5 MW Solar PV Power Project in Sivagangai Village, Sivaganga District, Tamil Nadu (1)

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

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CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD)

Version 03 - in effect as of: 22 December 2006

CONTENTS A. General description of the small scale project activity B. Application of a baseline and monitoring methodology C. Duration of the project activity / crediting period D. Environmental impacts E. Stakeholders’ comments

Annexes Annex 1: Contact information on participants in the proposed small scale project activity Annex 2: Information regarding public funding Annex 3: Baseline information

Annex 4: Monitoring Information


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Revision history of this document Version Number

Date Description and reason of revision

01 21 January 2003

Initial adoption

02 8 July 2005 • The Board agreed to revise the CDM SSC PDD to reflect guidance and clarifications provided by the Board since version 01 of this document.

• As a consequence, the guidelines for completing CDM SSC PDD have been revised accordingly to version 2. The latest version can be found at <http://cdm.unfccc.int/Reference/Documents>.

03 22 December 2006

• The Board agreed to revise the CDM project design document for small-scale activities (CDM-SSC-PDD), taking into account CDM-PDD and CDM-NM.


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SECTION A. General description of small-scale project activity A.1 Title of the small-scale project activity: Title: 5 MW Solar PV Power Project in Sivagangai Village, Sivaganga District, Tamil Nadu Version: 01 Date: 05/03/2010 A.2. Description of the small-scale project activity: Sapphire Industrial Infrastructures Private Limited (SIIPL), a subsidiary of Moser Baer Clean Energy Limited proposes to develop a 5 MW (P) grid connected solar PV power project in Sivaganga District in the State of Tamil Nadu in Southern India. The project activity is expected to generate 8322MWh of net electricity per annum. The entire power generated from this project will be sold to Tamil Nadu Electricity Board (TNEB) by connecting it to southern grid through a power purchase agreement with TNEB. The purpose of this project is to generate electricity by utilizing clean solar energy and to reduce the green house gas emissions that have been emitted by the carbon intensive southern grid in India. Project’s contribution to sustainable development The implementation of this project activity would contribute to the sustainable development of the region in the following ways as stipulated by the Ministry of Environment and Forests (MoEF) in the interim approval guidelines for CDM projects1 – Social well being There will be a good amount of employment opportunities created for the local workforce during the project construction phase. The project after implementation will continue to provide employment opportunities for the local populace in a sustained manner over the project life time. As both the genders of the society will be given equal opportunity this will aid to social parity and women enlistment, thereby elevating the social standards. Economic well-being The enhanced employment opportunities created by this project activity will lead to alleviation of poverty, and educated unemployment, as it is ideal and more feasible for the project developer to employ local workforce during the construction period and operational life time. Environmental well-being This project activity would be using the available solar potential in Sivagangai region for power generation process, which has no associated GHG emissions. This will certainly have a positive impact on the environment both at local and global level. Technological well-being The project activity will be making use of the reliable and proven technology available locally to ensure that an environmentally safe technology is only being implemented in the proposed project activity.

1 http://envfor.nic.in/divisions/ccd/cdm_iac.html


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Setting up of this project will also increase the private sector participation in this project category thereby contributing to more green power to the grid system. A.3. Project participants:

Name of Party involved ((host) indicates a host Party)

Private and/or public entity(ies)

project participants (as applicable)

Kindly indicate if the Party involved wishes to be

considered as project participant (Yes/No)

India

(Host Party)

Sapphire Industrial

Infrastructures Private Limited (Private Entity)

No

A.4. Technical description of the small-scale project activity: A.4.1. Location of the small-scale project activity: A.4.1.1. Host Party(ies): Host Party: India A.4.1.2. Region/State/Province etc.: State: Tamil Nadu A.4.1.3. City/Town/Community etc: Rettaipillai Ayyanarkulam Village Arasani Muthupatti Panchayat, Sivagangai District: Sivaganga A.4.1.4. Details of physical location, including information allowing the unique identification of this small-scale project activity : The project location is situated about 8 km from the Sivagangai town in Sivaganga district in the State of Tamil Nadu. Sivaganga district is situated in southern part of India near South Eastern coast and is bound by Madurai district on Western side, Pudukkottai district on Northern side and Ramanathapuram district on Southern side. The location map of the project is as given below –


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(Map indicating Sivaganga district)

(Site route map)


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The nearest railway stations are in Karaikudi and Manamadurai they are at distances of 65 km and 16 km respectively from the project site. The nearest airport is in Madurai and is 41 km from the project site. The project site is well connected from airport and railway station by NH 49 and NH/SH 7 & 45B respectively. The geographic co-ordinate of the project location is 78026’42.7” to 78027’56.3” (E) Longitude and 09048’04.7” to 9048’31.3” (N) Latitude. A.4.2. Type and category(ies) and technology/measure of the small-scale project activity: Type 1 – Renewable energy projects Category – Grid connected renewable electricity generation – AMS I.D./Version 15/EB 50 Technology/Measure This category comprises renewable energy generation units, such as photovoltaics, hydro, tidal/wave, wind, geothermal and renewable biomass, that supply electricity to and/or displace electricity from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired generating unit. As the proposed project activity is the implementation of grid connected solar power generation project, it falls under this category. Technical description The project activity is solar photovoltaic based power generation. The rated capacity of the power plant will be 5MW at standard test conditions of 1000W/m2 solar radiation, 250C ambient temperature and 1.5 air mass. The proposed plant will be predominantly north south oriented and layout with flat panel of thin film type modules of PV array will be prepared. Photovoltaic module consists of several photovoltaic cells connected by circuits and sealed in an environmentally protective laminate, which forms the fundamental building blocks of the complete PV generating unit. Several PV panels mounted on a frame are termed as PV Array. The DC electric power generated by the photo voltaic modules will be converted into 415V, 3 phase, 50Hz, AC power in a number of outdoor inverters, stepped up to 11000V through a set of outdoor transformers located in a distributed manner all over the plant. From the outgoing side of the transformers, power will be transmitted through a set of cable feeders to 11kV indoor switchboard in a centrally located grid interface substation. In the substation, the total power generated will be stepped up to 110kV in a 6.3MVA, 11/110kV power transformer with its associated 110kV outdoor switch gear located in a switch yard for interconnection to the 110kV transmission line of TNEB. A technical detail of different equipment of the proposed solar PV system is summarized below:

