CDM Type Micro-hydro Projects:A Case Study

National Workshop on Capacity Development for the Clean Development Mechanism (CDM)

Eugenio Lopez Conference CenterDecember 9, 2002

Grace S. YenezaPreferred Energy Inc.

Clean Development Mechanism

Will be driven by the availability of developing country projects operating below the “baselines”

Will be a “competitive” process Offers an excellent opportunity for

Philippines to fund projects for sustainable development

Technical Requirements for CDM

Baseline Study

Mitigation Analysis

Company to commission and pay for a baseline study, in accordance with Kyoto Protocol requirements

Company to prepare Project Concept Note showing “with Project scenario” and estimated emissions reduction benefits

Review of proposals by an investment banker for the buyers (fee range-10 to 15% of CER value).

Technical Requirements for CDM

Validation/verification

Preparation of Monitoring Plan by qualified consultants,

Operational Entity ("OE") to validate the Emission Reduction component of the Project

Buyer commissions an appraisal and due diligence at a level determined by the CDM.

Technical Requirements for CDM

Certification Prepare and submit a Project Design Document ("PDD") (with "Letter of Approval" from GOP

Project Company requests the GOP to submit to the CDM Executive Board a request for registration of the Project

Micro-hydro Projects Basically Small (up to 100kW)

Villa Escudero – 98 kW Tulgao, Kalinga - 30 kW Balbalasang MHP – 25 kW Lon-Oy MHP – 20 kW Caguyen, Licuan Baay, Abra - 7kW Buneg, Nabuanagan, Apayao- 5 kW

A 100-kW micro-hydro = 800-900 tCO2 e/yr Most are community-owned and operated, for

community use Dispersed & implemented in remote areas

Examples of CDM Projects Undergoing Evaluation

Caribbean wind farm project:-20 MW electricity output-50,000 t CO2 emission reductions per year (for 10 years)-Project costs: US$20m (+)-Carbon value

-@$3 US/tonne CO2e = $1.72m US

-@$5 US/tonne CO2e = $2.87m US SE Asia waste to energy project:

-2 MW electricity output-50,000 t CO2e (+) emissions reductions per year(for 10 years)

-Project costs: US$3.5m -Carbon value

-@$3 US/tonne CO2e = $1.72m US

-@$5 US/tonne CO2e = $2.87m US

It will take about 50-60 units 100-kW microhydros to attain significant CER to attract CDM

Challenges/Hurdles to Overcome

GOP approval process Current Technical Requirements Capacity building

What CDM is all about How to do baselines How to capture value of benefits How to prepare required documentation

Financing Project Aggregation; identify

organizations to do aggregation

Recommendations Pro-active government that is project

development-oriented Systems and approval procedures must

be clear & easy to comply with Lobby for “ Fast-track” mechanism for

approval/certification of small scale projects

Small scale projects must be viewed from the developmental perspective and not only from its carbon mitigation potential

Recommendations

Establish an entity to develop top down baselines for small scale projects

Even now, start a quasi-CDM program within DENR

Provide access to financing by small projects

Focus capacity building and support on developing real project developers