project design document sugar

7/24/2019 Project Design Document Sugar

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PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03

CDM Executive Board

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CLEAN DEVELOPMENT MECHANISM

PROJECT DESIGN DOCUMENT FORM (CDM-PDD)

Version 03 - in effect as of: 28 July 2006

CONTENTS

A. General description of project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

D. Environmental impacts

E. Stakeholderscomments

Annexes

Annex 1: Contact information on participants in the project activity

Annex 2: Information regarding public funding

Annex 3: Baseline Information

Annex 4: Monitoring Information

Appendix 1: ISO 9001- Quality Management Certificate


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SECTION A. General description of project activity

A.1. Title of the project activity:

Fuel switch and Renewable Electricity to the Grid by Ubombo Sugar Ltd., Swaziland

Version of the document: 2 dated: 23 December, 2010

The first version was developed based on ACM0006, version 9, and AM_REV_169.

A.2. Description of the project activity:

The project will avoid the combustion of coal imported from South Africa at the project site and willreplace the combustion of fossil fuels in grid connected power plants. This is achieved primarily byintroducing sugarcane trash as biomass fuel and the improvement of energy efficiency at the UbomboSugar Mill, the project site. To implement these measures technically, the heat-and-power-plant atUbombo Sugar Mill will be retrofitted and expanded.

Built in 1965, the Ubombo Sugar Mill operates in Big Bend and is the oldest of three sugar mills inSwaziland. Ubombo Sugar Limited, the owner of the mill, forms part of the Illovo Sugar Group, who hasa 60% share holding in Ubombo Sugar Limited. The remaining shares are held by Tibiyo Taka Ngawaneon behalf of the Swazi Nation.

Usually, sugarcane mills utilize bagasse during the milling season as fuel. Bagasse is the fibre remaining

after the extraction of sucrose from the sugar cane and dried by dewatering mills, enabling it to be used asfuel. Sugarcane trash is the unwanted crop residue (tops and leaves) of the cane plant that at the site hasprimarily been burnt off the standing cane plant to speed up the manual harvesting process. Thissupplementary source of boiler fuel is made available as and when green cane harvesting takes place andrequires harvesting, transporting and preparation for use as boiler fuel.

Historical/ Current Situation

Currently, the Ubombo sugar mill processes approximately 1.85 Mt of sugar cane per year. The cane isgrown on 8,170 ha of irrigated company owned fields and on 11,917 ha of out-grower farmed fields. Theexisting mill has 6 captive boilers which are historically fired with around 480 kt of bagasse and around30 kt of coal per year. Bagasse is the fibre from the sugar cane which remains following the juiceextraction process and is dried by dewatering mills. The coal to feed the boilers is imported from SouthAfrica.Generated energy is in the form of superheated steam that is used to drive sugar production prime moversand steam turbines used to drive electrical generators. The heat output from these operations is used in thesugar production process and electrical energy generated by these prime movers is also used to driveequipment used in the sugar production process. The yearly generation of electricity is 62 GWh of which52 GWh are for the mills own consumption and 10 GWh are exported for use within the company ownedestate.

Future Situation/ Expansion

In a memorandum of understanding concluded between Ubombo Sugar Limited and the SwazilandAgricultural Development Enterprise (SWADE) who are responsible for implementing the Lower Usuthu


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Smallholder Irrigation Project (LUSIP), Ubombo committed to process future cane from an additional5,000 ha of smallholder sugar cane, developed by LUSIP. The expansion of the cane area will be phased

over a five year period culminating in the production year 2015/2016. By then the mill will process2.59 Mt of cane instead of the current 1.85 Mt. This expansion corresponds to a production capacityincrease by 40% from 410 to 500 t of cane per hour (tch).