SN Parameters Description 1 Type of PV Modules 1. Flat panel or thin film type

PV modules 2 Capacity of each Module proposed 78W (P) / any other compatible

size.


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3 Inverters Capacity 500 kW each 4 Proposed area 66 acres

A.4.3 Estimated amount of emission reductions over the chosen crediting period:

Years Estimation of annual emission reductions in tonnes of CO2 e

2010 – 2011 7866 2011 – 2012 7866 2012 – 2013 7866 2013 – 2014 7866 2014 – 2015 7866 2015 – 2016 7866 2016 – 2017 7866

Total estimated reductions (tonnes of CO2e)

55062

Total Number of crediting years2 7 Annual average of the estimated reductions over the crediting period

7866

A.4.4. Public funding of the small-scale project activity: There is no public funding involved in this project activity. A.4.5. Confirmation that the small-scale project activity is not a debundled component of a large scale project activity: According to paragraph 2 of Appendix C3 to the Simplified Modalities and Procedures for Small-Scale CDM project activities (FCCC/CP/2002/7/Add.3), a small-scale project is considered as a debundled component of a large project activity if there is a registered small-scale CDM project activity or an application to register another small-scale activity:

• With the same project participants • In the same project category and technology/measure; and • Registered within the previous two years; and • Whose project boundary is within 1km of the project boundary of the proposed small scale

activity at the closest point None of the above applies to the proposed project activity and the project participant has not registered or applied for registration of another project. Therefore the proposed project is not a debundled component of a larger CDM project activity. 2 Renewable crediting period of 7 years is assumed 3 http://cdm.unfccc.int/EB/Meetings/007/eb7ra07.pdf


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SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the small-scale project activity: Title : Grid connected renewable electricity generation Reference : AMS I.D./Version 15/ EB 50 AMS I-D draws into following tool to determine baseline for electricity system “Tool to calculate emission factor for an electricity system, Reference: Version 02/EB – 50 Annex 14” B.2 Justification of the choice of the project category: The position of the CDM project activity vis-à-vis applicability conditions in the AMS-I.D is described in the following table.

Applicability Conditions Position of the project activity vis-à-vis applicability conditions

This category comprises renewable energy generation units, such as photo-voltaics, hydro, tidal/wave, wind, geothermal and renewable biomass, that supply electricity to and/or displace electricity from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired generating unit.

The project activity is a 5MW (P) solar PV based power generation project that generates and exports renewable electricity to the southern grid system.

Hydro power plants with reservoirs that satisfy at least one of the following conditions are eligible to apply this methodology: • The project activity is implemented in an existing reservoir with no change in the volume of reservoir; • The project activity is implemented in an existing reservoir, where the volume of reservoir is increased and the power density of the project activity, as per definitions given in the Project Emissions section, is greater than 4 W/m2; • The project activity results in new reservoirs and the power density of the power plant, as per definitions given in the Project Emissions section, is greater than 4 W/m2.

The project activity is not a hydro power plant.

If the unit added has both renewable and non-renewable components (e.g.. a wind/diesel unit), the eligibility limit of 15MW for a small-scale CDM project activity applies only to the renewable component. If the unit added co fires fossil fuel, the

The project activity is only 5 MW (P) solar PV based renewable electricity generation project. It does not include any non renewable unit and co-firing system.


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capacity of the entire unit shall not exceed the limit of 15MW. Combined heat and power (co-generation) systems are not eligible under this category.

The project activity does not involve combined heat and power generation system.

In the case of project activities that involve the addition of renewable energy generation units at an existing renewable power generation facility, the added capacity of the units added by the project should be lower than 15 MW and should be physically distinct from the existing units.

The project activity is not the extension of an existing renewable energy facility.

Project activities that seek to retrofit or modify an existing facility for renewable energy generation are included in this category. To qualify as a small-scale project, the total output of the modified or retrofitted unit shall not exceed the limit of 15 MW.

The project activity is not the retrofitting or modification of an existing facility for renewable energy generation.

The project activity is installation of 5 MW (P) of solar PV modules and there would not be any change in the capacity of the project during its crediting period. Since the project generates and exports renewable electricity to the grid system and the capacity of the project activity is well below the qualifying limit of 15 MW. Hence the choice of project Type and category is justified. B.3. Description of the project boundary: As per Para 7 of Indicative simplified baseline and monitoring methodologies for selected small scale CDM project activity category, the physical, geographical site of the renewable generation source delineates the project boundary. Hence the project boundary includes the Solar PV system and metering/substation system. B.4. Description of baseline and its development: The project activity is generation of electricity using solar energy and exporting the same to the grid system, which is also fed by other fuel sources such as fossil and non-fossil types. Emission reductions due to the project activity are considered to be equivalent to the emissions avoided in the baseline

SUN

SOLAR PV SYSTEM

METERING/ SUBSTATION

POWER TO GRID

Project boundary


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scenario by displacing the grid electricity. Emission reductions are related to the electricity exported by the project and the actual generation mix in the grid system. As per applied methodology, the baseline emissions is the product of electrical energy baseline EGBL,y, expressed in kWh of electricity produced by the renewable generating unit multiplied by an emission factor. BEy = EGBL,y × EFCO2

Where, BEy is the baseline emissions in year y, tCO2 EGBL,y is the energy baseline in year y; kWh EFCO2 is the CO2 emission factor in year y, tCO2e/kWh The emission factor can be calculated in a transparent and conservative manner as follows:

(a) A combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM) according to the procedures prescribed in the ‘Tool to calculate the emission factor for an electricity system’.

