barro blanco pdd v3

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 1

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

Version 03 – in effect as of: July 28, 2006

CONTENTS A. General description of the 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 project activity Annex 2: Information regarding public funding Annex 3: Baseline information

Annex 4: Monitoring plan

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 2 SECTION A. General description of the project activity A.1 Title of the project activity: Barro Blanco Hydroelectric Power Plant Project Version 03.8 April 27, 2010 A.2. Description of the project activity: The purpose of this project is to build a Hydroelectric Power Plant, with a total installed capacity of 28.84 MW and a mean annual generation of 124.83 GWh, with the aim of making use of the capacity of the Tabasara River. Initially the project involved the construction of a 19.99 MW hydroelectric power plant, but after a study of alternatives for different powers installed, the feasibility of increasing the installed capacity based on a better use of available flow in the reservoir was established, and 28.84 MW was set as project power. The main objectives of the power plant’s construction are as follows:

- Increase the country’s installed energy generation capacity by approximately 2.35%. - Increase the presence of energy generated with autochthonous natural resources, as compared to

the generation of energy with hydrocarbons. - Protect the national energy market from the rising cost of hydrocarbons in the international

markets. - Reduce or mitigate the CO2 emissions derived from the generation of electricity with

hydrocarbons in the medium and long-term, thus contributing to the sustainable development of the region and the country.

In geopolitical terms, the Barro Blanco Hydroelectric Power Plant Project will be located between the County of Bella Vista, Veladero and Cerro Viejo in the district of Tolé, within the province of Chiriquí, as well as the County of Bakama in the regional district of Müna. It’s important to point out that the civil work of the Project is located in Bella Vista and Veladero County’s. The Hydroelectric Power Plant has a roller-compacted concrete dam, which has a maximum height of 61.09 meters over the base, a maximum level of normal operation of 103.00 m over sea level and a maximum flood level of 108.25 m over sea level. For a flow of 35 m3/s (flow for a Kaplan Turbine) the gross drop is 42.94 metres and for a flow of 5.0 m3/s the gross drop is 44.28 metres. The reservoir surface that must be produced by the dam as a result of the operations shall not exceed 258.67 hectares, which includes the surface currently occupied by the Tabasara River in the section where the reservoir will be built. With the detailed topography and photogrammetry, it was determined that the land to be inundated (98% owned GENISA) is 189 hectares and the surface currently occupied by the Tabasara River in the section is 69.67 hectares, resulting in a total of 258.67 Ha of mirror Water Project to fill the reservoir to its full capacity level (103 m). The water stored in the dam will be discharged from the upstream gate through a pressurised pipe down to the engine house at the base of the dam, where two Kaplan turbines with an installed power of 13.43

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 3 MW each and a Francis turbine with a horizontal axis and an installed power of 1.98 MW will use the kinetic energy to generate electrical energy, producing clean energy that is free of greenhouse gas emissions. The energy will be transferred to the distribution yard or sub-station, where it will be converted from generation energy to transmission energy. From the sub-station, the energy will be transferred to the National Grid so that it can be distributed to the electricity market. The following table shows the main characteristics of the Barro Blanco Hydroelectric Power Plant:

Type of regulation: ....................................................................................Reservoir Ecological flow (m3/s):...................................................................................... 4.96 Design flow (m3/s): ................................................................................. 70 and 5.0 Nominal flow per turbine (m3/s): ..............................................................2*35+5.0 Maximum normal operating level (m): ......................................................... 103.00 Gross drop (m) (Q=35.0 m3/s): ....................................................................... 42.94 Gross drop (m) (Q=5.0 m3/s): ......................................................................... 44.28 Installed capacity (MW):................................................................................. 28.84 Number and type of turbines:................................................... 2 Kaplan+1 Francis

Therefore, this electrical energy with a hydraulic origin will replace energy that, in the absence of the power plant, would be partially produced by fossil fuel consuming plants (mainly bunker or diesel) that emit greenhouse gases. In this way, the result of the commissioning of this power plant will reduce the global greenhouse gas emissions of the Panamanian power plant infrastructure, reducing its contribution to the global climate change. In addition, the growing demand for electricity in the country can be catered for, with an approach that is compatible with the sustainable development principles and commitments acquired by Panama in the Electricity Sector’s Energy Policy. An added benefit is the stabilisation of the price of energy, with the reduction in the amount of energy generated with fossil fuels and corresponding reduction of the dependence on them. The project also has an important social component. The power plant will be located in an area with a low standard of living, with a very low level of community equipment and thus the basic needs (sanitation, education, etc.) will not be adequately satisfied in the area. The project contributes to regional development, consolidating the local and regional administrations in institutional terms. Its operation will provide direct financing to the municipalities that are directly affected, which will allow them to assume the development of their own projects, thus contributing directly to the improvement in the standard of living of the communities affected. Apart from the said financing schemes, the execution of the project will contribute to the creation of jobs. The developer, according to ensure employment generation in the area of influence of the project activity, shall apply to each the following sub-clauses: - The contractor must be informed about the contents of the SEI and comply fully with. - The contractor must exhaust all the necessary steps to ensure that at least 60% of staff for unskilled work in activities related to his contract, coming from the boroughs or districts of the province where the project is developed. - The contractor must have the "peace and except" correspondingly issued by ANAM.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 4 Furthermore, the quality of life of the population located in the middle of the river Tabasara is enhanced through technology transfer and implementation of environmental education programs in order to preserve and properly manage the area surrounding the project area. Therefore the project sponsor will implement a Environmental Education Plan in coordination with ANAM to transfer knowledge in regard to the following: watershed management, soil conservation, management of environmental projects such as reforestation and captive breeding of wild species, organic farming, etc. (as stated in the “Environmental Impact Study for the construction and operation of the Barro Blanco Hydroelectric Power Plant”). Furthermore, according to the cooperation agreement between the developer and the borough of Ngabe Bugle, technical training courses on topics in construction, masonry and carpentry will be performed as well as those already mentioned for better environmental management. Therefore, the hydroelectric power plant project of Barro Blanco contributes from the social, environmental and economic point of view to the development of the districts of Tolé and Müna, so that we can affirm that this is an eligible project in terms of the methods and procedures of the clean development mechanism (CDM) set forth by the UNFCCC. A.3. Project participants:

Name of the party involved

Public or Private Entity(ies) participating in the project

Indicate whether the party involved wishes to be considered as a project

participant or not (Yes/No)

Panama Generadora del Istmo, S.A. (GENISA) No A.4. Technical description of the project activity: A.4.1. Location of the project activity: A.4.1.1. Host Party(ies): Panama

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 5 A.4.1.2. Region/State/Province, etc.: Province of Chiriquí, Distric of Tole, Countys of Veladero and Bella Vista and regional district of Müna (Ngobe-Bugle).

A.4.1.3. City/Town/Community, etc.: The Countys of Bella Vista and, Veladero and Cerro Viejo in the district of Tolé and the borough of Bakama in the regional district of Müna.


A.4.1.4. Details of the physical location, including information allowing the unique identification of this project activity (maximum of one page): In geopolitical terms, the Barro Blanco Hydroelectric Power Plant Project will be located between the Countys of Bella Vista and, Veladero and Cerro Viejo in the district of Tolé, within the province of Chiriquí, as well as the borough of Bakama in the regional district of Müna. Most project structures, the entrance of vehicles to the project site, the engine room, sub-station, 50% of the dam and 30% of the reservoir produced by the dam’s operation will be located within the borough of Bella Vista. In turn, 50% of the dam and 20% of the reservoir will be located in the borough of Cerro Viejo Veladero. Therefore, 47.87% of the reservoir will be located in the borough of Veladero Cerro Viejo and 2.13% will be located in the area adjacent to Tabasara Arriba in the County of Bakama, district of Müna.

The project involves an engine room system at the base of the dam, where the geographical location of the structures related to the dam, engine room and restitution site will be located near the following coordinates: Lat 8.212851 and Long -81.594408, in relation to the Decimal Format.

A.4.2. Category(ies) of the project activity: The CDM project has a category 1: “Renewable source energy industries” A.4.3. Technology to be employed by the project activity : This project uses the water of the Tabasara River, with a hydroelectric power plant with reservoir and an engine house on the base of the dam, operating at the dam level – 103 m over sea level - driving the water from the upstream gate through a pressurised pipe to the engine house. There are two Kaplan turbines with a vertical axis and a Francis turbine with a horizontal axis in the engine house. In addition, there is a distribution yard, a transmission line and a private entrance for vehicles. A small description of each stage and unit mentioned in the previous paragraph is included below:

- Dam: The Dam projected will be structured with Roller Compacted Concrete (RCC) and will have a maximum height of 61.09 metres over the base. In terms of elevation or vertical level, the dam’s ridge will have an approximate height of 109.00 metres over sea level, i.e., 6 metres above the maximum operation level. Its maximum operation level must be 103.00 metres over sea level The reservoir surface that must be produced by the dam as a result of the operations shall not exceed 258.67 hectares, which includes the surface currently occupied by the Tabasara River in the section where the reservoir will be built. Along the dam have 23 transverse contraction joints, which identify 24 separate blocks, with joints and radial separations ranging between 7.5 and 18 m.

In addition, a sediment drainage system will be used in the base of the dam, which will allow the circulation of sediments through the dam with a controlled approach.


- The dam has a drainage background, located on the central blocks, unloading on the left in the adaptation made for one of the diversion channels. The height of these drains is 71.75 meters and consists of a double Bureau gates 2.25x 2.5 m2, with a separation of 5 meters between drainages.

- The dam will have weirs that will be composed of a series of radial gates that can reach

dimensions of up to 9 m x 12 m, controlled by Taintor gates and a discharge capacity of 2,355.52 m3/s.

- Channel bypass: is located on the right bank of the river, with rectangular section with a width

of 2.8 m (Francis) and 16.06 m (Kaplan).

- Engine house: The engine house will have a structure located at the base of the dam, which will host two Kaplan turbines with a vertical axis and a capacity of 13.43 MW each and a Francis turbine with a horizontal axis and a capacity of 1.98 MW. The total installed capacity will be 28.84 MW Kaplan turbines will have a gross drop of 42.94 metres and the Francis turbine will has a gross drop of 44.28 metres.

In addition, the engine house will host the following equipment:

o The generator; device that converts mechanical energy into electrical energy, i.e., electricity.

o Speed control units; group of devices that control the generator’s and turbine’s speed to

ensure that the energy frequency is within a commercially accepted range.

o Voltage control systems; a set of devices that control the energy’s voltage to ensure that it is within a commercially acceptable range.

o The control and protection systems of the generator sets; a set of devices that are

responsible for the control and protection of electromechanical units with alarms and digital information systems, such as SCADA systems (Supervision, Control and Data Acquisition System).

- Distribution yard: set of structures and electromechanical equipment in charge of converting

the voltage of the energy generated into a transmission voltage. Said voltage is then converted into a consumption voltage by a different distribution yard near the urban centres. The distribution yard has the following units: power transformer, switches, isolating blades, lightning arresters, instrument transformers and the structure.

In this case, the electrical energy transferred from the generator will operate at 13.8 kilovolts and be transformed into a voltage of 115 kilovolts. The distribution yard will be located near the engine house for operational purposes.

- Electrical transmission line: the line will have a length of 12.6 kilometres and will operate at

34.5 kilovolts, with the purpose of acting as the vehicle to send electrical energy from the distribution yard to the Veladero Sub-Station, which is run by ETESA.


