of Multiple Methodologies for Programme of Activities (Version 01.0), paragraph 7, “Additionality shall be demonstrated by establishing that in the absence of CDM, none of the implemented CPAs would occur.”

In accordance with ACM0002 version 13.0.0, “The additionality of the project activity shall be demonstrated and assessed using the latest version of the Tool for the demonstration and assessment of additionality agreed by the Board, which is available on the UNFCCC CDM website.” Hence, this Tool (hereinafter referred to as the Additionality Tool) will be used to establish the additionality of each CPA seeking inclusion in the PoA. However, the following criteria for determining the additionality of CPAs are established at the PoA level. For CPAs that utilize technologies on the positive list, the following applies The 63rd meeting of the CDM Executive Board expanded the positive list of grid-connected renewable electricity generation technologies up to 15MW installed capacity19. The positive list now includes: (a) Solar technologies (photovoltaic electricity generation); (b) Off-shore wind technologies; (c) Marine technologies (wave, tidal). CPAs utilizing these technologies with an installed capacity of 15MW or less will be automatically additional under this PoA. For CPAs with installed capacities up to 5MW, the following applies In accordance with EB63 report, Annex 23, ‘Guidelines for Demonstrating Additionality of Microscale Project Activities’ (Version 03): Project activities up to 5 megawatts that employ renewable energy technology20 are additional (i.e., would not be implemented in the absence of the PoA) if any one of four stated conditions is satisfied. The fourth condition “(d)” reads as follows:

19http://cdm.unfccc.int/filestorage/L/0/8/L08WMCZ5FO9ATRD7JP1X3BEHQK4NI2/eb63_repan24.pdf?t=Sjh8bT

BocGF1fDCZZ1gD75fg_8yf0eq9DUsj 20 All technologies/measures included in approved Type I Small Scale CDM methodologies are eligible to be considered. Furthermore at its fifty-seventh meeting the Board clarified that all CDM project activities that meet the criteria specified in these guidelines are eligible to apply the guidelines irrespective of the scale of the approved CDM methodology applied to the project activity. http://cdm.unfccc.int/filestorage/W/V/I/WVI3RN692YMCGLZT40QXBOUA8H5KFP/eb63_repan23.pdf?t=dVR8bTBocGVjfDBHPvKJ1X5c0KsX2Gd3VGDk

UNFCCC/CCNUCC CDM – Executive Board “(d) The project activity employs specific renewable energy technologies/measures recommended by the host country DNA and approved by the Board to be additional in the host country.” It goes on, inter alia, to specify the following conditions:

(i) The technologies/measures must be grid connected with an installed capacity of ≤ 5 MW; (ii) The ratio of the technology shall be ≤ than 3% of the total installed grid connected capacity in

the host country; and (iii) The data used to determine the specific contribution shall not be older than 3 years.

Therefore, in cases where condition “d” applies and the technology employed has been approved by the CDM Executive Board as a micro-scale renewable energy technology in the host country, the CPA shall be considered additional.

Technological barriers Developers of renewable energy projects commonly face several technological barriers in terms of limited domestic manufacturing capacity, insufficient skilled workforce and equipment failure as a result of frequent natural disasters as illustrated for the Philippines example in Table 1.

Table 1: Barriers to RE technology deployment: Philippines example

In general: The key electro-mechanical components of nearly all of the PoA-eligible technologies21 commonly

have to be imported, due to lack of RE manufacturing capacity in the host country. As a result, replacement parts must be ordered from abroad and significant repair delays can occur;

Due to limited experience with RE technologies, there is normally a lack of local skilled labour to build, operate and maintain RE facilities. This leads to an unacceptably high risk of equipment disrepair and malfunctioning or other underperformance;

The frequent and increasingly extreme weather events and the chances of seismic activity affect the operation of energy facilities. In some cases, the effects of such events can lead to permanent damage of generating equipment and buildings.

CPA proponents that elect to confirm their additionality by performing a barrier analysis may demonstrate that one or more of these barriers are significant and applicable to their CPA at the time of their application for inclusion. CPAs that are subject to one or more of the barriers presented here shall be considered additional under this PoA.

21 In the Philippines case, one solar PV manufacturing facility has recently been established that could supply units

to solar power plants.

Technology InstallationO&M/

repairsLabour

Training

needs

Technology

risksNatural risks

Wind Foreign Foreign Foreign Untrained YesDelayed

repairs

Typhoons, strong winds, landslides,

seismic activity

Hydro Foreign Foreign ForeignFew domestic

expertsYes

Delayed

repairs

Typhoons, landslides, seismic

activity, floods, droughts

Geothermal Foreign Foreign ForeignFew domestic

expertsYes

Delayed

repairs


activity, floods

SolarPartial

domesticForeign Foreign Untrained Yes

Delayed

repairs


activity, floods

Ocean Foreign Foreign Foreign Untrained YesDelayed

repairs

Typhoons, seismic activity,

tsunamis

UNFCCC/CCNUCC CDM – Executive Board For CPAs implemented in the Republic of the Philippines: Financial barrier: access to finance Some PoA-eligible projects are being developed by ‘blue chip’ corporations with significant balance sheets or government agencies/ utilities. In contrast to new RE market entrants/ entrepreneurs, the blue chip corporations are able to reach financial closure by securing on-the-books financing for their projects or are readily granted debt financing by banks because of their significant and publicly-acknowledged assets. Other PoA-eligible projects are being developed by government/ parastatal agencies or public-oriented utilities that do not operate on a commercial basis. However, there are many potential commercial developers of PoA-eligible projects in the Philippines that are confronted with significant barriers to reaching financial closure of their projects. They do not have the same leverage or financial track record as blue chip corporations to fund their projects and are unable to develop and run them with a low profit margin or loss as some parastatal organizations and utilities do. Hence, access to finance is the primary hurdle that must be overcome by these developers. It is well known in the Philippine renewable energy market that domestic banks do not provide non-recourse (i.e. project) finance for projects in this sector, especially for new RE market entrants/ entrepreneurs22, 23, demanding that applicants assign additional and often personal collateral as ‘Joint and Solidary Suretyship (JSS)’ as evidenced by their lists of requirements24,25. This “strict regulation(s) from (the) Central Bank of the Philippines”26 creates a major access to finance barrier27. Developers are required by financial institutions to provide significant collateral so many PoA-eligible projects, whether applying for incentives under the RE Act or not, will encounter difficulties/ delays in raising the capital needed to go ahead. Such project developers are generally viewed as less ‘credible’ than the large, established and well-funded corporations even those that are new to the RE sector. This barrier has been a major contributing factor to the delayed emergence of a vibrant RE sector in the country. CPA proponents in the Philippines that elect to confirm their additionality by performing a barrier analysis may demonstrate that this barrier is applicable to their CPA at the time of their application for inclusion. CPAs that are subject to the access to finance barrier presented here shall be considered additional under this PoA. Financial barrier: investment returns CPA proponents that are able to surpass the access to finance barrier may need the promise of carbon credits to ensure a sufficiently attractive financial return to warrant investing in the project. In such cases, if the project-based internal rate of return (IRR) without carbon credits is below an appropriate benchmark for the host country, the project shall be considered additional under this PoA. For CPA proponents in the Philippines, the benchmark to be applied is 15%. This benchmark was established by the Investment Coordinating Committee (ICC) of the Philippine National Economic Development Authority (NEDA) as the Shadow Discount Rate (SDR) used to discount the stream of economic costs and benefits of a project to their present values. 28 This value was used in a recently-

22 The Renewable Energy Conference and Expo Manila 2010: Final Report, session on financing & summary of key

challenges (provided to the DOE for validation) 23 http://www.c-cred.org/re2010/materials.php 24 Provided to the DOE for validation 25 Provided to the DOE for validation 26 CDM project 4447: http://cdm.unfccc.int/Projects/DB/SGS-UKL1296667766.19/view (validation report) 27 The existence of this barrier has also been clearly documented and acknowledged through the validation of two

recently-registered SHP CDM projects in the Philippines (Projects 4546 http://cdm.unfccc.int/Projects/DB/SGS-UKL1299250853.42/view & 4547 http://cdm.unfccc.int/Projects/DB/SGS-UKL1299251386.6/view ).

28http://www.neda.gov.ph/progs_prj/ICC/Latest_ICC_FormsJan_2004/ICC%20PROJECT%20EVALUATION%20PROCEDURES%20AND%20GUIDELINES.pdf

UNFCCC/CCNUCC CDM – Executive Board registered CDM project from the Philippines29 and can be further validated by comparing it to two other commonly-accepted financial indicators:

1. Government/ Treasury bond yields/ rates. These vary significantly depending on their time of issuance and tenor/ time to maturity as shown in a recent paper by the Bangko Sentral ng Pilipinas (BSP)30. This paper shows that secondary market yields on Philippine Treasury bills with a 25-year tenor were at 6.5% at the end of December 2011.