OR (b) The weighted average emissions (in kg CO2e/kWh) of the current generation mix. The data of the

year in which project generation occurs must be used. Calculations must be based on data from an official source (where available) and made publicly available. Option (a) has been considered to calculate the grid emission factor as per the ‘Tool to calculate the emission factor for an electricity system’ as data is available from an official source. In this project activity, Grid emission factor has been calculated and fixed ex-ante. The Operating Margin has been taken as an average of the past 3 years: Operating Margin4

Year 2006-07 2007-08 2008-09 Average Operating Margin (tCO2/MWh) 0.9991209 0.9906235 0.9729247 0.9875564

According to ‘Tool to calculate the emission factor for an electricity system’, Build Margin of the last one year has been selected: Build Margin5

Year 2008-09 Build Margin (tCO2/MWh) 0.8179232

4 Baseline carbon dioxide database version-05 published by Central Electricity Authority. http://www.cea.nic.in/planning/c%20and%20e/Government%20of%20India%20website.htm 5 Baseline carbon dioxide database version-05 published by Central Electricity Authority. http://www.cea.nic.in/planning/c%20and%20e/Government%20of%20India%20website.htm


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Grid Emission factor (Combined Margin) Particulars Details Remarks Operating Margin (tCO2/MWh) 0.9875564 - Build Margin (tCO2/MWh) 0.8179232 - Combined Margin (tCO2/MWh) 0.9451481

Weighted Average considering 75:25 weightage on OM & BM respectively

• Source: Baseline Carbon Dioxide Emissions from Power Sector, Central Electricity Authority,

India6. For more detail calculation, please refer Annex-3 in this PDD. B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered small-scale CDM project activity: This project activity is an initiative of Sapphire Industrial Infrastructures Private Limited (SIIPL), a subsidiary of Moser Baer Clean Energy Limited. The proposed project activity is implementation of 5 MWp grid connected solar power project in Sivaganga District in the State of Tamil Nadu in Southern India. The additionality for the Project Activity has been demonstrated as per “Non-binding best practice examples to demonstrate additionality for SSC project activities” (EB35, Annex 34). As per EB35 report, Annex 34, Project participants shall provide an explanation to show that the project activity would not have occurred anyway due to atleast one of the following barriers:

(a) Investment Barrier: a financially more viable alternative to the project activity would have led to higher emissions

(b) Access-to-finance barrier: the project activity could not access appropriate capital without consideration of the CDM revenues

(c) Technological barrier: a less technologically advanced alternative to the project activity involves lower risks due to the performance uncertainty or low market share of the new technology adopted for the project activity and so would have led to higher emissions

(d) Barrier due to prevailing practice: prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions; Best practice examples include but are not limited to, the demonstration that project is among the first of its kind in terms of technology, geography, sector, type of investment and investor, market etc.

(e) Other barriers: such as institutional barriers or limited information, managerial resources, organizational capacity, or capacity to absorb new technologies.

The additionality for this project activity is established with a more in depth investment analysis and barrier due to prevailing practice which may affect the successful implementation and operation of the proposed project activity. Investment Barriers: For the purpose of carrying out an investment analysis, the prime financial indicator that has been used is the Internal Rate of Return of the project activity i.e. the Project IRR. The Project IRR is one of the most commonly used tools to assess the feasibility of the project. As per Guidance on the Assessment of

6 http://www.cea.nic.in/planning/c%20and%20e/Government%20of%20India%20website.htm


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Investment Analysis, version-03, EB 51/Annex 58, the benchmark chosen is the Prime Lending Rate (PLR) published by RBI in a weekly statistical supplement dated 25th July 2008 which is 12.75%7. The project profitability statement has been developed by taken into consideration the following assumptions – Technical Parameters:

Parameters Value Unit Reference/Remarks Project capacity 5 MW (P) - Plant load factor 19% % The PLF has been taken from detailed project report

prepared by a third party contracted by PP. The same report was submitted to Bank for Loan approval. This is in line with “GUIDELINES FOR THE REPORTING AND VALIDATION OF PLANT LOAD FACTORS, Version” 1, EB48.

Financial parameters:

Parameters Value Unit Reference/Remarks Total project cost Rs. 9990

Lacs Rs. In lacs As per project report.

Grant from International finance corporation (IFC)

Rs. 1920 lacs Rs. In lacs Letter from IFC.