A.4.4 Estimated amount of emissions reductions over the chosen crediting period: The project activity reduces the CO2 emissions associated to the production of electricity, thanks to the use of a renewable energy source: hydroelectric energy. With the connection of the plant to the Panamanian Interconnected Electricity System, the dispatch of all plants connected to the grid will be modified, increasing their global efficiency and reducing the average emissions by kWh transferred to the grid. During the crediting period, the project has a reduction potential of 66,934 tCO2/year. If we take into account 3 renewable seven-year periods, the project would generate a total reduction of emissions of 1,405,622 t CO2.

Year Estimation of the reduction of emissions in tonnes of CO2e

2013 75,633 2014 75,633 2015 75,633 2016 75,633 2017 75,633 2018 75,633 2019 75,633 2020 62,585 2021 62,585 2022 62,585 2023 62,585 2024 62,585 2025 62,585 2026 62,585 2027 62,585 2028 62,585 2029 62,585 2030 62,585 2031 62,585 2032 62,585

Year

2033 62,585 Total estimated reductions (tonnes of CO2e) 1,405,622

Total number of crediting years 21 (Renewable twice until 21 years

are completed) Annual average over the crediting period of estimated

reductions (tonnes of CO2e) 66,934

A.4.5. Public funding of the project activity: This project does not include Public finance sources.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 9 SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity : If we take into account the operation of the Panamanian Interconnected System, the characteristics of the CDM project activity and the type of data available, this project activity will be developed in accordance with the approved consolidated baseline and monitoring methodology ACM0002 / Version 10 “Consolidated baseline methodology for grid-connected electricity generation from renewable sources”. The application of said methodology is complemented with version 02 of document “Tool to calculate the emission factor for an electricity system”, for the calculation of the baseline emission factor, as well as version 0.5.2 of the “Tool for the demonstration and assessment of additionality", used to carry out the analysis of the project's additionality. B.2 Justification of the choice of the methodology and why it is applicable to the project activity : The consolidated ACM0002 methodology / version (10) ten is applicable to the generation activities that use renewable sources and comply with a series of requirements. The conditions required for the application of this methodology and compliance with the project activity proposed are as follows:

1) the project entails an additional electric energy generation capacity after the commissioning of a new hydroelectric power plant.

2) the project entails the construction of a new hydroelectric power plant with a reservoir and a

power density of more than 4 W/m2.

Generation Capacity (MW) Reservoir area (ha) Power density (W/m2) 28.84 258.67 11.14

3) the project does not replace the use of fossil fuels by renewable energies in the site where the project activity is carried out.

B.3. Description of sources and gases included in the project boundary: In accordance with the ACM0002 methodology / version 10, the calculation of GHG emissions associated to the project and related to the baseline only consider the emissions of CO2 of the generation of energy in fossil fuel combustion plants that are shifted by the activity of the CDM project. This approach provides a set of calculations that are truly conservative, since the thermal power plants shifted by the operation of the power plant use fuels with a high level of leakage (methane leakages, from the natural gas distribution chain, liberation of methane associated to carbon mining, etc.). In the case of the

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 10 project activity, the associated CH4 emissions must be taken into account, since we are dealing with a hydroelectric power plant with a reservoir and a forecasted power density of 11.14W/m2.

Scenario Source Gas Included? Justification

CO2 Yes CH4 No

Baseline Shifted thermal power plants that consume

fossil fuels N2O No

Following the guidelines established by the ACM0002, the baseline must only consider the CO2 emissions from fossil fuel consuming plants that are shifted by the CDM project activity.

CO2 No CH4 Yes Project

activity

Barro Blanco Hydroelectric Power

Plant N2O No

The power plant has a reservoir, so that, in accordance with the ACM0002 methodology, the emissions from the reservoir must be taken into account.

The spatial extension of the limits of the project includes the physical location of the project (Hydroelectric Power Plant of Barro Blanco) and all plants connected to the electrical system, which will be connected to the plant (National Interconnected System of Panama), as shown on the following figure:

Operation of the Electricity Market in Panama. The electricity market of Panama is a traditional supply and demand-based market, where generators must compete to close energy and/or power acquisition/sale contracts in public tenders or sell energy to large consumers or the occasional market. The electricity generation market is composed of hydroelectric and thermoelectric energy generators or the generators of other sources of energy that are interconnected through the ETESA transmission system, transferring energy in kWh and power in kW. Energy is

Project Boundary

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 11 transferred by ETESA to the distribution companies, who carry it to companies, homes and other users of the electricity sector. There are two markets: the contracts market and the occasional market. The contracts market is based on the acquisition or sale of energy and/or power between generators, distributors and large clients. Distributors must submit a tender for the coverage of 100% of the demand of its clients regulated with a firm power rating, in the form of a public tender. The occasional market is the market of energy where the difference between what is established in the contracts and the real generation of each plant is balanced. B.4. Description of how the baseline scenario is identified and description of the baseline scenario: The project’s activity is based on the construction of a new hydroelectric power plant with a reservoir that will be integrated in the National Interconnected System of Panama. The Panamanian system is composed of a combination of thermal power plants that consume fossil fuels (mainly Bunker C or diesel) for the generation of electricity and plants that use renewable resources. Given the increase in demand for electricity, it is almost certain that the system will be expanded with the addition of new power plants. Therefore, the baseline scenario is one where the electricity supplied by the project to the grid will be generated by the operation of the plants that are currently connected to the grid and by new plants added to the System, based on the current trends in the sector. Both aspects are depicted in the Combined Margin Emission Factor, which is calculated as shown next. B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity (assessment and demonstration of additionality): As stated above, the additionality of the project activity has been analysed with the use of the latest version of the “Tool for the demonstration and assessment of additionality” (Version 05.2). These are the steps followed: Step 1. Identification of the alternatives to the project activity consistent with current laws and regulations. The project involves the generation of electricity from renewable energy sources (hydroelectric generation) and connection to the National Interconnected Grid of Panama. Sub-step 1a. Define the alternatives to the project activity: The alternatives defined are the following:

- Alternative 1: Continuation of the current trend to add capacity to the system (baseline scenario described in section B.4.). Electricity will continue to be provided by the existing Panama Interconnected Grid.


Continuation of the current situation would require no investments on the part of the project developer, and would not face any technological or other barrier. Electricity would continue to be provided by the existing mix of power plants in the grid.

- Alternative 2: Execution of the project without its registration as CDM, construction of a hydraulic plant with reservoir with an installed capacity of 28,84 MW connected to the national grid, implemented without considering CDM revenues.

- Alternative 3: Construction of a thermal plant to supply energy to the system.

Building and evaluating a Fuel Power Plant has been considered as an option for supplying energy to the system, as indicated in 2007-2021 Expansion Plan for the National Interconnected System. However, the project developer is not experienced in building thermal plants, and this type of plant is not part of his business activities; thus this alternative has not been considered.

- Alternative 4: Construction of a renewable power plant with the same installed capacity or the

same annual power output. We have not considered other renewable technologies in the additionality assessment, as wind or solar, since these technologies are not suitable in the area for the following reasons:

- The slope of the river is high, 1.5-3.5%, turning out to be ideal for hydro generation

compared to other renewable technologies (Environmental Impact Study, chapter 5, page 85).

- Tough orography in the area, so the consideration of wind energy as an alternative is not recommended.

- The Average annual rainfall in the Garrapato meteorological station, located within 3 km of the project, is 4,421.4 mm in 2003 (source: Comptroller General of the Republic of Panama, www.contraloria.gob.pa), so the consideration of solar energy as an alternative is not recommended (Environmental Impact Study, chapter 5, page 89).

Sub-step 1b. Consistency with mandatory laws and regulations. The aforesaid alternatives and the project's activity comply with the applicable regulatory and legal requirements. The planning process of the electricity sector is governed by Act No. 6, February 3, 1997, and its article 3 establishes the alignments of the Panamanian Energy Policy, which has the following objectives:

- Meeting the demand of electrical energy services and making the community’s access to them possible, based on economic efficiency, financial viability, quality and reliability of the service, within a framework of rational and efficient use of the different energetic resources of the country by, for example, optimising the water resources of the country or adding renewable systems.

- Establish the legal framework to motivate the attainment of economic efficiency in the development of the activities related to the generation, transmission, distribution and use of electrical energy.

- Promote competitiveness and the participation of the private sector as a basic instrument to increase the efficiency in the delivery of services, with the methods deemed as most convenient for such purposes.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 13 Regarding renewable sources, the Law No.45 (of August 4th,2004) establishes a regime of incentives for the promotion of hydroelectric generation system and other new, renewable and clean sources. However the incentives apply only to projects up to 20 MW meaning the project activity does not benefit from them. Said Act establishes the Regulatory and Institutional Framework for the Delivery of the Public Electricity Service during the 2007-2021 period in the 2007-2021 Expansion Plan for the National Interconnected System. Said document defines the evolution guidelines of the Panamanian generation park. The following table shows the potential short and medium-term actions for the expansion of the Panamanian generation system, in accordance with this document.

Potential Hydroelectric and Thermal Expansion Projects INSTALLED

CAPACITY (MW) INSTALLED

CAPACITY (MW) INSTALLED CAPACITY (MW)

Gualaca 27.6 Hydroelectric (Run-of-river) Lorena 35.7 Hydroelectric (Run-of-river) Prudencia 56.2 Hydroelectric (Run-of-river) Bonyic 30.0 Hydroelectric (Run-of-river) Sindigo 10.0 Hydroelectric (Run-of-river) Chan I 223.0 Hydroelectric (Run-of-river) El Alto 60.0 Hydroelectric (Run-of-river) Pando 32.6 Hydroelectric (Run-of-river) Monte Lirio 52.0 Hydroelectric (Run-of-river) Mendre 18.4 Hydroelectric (Run-of-river) Bajo de Mina 52.4 Hydroelectric (Run-of-river) Pedregalito 20.0 Hydroelectric (Run-of-river) Medium speed engine 50 Thermal (Bunker C) Medium speed engine 100 Thermal (Bunker C) Combined cycle 250 Combined cycle (Natural Gas) Carbon 150 150 Gas turbine (Natural Gas) Carbon 250 250 Thermal (Carbon) Source: 2007-2021 Expansion Plan for the National Interconnected System, ETESA-Approach Management, 2007.

Conclusion: The project and its alternatives meet the conditions established in Step 1.

Step 2. Investment Analysis The main analysis of the additionality of the project’s activity has been carried out with the option stated in Step 2 of the tool to demonstrate and assess additionality (investment analysis). Sub-step 2a. Determine appropriate analysis method Option I (simple cost analysis) is not applicable in this case, since the project will generate other economic and financial benefits that are different to those related to CDM charges, with the sale of the electricity generated. Option III has been selected out of the other two alternatives (Comparative analysis).