2. Risk premiums. One of the most accepted of these comes from Damodaran31 who presents a list of ‘Country Default Spreads and Risk Premiums’. The total risk premium assigned to the Philippine bond issuances is 10.13%.

Following these two means of benchmarking (bond rates and country risk premium) we can derive a benchmark higher than the NEDA value of 15% IRR. Philippine RE developers and regulators consider higher benchmarks. Discussions with NREB resulted32 in the following expected returns on equity as envisaged by project developers, PDOE and NREB:

NREB finally submitted these expected returns in its petition to the ERC33:

Given these IRR benchmark values and their relevance from the various perspectives of the stakeholders in the Philippines energy sector, our assumed benchmark of 15% is reasonable and conservative. CPA proponents in the Philippines that elect to confirm their additionality by performing a benchmark investment analysis must demonstrate that their project IRR does not exceed this 15% benchmark established at the PoA level. Common practice The step-wise procedures provided in the Guidelines on Common Practice (version 1.0) have been applied to perform an initial common practice analysis for the PoA-eligible technologies in the Philippines. A general analysis for all of the PoA-eligible technologies is not presented here, because the outcome of the initial analysis made it clear that the results are sensitive to both the capacity/output of a particular CPA (which determines the sample group analyzed) and the regional grid to which the CPA will be connected. However, general conclusions can be made with respect to tidal, wave, solar and wind technologies.

29 Project 2524: http://cdm.unfccc.int/Projects/DB/DNV-CUK1239822363.37/view 30 http://www.bsp.gov.ph/downloads/Publications/FAQs/intrates.pdf 31 http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html 32 Op. cit. Ref 12 33 Op. cit. Ref 16

Tech Developers DOE NREB

Hydro 18.4 16.0 17.0

Solar 16.5 16.5 17.0

Wind 16.5 16.5 17.0

Tech NREB

Hydro 17.0%

Solar 16.0%

Wind 17.0%

Ocean 15.1%

UNFCCC/CCNUCC CDM – Executive Board There are currently no tidal or wave technologies under commercial operation in the Philippines. Therefore, these technologies are clearly not common practice. There is currently only one solar power plant in commercial operation in the Philippines, with an installed capacity of 1MW. Solar power plants up to 15MW installed capacity are on the positive list and are automatically additional. There are no solar power plants in commercial operation that are larger than 15MW. Therefore, this technology is clearly not common practice. There are currently 89 large-scale grid-connected power plants installed in the Philippines.34 There is only one wind power plant under commercial operation in the Philippines. Therefore, wind power is clearly not common practice.35 With only a few exceptions, the isolated grids in the Philippines do not have any of the PoA-eligible technologies installed, relying almost 100% on diesel power generation.36 Therefore a CPA utilizing any of the PoA-eligible technologies in any of the isolated grid systems cannot be considered as common practice. An updated common practice analysis for the PoA-eligible technologies determined above to be not common practice for CPAs in the Philippines shall be provided at the end of each seven-year crediting period of this PoA. CPAs applying PoA-eligible technologies that are not on the positive list, are not approved micro-scale technologies in their host country, and have not been demonstrated here to be not common practice shall provide a common practice analysis in accordance with the Guidelines on Common Practice that are current at the time of application for inclusion in this PoA. B.2. Eligibility criteria for inclusion of a CPA in the PoA >> Each potential CPA being considered for inclusion in the PoA must fulfil the following eligibility criteria: 1. The geographical boundary of the CPA must be within the borders of the PoA Host Parties (applies to

all CPAs); 2. The project must not be included in another PoA or exist as a stand-alone project submission under

the CDM. This should be demonstrated by comparing the geographic coordinates and CPA owners of the CPA with other CDM project submissions (all);

3. Each CPA must be in compliance with the laws and regulations of the host country within which it is implemented (all);

4. Each CPA shall comprise one or more greenfield wind/ hydro / geothermal / solar PV/ wave or tidal power plant(s) or unit(s) generating electricity using new equipment (select one PoA-eligible RE technology only);

5. The electricity generated must be fed into an integrated or an isolated grid system (all); 6. The CPA proponent must enter into a cooperation agreement with the CME to participate in the PoA

(all); 7. The applicability conditions established for the PoA, as elaborated in Part II Section B.2, must be met

(all); 8. The CPAs must meet the requirements pertaining to the demonstration of additionality as elaborated

in Part I Section B.1 (all);

34 The power plants in this analysis include those connected to the Luzon, Visayas and Mindanao grid systems.

Isolated grid systems are discussed separately, below. 35 The existing wind power plant has a capacity of 33MW. For the capacity range of 15.1 to 50MW the F factor for

wind is 0.04 and Nall-Ndiff = 1. These calculations are based on data from the Philippines Department of Energy. The data and calculations are available to the DOE for validation.

36 Provided to the DOE for validation

UNFCCC/CCNUCC CDM – Executive Board 9. The CPA must meet the requirements of ACM0002 version 13.0.0 with regard to baseline setting and

monitoring as well as the requirements of all Tools associated with this methodology (all); 10. This PoA is not applicable to project activities that involve capacity additions, retrofits or

replacement of equipment in an existing facility (all); 11. This PoA is not applicable to hydropower project activities that create new, or increase the volume of

existing, reservoirs (all hydro projects); 12. This PoA is not applicable to CPAs that combine multiple PoA-eligible technologies (all); 13. The reported start date of the CPA must be supported by documentary evidence. The status of various

tasks leading up to commencement of the project should be reflected in the CME’s CPA process management template to confirm that the reported start date is realistic (all);

14. The CPAs must have complied with CDM and local requirements to hold a local stakeholder consultation and undertake an environmental impact analysis (all);

15. The CPA owner must provide evidence of the financing approach for the underlying project (applies exclusively to CPAs that use the access to finance barrier argument);

16. The CPA owner must obtain written confirmation from an Annex I party that funding they provide does not result in a diversion of official development assistance (only for CPAs that receive donor funding).

The conditions related to sampling requirements for a CPA are not relevant as each CPA will be monitored individually. B.3. Application of methodologies >> As indicated in Part I Sections A.2 and A.6, this PoA is applicable to CPAs employing the following renewable energy technologies and selling electricity to a regional or isolated grid system:

Wind; Hydroelectric; Solar PV; Wave; Tidal; and Geothermal;

Further, this PoA is restricted to CPAs that meet the applicability criteria established for methodologyACM0002 Consolidated baseline methodology for grid-connected electricity generation from renewable sources --- Version 13.0.0. This methodology is applicable for all of the technologies listed above.

SECTION C. Management system37 >> (i) a record keeping system for each CPA under the PoA, The CME will develop and maintain an electronic data storage and retrieval system that will, inter alia, include the following key data elements for each CPA:

Name of the CPA; Site location/ coordinates (GPS coordinates of the power house and the water intake); Owner/ developer name and contact details;

37 The VVS guide refers to “applicable provisions in the PoA standard.” As the PoA standard is not yet finalized and

published by the UNFCCC, we have followed prior guidelines from the VVM track for describing the management system to be put into place for this PoA.


Project status and progress through the CDM cycle; Installed capacity; Meter measurements of electricity supplied to grid; Sales records of electricity sold; and Records documenting meter calibrations.

(ii) a system/procedure to avoid double accounting e.g. to avoid the case of including a new CPA that

has been already registered either as CDM project activity or as a CPA of another PoA, Before being included in the PoA, the location of each applicant CPA will be cross-checked against the UNFCCC CDM project database to determine that it has not already been officially submitted as a stand-alone project or a CPA in another PoA. The CME has developed and will maintain a geo-referenced data set of PoA-eligible project types that have been submitted for consideration under the CDM. This will be utilized to compare the locations of CPAs requesting inclusion with the locations of existing CDM projects. (iii) the provisions to ensure that those operating the CPA are aware and have agreed that their

activity is being subscribed to the PoA; The Proponent of each proposed CPA will be required to enter into a PoA Participation Contract with the CME that includes sections on responsibilities and warranties among the contracted terms of participation.

SECTION D. Duration of PoA D.1. Start date of PoA >> July 1, 2014 or the date of PoA registration, whichever is later. The July 2014 start date was determined based on the current project plan for the first CPA. D.2. Length of the PoA >> The PoA is expected to last 28 years from the start date.