Debt Rs. 4900 lacs Rs. In lacs As per project report Equity Rs. 3170 lacs Rs. In lacs As per project report Interest rate 12% % As per project report Corporate tax 33.99% % IT act (2008-09) Minimum Alternative Tax

11.33% % IT act (2008-09)

SLM depreciation on Civil works

3.34% % As per company’s law 1956, www.fastfacts.co.in/resources/DepCoAct.rtf

SLM depreciation on Plant & machinery

10.34% % As per company’s law 1956, www.fastfacts.co.in/resources/DepCoAct.rtf

IT depreciation on civil works

10% % As per income tax act 2008-09

IT depreciation 15% % As per income tax act 2008-09 Annual O & M cost Rs. 9.00 Lakhs/MW As per project report Annual escalation on O & M cost

5.72% % As per project report

Power tariff 4.50 Rs./KWh TNERC endorsement letter dated 25/09/2009 MNRE incentive 10.50 Rs./KWh As per MNRE guideline,

http://mnes.nic.in/pdf/guidelines_spg.pdf ; para 4.3 Moratorium 12 Months As per project report 7 http://rbidocs.rbi.org.in/rdocs/Wss/PDFs/86374.pdf


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Considering the above mentioned assumptions and working out a project profitability statement over project life time the Project IRR without considering the revenues from CDM works out to 9.99% as against the Benchmark of 12.75%. Sensitivity Analysis Sensitivity analysis has been carried out to test the project additionality for the reasonable variation of critical parameters that may impact the performance of the project activity. As required by Annex 58 EB 51 “Guidance on the assessment of investment analysis” only those parameters that constitute more than 20% of either total project costs or total project revenues are subjected to reasonable variation. The critical parameters thus identified are Project cost, Operation and Maintenance (O&M) expenses, the Plant load factor (PLF) and power tariff. Sensitivity analysis with respect to identified parameters has been tabulated below: Parameters % change IRR RemarksProject cost +10% - Any upward change in project cost would have a

negative effect on project IRR and hence this is excluded from the analysis. This is conservative.

-10% 12.47% Even with a reduction of 10% from the base value, IRR remains below benchmark rate.

O & M cost +10% - Any upward change in O&M cost would have a negative effect on project IRR and hence this is excluded from the analysis. This is conservative.

-10% 10.11% Even after a reduction of 10% from the base value, IRR remains below the benchmark rate.

PLF +10% 11.91% PLF is another critical parameter which may change and have an impact on the financials of the project activity. The generation capacity of a solar PV power plant is often computed on a system performance model, taking in to account the working temperature, voltage generation at solar PV module, losses within the system as well as operator defined factors such as dust rating, grid interaction and transmission losses, etc. PLF in base value has been taken from the detailed project report prepared by a third party contracted by PP. The same PLF was submitted to bank for loan approval. As it is clear from the result, a 10% positive change does not help much and Project IRR remains below the benchmark rate.

-10% - Any downward change in CUF would have a negative effect on project IRR and hence this is excluded from the analysis. This is conservative.

Tariff rate 10% 10.18%

As per the power purchase agreement with Tamil Nadu Electricity Board (TNEB), the tariff rate for the power sold to the grid is Rs. 4.50/kWh and this is fixed for 10 years. The sensitivity on tariff rate has been undertaken from 11th year onwards. As it is clear from the result, a


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10% positive change does not help much and Project IRR remains below the benchmark rate.

-10% - Any downward revision in tariff would have a negative effect on project IRR and hence this is excluded from the analysis. This is conservative.

Barrier due to prevailing practice: India receives solar energy equivalent to over 5,000 trillion kWh per year. The daily average solar energy incident over India varies from 4 -7 kWh per square meter depending upon the location8. In India the Ministry of New and Renewable Energy is implementing a wide range of programmes for the development and deployment of solar energy9. The Government has taken several measures to promote grid connected solar energy systems, which include:

1. research and development to improve performance and reduce the consumption of materials, 2. subsidy on selected solar energy systems; 3. interest subsidy to provide soft loan to users and the manufacturers; 4. concessional or nil import duty on some of the raw materials, components and products; 5. excise duty exemption; and 6. 80% accelerated depreciation in the first year etc.

In addition to this, private companies are eligible to get production based incentive for power fed to the grid from megawatt capacity solar power plants set up on build own and operate basis in the country10. The National Action Plan on Climate Change has also identified development of solar energy in the country by setting up a Solar Mission11. Though the Ministry is implementing several schemes to promote solar energy but the growth of utilization of solar PV power systems is very nominal in the country. This is because of the high initial cost of solar energy systems which is a barrier in large scale utilization of solar energy systems, especially for power generation12. The growth of Indian Power Sector is quite impressive as the installed capacity has grown from 124287.2 MW13 as on 31/03/2006 to 144130.2 MW14 as on 31-03-08 but at the same time the growth of grid connected solar PV power is negligible. There was not any grid connected solar PV power plant in India

8 http://mnes.nic.in/press-releases/press-release-19112007-1.pdf 9 http://mnes.nic.in/press-releases/press-release-12102007.pdf 10 http://mnes.nic.in/press-releases/press-release-31032008.pdf

11 http://mnes.nic.in/press-releases/press-release-15122008-3.pdf 12 http://mnes.nic.in/press-releases/press-release-13072009.pdf 13 http://www.cea.nic.in/planning/c%20and%20e/user%20guide%20ver1.1.pdf

14 http://www.cea.nic.in/planning/c%20and%20e/user_guide_ver4.pdf


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till 31/01/200715. In the financial year 2007-08, with the financial support from Indian Government a total of 33 grid interactive solar PV power plants have been installed with aggregate capacity of 2.12 Megawatt with estimated generation of 2.55 million units of electricity in a year16. There was no further addition to the installed grid interactive solar PV power generation till 31/03/2009 and the total cumulative achievement on grid connected solar PV power capacity as on 31/03/2008 is only 2.12MW against the estimated potential of 50MW/Sq. KM17. The following table clearly demonstrates the growth of grid connected power sources in India.