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 14 Sub-step 2b. Option III. Apply benchmark analysis Project IRR is the financial indicator used to analyse the project’s economic viability within the Panamanian context. The IRR of reference to assess the financial self-sufficiency is 12%, in accordance with the financial self-sufficiency conclusions stated in the 2007 Expansion Plan (see Volume II, Chapter 13). Sub-step 2c. Calculation and comparison of financial indicators During the decision-making process of the project of the Hydroelectric Power Plant of Barro Blanco, the investment profitability analyses carried out by GENISA, as the project developer, included the comparative analyses shown next, as well as the monetization potential of the CO2 credits (i.e., certified reductions of emissions or CERs) derived from the project activity. The calculations include the comparison of the financial indicator chosen (IRR - Internal Rate of Return) for the project activity, with and without CER revenues. The following aspects have been taken into account for the calculation of the said indicators:

Parameter Unit Value Installed capacity MW 28.84 Firm power MW 10.92 Annual generation GWh/year 124.83 Total project costs US$ 92,941,081 Energy tariff US$/MWh 100 Power tariff US$/kW-month 11 Inflation rate % 2.02 Revenues (Energy and power sales) US$/year 17,283,313 Project Life years 50 Running expenses (O&M and regulatory)

US$/year 1,540,250

Residue Value % 80 Income Tax Rate % 30 Project IRR % 9.25

Source: Project Developer The following table shows a comparison between the Project IRR value obtained with and without the revenue related to the CDM.

Case 1: Without revenues related to the sale of CERs

Case 2: With revenues related to the sale of CERs

IRR (%) 9.25 9.60-10.02

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 15 The best profitability of the investment – in IRR terms – is obtained in the scenario that considers the revenues related to the sale of CERs (between 9.60% and 10.02%, depending on the CER price levels), as regards the options that do not consider the monetisation of CERs generated by the project activity (9.25%). The financial analysis calculations of the project are confidential and will be available to the DOE during the validation process. In accordance with the financial self-sufficiency conclusions stated in the 2007 Expansion Plan (see Volume II, Chapter 13), the IRR of reference to assess the financial self-sufficiency is 12% (this reference value is used in all stages of the expansion plan). In accordance with the abovementioned data of the Barro Blanco Hydroelectric Power Plant, we can see that not even a 10% financial rate is achieved with the absence of the sale of CERs, which shows the very low profitability of the project. On the other hand, this Expansion Plan states that the thermal power plant projects in Panama (excluding the commissioning of a thermal power plant that uses natural gas transported by a gas pipeline) are profitable, in accordance with the strict assessment of the private decision criteria, obtaining a return rate of 13% in the worst case scenario and a mean profitability of 20% (see the 2007 Expansion Plan, Volume II, Chapter 13), which is clearly above the data obtained for the project, where the internal rate of return (IRR) is between 9.60%-10.02%, including the income derived from the sale of CERs. Therefore, it is necessary to take into account the fact that the Barro Blanco Hydroelectric Power Plant project is not very attractive in financial terms when compared to the alternatives studied, which require its registration as a CDM project for its execution and to obtain the financial support required by the sale of CERs. Sub-step 2d. Sensitivity analysis The indicators used for the sensitivity analysis would be the price of t CO2 in organised markets, the initial investment cost, the project cost, O&M cost, Regulatory costs, Regulatory+O&M cost, Price per Firm Installed Capacity, Price per energy and Load Factor. The IRR increase for the different scenarios is shown on the following graph and table:


Project IRR (%)

9,50%

9,60%

9,70%

9,80%

9,90%

10,00%

10,10%

$/t CO2

Project IRR (%) 9,60% 9,67% 9,74% 9,81% 9,88% 9,95% 10,02%

10 12 14 16 18 20 22

Sensitivity analysis of the Project IRR in the stage with carbon credits depending on the price of CERs

Project IRR (%)

7,00%

8,00%

9,00%

10,00%

11,00%

12,00%

Investment Cost (Million USD)

Project IRR (%) 7,40% 8,26% 9,25% 10,38% 11,70%

111,50 102,21 92,92 83,62 74,33

Sensitivity analysis of the Project IRR in the stage without carbon credits depending on Investment Cost


Project IRR (%)

9,10%

9,15%

9,20%

9,25%

9,30%

9,35%

O&M Cost(USD)

P ro jec t IRR (%) 9,19% 9,22% 9,25% 9,28% 9,31%

(+)20%(O&M Co s t)

(+)10%(O&M Co s t)

(O&M Co s t)(-)10%(O&M

Co s t)(-)20%(O&M

Co s t)

Sensitivity analysis of the Project IRR in the stage without carbon credits depending on O&M Cost

Project IRR (%)

7,20%

7,70%

8,20%

8,70%

9,20%

9,70%

10,20%

Regulatory Cost (USD)

P ro ject IRR (%) 8,51% 8,88% 9,25% 9,61% 9,98%

(+)20% (Regulato ry Co s t)

(+)10% (Regulato ry Co s t)

(Regulato ry Co s t)(-)10% (Regulato ry

Co s t)(-)20% (Regula to ry

Co s t)

Sensitivity analysis of the Project IRR in the stage without carbon credits depending on Regulatory Cost


Project IRR (%)

8,40%

8,60%

8,80%

9,00%

9,20%

9,40%

9,60%

9,80%

10,00%

10,20%

Regulatory+O&M Cost (USD)

Project IRR (%) 8,46% 8,85% 9,25% 9,64% 10,04%

(+) 20% (Regulatory+O&

M Cost)

(+) 10% (Regulatory+O&

M Cost)

(Regulatory + O&M Cost)

(-) 10% (Regulatory+O&

M Cost)

(-) 20% (Regulatory+O&

M Cost)

Sensitivity analysis of the Project IRR in the stage without carbon credits depending on Regulatory+O&M Cost

Project IRR (%)

9,00%

9,05%

9,10%

9,15%

9,20%

9,25%

9,30%

9,35%

9,40%

9,45%

Price per Firm Installed Capacity ($/kW-Month)

Project IRR (%) 9,08% 9,16% 9,25% 9,33% 9,42%

9,00 10,00 11,00 12,00 13,00

Sensitivity analysis of the Project IRR in the stage without carbon credits depending on Price per Firm Installed Capacity


Project IRR (%)

8,50%

8,65%

8,80%

8,95%

9,10%

9,25%

9,40%

9,55%

9,70%

9,85%

10,00%

Price per Energy ($/MWh)

Project IRR (%) 8,94% 9,09% 9,25% 9,40% 9,55%

90,00 95,00 100,00 105,00 110,00

Sensitivity analysis of the Project IRR in the stage without carbon credits depending on Price per Energy

Project IRR (%)

8,00%

8,50%

9,00%

9,50%

10,00%

10,50%

Load Factor (%)

Project IRR (%) 10,21% 9,70% 9,25% 8,64% 8,10%

55,00 52,00 49,41 46,00 43,00

Sensitivity analysis of the Project IRR in the stage without carbon credits depending on Load Capacity

Conclusion: This project can not be considered as the most attractive alternative in terms of costs, in accordance with the criteria established in Step 2.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 20 Step 4. Common practice analysis Sub-step 4a. Analyze other activities similar to the proposed project activity The main barrier for hydroelectric power plants in Panama is related to the fact that hydroelectric technology has not been the main technology used since 1984. Most of the installed capacities of the last few years used to cater for the growth in the demand for energy in the country are based on the use of fossil fuels, as shown on the following table:

Type

Year when it started operating

Capacity (MW)

Dolega Run-of-river Hydroelectric power plant 1937 3.1 Macho de Monte Run-of-river Hydroelectric power plant 1937 2.4 La Yeguada Run-of-river Hydroelectric power plant 1967 7.0

BLM 2 Steam Turbine 1969 40.0



Bayano Hydroelectric power plant with a reservoir 1976 260.0

La Estrella Run-of-river Hydroelectric power plant 1978 42.0

Los Valles Run-of-river Hydroelectric power plant 1979 48.0

Fortuna Hydroelectric power plant with a reservoir 1984 300.0

BLM 5 Gas Turbine 1988 33.0


COPESA Gas Turbine 1998 45.0


PanAm Combustion Engines 1999 96.0

Ciclo 3 Gas Turbines 2000 60.0

Estí Run-of-river Hydroelectric power plant 2003 120.0

Pacora Combustion Engines 2003 53.4

Hidro PANAMÁ Run-of-river Hydroelectric power plant 2006 0.54

Hidro CANDELA Run-of-river Hydroelectric power plant 2006 2.8

Pan G Gas Turbine 2007 40.0

Itsmus (Concepción) Run-of-river Hydroelectric power plant 2008 10.0

Canopo Autogenerator 2008 -

IDB Combustion Engines 2008 41.5

Tcaribe Combustion Engines 2008 48.2 Source: National Dispatch Centre of Panama: www.cnd. co.pa, “Energy Statistics 1970-2005” and unfccc Given the above list of electric generation plants can be seen that by analyzing the plants that have been built in the last 10 years, we notice that of the thirteen plants that have been constructed only four are hydrogenation plants, and all of them are run of river hydroelectric plants.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 21 Taking into account the hydraulic plants, we can see that since 1984 only four hydroelectric power plants have been built and all of them are run of river hydroelectric plants. The last plant built, Concepción, has been registered as CDM the 21 October, 2006 (Ref. 0597) and the other two plants built, Hidro Panamá and Hidro Candela are two small-scale run-of-river power plants, with a capacity of 2.8 and 0.54 MW, respectively, so that they can not be compared to the project activity with a total capacity of 28.84 MW. These three power plants are minihydraulic plants and benefit from the incentives of the Law No.45 (of August 4th, 2004). The fourth plant, Estí, is a large-scale hydroelectric power plant with a total capacity of 120 MW, capacity much greater than Barro Blanco. The other hydroelectric power plants existing in the country are not compatible with the project activity since their capacity is much greater (more than twice Barro Blanco capacity) and they have been built more than twenty years ago. Also, the refurbishment and upgrading of Macho de Monte and Dolega hydropower plants have been registered as CDM (Ref. 0133 y Ref. 0135 respectively), and their capacity is much lower. Sub-step 4b. Discuss any similar options that are occurring: Currently, the Panamanian electricity system has eleven hydroelectric power plants, seven of which were built before 1985. In addition, the following table shows the type, year when they started operating and the capacity of the hydraulic plants in Panamá:

Type

Year when it started operating

Capacity (MW)

Dolega Run-of-river Hydroelectric

power plant 1937 3.12

Macho de monte Run-of-river Hydroelectric


La Yeguada Run-of-river Hydroelectric


Bayano Hydroelectric power plant

with a reservoir 1976 260.0

La Estrella Run-of-river Hydroelectric


Los Valles Run-of-river Hydroelectric


Fortuna Hydroelectric power plant

with a reservoir 1984 300.0

Estí Run-of-river hydroelectric

power plant with a reservoir 2003 120.0

Hidro PANAMÁ Run-of-river Hydroelectric


Hidro CANDELA Run-of-river Hydroelectric


Itsmus (Concepción) Run-of-river Hydroelectric


Source: National Dispatch Centre of Panama: www.cnd. co.pa, Energy Statistics 1970-2005 and unfccc

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 22 In Panama there are only two hydroelectric power plants with reservoir, Bayano and Fortuna, which were constructed in 1976 and 1984, respectively, so 1984 is the year when the last hydroelectric power plant with a reservoir started its operations. The Fortuna capacity is 300 MW and Bayano capacity is 260 MW, capacities much greater than Barro Blanco capacity, 28.84 MW. Therefore, the existing hydroelectric power plants with reservoir in Panama are not comparable to the project activity due to their generating capacities are much higher and they were built more than twenty years ago. Therefore, the plants that will be studied are the last ones built since 2003. The last plant built, Concepción, is a run of river plant with a capacity of 10 MW, and it has been registered as CDM (Ref. 0597), so this project has required registration as CDM to overcome its low profitability problems. The others last two plants (Hidro Panama and Hidro Candela) are small-scale run-of-river plants with a capacity that is much lower than the project activity, as stated above. All of then have a capacity under 20 MW, so they benefit from the incentives of the Law No.45 (of August 4th, 2004), that increase their economic performance and hence thus makes it easier to investment from developers. So all these plants are not comparable with the project activity. The last one, Estí, is a run of river hydraulic plant with a total capacity of 120 MW, four times higher than Barro Blanco capacity. So, this plant is not comparable due to its higher capacity and technological differences. On the other hand, in accordance with the information obtained from the 2007 Expansion Plan, in the different scenarios analysed, there is a forecasted installation of between 239 and 397 MW of thermal capacity (versus the 329 MW of hydraulic energy) between the year 2008 and 2012, (see the 2007 Expansion Plan, Volume II, Chapter 9), whereby all projects will be run-of-river hydroelectric power plants, as stated above (See B.5, sub-section 1 B). Conclusion: The project activity, a hydraulic power plant with a medium capacity1, can not be considered as a common practice in the Panamanian Interconnected System. Therefore, the application of the additionality tool shows that the project activity is additional because of the following:

1 According to “Empresa de Trasmisión Eléctica, S.A. (ETESA)” classifies hydraulic plants in:

- Hydro power plants: more than 100 MW

- Medium capacity hydro power plants: 10-100 MW

- Small hydro power plant: 1-10 MW

- Mini hydro power plant: 101 kW-1 MW

- Micro hydro power plant: 1-100 KW

As indicated in the document "First national renewable energy on a small scale in Panama" (http://www.bun-ca.org/nuevo/index.php).