SECTION E. Environmental impacts E.1. Level at which environmental analysis is undertaken >> Environmental Analysis is done at CPA level. The Philippines Department of Environment and Natural Resources (DENR) requires all projects to apply for approval under its Environmental Impact Statement (EIS) system38 (which is equivalent to an Environmental Impact Assessment (EIA) system). Therefore, performing the environmental analysis at the CPA level is appropriate. E.2. Analysis of the environmental impacts >> N/A

38http://www.google.at/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&sqi=2&ved=0CE0QFjAA&url=http%3A

%2F%2Femb.gov.ph%2Flaws%2Fenvironmental%2520impact%2520assessment%2FDAO30.doc&ei=9LvmT8XrE8bO4QTv_6nPAQ&usg=AFQjCNFc0SYlE3JtHbfa67IXCqAKYfBEIg

UNFCCC/CCNUCC CDM – Executive Board E.3. Environmental impact assessment >> N/A

SECTION F. Local stakeholder comments F.1. Solicitation of comments from local stakeholders >> Local stakeholder consultation is done at CPA level. While the Philippine DNA has not yet developed specific procedures for PoAs, they do have strong concerns about the correct conduct of stakeholder consultations to the extent that they require “the physical presence of stakeholders” with various levels of evidence.39 The required level of information can only be obtained at the CPA level. Therefore, performing stakeholder consultations at the CPA level is appropriate. F.2. Summary of comments received >> N/A F.3. Report on consideration of comments received >> N/A

SECTION G. Approval and authorization >> Only one Party is involved in this PoA: the Host Party of the first CPA, the Republic of the Philippines. The Letter of Approval (LoA) for the proposed PoA has not yet been applied for.40

PART II. Generic component project activity (CPA): for CPA types 1-5 (wind, hydroelectric, solar PV, wave and tidal power)

SECTION A. General description of a generic CPA A.1. Purpose and general description of generic CPAs >> The generic purpose of CPAs included in this PoA is to support the development of renewable energy projects that feed electric power into an interconnected or isolated grid. In general, the PoA enables developers of such CPAs to overcome financial and other barriers to developing and implementing their projects, by harnessing the financial support made available through the sale of carbon credits.

SECTION B. Application of a baseline and monitoring methodology B.1. Reference of the approved baseline and monitoring methodology(ies) selected >> For all of the applicable technologies in this PoA: ACM0002 Consolidated baseline methodology for grid-connected electricity generation from renewable sources --- Version 13.0.0 The latest approved versions of the following tools are referred to in this methodology:

39 Interim Guidelines On The Conduct Of Stakeholders’ Consultation Under DAO 2005-17,

http://cdmdna.emb.gov.ph/cdm/public/cdm-techResources.php?main=tech&ListCategories=03 40 The Philippine DNA only issues one LoA for the PoA as a whole.


The Tool to calculate the emission factor for an electricity system (current version: 02.2.1) The Tool for the demonstration and assessment of additionality (current version: 06.0.0) The Combined tool to identify the baseline scenario and demonstrate additionality (current

version: 4.0.0) The Tool to calculate project or leakage CO2 emissions from fossil fuel combustion (current

version: 2). B.2. Application of methodology(ies) >> Compliance with the applicability conditions in ACM0002 Version 13.0.0 and all associated Tools is included as an eligibility requirement for all CPAs applying for inclusion in this PoA. Table 2. Relevance of ACM0002 to the proposed PoA Applicability Condition from the Meth Relevance to Proposed PoA This methodology is applicable to grid-connected renewable power generation project activities that: (a) install a new power plant at a site where no renewable power plant was operated prior to the implementation of the project activity (greenfield plant); (b) involve a capacity addition; (c) involve a retrofit of (an) existing plant(s); or (d) involve a replacement of (an) existing plant(s).

The proposed PoA is applicable to project activities that install a new power plant at a site where there was no renewable energy power plant operating prior to the implementation of the project activity (Greenfield plant). The proposed PoA is not applicable to project activities that involve capacity additions, retrofits of existing plants, or replacements of existing plants.

The methodology is applicable under the following conditions: 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 the case of capacity additions, retrofits or replacements (except for capacity addition projects for which the electricity generation of the existing power plant(s) or unit(s) is not affected): the existing plant started commercial operation prior to the start of a minimum historical reference period of five years, used for the calculation of baseline emissions and defined in the baseline emission section, and no capacity addition or retrofit of the plant has been undertaken between the start of this minimum historical reference period and the implementation of the project activity;

The proposed PoA is applicable to installation of hydro, wind, geothermal, solar PV, wave and tidal power plants/units supplying electricity to a regional or isolated grid. The PoA is not applicable to solar thermal projects. The PoA is not applicable to hydropower projects that create new reservoirs or increase the volume of an existing reservoir.

In case of hydro power plants: One of the following conditions must apply:

o The project activity is implemented in an existing single or multiple reservoirs, with no change in the volume of any of the reservoirs; or

o The project activity is implemented in an

Hydropower project activities under this PoA may not increase the volume of an existing reservoir. New reservoirs are not allowed under this PoA.


existing single or multiple reservoirs, where the volume of any of the reservoirs is increased and the power density of each reservoir, as per the definitions given in the project emissions section, is greater than 4 W/m2; or

o The project activity results in new single or multiple reservoirs and the power density of each reservoir, as per the definitions given in the project emissions section, is greater than 4 W/m2.

In case of hydro power plants using multiple reservoirs where the power density of any of the reservoirs is lower than 4 W/m2 all of the following conditions must apply:

The power density calculated for the entire project activity using equation 5 is greater than 4 W/m2;

Multiple reservoirs and hydro power plants located at the same river and where are designed together to function as an integrated project41 that collectively constitute the generation capacity of the combined power plant;

Water flow between multiple reservoirs is not used by any other hydropower unit which is not a part of the project activity;

Total installed capacity of the power units, which are driven using water from the reservoirs with a power density lower than 4 W/m2, is lower than 15 MW;

Total installed capacity of the power units, which are driven using water from reservoirs with a power density lower than 4 W/m2, is less than 10% of the total installed capacity of the project activity from multiple reservoirs.

Hydropower project activities under this PoA may not increase the volume of an existing reservoir. New reservoirs are not allowed under this PoA.

The methodology is not applicable to the following: 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

The proposed PoA does not apply to: Project activities that involve switching

from fossil fuels; Biomass-fired power plants; Solar thermal;

41 This requirement can be demonstrated, for example, (i) by the fact that water flow from upstream power units

spilling directly to the downstream reservoir, or (ii) through the analysis of the water balance. Water balance is the mass balance of water fed to power units, with all possible combinations of multiple reservoirs and without the construction of reservoirs. The purpose of such water balance is to demonstrate the requirement of specific combination of multiple reservoirs constructed under CDM project activity for the optimization of power output. This demonstration has to be carried out in the specific scenario of water availability in different seasons to optimize the water flow at the inlet of power units. Therefore this water balance will take into account seasonal flows from river, tributaries (if any), and rainfall for minimum three years prior to implementation of CDM project activity.


at the site; Biomass fired power plants; A hydro power plant that results in the creation

of a new single reservoir or in the increase in an existing single reservoir where the power density of the reservoir is less than 4 W/m2.

Hydropower plants that create new reservoirs or increase the volume of existing reservoirs.

In the case of retrofits, replacements, or capacity additions, this methodology is only applicable if the most plausible baseline scenario, as a result of the identification of baseline scenario, is “the continuation of the current situation, i.e. to use the power generation equipment that was already in use prior to the implementation of the project activity and undertaking business as usual maintenance”.

The proposed PoA does not apply to retrofits, replacements or capacity additions.

In addition, the applicability conditions included in the tools referred to above apply.42 Relevant tools:

“Tool to calculate the emission factor for an electricity system”;

“Tool for the demonstration and assessment of additionality”;

“Combined tool to identify the baseline scenario and demonstrate additionality”;

“Tool to calculate project or leakage CO2 emissions from fossil fuel combustion”.

The proposed PoA incorporates this requirement in its applicability conditions.

B.3. Sources and GHGs Table 3 Emissions sources included in or excluded from the project boundary

Source GHGs Included? Justification/Explanation

Bas

elin

e

CO2 emissions from electricity generation in fossil fuel fired power plants that are displaced due to the project activity

CO2 Yes Main emission source CH4 No Minor emission source N2O No Minor emission source

Pro

ject

ac

tivi

ty

Not applicable CO2 No Not applicable CH4 No Not applicable N2O No Not applicable

42 The condition in the “Combined tool to identify the baseline scenario and demonstrate additionality” that all

potential alternative scenarios to the proposed project activity must be available options to project participants does not apply to this methodology, as this methodology only refers to some steps of this tool.


Figure 2: Sample flow diagram (wind)

Figure 3: Sample flow diagram (hydro)


Figure 4: Sample flow diagram (solar PV)

Figure 5: Sample flow diagram (wave power)

Figure 6: Sample flow diagram (tidal power)

UNFCCC/CCNUCC CDM – Executive Board B.4. Description of baseline scenario >> In accordance with ACM0002 (version 13.0.0) the baseline scenario for CPAs in this PoA is: 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”. B.5. Demonstration of eligibility for a generic CPA >> Confirming compliance with the PoA eligibility criteria: Each CPA must demonstrate that it:

1. Is in compliance with the laws and regulations of the host country within which it is implemented.

2. Comprises one or more greenfield plant(s) or unit(s) generating electricity using new equipment. 3. Will feed electricity into an integrated or an isolated grid system.

In addition:

4. Each CPA proponent must enter into a cooperation agreement with the CME to participate in the PoA.

5. Through the submission of a CPA-DD, the CPA must demonstrate that it meets the requirements of ACM0002 version 13.0.0 with regard to applicability conditions, baseline setting and monitoring as well as all Tools associated with this methodology.