Table: Growth of different grid connected power sources in India Installed capacity

(MW) as on

Thermal Hydro Nuclear Renewable including

solar energy

Grid connected Solar PV

power 31/03/200618 82410.54 32325.77 3360.00 6190.86 00 31/03/200719 86014.84 34653.77 3900.00 7760.60 00 31/03/200820 91906.84 35908.76 4120.00 12194.57 2.12

Table: % share of different grid connected power sources Sources Installed capacity as

on 31/03/2008 % share

Thermal 91906.84 64% Hydro 35908.76 25% Nuclear 4120.00 3% Renewable including solar energy

12194.57 8%

Grid connected Solar PV power

2.12 0.00147%

It is evident from the table above that around 64% of installed capacity comes from thermal stations, 25% from hydro, 3% from nuclear stations and 8% from renewable sources. Against this, the grid connected solar PV power projects in operation in India is only 2.12MW with a contribution of 0.00147% of total installed grid power, which is negligible. Apart from this, under the demonstration programme of MNRE a 2MW capacity grid interactive solar photovoltaic power plant is being set up by West Bengal Green Energy Development Corporation Limited in Asansol district in West Bengal and it is likely to be commissioned in December 2009. In

15 http://mnes.nic.in/annualreport/2006_2007_English/HTML/ch2_pg4.htm 16 http://mnes.nic.in/press-releases/press-release-31032008.pdf

http://mnes.nic.in/press-releases/press-release-28042008-5.pdf 17 http://mnes.nic.in/annualreport/2008-09EN/overview.htm 18 http://www.cea.nic.in/planning/c%20and%20e/user%20guide%20ver1.1.pdf 19 http://www.cea.nic.in/planning/c%20and%20e/user_guide_ver2.pdf 20 http://www.cea.nic.in/planning/c%20and%20e/user_guide_ver4.pdf


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addition, Karnataka Power Corporation Limited is also setting up a mega watt capacity solar photovoltaic power plant under the same programme in Raichur district at the tail-end of the grid21.

Table: Solar PV Power Projects under Implementation Location Developer Capacity (MW)

Asansol district, West bengal West Bengal Green energy development corporation limited

2

Raichur district in Karnataka Karnataka Power corporation limited

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The power generation capacity of Tamil Nadu is around 10214 MW which includes Central share and Independent Power Producers. Other than this, the state has installations in renewable energy sources like windmill up to 4300 MW22. The quantum of grid connected solar system in Tamil Nadu is at present only 0.165 MW23. The % shares of these sources are summarized in Table below.

Table: % share of different grid connected power sources in Tamil Nadu Sources % share Thermal 29% Central Share 28% Hydro 21% IPP 12% Gas 5% Grid connected solar 0.00162%

The above analysis demonstrates that the installed grid connected power is predominantly thermal based (64%) and the contribution of grid connected solar PV power in India is negligible. The contribution of total grid connected solar PV power in India is 0.00147% of total installed capacity and the share of grid connected solar PV power in Tamil Nadu is only 0.00162%. It also demonstrates that the project activity is the country’s largest grid interactive solar PV power plant and country’s first private sector megawatt size grid connected solar PV power plant. From above analysis it can be concluded that implementation of solar PV power project is not a common practice in the Host Country. CDM Impact on Project activity: Only after incorporating the revenues from CDM the Project IRR improves to 12.80%. CDM revenues will help to bridge the gap and enhance viability of the project. The project activity will be used as a demonstration project to the other developer in the region. Hence it is clearly evident that the project is not a business as usual scenario and this needs additional revenue stream to make the project viable. CDM Consideration: As per the GUIDANCE ON THE DEMONSTRATION AND ASSESSMENT OF PRIOR CONSIDERATION OF THE CDM, VERSION-3–

21 http://mnes.nic.in/press-releases/press-release-13072009-2.pdf 22 http://www.tneb.in/template_3.php?tempno=3&cid=0&subcid=184 23 http://tnerc.tn.nic.in/orders/Order%20No%206-11.07.08.pdf


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The project activity falls under “New Project Activities”. The project participant informed the Host Party DNA and the UNFCCC secretariat in writing of the commencement of the project activity and of their intention to seek CDM status. Such notification was made within six months of the project activity start date. Following demonstrates the serious consideration of CDM by PP in implementation of the project under discussion- SN Event Date Remarks 1 Detail Project report preparation July 2008 The DPR for the 5 MW solar PV power

plant was prepared and PP decided to go-ahead with considering CDM revenue for the project activity.

2 Board resolution 12/08/2008 Decision to apply for CDM registration. 3 Approval from Tamil Nadu Energy

Development Agency 21/09/2008 -

4 Agreement with CDM consultant 01/10/2008 - 5 Letter to UNFCCC 20/02/2009 The PP informed the UNFCCC secretariat

of the commencement of the project activity and of their intention to seek CDM status.

6 Letter to Host country DNA 20/02/2009 The PP informed the Host country DNA of the commencement of the project activity and of their intention to seek CDM status.

7 Letter from IFC on grant 14/04/2009 - 8 Validation proposal from DOE 14/04/2009 - 9 Stakeholder consultation 24/06/2009 - 10 DOE engagement for validation 09/07/2009 -

11 Approval from State pollution control board 19/08/2009 -

12 Power Purchase agreement 20/08/2009 - 13 PDD submitted for HCA 11/11/2009 - 14 Land sale deed 24/11/2009 - 15 Contract signed for EPC 29/01/2010 Project start date 16 Loan sanction 12/02/2010 - B.6. Emission reductions: B.6.1. Explanation of methodological choices: This is a renewable power generation project, supplying the entire power generated from the solar farm to the grid. This form of energy generation has no associated GHG emissions. So, the emission reductions will just depend on the quantity of electricity being supplied to the grid system. Baseline emission (BEy):