Reference Situation/ Baseline scenario

The mills capacity expansion was assessed by performing a feasibility study. The energy efficiency ofthe mill would remain as it is and the installed spare energy generation capacity would be used. Thisscenario has by far lower (investment and operating) costs than the proposed project activity, but resultsin significantly higher GHG emissions.The current margin of electricity generated for export to the estate would not compensate for theincreased power requirements of the factory. The share of coal as part of the overall fuel requirementwould remain at a similar level (as a percentage on bagasse), but increase in absolute values due to the

increased milling capacity.

Proposed project activity

The incentives given by the CDM allows Ubombo Sugar Ltd. to take a different approach from theforeseen business-as-usual-scenario. If the project activity is implemented, the consumption of coal willbecome obsolete while considerable amounts of renewable power will be available for grid export. In theproject activity, the co-firing of sugar cane trash (together with bagasse) will be established in the amountof up to 77 kt by the year 2015/16 and 96 GWh of electricity will be replaced. Thereof 41 GWh are usedby the Ubombo estate and around 55 GWh are exported to the Swaziland electricity grid. In comparisonwith the reference plant this situation decreases greenhouse gas emissions significantly.

The proposed project activity include the installation of a new sugarcane trash preparation line, fuelstock-piling and reclaim systems, a new bagasse/ biomass boiler, the retrofit of the existing cogenerationplant with a high efficiency steam turbine driven generator, and the establishment of cane trash logisticsfrom the cane fields to the mill. The proposed development has been awarded an EnvironmentalCompliance Certificate by the SEA. The SEA is the Swaziland Environmental Authority (SEA) whichrequested an Initial Environmental Evaluation (IEE) before awarding the mentioned certificate.

Sustainable Development

The project activity will have a positive impact on sustainable development as follows:

- Economic BenefitsThe project activity has a positive effect on national economic development in terms of:

The project will contribute to national economic development by bringing foreign exchange intothe country through the sale of carbon credits.

The project will generate employment both during construction and operation. The majority ofthese positions will be filled from the local community of Swaziland and surrounding districts.

There are very few existing projects using the envisaged technology with some technology beingthe first of its kind in Swaziland and Southern Africa. The project will thus provide anopportunity for technological and knowledge transfer.

The projects contribution to social development is centered around the reduction of harmfulemissions to the atmosphere, thus resulting in a cleaner and safer environment in the immediatevicinity of the project.

On a wider scale, the project will also contribute towards the sustainable recovery, reuse and


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recycling of waste gas by major industry and the combating of climate change.- Social Benefits

The project will result in the creation of skilled professional-level jobs, technician-level jobs and semi-skilled/unskilled jobs. The projects contribution to employment and the associated multiplier effect ofthese jobs is difficult to monitor, but could be ascertained by an annual profitability review for the overallproject. (This would be based on the assumption that job creation and sustainability is directly related tothe ongoing profitability and success of the project). Because there are no similar technology installationsin the area, employees will require education and training in the operation and maintenance of the plant.This will enhance information sharing and skills transfer from foreign parties to the local community.

- Environmental BenefitsThe project activity will take place on an existing established industrial site, on previously utilizedavailable open land within the greater plant operation covered by the existing plant permit. There will bea reduction in SO2-emissions and the NOx-emissions associated with the combustion of coal. On anational scale the project will have a positive impact on air quality as carbon dioxide (CO2) emissions will

be mitigated.


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A.3. Project participants:

Name of Party involved (*)

((host) indicates a host Party)

Private and/or public

entity(ies) project

participants (*)

(as applicable)

Kindly indicate if the

Party involved wishes

to be considered as a

project participant

(Yes/No)

Kingdom of SwazilandPrivate Entity:

Ubombo Sugar Ltd.No

(*) In accordance with the CDM modalities and procedures, at the time of making the CDM-AR-PDD public atthe stage of validation, a Party involved may or may not have provided its approval. At the time of requestingregistration, the approval by the Party(ies) involved is required.