N.B. This PoA is not applicable to capacity additions, retrofits or replacements in existing facilities or to hydropower project activities that create new, or increase the volume of existing, reservoirs. Confirming additionality at the CPA level: In accordance with ACM0002 version 13.0.0, all CPAs applying for inclusion in this PoA must confirm their additionality by applying the most recent version of the Tool for the demonstration and assessment of additionality. However, CPAs may confirm that they that utilize technologies on the positive list and thereby can be considered as automatically additional. Similarly, CPAs with PoA-eligible technologies that have installed capacities up to 5MW may confirm that the technology they utilize represents ≤ 3% of the total installed grid-connected capacity in their host country at the time of their application for inclusion in this PoA. The CPA must demonstrate that the technology applied in the CPA has been recommended as an additional micro-scale technology by the DNA of their host country and that the recommendation has been accepted by the Executive Board. CPAs that are proposed for inclusion in this PoA but utilize technologies not eligible under the positive list or the micro-scale rule must either:

a) Provide documented evidence confirming that one of the additionality criteria established at the PoA level applies to their CPA, or

b) Apply the Tool for the demonstration and assessment of additionality independently. In section B.1, above, Technology barriers have been established at the PoA level. Further, an Access to Finance barrier and a benchmark IRR for project-based investment analyses have been established at the

UNFCCC/CCNUCC CDM – Executive Board PoA level for CPAs located in the Republic of the Philippines. For the purpose of demonstrating additionality, a typical CPA will confirm that at least one of these applies to their project activity. For CPA’s electing to confirm their additionality through investment analysis, the analysis shall take into account relevant type-specific technical and economic parameters such as:

(a) Technical and economic parameters that are technology specific (e.g. ranges of load factors, sizes of installation, wind speed) (b) Parameters reflecting the investment climate:

(i) Subsidies or other financial flows; (ii) Tariffs; (iii) Depreciation; (iv) Power purchase agreements; (v) Other parameters determining market circumstances;

(c) Ranges of costs (capital investment, operating and maintenance costs, etc.) and revenues (income from electricity sale, subsidies/fiscal incentives, ODA).

Those CPAs which are required to perform a common practice analysis shall do so presenting publicly-available data for the relevant isolated, regional or national grid to which the CPA is intended to deliver power. For CPAs implemented in the Republic of the Philippines Consistency with mandatory laws and regulations There are no laws or regulations requiring greenfield grid-connected renewable power plant/unit(s). Therefore, project activities of this type are in compliance with Philippine laws and regulations. Option III: Investment analysis benchmark All CPAs that elect to demonstrate the additionality of their projects by applying benchmark analysis, in accordance with the Tool, shall be considered additional under this PoA if their project-based internal rate of return (IRR) without carbon credits is below the PoA-established benchmark of 15%. The project IRR shall be demonstrated based upon a comparison of total cash outflows (capital expenditures and operating costs) and cash inflows (sale of power to the grid). A sensitivity analysis (Sub-step 2d) shall been performed on key assumptions. The other investment analysis options provided in the Tool may also be used. Access to Finance The Access to Finance barrier is established at the PoA level. Projects that must borrow capital from financial institutions, or turn to co-investors that demand access to carbon credits, to finance their investment face this barrier and are, therefore, additional. Project proponents proposing CPAs for inclusion in the PoA may utilize this barrier to demonstrate their project’s additionality by confirming its validity in relation to the project in question. Documented evidence must be presented. Common Practice Analysis As a complement to barrier and/or investment analyses, the “Tool for the demonstration and assessment of additionality” requires that each CPA must provide an analysis of the extent to which the proposed project type (e.g. technology or practice) has already diffused in the relevant sector and region. Guidelines on Common Practice have been published for this purpose. It has been established at the PoA level that wind, solar, tidal and wave technologies are not common practice anywhere in the Philippines. Further, none of the technologies applicable in this PoA are common practice in the isolated grid systems in the Philippines. CPAs applying PoA-eligible technologies that are not on the positive list, are not approved micro-scale technologies, and have not been demonstrated here to be not common practice shall provide a common practice analysis in

UNFCCC/CCNUCC CDM – Executive Board accordance with the Guidelines on Common Practice that are current at the time of application for inclusion in this PoA. B.6. Estimation of emission reductions of a generic CPA B.6.1. Explanation of methodological choices >> Emission reductions are calculated as baseline emissions less project emissions and leakage. The methodological choices for each are detailed below. Project Emissions For wind, hydro, solar PV, tidal and wave CPAs: PEy = 0. Baseline emissions In accordance with methodology ACM0002 Version 13.0.0, baseline emissions include only CO2 emissions from electricity generation in fossil fuel fired power plants that are displaced due to the project activity. The methodology assumes that all project electricity generation above baseline levels would have been generated by existing grid-connected power plants and the addition of new grid-connected power plants. The baseline emissions are to be calculated as follows:

yCMgridyPJy EFEGBE ,,, * (6)

yPJEG , = Quantity of net electricity generation that is produced and fed into the grid as a result

of the implementation of the CDM project activity in year y (MWh/yr) Calculation of EGPJ,y

yfacility,yPJ, EGEG (7) Where:

yPJ,EG

= Quantity of net electricity generation that is produced and fed into the grid as a result of the implementation of the CDM project activity in year y (MWh/yr)

yfacility,EG

= Quantity of net electricity generation supplied by the project plant/unit to the grid in year y (MWh/yr)

Calculation of the Combined Margin Grid Emission Factor (EFgrid,CM,y) The combined margin grid emission factor for the relevant isolated, regional or national grid is calculated using the Tool to calculate the emission factor for an electricity system, Version 02.2.1, as follows: 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 (optional); 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. Calculate the build margin (BM) emission factor; STEP 6. Calculate the combined margin (CM) emissions factor.

UNFCCC/CCNUCC CDM – Executive Board Step 1: Identify the relevant electricity systems For determining the electricity emission factors, a project electricity system is defined by the spatial extent of the power plants that are physically connected through transmission and distribution lines to the project activity and that can be dispatched without significant transmission constraints. For project activities connected to the Luzon and Visayas interconnected regional grid or the Mindoro isolated grid, the project electricity system includes the project site and all power plants supplying power to the grid. Step 2: Choose whether to include off-grid power plants in the project electricity system (optional) Project participants may choose between the following two options to calculate the operating margin and build margin emission factor: Option I: Only grid power plants are included in the calculation. Option II: Both grid power plants and off-grid power plants are included in the calculation. For project activities connected to the Luzon and Visayas interconnected regional grid or the Mindoro isolated grid, Option I is chosen: only grid power plants are included in the calculation. Step 3: Select a method to determine the operating margin (OM) The calculation of the operating margin emission factor (EFgrid,OM,y) 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.

For project activities connected to the Luzon and Visayas interconnected regional grid or the Mindoro isolated grid, the low-cost/must-run resources constitute less than 50 percent of total generation. Option (a), Simple OM, is applied.43 For the simple OM, the simple adjusted OM and the average OM, the emissions factor can be calculated using either of the two following data vintages:

Ex ante option: If the ex ante option is chosen, the emission factor is determined once at the validation stage, thus no monitoring and recalculation of the emissions factor during the crediting period is required. For grid power plants, use a 3-year generation-weighted average, based on the most recent data available at the time of submission of the CDM-PDD to the DOE for validation. For off-grid power plants, use a single calendar year within the 5 most recent calendar years prior to the time of submission of the CDM-PDD for validation.

Ex post option: If the ex post option is chosen, the emission factor is determined for the year in which the project activity displaces grid electricity, requiring the emissions factor to be updated annually during monitoring. If the data required to calculate the emission factor for year y is usually only available later than six months after the end of year y, alternatively the emission

43 For the Luzon and Visayas integrated regional grid, the 5-year average (2006 – 2010) of total grid generation that

was not from low-cost/must-run sources was 72.31%. This value is the result of a calculation based on data downloaded from the PDOE website (Op. cit. ref 6, and Annex 1: Excel files provided to the DOE for validation). For the Mindoro isolated grid, the 5-year average (2007-2011) of total grid generation that was not from low-cost/must-run sources was 95.5%. The electricity generation data for the Mindoro isolated grid has been supplied by the National Power Corporation’s Small Power Utilities Group (NPC-SPUG) for the power plants it manages, by the two distribution utilities (Oriental Mindoro Electric Cooperative [ORMECO] and Occidental Mindoro Electric Cooperative [OMECO]), the Philippine Department of Energy, and two private IPPs (GBH Power Resources, Inc., and Ormin Power Inc.) for the remaining power plants on the island (See: Annex 2: Excel file provided to the DOE for validation). The calculation of the 5-year averages for each of the grids can be found in Annex 1 and Annex 2 (spreadsheets provided to the DOE for validation).


factor of the previous year y-1 may be used. If the data is usually only available 18 months after the end of year y, the emission factor of the year preceding the previous year y-2 may be used. The same data vintage (y, y-1 or y-2) should be used throughout all crediting periods.