1. The project activity can not be compared to the baseline scenario, characterised by the construction of run-of-river hydroelectric power plants and thermal power plants.

2. There are no other similar activities considered as common practices in Panama.

3. The project activity has important barriers that are not present in the baseline scenario or which

are not as important.

4. These barriers can be partially overcome with the registration of the project as a CDM.

5. The monetisation of the sale of CERs is required to make the investment attractive.

6. As a consequence of the greater contribution to local sustainability and the mitigation of the climatic change, GENISA has opted for the development of the project activity in lieu of other options that were more attractive in economic terms.

In addition, it is necessary to highlight that the consideration of the CDM incentives in the decision-making process on the project’s development has been taken into account from the design phase. The Barro Blanco Hydroelectric Power Plant project has a “no objection” and a “complacency” letter awarded by the National Environmental Authority, dated May 20, 2008. Likewise, it is included in the portfolio of Panamanian projects eligible for the clean development mechanism drafted by the National Environmental Authority, dated June 06, 2008.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 24 B.6. Emission Reductions:

B.6.1. Explanation of methodological choices: The Barro Blanco hydroelectric power plant project will be integrated in the National Interconnected System of Panama. Said system is characterised by the generation of hydroelectric and thermal energy from diesel and bunker fuels, approximately 54 % and 36 %, respectively2. If we take into account this distribution, the commissioning of the Barro Blanco Hydroelectric Power Plant will shift electricity from the supply grid that would be supplied and generated by conventional power plants, including GHG producing thermal power plants. Therefore, the commissioning of the system entails lower CO2 emissions of the electric generation system set than those generated if the project activity proposed were not to be carried out. To quantify the reduction of emissions generated by the project activity, version 10 of the consolidated ACM0002 methodology has been applied. In accordance with the said methodology, the reduction of emissions is the difference between the baseline emissions (characterised by the absence of the project) and the project's emissions. For this type of projects that use a reservoir, the emissions derived from the project must be calculated. Therefore, the calculation for the reduction of emissions associated to the operation of the project activity only considers the baseline emissions and CH4 emissions derived from the plant’s reservoir. The baseline emissions include only CO2 emissions from electricity generation in fossil fuel power plants that are displaced due to the project activity. The baseline emissions are calculated as follows:

BEy= EGPJ,y EF grid,CM, y [Equation 1]

Where: - BEy= Baseline emissions in year y (tCO2/yr). - EGPJ,y= Quantity of net electricity generation that is produced and fed into the grid as result of

the implementation of the CDM project activity in year y (MWh/yr). - EFgrid,CM,y = Combined margin CO2 emission factor for project electricity system in year y

(tCO2/MWh) Hence, their calculation of baseline emissions is carried out with a combined margin emission factor, resulting from the weighting of the two factors calculated before:

• operating margin CO2 emission factor: shows the emissions avoided as a consequence of the electrical energy previously transferred to the system by thermal power plants and which is shifted after the commissioning of the new plant.

• build margin CO2 emission factor: introduces the calculation of GHG emissions avoided as a

result of the effects of increasing the capacity by adding plants to the system.

2 Own source, with the data provided by the National Dispatch Centre

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 25 Only the grid power plants have been included in the calculation of the operating margin and build margin emission factor. The National Dispatch Centre is dependant on the non-profit company Empresa de Transmisión Eléctrica, S.A. (ETESA), which provides the data required to calculate the last two emission factors. Most of the data is available in their Web page. The following information has been gathered from this source and other additional sources:

BASIC INFORMATION FOR THE CALCULATION OF THE BASELI NE Data Source

Fuel emission factor 2006 IPCC Guidelines for National Greenhouse Gas Inventories. Volume 2.

Plant Heat Rate National Dispatch Centre (NDC) Hourly electricity generated by the whole system during the year 2007

NDC

Total electricity generated by each plant during the year 2007

NDC

Type of fuel used in each plant NDC The method selected to calculate the operating margin emission factor is the Simple Adjusted Method, i.e., “option B”, for the calculation of the emission factor of the operating margin of the “Tool to calculate the emission factor for an electricity system”, version 02. The Simple Adjusted Method provides a formula for the calculation of the emission factor, taking into account the hourly generation of the system and the % generation provided by the low-cost/must-run power plants. The operating margin emission factor can be calculated:

- Calculation ex-ante: for grid power plants calculated from the average value obtained for the past three years for which data are available, without the need for monitoring or its recalculation in the credit period. - Calculation ex-post: calculated for one year, being monitored and recalculated for the remaining years of the crediting period.

In this case the calculation ex-post has been selected for calculating the operation margin emission factor, so it will be recalculated annually. “Option 2” has been chosen in the build margin emission factor as the tool. Therefore, it must be updated annually with an ex-post approach during the first crediting period, while the factor will be calculated with an ex-ante approach during the following crediting periods. In accordance with version 02 of the “Tool to calculate the emission factor for an electricity system”, the baseline emission factor (EF grid,CM,y) is calculated with the weighted mean of the operating margin emission factor (EFgrid,OM,y) and the build margin emission factor (EFgrid,BM,y). The weighting factors selected are identical for both factors (wOM=wBM=0.5). The values of these factors would be 0.25 for WOM and 0.75 for WBM for the second and third crediting periods.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 26 A detailed description of the methodological options selected for the calculation of these factors is shown below. a) Calculation of the operating margin emission factor (EFgrid,OM,y ): Simple Adjusted Method This option of the “Tool to calculate the emission factor for an electricity system” is applicable to electricity systems, where % of the mean generation during a period of five years for low-cost/must-run plants exceeds 50% of the total, as is the case of the Panamanian System. The main difference with the simple method lies in the fact that the simple adjusted method takes into account this type of plants, differentiating them in the calculation of the emission factor from the rest of plants. In the case of Panama, the simple method can not be used, since this type of plants has represented more than 50% during the last five years (data from the National Dispatch Centre), as shown on the following table:

Year % Low-cost/ Must-run 2003 48.8 2004 63.6 2005 63.4 2006 59.1 2007 57.1

Average 58.4 The plants registered as CDM project activities have been taken into account for the calculation of the operating margin emission factor, as established in the Tool. Therefore, the procedure followed for the calculation of the operating margin includes the following stages:

1. The option of the tool based on the performance of the different power plants in the Panamanian Interconnected System (option A2) has been chosen for the calculation of the emission factor of each plant with the following equation:

yimCOmym

yimCOymEL EFrateHeat

EFEF ,,,

,

,,,,, 2

26,3

×==η

[Equation 2]

Where:

- EF EL,m,y is the emission factor of plant m, in t CO2/MWh. - η m,y is the mean efficiency of plant m in year y (ratio). - Heat ratem is the inverse efficiency of the plant m (GJ/MWh)3. - EF CO2,m,i,y (t CO2/GJ) provides the quantity of CO2 emitted by plant m for every GJ fuel

used4 during year y.

3 The values of all operating plants have been downloaded from Web page of the Panamanian National Dispatch Centre (www.cnd.com.pa) in BTU/KWh units and with a change in units it has been transformed to GJ/MWh to include it in this equation.


2. The value of λy must be calculated before calculating the operating margin emission factor with the following equation:

yearper hours8760

yyear in margin on the are sourcesrun -cost/must-low hours ofNumber (%)yλ =

[Equation 3]

The steps required to calculate λy are: � Step i: The total hourly generation data of the year are presented, from high to low, in comparison

to the total 8,760 hours of the year.

� Step ii: Calculation of the total annual generation of low-cost/must-run plants (∑k

ykEG , ).

� Step iii: Draw a horizontal line that crosses the line represented, so that the area under the curve

represents the total generation of low-cost/must-run plants (∑k

ykEG , ).

� Step iv: Determine value λy, taking into account that λy is calculated as X/8760, where X represents the hours on the right of the point of intersection.

3. The next step involves the calculation of the quantity of carbon dioxide emissions produced by energy unit generated by the system. The said emission factor (EF grid,OM-adj,y) is obtained with the following equation:

∑

∑

∑

∑

− ×+×−=k

yk

kykELyk

y

jym

jymELym

yyadjOMgrid EG

EFEG

EG

EFEGEF

,

,,,

,

,,,

,, )1( λλ

[Equation 4]

Where:

- yadjOMgridEF ,, − is the simple adjusted operating margin CO2 emission factor in year y

(tCO2/MWh). - ymEG , , ykEG , is the net quantity of electricity generated and delivered to the grid by

plant m or k. during year y in MWh, where k are the low-cost/must-run plants and m the rest of plants.

4 In this case, the values shown on table 1.4 of page 1.23 of the document “2006 IPPC Guidelines for National Greenhouse Gas Inventories” have been used, with the factor applied to each plant, in accordance with the fuel used, using the lowest value for the 95% confidence interval, as established by the tool.


- ymELEF ,, and ykELEF ,, is the emission factor of plant m or k, during year y and in t

CO2/MWh. This factor is calculated with equation No. 2. After having the data corresponding to year 2007 from the National Dispatch Centre of Panama and applying the previous steps, the following value has been obtained for the operating margin emission factor:

EFgrid,OM,2007 = 0.815 t CO2/MWh Annex 3 includes more information about the calculations that have been carried out. b) Build margin emission factor (EFgrid,BM,y ) Option 2 of the “Tool to calculate the emission factor for an electricity system”, version 02, has been selected for the calculation of the build margin calculation factor, which states that, for the first certification period, the build margin emission factor must be updated annually (ex-post) before the year of the actual generation and reduction of emissions of the project. The set of plants used for the calculation of the build margin factor is made up of the alternative that represents the greatest quantity of energy between the five plants that have been built recently, which generated 20% of the system’s energy5. Both cases have not included the plants registered as CDM project activities, as established in the tool. Once the option of the number of plants to use is selected, the build margin emission factor will be calculated with the following equation:

∑

∑=

mym

miymELym

yBMgrid EG

EFEG

EF,

,,,,

,, [Equation 5]

Where: - EFEL,m,y is the emission factor of plant m in kgCO2/MWh, of the set of plants selected for

the calculation of the build margin emission factor and it is obtained from equation 2. - EGm,y is the quantity of energy generated by plant m during year y. This calculation uses

the annual plant generation information, provided by the NDC. The equation has been applied with the same units described for the calculation of the operating margin emission factor.