A.4. Technical description of the project activity:

A.4.1. Location of the project activity:

A.4.1.1. Host Party(ies):

Kingdom of Swaziland

A.4.1.2. Region/State/Province etc.:

District of Lubombo

A.4.1.3. City/Town/Community etc.:

Town of Big Bend

A.4.1.4. Details of physical location, including information allowing the

unique identification of this project activity (maximum one page):

Ubombo Sugar Ltd. is situated in the town of Big Bend in the eastern part of Swaziland (see map ofSwaziland). The town lies on theLusutfu Riverbetween 26 49' 0" South and 31 56' 0" East.

The satellite image below contains the town of Big Bend, the Ubombo sugar mill, and surrounding(irrigated) sugarcane fields.
http://en.wikipedia.org/wiki/Swazilandhttp://en.wikipedia.org/wiki/Lusutfuhttp://en.wikipedia.org/wiki/Lusutfuhttp://en.wikipedia.org/wiki/Swaziland


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A.4.2. Category(ies) of project activity:

Sectoral Scope:

Category1, Energy industries (renewable / non-renewable sources)


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A.4.3. Technology to be employed by the project activity:

The proposed project activity will be established in the agro-industrial complex of the Ubombo sugarmill. The mill can be separated into two functional parts: a) sugar extraction and sugar processing, andb) energy plant, where heat and power are produced.The emission level of the proposed project activity will be significantly less than of its alternative, theretrofitted existing plant, i.e. reference plant. For clarification purposes,the technology in the referenceand the project plant will be compared to each other:

Current/ Historic Situation:Energy for sugar extraction and processing is obtained from the combustion of bagasse and coal in sixcaptive boilers on-site. The mixing ratio of bagasse and coal varies throughout the year dependingprimarily on the fibre content of processed sugar cane and the rateability of cane supply to the sugar mill.Bagasse is dried in dewatering mills reducing the moisture content from approximately 80% to 50% bymass to produce bagasse which is able to be combusted in the boilers.Since the amount of bagasse is linked to the amount of sugar cane processed, i.e. ratio between cane andaccruing bagasse is fixed (with marginal variations), it means that the current cane trash and tops biomassshare in the fuel mix cannot be increased without increasing the amount of bagasse and consequently canecrushed.

With respect to the harvesting of the raw material, the majority of cane is burned in the field beforeharvesting in order to get rid of leaves and other unwanted biomass. Some cane is currently harvestedgreen with mechanical harvesters.

Reference Scenario:Ubombo is obligated to expand the crushing capacity of the sugar mill by April 2011 with the cane cropgradually increasing up to 2015/16 primarily due to the requirement to accommodate small holder farmercane from LUSIP. To supply the expansions energy demand,the steam generation capacity (MaximumContinuous Rating, MCR) of the existing boilers would be exploited to a higher degree, i.e. 86.7%instead of the current 70.0%, and the average heat-to-power-ratio (the relation between heat andelectricity output) would be shifted towards heat. The current margin of electricity generated for export tothe estate would not compensate for the increased power requirements of the expanded factory. The shareof coal as part of the overall fuel requirement would remain at a similar level (as a percentage onbagasse), but would increase in absolute values due to the increased milling capacity.

The processing plant, in the absence of the project activity, would undergo modifications to handle the

increased throughput. These modifications/ retrofits would include expanding the equipment relating tosugar cane preparation, extraction and sugar processing from the current capacity of 410 tch (tch: tons ofcane per hour) to 500 tch:

Equipment Current/Historic Setup Reference Plant

Cane milling capacity 410 tch 500 tch

-Whereof Line 1 Milling tandem capacity of230 tch

Removed and replaced by300 tch Bosch diffuser

-Whereof Line 2 DeSmet diffuser capacity of180 tch

Capacity increased to 200 tch


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- Because of the installation of the new diffuser (300 tch Bosch diffuser), five of the six mills thatformed part of the existing milling tandem will become redundant and will be removed. The

remaining mills in addition to a new 84 mill will continue in service, de-watering bagassedischarged from the new and existing diffuser. The properties of the bagasse are not affected bythis measure.

- Additional sugar processing equipment such as a clarifier, evaporators, crystallisation pans andcentrifugals.