For project activities connected to the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid, the Ex ante option has been chosen. The emission factor is determined at the validation stage of the PoA for the entire first crediting period. A 3-year generation-weighted average has been calculated. For the Luzon and Visayas interconnected regional grid the calculation is based on data for calendar years 2008 through 2010. For the Mindoro isolated grid the calculation is based on data for calendar years 2009 through 2011. Step 4: Calculate the operating margin emission factor according to the selected method Simple OM emission factors for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid have been calculated as the generation-weighted average CO2 emissions per unit net electricity generation (tCO2/MWh) of all generating power plants serving the system, not including low-cost/must-run power plants/units. Power plants developed as registered CDM projects have been eliminated from this calculation. The simple OM may be calculated: Option A: Based on the net electricity generation and a CO2 emission factor of each power unit;44 or Option B: Based 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. For project activities connected to the Mindoro isolated grid, Option A has been chosen. For project activities connected to the Luzon and Visayas interconnected regional grid, fuel consumption data is not available for individual power generation units or for the system as a whole. Therefore, Option B has been chosen, applying a deviation from the Tool that has been accepted by the UNFCCC and has commonly been applied.45 The simple OM emission factor is calculated based on the net electricity supplied to the grid by all power plants serving the system, not including low-cost/must-run power plants/units or power plants/units registered as CDM projects, and based on the fuel type(s) and fuel consumption expressed in heat units derived from electricity generation by technology type, as follows:

y

iyiCOyiyi

yOMsimplegrid EG

EFNCVFCEF

,,2,,

,,

(1) Where: EFgrid,OMsimple,y = Simple operating margin CO2 emission factor in year y (tCO2/MWh) FCi,y = Amount of fossil fuel type i consumed in the project electricity system in year y (mass

or volume unit) NCVi,y = Net calorific value (energy content) of fossil fuel type i in year y (GJ/mass or volume

unit) 44 Power units should be considered if some of the power units at the site of the power plant are low-cost/must-run

units and some are not. Power plants can be considered if all power units at the site of the power plant belong to the group of low-cost/must-run units or if all power units at the site of the power plant do not belong to the group of low-cost/must-run units.

45 See, for example, CDM projects 4546 & 4547 (Op. cit. ref 27)

UNFCCC/CCNUCC CDM – Executive Board EFCO2,i,y = CO2 emission factor of fossil fuel type i in year y (tCO2/GJ) EGy = Net electricity generated and delivered to the grid by all power sources serving the

system, not including low-cost/must-run power plants/units, in year y (MWh) i = All fossil fuel types combusted in power sources in the project electricity system in

year y y = The relevant year as per the data vintage chosen in Step 3 For project activities connected to the Luzon and Visayas interconnected regional grid, FCi,y is estimated for each power unit based on the heat rate and carbon content of the fuel consumed and a combustion efficiency for the type of power unit.46 The Luzon and Visayas interconnected regional grid and the Mindoro isolated grid are not connected to any other grid systems. Hence no electricity imports occur to either of these grid systems. The calculation of the operating margins for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid are presented in Annex 1 and Annex 2, respectively. Step 5: Calculate the build margin (BM) emission factor In terms of vintage of data, project participants can choose between one of the following two options: Option 1: For the first crediting period, calculate the build margin emission factor 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. For the second crediting period, the build margin emission factor should be updated based on the most recent information available on units already built at the time of submission of the request for renewal of the crediting period to the DOE. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. This option does not require monitoring the emission factor during the crediting period. Option 2: For the first crediting period, the build margin emission factor shall be updated annually, ex post, including those units built up to the year of registration of the project activity or, if information up to the year of registration is not yet available, including those units built up to the latest year for which information is available. For the second crediting period, the build margin emissions factor shall be calculated ex ante, as described in Option 1 above. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. For project activities connected to the Luzon and Visayas interconnected regional grid or the Mindoro isolated grid, Option 1 has been chosen. The sample group of power units m used to calculate the build margin has been determined as follows:

(a) Identify the set of five power units, excluding power units registered as CDM project activities, that started to supply electricity to the grid most recently (SET5-units) and determine their annual electricity generation (AEGSET-5-units, in MWh);

(b) Determine the annual electricity generation of the project electricity system, excluding power units registered as CDM project activities (AEGtotal, in MWh). Identify the set of power units, excluding power units registered as CDM project activities, that started to supply electricity to the grid most recently and that comprise 20% of AEGtotal (if 20% falls on part of the generation of a unit, the generation of that unit is fully included in the calculation) (SET20%) and determine their annual electricity generation (AEGSET-≥20%, in MWh);

(c) From SET5-units and SET20% select the set of power units that comprises the larger annual electricity generation (SETsample);

Identify the date when the power units in SETsample started to supply electricity to the grid.

46 The calculation of FCi,y for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid can

be found in Annex 1 and Annex 2, respectively.

UNFCCC/CCNUCC CDM – Executive Board If none of the power units in SETsample started to supply electricity to the grid more than 10 years ago, then use SETsample to calculate the build margin. Ignore steps (d), (e) and (f). The determination of the build margin sample groups for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid are presented in Annex 1 and Annex 2, respectively. SET≥20% has been selected as SETsample for the Luzon and Visayas grid. SETxxx has been selected as SETsample for the Mindoro grid. None of the power units in SETsample in either of these two grid systems started to supply electricity to the grid more than 10 years ago. Hence, SETsample has been used to calculate the build margin emissions factor. The build margin emissions factor has been calculated as the generation-weighted average emission factor (tCO2/MWh) of all power units m during year y. Using the most recent available data, year y is 2010 for the Luzon and Visayas interconnected regional grid and 2011for the Mindoro isolated grid. The calculation was performed as follows:

mym,

my,m,ELy,m

yBM,grid, EG

EFGEEF

(2) Where: EFgrid,BM,y = Build 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 = Power units included in the build margin y = Most recent historical year for which power generation data is available (2010) The calculation of the build margin emission factors for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid are presented in Annex 1 and Annex 2, respectively. Step 6: Calculate the combined margin emissions factor The calculation of the combined margin (CM) emission factor (EFgrid,CM,y) is based on one of the following methods:

(a) Weighted average CM; or (b) Simplified CM. (c)

The weighted average CM method (option A) should be used as the preferred option. The simplified CM method (option b) can only be used if:

The project activity is located in a Least Developed Country (LDC) or in a country with less than 10 registered projects at the starting date of validation; and

The data requirements for the application of step 5 above cannot be met. For project activities connected to the Luzon and Visayas interconnected regional grid or the Mindoro isolated grid, option (a), the weighted average CM, has been chosen. (a) Weighted average CM The combined margin emissions factor is calculated ex ante as follows:

BMyBM,grid,OMyOM,grid,yCM,grid, wEFwEFEF (3)

Where: EFgrid,BM,y = Build margin CO2 emission factor in year y (tCO2/MWh) EFgrid,OM,y = Operating margin CO2 emission factor in year y (tCO2/MWh) wOM = 50% for all PoA technologies except wind and solar. For wind and solar: 75% wBM = 50% for all PoA technologies except wind and solar. For wind and solar: 25%

UNFCCC/CCNUCC CDM – Executive Board The calculation of the combined margin emissions factor for the Luzon and Visayas interconnected regional grid is presented in Annex 1. The resulting grid emission factor EFgrid,CM,y (EFCO2,grid,y in the BEy calculation, above) to be used for calculating emission reductions of all CPAs except wind and solar connected to this grid is 0.476 tCO2/MWh. For wind and solar CPAs connected to this grid, the CM grid emission factor is 0.547 tCO2/MWh. The calculation of the combined margin emissions factor for the Mindoro isolated grid is presented in Annex 2. The resulting grid emission factor EFgrid,CM,y (EFCO2,grid,y in the BEy calculation, above) to be used for calculating emission reductions of all CPAs except wind and solar connected to this grid is 0.776 tCO2/MWh. For wind and solar CPAs connected to this grid, the CM grid emission factor is 0.747 tCO2/MWh. The grid emission factors for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid shall be monitored at the PoA level in accordance with the monitoring methodology published in the “Tool to calculate the emission factor for an electricity system” (Version 02.2.0). Leakage As per ACM0002 version 13.0.0 no leakage emissions are considered. Emission reductions: As project emissions and leakage are zero, emission reductions for a CPA shall be calculated as follows:

(11) Where:

Emission reductions in year y (t CO2e)

Baseline Emissions in year y (t CO2)

Estimation of emissions reductions prior to validation Project participants should prepare as part of the CPA-DD an estimate of likely emission reductions for the proposed crediting period. This estimate should, in principle, employ the same methodology as selected above. Changes required for methodology implementation in 2nd and 3rd crediting periods At the start of the second and third crediting period project proponents have to address two issues:

Assess the continued validity of the baseline; and Update the baseline. In assessing the continued validity of the baseline, a change in the relevant national and/or sectoral regulations between two crediting periods has to be examined by each CPA at the start of the new crediting period. If at the start of the project activity, the project activity was not mandated by regulations, but at the start of the second or third crediting period regulations are in place that enforce the practice or norms or technologies that are used by the project activity, the new regulation (formulated after the registration of the project activity) has to be examined to determine if it applies to existing plants or not. If the new regulation applies to existing CDM project activities, the baseline has to be reviewed and, if the regulation is binding, the baseline for the project activity should take this into account. This assessment will be undertaken by the verifying DOE.

yER

yBE

y y BEER

UNFCCC/CCNUCC CDM – Executive Board For updating the baseline at the start of the second and third crediting period, new data available will be used to revise the baseline scenario and emissions. Project participants shall assess and incorporate the impact of new regulations on baseline emissions. Requirements for updating of ex ante grid emission factors at the start of the second and third crediting periods are provided in the Tool to calculate the emission factor for an electricity system (Version 02.2.1). The operating margin emission factor should be updated at the beginning of each crediting period. The build margin emission factor should be updated for the second crediting period based on the most recent information available on units already built at the time of submission of the request for renewal of the crediting period to the DOE. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. Ex ante calculations of grid emission factors do not require monitoring the emission factor during the crediting period. B.6.2. Data and parameters that are to be reported ex-ante (Copy this table for each data and parameter.) Fixed parameters: The following parameters are fixed for all CPAs included during the first 7 years of the PoA crediting period and for the respective first 7-year crediting period of these CPAs. These parameters are to be updated at the PoA level at the start of the second and third crediting periods of the PoA: Parameters associated with calculations of the grid emission factor (for baseline calculations: sources and values applied here are for CPAs connected to the Luzon and Visayas interconnected regional grid or the Mindoro isolated grid)

Data / Parameter EFCO2,i,y Unit tC/TJ

Description Emission factor for fuel i in year y Source of data Default carbon contents, 2006 IPCC Guidelines for National Greenhouse Gas

Inventories, Chapter 1, page 1.21, Table 1.3. From http://www.ipcc-nggip.iges.or.jp/public/2006gl/pdf/2_Volume2/V2_1_Ch1_Introduction.pdf Accessed August 11, 2011.

Value(s) applied Coal (Anthracite) 26.8; Diesel Oil 20.2; Residual Fuel Oil 21.1; Natural Gas 15.3

Choice of data or Measurement methods and procedures

Reliable data for the Philippines is not available. The IPCC Guidelines are generally accepted as the most reliable source for assumptions regarding these values.

Purpose of data Calculation of baseline emissions

Additional comment

None


Data / Parameter EFCO2,m,i,y

Unit tC/TJ

Description Average emission factor for fuel i used in a power unit m in year y Source of data Default carbon contents, 2006 IPCC Guidelines for National Greenhouse Gas

Inventories, Chapter 1, page 1.21, Table 1.3. From http://www.ipcc-nggip.iges.or.jp/public/2006gl/pdf/2_Volume2/V2_1_Ch1_Introduction.pdf Accessed August 11, 2011.

Value(s) applied Coal 26.8; Diesel 20.2; Residual Fuel Oil 21.1; Natural Gas 15.3 Choice of data or Measurement methods and procedures

Reliable data for the Philippines is not available. The IPCC Guidelines are generally accepted as the most reliable source for assumptions regarding these values.


Additional comment

None

Data / Parameter EFgrid,CM

Unit tCO2/MWh Description CO2 emission factors for electricity displaced from the Luzon and Visayas

interconnected regional grid and the Mindoro isolated grid (as appropriate for the CPA in question).

Source of data Calculated, based on electricity generation data downloaded from the PDOE website (Op. cit. ref 6, Excel files provided to the DOE for validation).

Value(s) applied 0.476 for the Luzon and Visayas interconnected regional grid, except for solar and wind projects, for which 0.547 has been applied 0.776 for the Mindoro isolated grid, except for solar and wind projects, for which 0.747 has been applied.


This parameter has been calculated ex ante for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid as a combined margin (CM), in accordance with the “Tool to calculate the emission factor for an electricity system” (Version 02.2.1).


Additional comment

None


Data / Parameter EGm,y Unit MWh

Description Annual net electricity generation for power units connected the Luzon and Visayas interconnected regional grid or Mindoro isolated grid (as appropriate for the CPA in question).

Source of data PDOE (Op. cit. ref 6, Excel files provided to the DOE for validation) Value(s) applied See Annex 1 and Annex 2


The Philippines Department of Energy is the national official source of net electricity generation data for the Luzon and Visayas interconnected regional grid. The electricity generation data for the Mindoro isolated grid has been supplied by the National Power Corporation’s Small Power Utilities Group (NPC-SPUG) for the power plants it manages, by the two distribution utilities (Oriental Mindoro Electric Cooperative [ORMECO] and Occidental Mindoro Electric Cooperative [OMECO]), the Philippine department of Energy, and two private IPPs (GBH Power Resources, Inc., and Ormin Power Inc.) for the remaining power plants on the island


Additional comment

None

Data / Parameter EFEL,m,y

Unit tCO2/MWh Description Power unit emission factor

Source of data Calculated Value(s) applied See Annex 1 and Annex 2


This parameter has been calculated ex ante for the Luzon and Visayas interconnected regional grid and the Mindoro isolated grid, in accordance with the “Tool to calculate the emission factor for an electricity system” (Version 02.2.1).

Purpose of data Calculation of baseline emissions Additional comment

None

B.6.3. Ex-ante calculations of emission reductions >> Ex ante calculations of emission reductions shall be provided in each CPA-DD.

UNFCCC/CCNUCC CDM – Executive Board For CPA1:

Year

Baseline emissions Project emissions

Emission reductions

(t CO2e) (t CO2e) (t CO2e)

1 54,640 0 54,640

2 54,640 0 54,640

3 54,640 0 54,640

4 54,640 0 54,640

5 54,640 0 54,640

6 54,640 0 54,640

7 54,640 0 54,640

Total 382,480 0 382,480

Total number of crediting years

7

Annual 54,640 0 54,640

average over the crediting period

B.7. Application of the monitoring methodology and description of the monitoring plan B.7.1. Data and parameters to be monitored by each generic CPA (Copy this table for each data and parameter).

Data / Parameter EGfacility,y Unit MWh/yr

Description Quantity of net electricity generation supplied by the project plant/unit to the grid in year y

Source of data Project activity site

Value(s) applied For CPA1 ex ante estimate: 73,146 Measurement methods and procedures

The following parameters shall be measured: (i) The quantity of electricity supplied by the project plant/unit to the grid; and (ii) The quantity of electricity delivered to the project plant/unit from the grid Electricity meters The meter shall be installed at the point of connection to the grid as agreed with the grid operator. A high level of accuracy of the measurements will be achieved through the use of high-precision equipment calibrated and tested according to recognized standards and agreed with the grid operator. NOTE: The electricity meter owned by the grid operator is managed and maintained under the sole responsibility of the grid operator and according to their internal standards. Therefore, it is NOT part of the project, nor within the project boundary.

Monitoring frequency

Continuous measurement and at least monthly recording


QA/QC procedures QC: Measurement results shall be cross checked with records for sold/purchased electricity (e.g. invoices/receipts). If values differ, the value produced from the meter with the highest precision shall be used. QA: The meter will be re-calibrated at least once a year by a third party entity. QC: There will be strict compliance with the meter maintenance schedule recommended by the technology provider and/or the grid operator.

Purpose of data Calculation of baseline emissions Additional comments None

B.7.2. Description of the monitoring plan for a generic CPA >> Monitoring will be carried out for each CPA. For each CPA, technology-relevant parameters included in Part I, Section B.6.2 will be monitored by the CPA Proponent according to the procedures and monitoring framework established in Part II section B.7.2 and Appendix 5. The monitoring data will be submitted to the CME that will store the data in an electronic database. Primary data will be stored by the implementing entities. Each CPA will be verified separately. Verification reports may be separate for each CPA or combined in group reports. Data shall be verified for each CPA and the verification status of each CPA will be recorded by the CME in the database. 1. Organization and procedures The Proponent identified for each CPA will hold primary responsibility for monitoring of their project activity. Each CPA will establish clearly-defined staff roles and responsibilities and monitoring routines within the CPA O&M structure, for ensuring the completeness and accuracy of all required monitored data, and for providing said data to the CME in the format required and in a timely manner. A CDM Manager for each CPA will be responsible for:

Managing the process of training new staff with monitoring duties; Ensuring that staff carry out their monitoring duties; Ensuring that procedures are followed on the site; and Improving processes such that the monitoring system is both efficient and effective.