5 While the PDD was being drafted, the five plants built most recently generated less than 20% of the system’s energy, so that, to carry out the ex-ante calculations of the build margin emission factor, the set of plants that have been built recently and generated 20% of the system’s energy during 2007 was selected for the calculations.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 29 For the year 2007, following the previous steps, we have obtained the following build margin emission factor:

EFgrid,BM,2007 = 0.397 tCO2/MWh Annex 3 includes more information about the calculations that have been carried out. c) Combined margin emission factor (EFgrid,CM,y ) The baseline emission factor (EFy) is obtained with the combination of the operating and build margin emission factors:

yBMgridBMyOMgridOMyCMgrid EFwEFwEF ,,,,,. += [Equation 6]

Where:

- EFgrid,CM,y is the baseline emission factor during year y. - WOM is the weight of the operating margin emission factor. A value of 0.5 has been used.

The value for the second and third crediting period is 0.25. - EFgrid,OM,y is obtained in Equation 4. - WBM is the weight of the build margin emission factor. A value of 0.5 has been used. The

value for the second and third crediting period is 0.75. - EFgrid,BM,y is obtained in Equation 5.

The following global emission factor is obtained with the combination of the aforesaid factors for 2007:

EF grid, CM,2007 = 0.606 tCO2/MWh In accordance with the consolidated ACM0002 methodology, version 10, the calculation of the project activity emissions during the construction of power plants that require the construction of a new reservoir will not be considered as almost non-existent, as in the case of the Barro Blanco Hydroelectric Power Plant. The methodology distinguishes between plants with a power density between 4 and 10 W/m2, or greater than 10 W/m2. The methodology offers the following equation to calculate the power density of the project activity:

BLPJ

BLPJ

AA

CapCapPD

−−

= [Equation 7]


Where:

- PD is the power density of the project activity in W/m2. - CapPJ is the installed capacity of the hydroelectric power plant after the implementation

of the project activity in W. - CapBL is the installed capacity of the hydroelectric power plant before the

implementation of the project activity in W. In this case, the value is zero, since we are dealing with the construction of a new plant.

- APJ is the reservoir area before the implementation of the project activity in m2. - ABL is the reservoir area after the implementation of the project activity in m2. In this

case, the value is zero since we are dealing with the construction of a new plant. The following is obtained when we apply the values of the project activity:

PD = 11.14 W/m2 Therefore, if we take into account this value, the second case should take into account, where the power density is greater than 10 W/m2. In this case, the methodology indicates that the project activity is zero, so:

PE y = 0 t CO2/year


B.6.2. Data and parameters that are available at validation: Data/Parameter: Emission Factors Data Unit: kg CO2/TJ Description: Emission factor of the plants, in accordance with the fuel used for the

generation of energy. Source of data used: Table 1.4 on page 1.23 of the document “2006 IPPC Guidelines for National

Greenhouse Gas Inventories”. Volume 2, taking the lowest value for a 95% confidence interval.

Value applied: See annex 3. Justification of the choice of data or description of measurement methods and procedures actually applied:

Document “Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual” does not provide specific emission factors per thermal energy unit for Panama, so that the general values stated in Volume 2 of the “2006 IPPC Guidelines for National Greenhouse Gas Inventories” have been used.

Any comment: These values will be revised when relevant bibliography is available.

Data/Parameter: Installed capacity of the Hydroelectric Power Plant of Barro Blanco (CapPJ) Data Unit: MW /W Description: - Source of data used: Generadora del Istmo, S.A. (GENISA) Value applied: 28.84 MW /28,840,000 W Justification of the choice of data or description of measurement methods and procedures actually applied:

-

Any comment: -

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 32 Data/Parameter: EFRes Data Unit: Kg CO2e/MWh Description: Default emission factor for the emissions of reservoirs Source of data used: - Value applied: 90 Justification of the choice of data or description of measurement methods and procedures actually applied:

In accordance with EB32, the default value is 90 Kg CO2e/MWh.

Any comment: This value will be revised when a new value is determined and indicated. Data/Parameter: APJ Data Unit: m2 Description: Reservoir area after the implementation of the project when it is full Source of data used: Generadora del Istmo, S.A. (GENISA) Value applied: 285,670 Justification of the choice of data or description of measurement methods and procedures actually applied:

-

Any comment: -


B.6.3 Ex-ante calculations of emission reductions: The ex-ante calculations for the reduction of emissions are the following:

yyy PEBEER −= [Equation 8]

Where:

- ERy is the reduction of emissions (tCO2e) during year y - BEy are the baseline emissions during year y - PEy are the project emissions during year y

Therefore, the calculation of the reduction of emissions only takes into account the emissions of the baseline and the project activity emissions. These calculations will be carried out in accordance with the methodology stated in section B.6.1.

B.6.4 Summary of the ex-ante estimation of emission reductions: Based on the data we already know, we forecast that the following reduction in emissions will be attained during the three crediting periods of the project activity:

Year Estimation of project

activity emissions (tonnes of CO2e)

Estimation of baseline

emission(tonnes of CO2e)

Estimation of leakages (tonnes

of CO2e)

Estimation of overall emission recutions (tonnes

of CO2e) 2013 0 75,633 0 75,633 2014 0 75,633 0 75,633 2015 0 75,633 0 75,633 2016 0 75,633 0 75,633 2017 0 75,633 0 75,633 2018 0 75,633 0 75,633 2019 0 75,633 0 75,633 2020 0 62,585 0 62,585 2021 0 62,585 0 62,585 2022 0 62,585 0 62,585 2023 0 62,585 0 62,585 2024 0 62,585 0 62,585 2025 0 62,585 0 62,585 2026 0 62,585 0 62,585 2027 0 62,585 0 62,585 2028 0 62,585 0 62,585 2029 0 62,585 0 62,585 2030 0 62,585 0 62,585


Year Estimation of project

activity emissions (tonnes of CO2e)

Estimation of baseline

emission(tonnes of CO2e)

Estimation of leakages (tonnes

of CO2e)

Estimation of overall emission recutions (tonnes

of CO2e) 2031 0 62,585 0 62,585 2032 0 62,585 0 62,585 2033 0 62,585 0 62,585

B.7 Application of the monitoring methodology and description of the monitoring plan: The project uses the approved ACM0002 monitoring methodology “Consolidated baseline and monitoring methodology for grid- connected electricity generation from renewable sources”, version 10, In the case of the Barro Blanco Hydroelectric Power Plant, this document establishes the need for monitoring the following data:

1. Electricity generated by the project’s activity

2. Data required to recalculate the operating margin emission factor

3. Data required to recalculate the build margin emission factor

4. Data required to recalculate the emissions of the project activity All data required for the verification and issue of CERs will be stored in electronic format during at least two years after the end of the crediting period or the last issue of CERs for the project.


B.7.1 Data and parameters monitored: Data/Parameter: Quantity of electricity generated by the Hydroelectric Power Plant of Barro

Blanco Data Unit: kWh Description: Net electricity generated by the Hydroelectric Power Plant of Barro Blanco

during each hour (Electricity generated less electricity consumptions) Source of data to be used:

It will be measured every hour by GENISA.

Value of data applied with the purpose of calculating expected emission reductions in section B.5

124,830,000 kWh/ year.

Description of the measurement methods and procedures to be applied:

The quantity of energy generated will be monitored with on-site measurement equipment located in the sub-station (where the energy generated is transferred to the Panamanian Interconnected System). This system is known as the Commercial Measurement System (CMS) and is composed of transformation and measurement equipment and devices, communication links and protocol. It has a main measurement unit and a backup measurement unit and GENISA is responsible for supplying, installing and maintaining the said units. The CMS of the Barro Blanco Hydroelectric Power Plant will be revised every year after its certification or when the National Dispatch Centre (NDC) requests such certification. The communication between measurement units and the NDC will be through the current channel and protocol established in the “Methodology for the Verification of the CMS”. The communication between the measurement units and the NDC is direct, with a read access. These measurement units are bidirectional, with a precision of 0.2% or better, storing the data in a non-volatile memory. The measurement units must obtain the approval of the NDC before their implementation. The hourly data provided by GENISA (measurements taken every 15 minutes) will be recorded once a month on a spreadsheet. In addition, the data will also be provided by the National Dispatch Centre of Panama, which will be downloaded annually and recorded on a different spreadsheet.

QA/QC procedures to be applied:

Internal and external calibrations carried out by the Plant’s measuring units and their frequency will be described in the “NDC Dispatch and Hourly Planning Manual” and those requested by the Panamanian Electricity Transmission Company (ETESA). In addition, there will be weekly, monthly and annual records and reports of the results derived from the said calibrations, both in paper and digital format, within the databases of GENISA. The measurement data registered by the personnel of GENISA will be compared with the data provided by the National Dispatch Centre to detect possible errors.

Any comment: -

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 36 Data/Parameter: Electricity generated by each plant (j, k, m) of the National Interconnected

System of Panama. Data Unit: MWh Description: Net electricity generated by each plant (j, k, m) of the National Interconnected

System of Panama. (Electricity generated less electricity consumptions) Source of data to be used:

National Dispatch Centre


The data obtained by the National Dispatch Centre for the year 2007 has been used.


The quantity of energy generated by the plants during one year will be registered in the web page of the National Dispatch Centre of Panama or requested to them. This system will be accessed or request once a year to download all data, which will be recorded on a spreadsheet.


The data of the total generation of the system corresponding to each plant will be downloaded. The sum of all individual data will be checked, in order to ensure that it is similar to the total system generation data. In case there are differences between the two types of data, the reasons and sources will be analysed and errors will be corrected.

Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 37 Data/Parameter: Hourly electricity generated by the National Interconnected System of Panama. Data Unit: MWh Description: Electricity generated by the National Interconnected System of Panama in hourly

terms. Source of data to be used:

National Dispatch Centre


The hourly data obtained in the web page of the National Dispatch Centre of Panama for the year 2007 has been used (Paragraph: Statistics/ System behaviour)


The quantity of energy generated by the plants during one year will be registered in the web page of the National Dispatch Centre of Panama. This system will be accessed once a year to download all data, which will be recorded on a spreadsheet.


Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 38 Data/Parameter: Plants considered for the calculation of the build margin emission Factor (m). Data Unit: Text Description: Identification of the plants for the calculation of the build margin emission

Factor. Source of data to be used:

National Dispatch Centre of Panama


The data has been provided by National Dispatch Centre of Panama for the ex-ante calculations (see Annex 3).


The information about new plants built and those commissioned in the National Interconnected System of Panama will be gathered each year. The data will be registered in an electronic spreadsheet.


Comparison of the plants used in previous years to detect potential errors. The differences found will be analysed one by one.

Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 39 Data/Parameter: Annual electricity generated by low-cost/must-run plants and all other plants. Data Unit: MWh Description: Annual electricity generated by low-cost/must-run plants and all other plants. Source of data to be used:



The sum of the annual generation of all low-cost/must-run plants and all other plants has been carried out, obtaining the following values: low-cost/must-run (MWh) 3.573.381,2 Thermal (MWh) 2.495.989,8


This piece of data is calculated automatically by the spreadsheet designed to monitor the project. The addition of new plants and their typology must be taken into account each year.


Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 40 Data/Parameter: Heat Rate Data Unit: BTU/kWh (GJ/MWh) Description: Heat Rate of the different plants connected to the National Interconnected

System of Panama. Source of data to be used:



See annex 3.


This information is downloaded from the Web page of the National Dispatch Centre of Panama in BTU/kWh.


-

Any comment: The data will be updated in accordance with the latest information facilitated by the NDC.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 41 Data/Parameter: Emission factor of each plant (EFEl,m,y) Data Unit: tCO2/MWh Description: Emission factor of each plant, in accordance with the type and characteristics of

the fuel used to obtain energy. Source of data to be used:

-


See annex 3.


Calculated once a year with the application of Equation 2, section B.6.1.


-

Any comment: The data will be updated in accordance with the latest information facilitated by the NDC.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 42 Data/Parameter: Operating margin emission factor (EFgrid,adj-OM,y) Data Unit: t CO2/MWh Description: Operating margin emission factor Source of data to be used:

-


0.815


Calculated once a year, as specified in section B.6.1.


-

Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 43 Data/Parameter: Build margin emission factor (EFgrid,BM,y) Data Unit: t CO2/MWh Description: Build margin emission factor Source of data to be used:

-


0.397




-

Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 44 Data/Parameter: Baseline emission factor (EFgrid,CM,y) Data Unit: t CO2/MWh Description: Baseline emission factor Source of data to be used:

-


0.606




-

Any comment: -

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 45 Data/Parameter: Annual generation of the Hydroelectric Power Plant of Barro Blanco (TEGy) Data Unit: MWh/year Description: Annual electricity generated by the plant, including that supplied to the grid and

that used in self-consumption. Source of data to be used:

It will be measured every hour by GENISA.


124.830 MWh/ year


The quantity of energy generated will be monitored with on-site measurement equipment located in the sub-station (where the energy generated is transferred to the Panamanian Interconnected System). This system is known as the Commercial Measurement System (CMS) and is composed of transformation and measurement equipment and devices, communication links and protocol. It has a main measurement unit and a backup measurement unit and GENISA is responsible for supplying, installing and maintaining the said units. The CMS of the Barro Blanco Hydroelectric Power Plant will be revised every year after its certification or when the National Dispatch Centre (NDC) requests such certification. The communication between measurement units and the NDC will be through the current channel and protocol established in the “Methodology for the Verification of the CMS”. The communication between the measurement units and the NDC is direct, with a read access. These measurement units are bidirectional, with a precision of 0.2% or better, storing the data in a non-volatile memory. The measurement units must obtain the approval of the NDC before their implementation. The hourly data provided by GENISA (measurements taken every 15 minutes) will be recorded once a month on a spreadsheet. In addition, the data will also be provided by the National Dispatch Centre of Panama, which will be downloaded annually and recorded on a different spreadsheet.


Internal and external calibrations carried out by the Plant’s measuring units and their frequency will be described in the “NDC Dispatch and Hourly Planning Manual” and those requested by the Panamanian Electricity Transmission Company (ETESA). In addition, there will be weekly, monthly and annual records and reports of the results derived from the said calibrations, both in paper and digital format, within the databases of GENISA. The measurement data registered by the personnel of GENISA will be compared with the data provided by the National Dispatch Centre to detect possible errors.

Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 46 Data/Parameter: Investments directly related to obtaining CERs Data Unit: USD (PAB) Description: USD (PAB) destined to social projects in relation to the total USD (PAB)

obtained by CERs generated by the project. Source of data to be used: - Value of data applied with the purpose of calculating expected emission reductions in section B.5

-


Accounted annually, in accordance with the records associated to the investments made.


-

Any comment: GENISA will commit to allocate 20% of the funds obtained, in accordance with the negotiation of the certified carbon emission reductions (CER), for the creation of the annual community support fund, as stated in the resolution of the Environmental Impact Study, dated May 9, 2008.

Data/Parameter: Ecological flow Data Unit: m3/s Description: Ecological flow as the minimum water necessary to preserve the ecological

values in the river Source of data to be used: “Basic desing Barro Blanco Hydraulic power plant” Value of data applied with the purpose of calculating expected emission reductions in section B.5

4.96 m3/s


It is carried out a monitoring of the behavior of water for environmental flow performance as resolutions AG-0127-2006 and AG-0522-2006.


-

Any comment: The ecological flow is an annual average of 4.96 m3/s and it will vary depending on the month of the year. It can be concluded that it use to be 2 m3/ s in dry season and 5 m3 /s in winter, giving an annual average of 4.96 m3/s.


B.7.2 Description of the monitoring plan:

The monitoring plan will be implemented through a series of monitoring activities, in order to guarantee that all aspects related to greenhouse gas emission reductions of the project activity projected are controlled and reported. Therefore, it is necessary to monitor the project to guarantee the performance levels, in accordance with the project design and the real attainment of Certified Emission Reductions (CER) calculated. In this sense, a monitoring plan has been designed with the purpose of guaranteeing that the project activity is correctly organised from the start, in terms of data gathering and maintenance, as required to obtain realistic GHG emission data. Therefore, the Supervisor of the project activity maintenance tasks will be defined prior to the start of the crediting period, who shall assume the development and execution of the monitoring plan. This Supervisor (Project Manager) will receive the training necessary to perform his functions. To obtain the measurements required, the project activity will be supervised throughout the crediting period with the measurement systems that will provide the official flow, energy and power measures, as explained in the previous section. The Barro Blanco Hydroelectric Power Plant will transfer its energy to the National Interconnected System of Panama in the Veladero sub-station, which will be run by ETESA; precisely where the commercial frontier will be installed. The commercial transactions between the plant and the SIN will be calculated with the measurements taken by the Commercial Measurement System (CMS) and in accordance with the "Dispatch and Hourly Planning Manual" of the National Dispatch Centre. The plant will be responsible for the maintenance of its system, in accordance with the "Operation and Maintenance Manual" and the "Information Exchange Regulations". The measuring units installed (main and backup unit) are bidirectional, with a minimum precision of 0.2% for the power rating used. The information is stored in periods of at least 15 minutes, with a minimum memory log of 45 days. Approval by the NDC is required prior to the implementation of the plant’s CMS. Internal and external calibrations forecasted with the Plant’s measuring units and their frequency will be described in the “Dispatch and Hourly Planning Manual” of the National Dispatch Centre (NDC) or those requested by the Panamanian Electricity Transmission Company (ETESA). Therefore, the plant’s CMS will be revised each year after its certification or when the NDC requests it. In addition, there will be weekly, monthly and annual records and reports of the results derived from the said calibrations, both in paper and digital format, within the databases of GENISA. The SCADA system is located in the installations of the NDC in the city of Panama and it centralises the Supervision, Control and Acquisition of the Data gathered by each sub-station’s remote terminal unit (RTU), so that this will be the system receiving the generation data directly from the Barro Blanco Hydroelectric Power Plant, with the purpose of providing the operation’s information in real time. In accordance with the “Dispatch and Hourly Planning Manual” and for dispatch and weekly programming purposes, the plant will report its hourly and weekly availability to the NDC with a week's advance (before 11:00h of the last working day of a calendar week), including all other information related to the generation offer, as required to program the dispatch operations. In addition, every day

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 48 before 11:00h, the plant will submit the information required for the pre-dispatch of the next day to the NDC; called the “daily dispatch” information.

Likewise, the Plant’s Operation Reports developed by the Operation and Maintenance Department will be used as a reference and be made available for any inspections carried out during the crediting period, including the following aspects:

• Electricity production

• Power

• Demand

• Load factor

• Equivalent hours

The Project Manager will be responsible for the implementation and update of all data and parameters monitored, included in the previous section, ensuring that the emission reduction calculations obtained are realistic and based on evidence. Likewise, he will be in contact with the person responsible for the execution of the Environmental Handling Plant of the Barro Blanco Hydroelectric Power Plant, with the purpose of guaranteeing the execution of the project and that it contributes to the social and environmental development of the region. A set of spreadsheets has been designed to automate the process for the calculation of the emission factors with the purpose of facilitating the calculations required in the follow-up and monitoring tasks, which will be analysed in Annex 4 of this document. The successive calculation of the reduction of emissions in these spreadsheets will be summarised in monitoring and follow-up reports that will be subject to third-party verification. GENISA aims to implement a Quality Improvement System certified by the ISO 9001 standard to ensure the correct collection and archiving of all the data involved in the monitoring plan and the employee training. So, the general operation of the plant of Barro Blanco and the Monitoring Plan for the reduction of GHG emissions will be integrated within the System, being subject to an audit by a third part that will guarantee its correct implementation. The developer will develop a specific procedure within the framework of ISO 9001, reflecting the implementation of the Monitoring Plan, which specify the responsibility, means, frequencies and tasks to be developed in terms of data collection, calculations and file records of all monitored parameters, and taking into account the procedures QA / QC specified in the PDD for each of them.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 49 B.8 Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies): Ending date of the baseline study applied and the monitoring methodology:

November 2, 2009 Name of the responsible person(s) / entity(ies):

David Llorente Ónega, NOVOTEC CONSULTORES S.A. Environment Department – PA and Utilities C/ Campezo, 1 Edificio 4, Planta 1 28022 Madrid Spain Tel.: +34 91 210 79 00 Fax : +34 91 210 79 03 E-mail: [email protected] Raquel García Alonso, NOVOTEC CONSULTORES S.A. Environment Department – PA and Utilities C/ Campezo, 1 Edificio 4, Planta 1 28022 Madrid Spain Tel.: +34 91 210 79 00 Fax : +34 91 210 79 03 E-mail: [email protected]

NOVOTEC CONSULTORES S.A. is not a participant of the project.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 50 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: June 1, 2009

C.1.2. Expected operational lifetime of the project activity: 50 years C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period: C.2.1.1. Starting date of the first crediting period: January 1, 2013 C.2.1.2. Length of the first crediting period: 7 years (renewable) C.2.2. Fixed crediting period: Not selected. C.2.2.1. Starting date: C.2.2.2. Length :

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 51 SECTION D. Environmental impacts D.1. Documentation of the analysis of environmental impacts, including transboundary impacts: GENISA, Generadora del Istmo S.A. requested Proyectos y Estudios Ambientales del Istmo S.A. the “Study of the Environmental Impact for the construction and operation of the Barro Blanco Hydroelectric Power Plant”, which has been used to define the prevention and mitigation measures, as well as the projects required to control, compensate and prevent the negative impacts and effects that the project generates, in addition to maximising the positive impacts derived from the construction of the Barro Blanco Hydroelectric Power Plant. In addition, it is aimed at guaranteeing the correct use of resources and minimise (or avoid, when possible) their negative impact. The Environmental Impact Study provides the initial description of the project and a descriptive analysis of the natural (physical and biological) and socio-economic environment. Subsequently, the Environmental Handling Plan is implemented, which shows the different actions that must be started to reduce the most important negative environmental aspects and increase the effectiveness of positive effects. The Environmental Handling Plan (EHP) includes the following contents:

� Description of measures � Entity responsible for its execution � Monitoring � Execution schedule � Citizen Participation Plan � Risk Prevention Plan � Fauna Rescue and Relocation Plan � Environmental Education Plan � Contingency Plan � Post-operational Environmental Recovery Plan � Abandon Plan � Environmental Management Cost