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The baseline emission is the kWh produced by the renewable generating unit multiplied by an emission coefficient (measured in kg CO2e/kWh) calculated in a transparent and conservative manner. Baseline emission factor is calculated as combined margin, consisting of a combination of operating margin (OM) and build margin (BM) factors (For detailed calculation, refer Annex-3). BEy = EGBL,y × EFCO2 (1) Where, BEy is the baseline emissions in year y, tCO2 EGBL,y is the energy baseline in year y, kWh EFCO2 is the CO2 emission factor of the grid in year y (tCO2/kWh). Project emission (PEy): There are no project activity emissions as this is a renewable project activity. Leakage (Ly): Leakage due to transfer of equipments from another activity: The equipments installed in the project activity are not transferred from any other activity. Hence leakage for this part is zero. Emission reduction (ERy): The emission reduction achieved by the project activity will be the difference between the baseline emission and the sum of the project emission and leakage. ERy = BEy – (PEy + Ly) (2)

B.6.2. Data and parameters that are available at validation: Data / Parameter: EFOM Data unit: tCO2/MWh Description: Operational Margin of the Southern Grid Source of data used: Central Electricity Authority(CEA) of India Database

Value applied: 0.9875564 Justification of the choice of data or description of measurement methods and procedures actually applied :

Calculated by CEA for all the regional grids in India. Specifically meant for use in CDM project activities.

Any comment: Latest available is used Data / Parameter: EFBM Data unit: tCO2/MWh Description: Build Margin of the Southern Grid Source of data used: Central Electricity Authority(CEA) of India Database


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Value applied: 0.8179232 Justification of the choice of data or description of measurement methods and procedures actually applied :

Calculated by CEA for all the regional grids in India. Specifically meant for use in CDM project activities.

Any comment: Latest available is used

B.6.3 Ex-ante calculation of emission reductions: Baseline emissions: Baseline emission is calculated as per equation (1) in section B.6.1 BEy = EGy * EFy EGy = 5MW*19%*365days*24 hrs = 8322MWh PLF (19%) in base value has been taken from the report of Central Electricity Regulatory Commission on Tariff regulation of Renewable energy. The same PLF has been given by a third party contracted by PP. EFy = 0.9451481 tCO2e/MWh BEy = 7866tCO2/annum Project emissions: Not applicable as this is a solar power generation project. PEy = 0 Leakage emissions: No leakage emissions occur due to this project activity. LEy = 0 Emission reductions: ERy = BEy – PEy - LEy or ERy = BEy as PEy = 0 and LEy = 0 ERy = 7866 tCO2/annum

B.6.4 Summary of the ex-ante estimation of emission reductions:

Year Estimation of project activity

emissions (tCO2e)

Estimation of baseline emissions ( tCO2e)

Estimation of leakage ( tCO2e)

Estimation of overall emission

reductions ( tCO2e) 2010 – 2011 0 7866 0 7866 2011 – 2012 0 7866 0 7866 2012 – 2013 0 7866 0 7866 2013 – 2014 0 7866 0 7866


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2014 – 2015 0 7866 0 7866 2015– 2016 0 7866 0 7866 2016 – 2017 0 7866 0 7866 Total (tonnes

of CO2 e) 0 55062 0 55062

B.7 Application of a monitoring methodology and description of the monitoring plan:

B.7.1 Data and parameters monitored: Data / Parameter: EGy Data unit: MWh Description: Net Electricity supplied to the grid Source of data to be used:

Monthly billing records provided by TNEB for the electricity supplied

Value of data -- Description of measurement methods and procedures to be applied:

The Electricity will be measured continuously using calibrated energy meters and the readings will be recorded on monthly basis. The recording will be done on a chosen date in a month by TNEB personnel in the presence of representative of the PP.

QA/QC procedures to be applied:

The energy meter used will be tested and calibrated as per power purchase agreement.

Any comment: -

B.7.2 Description of the monitoring plan: The organisation structure for the proposed power plant envisages a Site Engineer as the in-charge for the entire power plant operations and maintenance. He will be positioned at site and will directly report to the Board of Directors. He will be assisted by shift in charge and maintenance technicians. The day-to-day operation like planning the routine maintenance, safety and environmental control will be placed under the care of the shift in charges. All administrative functions like personnel, industrial relations, labour welfare and financial functions will be looked after by SIIPL. The organizational structure and responsibilities on project operation, monitoring and data recording has been mentioned below:

Director

Site Engineer

Shift engineer

Maintenance technician


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Organizational Structure

Designation Responsibilities Director Holds complete control over monitoring aspects

pertaining to the project Site Engineer • Operation & Maintenance

• Recording • Storage of Data

Shift engineer & Maintenance technician

• Day to day Operation • Storage of data • Data Recording

Operating and maintaining a solar PV power plant requires certain degree of skills and exposure to state of the art equipment and technology. In order to maintain a close knit operation and safe maintenance, sufficient training will be imparted to the O&M team before the implementation of the project. The parameters required for monitoring would be the energy supplied to TNEB grid. This data would be measured monthly and achieved annually. The electricity generated in the project activity will be monitored using energy meter as specified in the project boundary. Measurement methods and procedures will be according to that detailed in the Power Purchase Agreement. Main meter and check meter will be installed with facilities to record export and import of energy and as per the standards stipulated in the Central Electricity Authority’s Regulation 2006 and regulation issued by the State electricity regulatory commission. The energy generation readings will be taken on a said date on a month by TNEB personnel in the presence of SIIPL site in-charge. All the monitoring data will be stored in log book and kept under safe custody. Energy meters used would be in the custody of TNEB and they will be maintained as per the norms stipulated in the PPA with TNEB. The energy generation data would be available for a period of 2 years beyond the crediting period date. B.8 Date of completion of the application of the baseline and monitoring methodology and the name of the responsible person(s)/entity(ies) The date of completion of baseline and monitoring methodology is 17/12/2009. The contact details of the entity responsible for same is as below – Mr. Dinesh Narang Vice President – Finance Sapphire Industrial Infrastructure Private Limited 213 – B, Okhla Industrial Estate, Phase III, New Delhi – 110 020, India Phone: 011 – 4762 4101 E-mail: [email protected]