To ensure that the data is reliable and transparent, each CPA Proponent will establish Quality Assurance and Quality Control measures for meter maintenance and calibration as well as data reading, recording, archiving and auditing. 2. Metering An electricity meter will be installed on the power supply line to the grid. This electricity meter will measure the quantity of electricity that the CPA supplies to the grid operator. The meter will be owned, installed, operated and maintained by the CPA Proponent. Electricity meters used by CPAs should meet the relevant local standards at the time of installation. Prior to installation, they should be factory-calibrated by the manufacturer. The meters will be installed by either the project developer or the grid operator. Records of the meter (type, make, model and calibration documentation) will be retained in the quality control system. The meters will be re-calibrated at least once a year by a third party entity. In case of meter failure, meter readings from the grid operator will be used until the project meter is restored. Steps shall be taken by the CPA Proponent to ensure that the project meter is immediately restored and fully functional.

UNFCCC/CCNUCC CDM – Executive Board 3. Data storage, archiving and verification The data will be archived electronically and stored by the CPA Proponent for two years following the end of the CPA crediting period to which it applies. The CPA Proponent will also provide the CME with copies of calibration certificates as well as receipts from sales to the relevant grid operator. The CME has developed and will maintain an electronic data storage and retrieval system with unique identifiers for each CPA, constituting individual records within the system. The data maintained in this system will include the metered data quantifying the electricity supplied to the grid. The CME will also archive written documentation of the CPAs (such as maps, diagrams, permits/licenses, and the feasibility study). The CME will be responsible for providing the verifying DOE with all data required from the individual CPAs.

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PART II. B. Generic component project activity (CPA): for CPA type 6 (geothermal power)

SECTION A. General description of a generic CPA A.1. Purpose and general description of generic CPAs >> The generic purpose of CPAs included in this PoA is to support the development of renewable energy projects that feed electric power into an interconnected or isolated grid. In general, the PoA enables developers of such CPAs to overcome financial and other barriers to developing and implementing their projects, by harnessing the financial support made available through the sale of carbon credits.

SECTION B. Application of a baseline and monitoring methodology B.1. Reference of the approved baseline and monitoring methodology(ies) selected >>Please see Part II. A. Section B.1, which also applies here B.2. Application of methodology(ies) Please see Part II. A. Section B.2, which also applies here.

UNFCCC/CCNUCC CDM – Executive Board B.3. Sources and GHGs Table 3 Emissions sources included in or excluded from the project boundary

Source GHGs Included? Justification/Explanation

Bas

elin

e

CO2 emissions from electricity generation in fossil fuel fired power plants that are displaced due to the project activity


Pro

ject

act

ivit

y

For geothermal power plants, fugitive emissions of CH4 and CO2 from non-condensable gases contained in geothermal steam

CO2 Yes Main emission source CH4 Yes Main emission source N2O No Minor emission source

CO2 emissions from combustion of fossil fuels for electricity generation in geothermal power plants


Figure 7: Sample flow diagram (geothermal)

B.4. Description of baseline scenario >> In accordance with ACM0002 (version 13.0.0) the baseline scenario for CPAs in this PoA is: 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”.

B.5. Demonstration of eligibility for a generic CPA >> Please see Part II. A. Section B.5, which also applies here. B.6. Estimation of emission reductions of a generic CPA B.6.1. Explanation of methodological choices >> Emission reductions are calculated as baseline emissions less project emissions and leakage. The methodological choices for each are detailed below. Project Emissions Project emissions for geothermal plants include project emissions from fossil fuel consumption and from the release of non-condensable gases. PEy = PEFF,y + PEGP,y (1) Where: PEy = Project emissions in year y (tCO2e) PEFF,y = Project emissions from fossil fuel consumption in year y (tCO2) PEGP,y = Project emissions from the operation of geothermal power plants due to the release of

non-condensable gases in year y (tCO2e) Fossil Fuel Combustion (PEFF,y) For geothermal projects, which also use fossil fuels for electricity generation, CO2 emissions from the combustion of fossil fuels shall be accounted for as project emissions (PEFF,y). PEFF,y shall be calculated as per the latest version of the Tool to calculate project or leakage CO2 emissions from fossil fuel combustion. Emissions of non-condensable gases from the operation of geothermal power plants (PEGP,y) For geothermal project activities, project participants shall account fugitive emissions of carbon dioxide and methane due to release of non-condensable gases from produced steam. Non-condensable gases in geothermal reservoirs usually consist mainly of CO2 and H2S. They also contain a small quantity of hydrocarbons, including predominantly CH4. In geothermal power projects, non-condensable gases flow with the steam into the power plant. A small proportion of the CO2 is converted to carbonate/bicarbonate in the cooling water circuit. In addition, parts of the non-condensable gases are reinjected into the geothermal reservoir. However, as a conservative approach, this methodology assumes that all non-condensable gases entering the power plant are discharged to atmosphere via the cooling tower. Fugitive carbon dioxide and methane emissions due to well testing and well bleeding are not considered, as they are negligible. PEGP,y is calculated as follows:

ysteam,CH4yCH4,steam,yCO2,steam,yGP, MGWPwwPE (2)

Where: PEGP,y = Project emissions from the operation of geothermal power plants due to the release of

non-condensable gases in year y (tCO2e) wsteam,CO2,y = Average mass fraction of carbon dioxide in the produced steam in year y

(tCO2/t steam)

UNFCCC/CCNUCC CDM – Executive Board wsteam,CH4,y = Average mass fraction of methane in the produced steam in year y (tCH4/t steam) GWPCH4 = Global warming potential of methane valid for the relevant commitment period

(tCO2e/tCH4) Msteam,y = Quantity of steam produced in year y (t steam) Baseline emissions Please see Part II. A. Section B.6.1, Baseline emissions, which also applies here. Leakage As per ACM0002 version 13.0.0 no leakage emissions are considered. Emission reductions: Emission reductions for a CPA shall be calculated as follows:

(11) Where:

Emission reductions in year y (t CO2e)

Baseline Emissions in year y (t CO2)

Project emissions in year y (t CO2e)

Estimation of emissions reductions prior to validation Project participants should prepare as part of the CPA-DD an estimate of likely emission reductions for the proposed crediting period. This estimate should, in principle, employ the same methodology as selected above. Changes required for methodology implementation in 2nd and 3rd crediting periods Please see Part II. A. Section B.6.1, Changes required for methodology implementation in 2nd and 3rd crediting periods, which also applies here.

B.6.2. Data and parameters that are to be reported ex-ante (Copy this table for each data and parameter.) Fixed parameters: The following parameters are fixed for all CPAs included during the first 7 years of the PoA crediting period and for the respective first 7-year crediting period of these CPAs. These parameters are to be updated at the PoA level at the start of the second and third crediting periods of the PoA:

yyy PEBEER

yER

yBE

yPE


Data / Parameter GWPCH4 Unit tCO2e/tCH4

Description Global warming potential of methane valid for the relevant commitment period

Source of data IPCC Value(s) applied For the first commitment period: 21 tCO2e/tCH4


Defined in the methodology.

Purpose of data Calculation of project emissions Additional comment Used exclusively for geothermal projects

For parameters associated with calculations of the grid emission factor see Part II A. Section B.6.2, which also applies here. B.6.3. Ex-ante calculations of emission reductions >> Ex ante calculations of emission reductions shall be provided in each CPA-DD. Geothermal is not applicable to first CPA, hence no estimates are provided here.

UNFCCC/CCNUCC CDM – Executive Board B.7. Application of the monitoring methodology and description of the monitoring plan B.7.1. Data and parameters to be monitored by each generic CPA (Copy this table for each data and parameter).

Data / Parameter EGfacility,y

Unit MWh/yr Description Quantity of net electricity generation supplied by the project plant/unit to the

grid in year y Source of data Project activity site

Value(s) applied Not applicable to first CPA Measurement methods and procedures

The following parameters shall be measured: (i) The quantity of electricity supplied by the project plant/unit to the grid; and (ii) The quantity of electricity delivered to the project plant/unit from the grid Electricity meters The meter shall be installed at the point of connection to the grid as agreed with the grid operator. A high level of accuracy of the measurements will be achieved through the use of high-precision equipment calibrated and tested according to recognized standards and agreed with the grid operator. NOTE: The electricity meter owned by the grid operator is managed and maintained under the sole responsibility of the grid operator and according to their internal standards. Therefore, it is NOT part of the project, nor within the project boundary.


Continuous measurement and at least monthly recording

QA/QC procedures QC: Measurement results shall be cross checked with records for sold/purchased electricity (e.g. invoices/receipts). If values differ, the value produced from the meter with the highest precision shall be used. QA: The meter will be re-calibrated at least once a year by a third party entity. QC: There will be strict compliance with the meter maintenance schedule recommended by the technology provider and/or the grid operator.