Project Scenario:The project activity involves the establishment of a new cane trash receiving, handling and preparationsystem. Cane trash will be co-fired at a ratio of up to 10% (mass volume) of the combined bagasse andcane trash. Where possible the harvesting practice will be switched to green cane harvesting as opposed tothe current practice of burning of cane stalks in order to maximise the quantity of harvested trash andtops.

Through the project activity electricity generation by the mill will be increased in absolute values (MWh),but also the period of electricity production will be extended by building up a biomass stock-pile and byinstalling a controlled extraction/condensing turbine that can be used efficiently for electricity productionduring the off-season when sugar cane is not being crushed. The length of this off-season, i.e. when nosugar cane is crushed by the sugar mill, depending on the year, is around 12 weeks.

The equipment installed and the buildings constructed due to the proposed project activity include thefollowing:

- New biomass boiler (No8): Capacity of 105 t of steam per hour (at 31 bar), imported from SouthAfrica to Swaziland. It can be run on biomass only and will have a facility to fire coal foremergency situations when unplanned interruptions in the biomass fuel supply occur. It will beoperated together with the existing boilers No. 5, 6, and 7. Boilers No. 2, 3, and 4 becomeredundant. The new boiler features a higher efficiency than the existing ones.

Table 1: Data on Steam Boilers (Historic and Project Situation)

Item Situation 2 3 4 5 6 7 8

Installed (year) --- 1961 1965 1965 1968 1982 1999 2011

Manufacturer* --- B & W B & W B & W B & W JTA B & W AJT

Capacity (t steam/h) --- 23 30 27 30 74 105 105

Use Historic X X X X X X -

Project - - - X X X X

*B&W: Babcock and Wilcox, JTA: John Thompson, AJT: ACTOM John Thompson

- Cane trash shredder: based on wood hogger technology; nominal capacity of 15 t/h. Powered by330 kW motor. This will be incorporated into a biomass feeding system that may include sometrash and tops separation equipment in the future.

- Controlled extraction/ condensing turbine: Capacity of 25 MW of power generation with flexibleheat-to-power-ratio. It will supply the majority of process steam during the season and producethe majority of electricity during the off-season. It is supplementary to the existing turbinealternator sets No. 2, 3, 4 and 5, which will be retained. During the cane processing season, theturbine alternator sets No. 3 and 4 will be used in addition to the new extraction/ condensingturbine.

- Forced draught cooling tower: servicing the extraction and condensing turbine alternator.- Boiler feed water quarantine system and dedicated boiler feed water pumps supplying boiler 8.


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- An open air biomass storage facility: on a surface of 66,000 m2next to the Ubombo sugar millwill be established. This surface offers sufficient space to store around 100,000 t of

bagasse/biomass. Walking floor or tipping trailers, front end loaders and excavators will enablethe transport of biomass between the storage facility and the fuel export/re-claim conveyingsystem. The biomass in the storage facility will be covered with tarpaulins to reduce degradationand fire risk.

The table below shows the cane trash harvesting and supply machinery necessary for the 67,000 t of trashharvested, as planned for the first year of the project activity 2011/12. At full capacity around 77,000 twill have to be harvested.

Table 2: Provisional List of Equipment in the Cane Trash Chain

Activity Machine Powered by Power Rate

Raking rakes tractors At 35 kW

Preparation forTransport

balers tractors At 54 kWbale loaders Self propelled At 30 kW

silage loaders (6.5t) tractors At 140 kW

Transport transport trucks (14t) Truck horses At 120 kW

bale transport trailers tractors At 54 kW

silage loaders (6.5t)(same units as above)

tractors(same units as above)

At 140 kW

The on-site transport of biomass from the mill to the storage facility (during the cane crushing season)and from the storage facility to the mill (during off-crop-season) will be done by the followingequipment:

bull dozer (self propelled)front end loaders (self propelled)walking floor or tipping trailers (high capacity) (powered by truck horse)excavators (self propelled)

The above list of vehicles is provisional since the investigations into appropriate cane trash haulage arestill ongoing. All vehicles in the cane trash provision (from field works over haulage to on-site recovery)will, however, be included in the monitoring.