This plan is basically composed of the description of measures, including the following contents: Activity, Action, Environmental Impact, Mitigation Measures and Description of Measures. These activities are described for the planning phase, construction phase and project operation phase, defining the actions for the following activities: Actions defined for the following activities

Drafting studies, designs and final plans Acquisition of plots affected and found within the main works site Assessment and protection of archaeological findings in the project area

Planning phase

Ecological compensation payments and use of water Temporary facilities Work site paths

Construction phase

Construction of the roller-compacted concrete dam

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 52 Actions defined for the following activities

Construction of the engine house and distribution yard Construction of 12.6 km of transmission lines of the distribution yard to the future national electricity transmission system Cleaning 190 Hectares from the banks of the Tabasara River from the dam to an upstream distance of 6.7 km Regulation of the flows of the Tabasara River

Operating phase Dispatch of electrical energy to urban centres

The main negative impacts and, therefore, main mitigation measures take place during the construction phase, where the EHP will reduce the impacts on fluvial and terrestrial plant and animal life. On the contrary, the greatest positive impacts take place during the operating phase, highlighting the improvement in the conditions of plant and animal life, thanks to the increased monitoring and presence of ANAM in the area. The Environmental Impact Study has been approved by ANAM with the “Resolution of the Environmental Impact Study, Category III, No. IA 332-2008, May 9, 2008”. Said resolution includes other mitigation and compensation measures, in addition to those described in the EHP. These include the presentation of a Reforestation Plan for the river bank and reservoir, including the results of the aquatic fauna studies of the Tabasara River, presentation of the information gathered from the limnigraphic station, etc. Likewise, these measures specify the obligation to allocate 20% of the funds obtained, in accordance with the stipulations of the Environmental Impact Plan and the negotiation of certified carbon emission reductions (CER) for the annual community support fund, provided that these funds are obtained.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 53 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: In accordance with the abovementioned structure, the main impacts are described for the planning, construction and operating phase. The identification and assessment of each impact associated to each project stage is structured by the correlation between the project activities with the components and processes of the environment. During the planning phase, we can basically highlight the positive environmental impacts, since different studies are carried out during this phase, defining the process and including the allocation of ecological compensation and water usage funds, in order to foster and strengthen the presence of the ANAM in the area. On the other hand, special attention is paid to the measures that must be adopted in case of detecting and protecting cultural heritage that has not been detected before. On the contrary, the most relevant negative impacts on the project take place during the construction phase, whereby corresponding corrective measures have been established. These include reversible impacts, such as the generation of dust or noise by the works; impacts that will cease when the project phase ends. During this phase, the EHP has proposed the installation of warning signs to indicate the execution of the works and prevent high levels of noise. As regards dust, a water irrigation program has been established. On the other hand, in relation to the non-reversible impacts on the natural environment, we can highlight those on the vegetation, floor and fauna. The loss of the plant cover and tree species on the banks of the river can lead to the instability of embankments, so that a Monitoring Plan will be in place to monitor their stability and revegetation. As regards the effects of the decrease in the space available on native fauna, a rescue plan will be carried out, which will count, identify and relocate the animals. An expert will be hired by the project Developer for such purposes. Finally, different measures will be established to mitigate the negative impacts on the landscape, such as the placement of plant barriers in strategic points or painting buildings with colours that match those of the landscape. The positive impacts will be highlighted during the operating phases, provided that they comply with the project’s specifications. In general, we must mention that the quality of life of the inhabitants will increase, as a result of the number of jobs available and the improvement in the conditions of the quality of water and river banks, which will provide new leisure areas to the community. On the other hand, there will be a greater knowledge and monitoring of the natural resources in the project’s environment, which will allow for their adequate management. Certain negative impacts can be present during this phase, such as the potential start of eutrophication processes. Therefore, a Monitoring Plan of the Chemical Quality of Water has been established to prevent such processes. Likewise, the fluvial plant and animal life can be affected during the operating phases, so that the Developer has established a monitoring plan of the fish diversity with periodical reports drafted by an expert. As mentioned above, the set of measures used to prevent and mitigate the negative project impacts and improve the effectiveness of the positive impacts are included in the Environmental Handling Plan. The EHP has been drafted to guarantee the environmental sustainability of the project and the environment where it will be located and operated. The total cost of environmental management described in the EHP is as follows:


COST OF ENVIRONMENTAL MANAGEMENT Punctual costs Planning phase 37,706.50 Construction phase 381,800.00 TOTAL 399,535.50 Periodical costs Operating phase 93,900.65

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 55 SECTION E. Stakeholders’ comments

E.1. Brief description how comments by local stakeholders have been invited and compiled: In accordance with article No. 29 of Chapter II of the Executive Decree No. 209 of the year 2006, the developer has incorporated the participation of citizens from an early project phase, with the purpose of providing enough information to the citizen communities in the project area, so that they can understand the scope of the project and give their opinion. The following work procedure was established for such purposes:

1. An initial research process was carried out with the official data recorded to determine the communities located within the study area and their main characteristics. 13 communities were detected, which are affected to a greater or lesser extent by the project.

2. An analysis of the access alternatives was carried out to plan and program the work schedule and visit the communities affected. All communities affected were visited during the previous phase, starting by those that were farthest from the project area. The main objective was to gain a greater rapport with the leaders of each Community. A general explanation of the development of the hydroelectric project and the importance of the development of the energy sector in the region of Chiriqui and the rest of the Republic of Panama was provided to the communities.

3. In parallel, surveys were performed per home in the different communities, using a representative sample. The purpose of the surveys was to obtain the perception of the inhabitants in the area about the commissioning of the Barro Blanco Hydroelectric Power Plant. Forms were designed to allow the persons surveyed to describe their living conditions and opinions about the project. All persons surveyed were invited to the informative meetings when the surveys were performed. The following surveys were performed by Community:

Communities No. of surveys Cerro Caballo 7 Cerro Venado 5 Cerro Viejo 4 Nancito 11 Pueblo Viejo de Abajo 4 Tabasara 10 Tabasara de Abajo 3 El Llano 4 Tolé 3 Bella Vista 3 Veladero 2 Piedra Pintada 1 San Miguel 1 TOTAL 58

In general, most of the persons surveyed are between the ages of 20 and 82. Men and women participated in the surveys, out of which 60% were in a relationship, 25% were married, 10% were single and the remaining 5% were widows or widowers.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 56 Experts in each study area were in charge of the execution of the informative meetings and surveys, including area staff with enough experience and skills to perform these activities. E.2. Summary of comments received: In relation to the acceptance of the project for the construction of the Barro Blanco Hydroelectric Power Plant, as shown in the initial surveys of August 14, 2007 during the preparation of the Environmental Impact Study (ESIA), in accordance with the data obtained from the 58 surveys performed, 50% of the persons surveyed were in favour and 50% against the project, obtaining the following results from the Community:

Communities No. of surveys For Against Cerro Caballo 7 5 2 Cerro Venado 5 4 1 Cerro Viejo 4 2 2 Nancito 11 4 7 Pueblo Viejo de Abajo 4 3 1 Tabasara 10 2 8 Tabasara de Abajo 3 1 2 El Llano 4 4 --- Tolé 3 3 --- Bella Vista 3 1 2 Veladero 2 --- 2 Piedra Pintada 1 --- 1 San Miguel 1 --- 1 TOTAL 58 29 29

In accordance with this information, we can see that the Communities with a highest level of rejection to the project are Tabasara and Nancito. The main displayed causes for the rejection or acceptance of the project are as follows:

Difficulties: � Their land will be expropriated � The environment will be harmed � They will have no place to go � They will have no land to work in � They will not be able to use the river

Benefits: � There will be new jobs for the community � The electricity charges will be cheaper � There will be more water � The standard of living of the inhabitants will be improved � New and better paths and roads will be built

Therefore, some of the inhabitants participating in the process associated the project to the social and environmental problems caused by other hydroelectric projects in Panama. Likewise, some of the

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 57 inhabitants considered that the project developer only wanted to throw them away from their homes and they changed their attitude after the developer and team of experts responsible for the process listened to them and clarified many of their doubts on the project. But the current position of the community is favourable, getting support for the project from local communities and local authorities. In this regard it is important to stress that following the community works being done since 2007 until now, the results of initial surveys dated August 14, 2007, are far from represent the views of the community today on the Barro Blanco project. It is highly relevant that many of the owners that in mid-2007 were opposed the Barro Blanco project have voluntarily sold their acres to GENISA. E.3. Report on how due account was taken of any comments received: In accordance with the conclusions obtained during the informative meetings and project acceptance surveys undertaken with the communities affected by the project, the company Generadora del Istmo S.A., GENISA, shall commit to the following:

- Development of an Informative Program that clarifies and explains the following:

o The developer will not prevent or put obstacles to the access to the Tabasara River to any person through the existing easements.

o The developer does not plan or intend to prevent the inhabitants from using the Tabasara River for fishing, leisure or circulation activities.

o The developer depends on the sustainable quality of the water resource for the operation of its own project. Therefore, it intends to create alliances with the communities so they can also benefit from the project.

o The project carried out by the developer can have access to international funds as a result in the reduction of contaminating gases, so that it shall commit with this document to allocate 20% of these funds for the development of the community.

o The developer shall acquire and pay the corresponding compensations to the plot owners in the reservoir area with legal agreements or contracts, whereby they shall pay for the use of their land.

o The developer shall pay the State contribution for the annual use of water resources, as required for the operation of the project.

o The developer shall promote community development projects that reduce the levels of poverty in the communities near the future hydroelectric power plant.

o The developer will give preference to the inhabitants of the communities near the project when hiring personnel.

o The developer shall promote the reproduction of fish in a laboratory with a renowned prestige to guarantee the existence of local fish species in the future reservoir.

o The developer shall make its best effort and negotiate the electricity rates with the authorities to gain a preferential charge for the populations of Tole.

- Development of an Environmental Education Plan, focused on technical training programs and

the spreading of good environmental practices, aimed at the inhabitants of the communities near the project in relation to ecological actions for the protection of the local hydrographical basin.


- Punctual economic aid for the projects on the following table:

Community Project Costa Rica- Panama Trips for the development of the CONADES Action Plan Donation to the Military Band of the Commercial School of Tole to repair their instruments Two ceiling fans for the Commercial School of Tole Donation for the dancing activities organised by the Family Parent’s Association of the Commercial School of Tole Electrical material and installation of electric light in the Elderly Home and repair of the illuminated sign

Tolé

Material for the improvement of installations in the Police Sub-station of Tole 8,100 cubic feet of wood for the construction of nine wooden houses for families in need

Bella Vista Formica panel and simple desk for the C.E.B.G. School in Bella Vista Softball uniform for the H.R. Ismael Neftalí Alvarado and a box of balls

Cerro Viejo Donation for the inauguration toast of the infrastructure of the Cerro Viejo County

- GENISA has worked since the beginning of this process, together with the District Authorities

Ngäbe Bugle. As proof of this is presented are the next documentation:

o Letter of No Objection ESIA Project Barro Blanco, dated December 22, 2007: This letter authenticating the completion of the ESIA in the area of Ngäbe Bugle.

o Resolution DIEORA IA-332-2008 Approval of the Draft ESIA Barro Blanco: Article 4, where in addition to mitigation and compensation provided in the ESIA Project Barro Blanco, GENISA must comply with section 13, which defines and coordinates in detail the fundamental rights of Ngäbe Bugle and agreements reached with GENISA.

o CAR-GEN-0877, CAR-GEN-08105, CAR-GEN-08113, GEN-08116-CAR, CAR-GEN-08121, GEN-08124-CAR, CAR-GEN-08128, GEN-08129-CAR, CAR - GEN-08134, CAR-GEN-09167: Meetings to discuss issues of several of the Ngäbe Bugle Project community and Barro Blanco project from 16 May 2008 to February 17, 2009.

o Cooperation Agreement GENISA- Ngäbe Bugle of December 13, 2008: Where were defined and coordinated in detail the fundamental rights of Ngäbe Bugle and the agreements made with GENISA, as part of compliance with Article 4, Section 13 of the Resolution DIEORA IA-332-2008.

o Invitation “First General Congress for Delegate Ngäbe Bugle Region of February 6”, 2009: The traditional authorities of the Ngäbe Bugle region (General Cacique and Regional Caciques) invited GENISA to participate in the ceremony of “Instalacion, Juramentación e inaguración”, that is an important event for Ngäbe Bugle community.