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SECTION C. Duration of the project activity / crediting period C.1 Duration of the project activity: C.1.1. Starting date of the project activity: 29/01/2010 (Date of EPC contract signed) C.1.2. Expected operational lifetime of the project activity: 25 years C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period Yes C.2.1.1. Starting date of the first crediting period: The start date of the crediting period is 01/05/2010 or a date not earlier than the date of registration of the small scale project activity C.2.1.2. Length of the first crediting period: 7 years C.2.2. Fixed crediting period: NA C.2.2.1. Starting date: NA C.2.2.2. Length: NA SECTION D. Environmental impacts D.1. If required by the host Party, documentation on the analysis of the environmental impacts of the project activity:


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As per the notification from MoEF dated September 14, 200624, the list of project activities which require prior environmental clearance is stipulated. This does not include the proposed small scale project activity type as it involves solar power generation. D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party:

Following positive environmental impacts have been envisaged:

1. Using solar panels does not pollute the air.

2. Using solar panels doesn't release carbon dioxide, nitrogen oxide, sulpher dioxide, or mercury into the atmosphere as many traditional forms of electrical generation do.

3. The solar panels operate silently, have no moving parts, and don't release offensive smells.

4. Does not contribute to acid rain, global warming, or smog and it reduces the emission into environment.

No significant negative impacts considered due to implementation of project activity by the host party. Hence, no references or procedures specified here. SECTION E. Stakeholders’ comments E.1. Brief description how comments by local stakeholders have been invited and compiled: Stakeholder consultation for the project activity has been conducted to account for the views of the people impacted either directly or indirectly due to the project activity. This has been carried out at all levels of stakeholders –

A. District Advisory committee on Renewable energy B. Local gram panchayat C. Local people D. Tamil Nadu electricity board

SIIPL had published public notices in leading news papers on 17/06/2009. Through this notice SIIPL had expressed their plan to develop the proposed 5 MW grid connected project as a CDM project activity and called for the suggestions/comments of the local stakeholders. In line with the public notice, a meeting was held in the Community Hall, Muthupatti Village Sivagangai District on 24/06/2009. This meeting was attended by Mr. Ganesan – President, Muthupatti Village Panchayat, Mr. Samuel Rajasekaran – Executive Engineer, TNEB, Tahsildar, the Block Development Officer and Mr. S. Nagarajan - Honourable Additional Collector and Secretary – District Advisory Committee on Renewable Energy, Sivagangai. 24 http://envfor.nic.in/legis/eia/so1533.pdf


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E.2. Summary of the comments received: The representatives of SIIPL explained all stakeholder’s about the project activity and the likely social benefits to the local populace from the proposed project in terms of employment opportunity. Following is the summary of the stakeholder consultation process:- The Executive engineer of Tamil Nadu, Sivagangai expressed his views and welcomed this solar power project and mentioned that the necessary departmental support will be given to the project. The Muthupatti Panchayat president also conveyed his best wishes to the project and extended his support along with local people for success of the project. E.3. Report on how due account was taken of any comments received: There were no negative comments received from the stakeholders. Therefore, It was not necessary to take due account of any of the other comments received.


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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Sapphire Industrial Infrastructures Private Limited Street/P.O.Box: 213 – B, Building: Okhla Industrial Estate, Phase III, City: New Delhi State/Region: Delhi Postfix/ZIP: 110 020 Country: India Telephone: 011 – 4762 4105/4762 4100 FAX: 011 – 4762 4229 E-Mail: [email protected] URL: - Represented by: Mr. Dinesh Narang Title: Vice President – Finance Salutation: Mr. Last Name: Narang Middle Name: First Name: Dinesh Department: Finance Mobile: + 91 9810126719 Direct FAX: 011 – 4762 4229 Direct tel: 011 – 4762 4105/4762 4100 Personal E-Mail: [email protected]


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Annex 2

INFORMATION REGARDING PUBLIC FUNDING

There is no public funding involved in this project activity.


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Annex 3

BASELINE INFORMATION Calculation of Grid emission factor: As per methodology: (a) A combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM) according to the procedures prescribed in the ‘Tool to calculate the emission factor for an electricity system’.

OR

(b) The weighted average emissions (in kg CO2e/kWh) of the current generation mix. The data of the year in which project generation occurs must be used.

Calculations must be based on data from an official source (where available) and made publicly available.

Option (a) has been considered to calculate the grid emission factor as per the ‘Tool to calculate the emission factor for an electricity system’ as per the methodology as data is available from an official source.