Summary:

In terms of electricity import by the mill the relation between the three scenarios can be summarized asfollows:

Table 3: Electricity Balance of Ubombo Mill with Off-Site Sources in Scenarios (Imports negative,exports positive) (GWh/a)

Year Existing Reference Project

2007/082009/10 +9.9 n/a n/a

2011/12 n/a -0.9 +77.8

2012/13 n/a -0.8 +90.1

2013/14 n/a -0.7 +102.6

2014/15 n/a -0.7 +104.2

2015/16 n/a -0.7 +110.5

Same as previous season n/a -0.7 +110.5


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A schematic of the mills power plant is attached below showing how this would behave in the threescenarios. The three colours represent:

- Red: The historic situation;- Green: The reference plant/baseline scenario (for equipment this corresponds to the historic

plant);- Violet: The project plant.

Equipment that is indicated in black is operated in the historic, the reference, and the project plant. Valuesindicated in violet are for the project plant.


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Demand-Side Energy Efficiency:

The introduction of cane trash as new renewable fuel in parallel to supply-side and demand-side energy

efficiency improvement has been considered during the planning phase to achieve the objective ofmaximising grid electricity export and to eliminate the combustion of coal during normal operations. Dueto specific conditions, the demand-side and the supply-side measures overlap. Therefore, a Request forDeviation has been submitted.

At demand-side the most important measures are:- Electrification of inefficient steam driven prime movers, e.g. steam drives of a shredder, de-

watering mills and a boiler induced draft fan drive with high efficiency electric drives;

From an energy point of view, the above demand-side energy efficiency improvements alone are notsufficient and need to be implemented together with the following process efficiency improvements tobalance steam demand:

- Installation of significantly increased heat exchanger capacity to enable the use of lower ordervapour as heating medium;

In the reference plant, the process steam demand increases to the point where superheated steam wouldbe let-down and saturated for process steam, as is the case in the historic plant. The limited capacity of theinstalled co-generation equipment in the reference plantwould also make further electrification of primemovers impossible. In other words, the electrification of prime movers and process efficiencyimprovements would not be possible in the reference plantand would not take place in the absence of theproject activity.

A.4.4. Estimated amount of emission reductions over the chosen crediting period:

The option of renewable crediting periods is selected, with the first crediting period lasting seven years.The proposed project activity is expected to generate the following amounts of emission reductionsstarting in April, 2011:

Year

Estimate of Annual Emission Reduction

(in tonnes of CO2-equivalents)

04/2011-03/2012 100,364

04/2012-03/2013 109,135

04/2013-03/2014 116,703

04/2014-03/2015 118,499

04/2015-03/2016 117,493

04/2016-03/2017 117,493

04/2017-03/2018 117,493

Total estimated reductions(tonnes of CO2e)

797,179

Total number of crediting years 7

Annual average of over the crediting period of

estimated reductions (tonnes of CO2e) 113,883


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A.4.5. Public funding of the project activity:

The proposed project activity will be financed by Ubombo Sugar Ltd. It is not running under a publicincentive scheme. The development of the PDD was financed by the Restructuring and DiversificationManagement Unit (RDMU) financed by the European Commission. The RDMU coordinates theimplementation of the National Adaptation Strategy to the EU Sugar Reform in Swaziland(EuropeAid/125214/C/SER/SZ). This financing does not lead to the diversion of Official DevelopmentAid.


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SECTION B. Application of a baseline and monitoring methodology

B.1. Title and reference of the approved baseline and monitoring methodology applied to the

project activity:

The approved consolidated baseline and monitoring methodology ACM0006 in its most recent version,version 11, will be applied.