Annex 1:

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organisation: GENISA (Generadora del Istmo S.A.) Street/Postcode: Capital Plaza, Costa del Este, piso 14, oficina 1401 Building: Capital Plaza City: Panama Province: Panama Postcode: 0832-021299 Country: Panama Telephone: (507) 265-4685 Fax : (507) 265-4688 Email: [email protected] URL: Represented by: Position: Project Manager Form of addressing: Engineer Surname: Lasso Vaccaro Name: Julio Cesar Department: Mobile phone: (507) 6430-7717 Direct fax: (507) 265-4688 Direct telephone: (507) 265-4685 Personal email:


Annex 2:

INFORMATION REGARDING PUBLIC FUNDING This project does not include Public finance sources.


Annex 3:

BASELINE INFORMATION

Fuel emission factors The emission factors (effective CO2 emission factor) assumed in all calculations have been obtained from table 1.4, page 1.23 of Document “2006 IPPC IPPC Guidelines for National Greenhouse Gas Inventories”, taking the lowest value with a 95% confidence interval.

CO2 Emission factors CO2 Type of fuel Effective emission factor (kg/TJ)

Bunker C 75,500 Light Diesel 72,600

Marine Diesel 72,600 Heat rates and type of fuel used in each thermal power plant

Name of the Plant Heat Rate (BTU/MWh) Main fuel BLM 2 14.19 Steam Turbine BLM 3 13.77 Steam Turbine BLM 4 14.76 Steam Turbine BLM 5 16.00 Gas Turbine BLM 6 15.88 Gas Turbine BLM 8 14.69 Gas Turbine

Combined Cycle 8.75 3 Gas turbines and a heat exchanger PanAm 8.33 Combustion Engines Copesa 15.17 Gas Turbine

Pedregal (PACORA) 8.36 Combustion Engines Pan G1 (EGESA) 17.64 Gas Turbine Pan G2 (EGESA) 17.44 Gas Turbine

Source: National Dispatch Centre (NDC), paragraph: Reports/reports of operations/Dispatch/weekly (informes/informes de operaciones/Despachos/Semanal) Emission factors by plant The combination of the data of the two tables shown above can be used to obtain the following factors of emission per MWh generated for the thermal power plants.


Name of the Plant Emission factor (t CO2/MWh) BLM 2 1.130 BLM 3 1.097 BLM 4 1.176 BLM 5 1.226 BLM 6 1.216 BLM 8 1.125

Combined Cycle 0.670 BLM (Average)6 0.897

PanAm 0.664 Copesa 1.162

Pedregal (PACORA) 0.666 Pan G (EGESA) 7 1.343

A.C.P. 0.9398 Calculation of λλλλ y

� Step i: The total hourly generation of the year is represented from high to low, in comparison to the total of 8,760 hours per year. The graph obtained for the year 2007 is shown next, where the operating margin emission factor gas been calculated as follows:

6 BLM power factor is calculated as average of all of them, taking into account the generation of each download from the website of the National Dispatch Centre of Panama (Reports / Market Reports / Reports Generation/Monthly (informes/informes de mercado/Informes de generación/Mensual)) and the values of their heat rate. This average factor has been applied subsequently to the total generation of BLM, because the SMEC generation of each unit (BLM2, BLM3, BLM4, BLM5, BLM6, BLM8 y cyclo) are not available. 7 Average value for PNA G1 y PAN G2. 8 For the thermal power of ACP (Miraflores) the average value has been obtained from the heat rate and annual generation of each of its units. Data from the 2007 generation have been provided by the National Office.


� Step ii: Calculation of the total annual generation of low-cost/must-run plants (∑k

ykEG , ).

In accordance with the total generation data for the year 2007, the total quantity generated by

low-cost/must-run plants (for values ∑k

ykEG , ) is shown next:

Year Total generation (MWh) ∑

kykEG , (MWh)

2007 6.069.370,9 3.573.381,2

� Step iii: Draw a horizontal line that crosses the curve presented, so that the area under the curve

represents the total generation of low-cost/must-run plants

∑

kykEG , .

� Step iv: Determine the value of λ, taking into account that it is calculated as X/8760, where X represents the hours on the right of the point of intersection:

In this case there is no intersection between the horizontal line and the curve represented, so that, according to the "Tool to calculate emission factor for an electricity system", version 02, the value of λ is zero.

02007 =λ

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 64 Operating margin emission factor

2007 PLANT MWh tCO2/MWh tCO2

ACP (Hydraulic) 262,882.9 0.000 0.0 ACP (Thermal) 375,729.0 0.939 352,731.7

BAYANO 687,462.2 0.000 0.0 ESTI 617,738.2 0.000 0.0

LA ESTRELLA 242,714.2 0.000 0.0 LOS VALLES 294,007.1 0.000 0.0

COPESA 65,584.2 1.162 76,218.4 EGEBLM 1,012,702.2 0.897 907,984.6

FORTUNA 1,433,749.8 0.000 0.0 EGESA 7,228.0 1.343 9,709.7

HCANDELA 2,130.8 0.000 0.0 HDOLEGA 17,427.8 0.000 0.0 HIDROPMA 2,558.6 0.000 0.0 HMMONTE 12,645.5 0.000 0.0 PAN_AM 667,962.9 0.664 443,243.9

PEDREGAL 366,783.6 0.666 244,177.1 SEMPER 64.2 0.000 0.0

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 65 Build margin emission factor The calculation of the marginal build factor involved the calculation of 20% of the total energy generated during the year 2007, obtaining a value of 1,213,874 MWh. The plants were classified, in accordance with the most recently built plants, adding the energy generated per plant during 2007, so that the total would provide a value equal to or above 1,213,874 MWh and which would include a complete plant, for calculation purposes, as stated in the methodology.

LAST PLANTS BUILTS THAT REPRESENT AT LEAST 20% OF T OTAL GENERATION

Plant Operation Date tCO2/MWh MWh tCO 2 CICLO 2,000 0.672 517,366.2 346,851.5 ESTI 2,003 0.000 617,738.2 0.0

PEDREGAL 2,003 0.666 366,783.6 244,177.1 HCANDELA 2,006 0.000 2,130.8 0.0 HIDROPMA 2,006 0.000 2,558.6 0.0

EGESA 2,007 1.343 7,228.0 9,709.7

1,513,805.3 600,738.3 If we analyse the energy generated by the last five plants installed, we can see that the energy generated is lower than that generated by the plants that make up 20% of the total energy in 2007, so that, in accordance with the methodology, the plants that make up 20% of the total are selected. The table shown next includes the energy generated by the last five plants, to justify the selection.

LAST FIVE PLANTS BUILT

Plant Operation Date tCO2/MW

h MWh tCO 2

ESTI 2,003 0.000 617,738.2 0.0 PEDREGAL 2,003 0.666 366,783.6 244,177.1 HCANDELA 2,006 0.000 2,130.8 0.0 HIDROPMA 2,006 0.000 2,558.6 0.0

EGESA 2,007 1.343 7,228.0 9,709.7 996,439.1 253,886.9

Consideration of exports and imports The “Tool to calculate the emission factor for an electricity system”, version 02, establishes that the importation of electricity from other connected systems must be considered as another plant in the calculation of the operating margin factor. Due to the However, when the imports come from other countries the emission factor 0 tons CO2 per MWh. Due to its low value, they are not taken into account. As regards exports, in accordance with said tool, they must not be extracted from the system's electricity generation for the calculation of the emission factors, as is the case.


Annex 4:

MONITORING INFORMATION The Monitoring Plan established can be used to calculate the reduction of GHG emissions generated by the project’s activity with a simple process. The calculations will be mainly based on the gathering of data on the electricity generated by all plants connected to the National Interconnected System of Panama, including that corresponding to the Barro Blanco Hydroelectric Power Plant. The data will be archived electronically and kept at least two years after the end of the crediting period of the project activity, which is composed by a period of 7 years and which can be extended for another two 7-year periods. The plant has a reservoir, so that its emissions must also be calculated and, therefore, the project activity emissions must be monitorised. However, the leakages associated to the project will be practically zero. The baseline emissions are mainly composed by the CO2 emissions of the thermal power plants that use bunker and diesel and which are shifted by the generation of the Barro Blanco Hydroelectric Power Plant. To assess their performance, the operating and build margin factors will be calculated, as explained next: The calculation of the total generation data will use a spreadsheet (Generation Data) with 13 tabs, for each month of the year and the last one which calculates the total generation for each plant. The calculation of the heat rate of each plant will use a spreadsheet (Heat rate) which will calculate the emission values of each power plant in tCO2/MWh from the heat rate values of the plants, provided by the National Dispatch Centre in BTU/KWh (Web site of the National Dispatch Center of Panama (www.cnd.com.pa), of paragraph: Reports/reports of operations/Dispatch/weekly (informes/informes de operaciones/Despachos/Semanal), as well as the emission factors extracted from table 1.4 of page 1.23 of the document “2006 IPPC IPPC Guidelines for National Greenhouse Gas Inventories”. The heat rate for ACP is calculated with information provided by MEF. The calculation of the emission reductions will use a spreadsheet (Emission reductions calculation) with six tabs, to guarantee the dynamic and automatic monitoring of the reduction of GHG emissions attained after the implementation of the project.

- The first one, called Hourly Generation Data, contained the the total hourly generation of the system, downloaded from the Web site of the National Dispatch Center of Panama (www.cnd.com.pa), of paragraph:"Statistics/System Behaviour" ("Estadísticas/Comportamiento del Sistema").

- The second tab (Lambda) orders the total hourly generation of the system, from high to low, represented in accordance with the 8760 hours of the year. In addition, it calculates the area under the curve for the different hours of the year, to calculate the value of λ.

- The third tab (Operating emission factor) has a list of the plants of the generation system and their emission factors and calculates the operating margin emission factor, taking into account


the value of λ, of the generation of each plant and their emission factors. Moreover it will calculate the % corresponding to low-cost/must-run out of the system total.

- The fourth tab, called “Building emission factor”, has a list of the plants of the generation

system and their emission factors. It is used to enter the new plants commissioned, which takes into account those that are the last five plants built or those that complete 20% or the year´s generation, updating the said factor.

- The fifth lab (Project emissions) is used for the calculation of the project activity emissions, which the annual generation of the plant to obtain the abovementioned emissions.

- The last lad, called “Emission Reductions”, is used to calculate the reduction of emissions in accordance with the baseline emission factor, the baseline emissions and the project activity emissions.

barro blanco pdd v3

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