Purpose of data Calculation of baseline emissions Additional comments None


Data / Parameter wsteam,CO2,y Unit tCO2/t steam

Description Average mass fraction of carbon dioxide in the produced steam in year y Source of data Project activity site


Non-condensable gases sampling should be carried out in production wells and at the steam field-power plant interface using ASTM Standard Practice E1675 for Sampling 2-Phase Geothermal Fluid for Purposes of Chemical Analysis (as applicable to sampling single phase steam only). The CO2 and CH4 sampling and analysis procedure consists of collecting non-condensable gases samples from the main steam line with glass flasks, filled with sodium hydroxide solution and additional chemicals to prevent oxidation. Hydrogen sulphide (H2S) and carbon dioxide (CO2) dissolve in the solvent while the residual compounds remain in their gaseous phase. The gas portion is then analyzed using gas chromatography to determine the content of the residuals including CH4. All alkanes concentrations are reported in terms of methane


At least every 3 months and more frequently, if necessary

QA/QC procedures Not applicable Purpose of data Calculation of project emissions

Additional comments Applicable to geothermal power projects

Data / Parameter wsteam,CH4,y Unit tCH4/t steam

Description Average mass fraction of methane in the produced steam in year y Source of data Project activity site Value(s) applied Not applicable to first CPA

Measurement methods and procedures

As per the procedures outlined for wsteam,CO2,y


As per the procedures outlined for wsteam,CO2,y

QA/QC procedures Not applicable

Purpose of data Calculation of project emissions Additional comments Applicable to geothermal power projects


Data / Parameter Msteam,y Unit t steam/yr

Description Quantity of steam produced in year y Source of data Project activity site


The steam quantity discharged from the geothermal wells should be measured with a venture flow meter (or other equipment with at least the same accuracy). Measurement of temperature and pressure upstream of the venture meter is required to define the steam properties. The calculation of steam quantities should be conducted on a continuous basis and should be based on international standards. The measurement results should be summarized transparently in regular production reports


Daily

QA/QC procedures Not applicable Purpose of data Calculation of project emissions

Additional comments Applicable to geothermal power projects

Data / Parameter EFgrid,CM,y

Unit tCO2/MWh Description 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”

Source of data As per the “Tool to calculate the emission factor for an electricity system”

Value(s) applied For projects connected to the Luzon and Visayas interconnected regional grid, except for solar and wind projects: 0.476 For solar and wind projects connected to the Luzon and Visayas interconnected regional grid: 0.547 For projects connected to the Mindoro isolated grid, except for solar and wind projects: 0.776 For solar and wind projects connected to the Mindoro isolated grid: 0.747


As per the “Tool to calculate the emission factor for an electricity system”


As per the “Tool to calculate the emission factor for an electricity system”

QA/QC procedures As per the “Tool to calculate the emission factor for an electricity system” Purpose of data Calculation of baseline emissions

Additional comments For CPAs connected to the Luzon and Visayas integrated regional grid or the Mindoro isolated grid the value established ex ante at the PoA-level shall be applied and need not be monitored during the crediting period.


Data / Parameter PEFF,y Unit tCO2

Description Project emissions from fossil fuel consumption in year y Source of data As per the “Tool to calculate project or leakage CO2 emissions from fossil

fuel combustion” Value(s) applied Not applicable to the first CPA


As per the “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion”


As per the “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion”

QA/QC procedures As per the “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion”

Purpose of data Calculation of project emissions Additional comments Applicable to geothermal projects that also use fossil fuels for electricity

generation B.7.2. Description of the monitoring plan for a generic CPA >> Please see Part II. A. Section B.7.2, which also applies here.


Appendix 1: Contact information on entity/individual responsible for the PoA

Organization Carbonergy Business Consultancy Services

Street/P.O. Box 203 Banaue Street, Ayala Alabang Village Building N/A

City Muntinlupa City State/Region Metro Manila

Postcode 1780 Country Philippines

Telephone +632 809 7826 Fax N/A

E-mail N/A Website www.climatebusiness.net/carbonergy

Contact person N/A Title CEO

Salutation Dr. Last name Pembleton

Middle name N/A First name Peter

Department N/A Mobile +63 917 826 2688

Direct fax N/A Direct tel. +632 809 7826

Personal e-mail [email protected]


Organization: Bulalacao Wind Power Corp. Street/P.O.Box: 210N. Garcia Street

Building: 318B LRI Business Plaza City: Bel-Air, Makati

State/Region: Metro Manila Postfix/ZIP: Country: Philippines

Telephone: FAX:

E-Mail: URL:

Represented by: Title: Ms.

Salutation: President Last Name: Yu-Owen

Middle Name: First Name: Ruth

Department: Mobile: +63 (0) 09175275466

Direct FAX: Direct tel:

Personal E-Mail: [email protected]

Appendix 2: Affirmation regarding public funding

No public funding will be utilized for the financing of this PoA.

Appendix 3: Application of methodology(ies)

The applicability of methodology ACM0002 Version 13.0.0 is described in detail in Part II Section B.2. Table 2.

Appendix 4: Further background information on ex ante calculation of emission reductions

For full details of the grid emission factor calculations see: Annex 1 and Annex 2 For full details of the baseline calculation for CPA1 see: Annex 3

Appendix 5: Further background information on the monitoring plan

The elements of the monitoring plan and associated data management system and tools for the PoA as a whole and for individual SSC CPAs in particular include the following processes: • CPA inclusion; • Monitoring and issuance; • CME functions; • Data management; • File storage;

UNFCCC/CCNUCC CDM – Executive Board • Process management; and • Marketing. The roles and responsibilities assigned to the different participants in the Programme are indicated in the table below.

The only data required to be monitored at the CPA level for most CPAs is EGBL,y i.e. the electricity delivered by the CPA to the grid in year y. Projects that involve retrofitting/replacing existing

hydropower units must also monitor . CPA managers will be assigned responsibility for the CDM

aspects of monitoring and reporting on EGBL,y, and where relevant , for their projects. According to Philippine Republic Act 9513, project developers that wish to avail themselves of incentives are required to enter into a Renewable Energy Payment Agreement (REPA) that includes a ‘Transmission Services Agreement’ and a ‘Metering Services Agreement’ with the National Grid Corporation (NGCP) of the Philippines in order to sell their power to the grids that are operated by NGCP. Traditional power purchase agreements and associated terms will be negotiated with the respective sub-grid operators, and similar procedures will apply, for all projects connected to isolated grids, as well as for those developers that do not wish to avail themselves of the RE incentives. According to these agreements, NGCP shall install a revenue meter, or such applicable metering device and/or related instruments, to measure and record the delivery of electricity generated by the RE Plant to the relevant Grid (“Revenue Meter”) at the physical delivery point or where the high-voltage side of the step-up transformer of the RE Plant is located (“Metering Point”). While NGCP-approved meters shall be utilized in the measurement of the electricity deliveries received from the RE Developer, the Developer shall install and maintain its own nationally/ NGCP-approved meter in close proximity to the Metering Point. The actual kilowatt-hours delivered by the Developer will be read from its meter on a monthly basis at an agreed concurrent time with NGCP’s reading of its own meter. The RE Developer shall record the values in its own monthly ‘Record of Meter Reading’ and shall prepare and present a signed Record of Meter Reading to NGCP on the first Business Day following each reading. NGCP shall check against the concurrent reading taken at its own meter and co-sign the Record of Meter Reading and return to the RE Developer. In the event of exceptions or disputes, the Parties shall confer within two (2) Business Days thereafter to resolve any such exceptions and disputes. In the event that the dispute is not resolved within such time, the reading of NGCP shall prevail while reasons for the discrepancy are sought including possible re-calibration of the meters. The RE Developer will appoint a CDM Manager, possibly supported by a data manager, who will be responsible for the above-mentioned monitoring process. The CDM Manager will: generate primary data

historicalσ

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UNFCCC/CCNUCC CDM – Executive Board through its own monitoring; collate and store the primary data in hard copy and electronic form; cross-check their data against invoices for electricity sales; aggregate primary data into electronic data sets and reports; control the quality of data entered into electronic storage media; transmit the data to the CME; and secure the records through backups and mirror sites. The CDM Manager will also store hard and soft copies of the data, sales receipts and meter calibration reports. The CME has developed an electronic template using Microsoft Excel to manage the incoming monitoring data—this template will be provided to the CDM Manager of all CPAs to ensure consistency in the format of reporting. The CME will collect and store other information from and about the CPAs namely: basic information on the CPA; meter data; key reference documents; a process checklist; a permits checklist; and the DNA requirements checklist. The CME has developed a set of data and management tools in order to: ensure accuracy, quality and

reliability of data (EGBL,y and, where appropriate ) monitoring; and ensure transparency of the processes; avoid duplication of submissions for registration and claims for CERs; organize and store data for ease-of-recall; and manage the numerous processes of the PoA. The data in the system will be regularly updated to reflect a project’s status as it progresses through the stages of development and implementation. In addition, the templates will be adjusted over time to better monitor data and activities.

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History of the document

Version Date Nature of revision(s)02.0 EB 66

13 March 2012 Revision required to ensure consistency with the "Guidelines for completing the programme design document form for CDM programmes of activities" (EB 66, Annex 12).

01 EB33, Annex 41 27 July 2007

Initial adoption.

Decision Class: Regulatory Document Type: Form Business Function: Registration

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