Baseline Methodology Procedure: Project participants shall apply the following six steps: STEP 1: Identify the relevant electricity system. 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. Identify the group of power units to be included in the build margin (BM). STEP 6. Calculate the build margin emission factor. STEP 7. Calculate the combined margin (CM) emissions factor. STEP 1. Identify the relevant electric power system:

The tool defines the electric power system as 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. Keeping this into consideration, the Indian grid system was divided into five independent regional grids, namely Northern, Eastern, Western, Southern, and North-Eastern. Each grid covered several states (see Table 3.1). Since August 2006, however, all regional grids except the Southern Grid have been integrated and are operating in synchronous mode, i.e. at same frequency. Consequently, the Northern, Eastern, Western and North-Eastern grids will be treated as a single grid and is being named as NEWNE grid. Table 3.1 Geographical Scope of regional grids in India

NEWNE Grid Southern grid Northern Eastern Western North-Eastern Chandigarh Bihar Chhattisgarh Arunachal pradesh Andhra Pradesh Delhi Jharkhand Gujarat Assam Karnataka


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Haryana Orissa Daman & Diu Manipur Kerala Himachal Pradesh West Bengal Dadar & Nagar

Haveli Meghalaya Tamil Nadu

Jammu & Kashmir Sikkim Madhya Pradesh Mizoram Pondicherry Punjab Andaman-Nicobar Maharashtra Nagaland Lakshadweep Rajasthan Goa Tripura Uttar Pradesh Uttarakhand The project activity is in the state of Tamil Nadu, which is connected to Southern Grid. Thus the Southern grid has been considered for estimating the grid emission factor. These states under the regional grids have their own power generating stations as well as centrally shared power-generating stations.

STEP2: 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. The Option I has been chosen to calculate the OM and BM.

STEP 3. Select a method to determine the operating margin (OM):

The calculation of the operating margin emission factor (EFOM,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.

Any of the four methods can be used, however, the simple OM method (option a) can only be used if low-cost/must-run resources

constitute less than 50% of total grid generation in:

1) average of the five most recent years, or 2) based on long-term averages for hydroelectricity production.

Table below analyses whether simple OM can be used in the project case or not: Generation source 2004-0525 2005-06 2006-07 2007-08 2008-09 Average (last five

years) Southern grid

Net Generation (GWh) 134675.841 138328.5 152205. 157315. 157,336 147,972.36

25 Net generation and % of low cost/must run sources has been taken from “Baseline carbon dioxide database”, version-05 published by Central Electricity Authority.

http://www.cea.nic.in/planning/c%20and%20e/Government%20of%20India%20website.htm


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5 95 02 % of Low cost/ Must

run sources 21.61% 27.00% 28.31%

27.08%

22.79% 25.36%

The above table clearly shows that the percentage of total grid generation by low-cost/must-run plants (on the basis of average of five most recent years) is much lesser than 50% of the total generation. Thus, Simple OM method can be used for calculating the emission factor. STEP 4. Calculate the operating margin emission factor according to the selected method: 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: 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, without requirement to monitor and recalculate the emissions factor during the crediting period, or

• Ex post option: 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 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 proceeding 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.

The simple OM emission factor is 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. Method adopted for Simple OM in the project activity: In the project activity, (ex-ante) the generation-weighted average for the most recent 3 years for which data are available at the time of PDD submission to DOE has been considered. The data is published by the Central Electricity Authority. This is designed to be consistent with of the Tool to calculate the emission factor for an electricity system published by CDM Executive Board. It is confirmed that ex-ante vintage is considered in the project activity and cannot be changed during the crediting period.

Year Southern Value (tCO2/ MWh) 2006-07 0.9991209 2007-08 0.9906235 2008-09 0.9729247 Simple OM, average 0.9875564

STEP 5. Identify the group of power units to be included in the build margin (BM): The value of the data has been taken from the data published by CEA as referred in earlier step. The CEA Baseline Database has been calculated as per the tool and the details of the key assumptions considered to calculate the figure can be found in the User Guide of the same.


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Project participants can choose between one of the following two options: Option 1: Calculate the Build Margin emission factor EFBM,y ex-ante based on the most recent information available on plants already built for sample group m at the time of PDD submission. The sample group m consists of either the five power plants that have been built most recently or the power plant capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. Project participants should use from these two options that sample group that comprises the larger annual generation. Option 2: For the first crediting period, the Build Margin emission factor EFBM,y must be updated annually ex-post for the year in which actual project generation and associated emissions reductions occur. For subsequent crediting periods, EFBM,y should be calculated ex-ante, as described in option 1 above. The sample group m consists of either the five power plants that have been built most recently or the power plant capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. Project participants should use from these two options that sample group that comprises the larger annual generation. STEP 6. Calculate the build margin emission factor (EFgrid, BM,y): Option 1 as described above is chosen in the project activity. BM is calculated ex-ante based on the most recent information available at the time of submission of PDD and is fixed for the entire crediting period.

Grid BM (tCO2/ MWh) Southern grid

0.8179232

STEP 7. Calculate the combined margin (CM) emissions factor (EFgrid, CM, y ): The CM can be calculated as per the following: EFgrid,CM,y = EFgrid,OM,y * WOM + EFgrid,BM,y * WBM Where: Parameter Detail EFgrid, OM,y Build Margin CO2 emission factor in the year y (tCO2/MWh) EFgrid, BM,y Operating Margin CO2 emission factor in the year y (tCO2/MWh) WOM Weighting of operating margin emission factor (%) WBM Weighting of build margin emission factor (%)

Where:


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A weightage of 75:25 is assumed in the calculation of emission factor as this is a solar based power generation project. The value chosen is taken from relevant official sources and is publicly available26. Sub bundle OM, Operating Margin BM, Build Margin CM, Combined Margin Value (tCO2/ MWh) Southern Grid 0.9875564 0.8179232 0.9451481

Reference: Tool to calculate the emission factor for an electricity system Source of Data: CO2 Baseline Database for the Indian Power Sector, Version 5.0, November 2009 http://www.cea.nic.in/planning/c%20and%20e/Government%20of%20India%20website.htm

26 http://www.cea.nic.in/planning/c%20and%20e/user_guide_ver5.pdf


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Annex 4

MONITORING INFORMATION

The detailed monitoring plan is as provided in Section B.7.2.

- - - - -