It refers to the following methodology(ies) and tool(s):

Tool to determine the remaining lifetime of equipment(Version 01)

Tool for the demonstration and assessment of additionality (Version05.2)

Tool to determine the baseline efficiency of thermal or electric energy generation

systems(Version 01)

Tool to calculate the emission factor for an electricity system (Version02)Tool to determine methane emissions avoided from disposal of waste at solid waste disposal

sites(Version 05)

Tool to calculate project or leakage CO2emissions from fossil fuel combustion (Version02)

Tool to calculate baseline, project and/or leakage emissions from electricity consumption

(Version 01)

B.2. Justification of the choice of the methodology and why it is applicable to the project

activity:

According to the ACM0006, version 11,

(...) the project activity may include the following activities or combinations of these activities:

a) The installation of new plants at a site where currently no power generation occurs (greenfieldpower projects); or

b) The installation of new plants at a site where currently power or heat generation occurs. The new

plant replaces or is operated next to existing plants (capacity expansion projects); or

c) The improvement of energy efficiency of existing plants (energy efficiency improvement projects)which can also lead to a capacity expansion, e.g. by retrofitting the existing plant; or

d) The total or partial replacement of fossil fuels by biomass residues in existing plants or in newplants that would have been built in absence of the project (fuel switch projects), e.g. byincreasing the share of biomass residues use as compared to the baseline, by retrofitting anexisting plant to biomass residues, etc.

The proposed project activity is a combination of the activities b), c), and d): An existing power-

and-heat plant, where bagasse and fossil fuels are co-fired, will be retrofitted and new renewable

energy generation capacities be added. Power generation will be increased, partially due to

increased energy efficiency and partially due to added co-generation equipment capacity. The fossil

fuel used in the baseline plant will be replaced and a new type of biomass residues (cane trash) be

introduced at the site.


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ACM0006, version 11, is applicable under the following conditions:

1.

No biomass types other than biomass residues are used in the project plantIn the proposed project only biomass residues are used.

2. Fossil fuels may be co-fired in the project plant. However, the amount of fossil fuels co-fireddoes not exceed 50% of the total fuel fired on an energy basis.

Fossil fuels may be used as an auxiliary fuel during the project activity if extreme wet

weather conditions increase the moisture content of bagasse above around 55% after

dewatering or if logistical problems in the biomass supply would occur. These cases,

however, will be exceptional and the amount of fossil fuels combusted will remain clearly

below 50% of the total fuel on an energy basis during a certain year.

3. For projects that use biomass residues from a production process (e.g. production of sugar orwood panel boards), the implementation of the project shall not result in an increase of theprocessing capacity of raw input (e.g. sugar, rice, logs, etc.) or in other substantial changes (e.g.

product change) in this process;

The project will use biomass residues from a production process, namely bagasse from

sugar cane processing, which has also been utilised in the baseline.

In the sugar mill, where the project plant is located, the crushing capacity will be gradually

increased from currently 410 tch to 500 tch in 2015/16 (or from 1.85 Mt to 2.59 Mt of cane

per year). This is due to commitments made by Ubombo Sugar Limited to crush small

holder farmer cane from LUSIP. It is thus not a result of the proposed project activity.

The LUSIP programme is an agricultural programme assisting smallholders in Lower

Usuthu region to irrigate and grow sugar cane. In this context the Ubombo mill complied to

expand its sugar cane milling capacity. The decision for renewable energy generation from

sugar cane trash, however, is not attributable to the LUSIP.

4. The biomass residues used by the project facility should not be stored for more than one year;

The constructed storage capacity is designed to store biomass for less than one year. The

storage capacity is to build up sufficient biomass for the cane crushing period where the

fibre content of the cane is low and to cover the biomass residue demand during the off-

crop season of the mill (around 12 weeks of the year). During the off-crop season electricity

shall be produced to satisfy estate requirements and export to the Swaziland electricity grid

(both replacing grid electricity).

In other words, the biomass storage is planned to bridge the gap in fuel supply during the

off season where no bagasse is generated by the mill and no harvesting of cane takes place

biomass and thus no cane trash harvested. This period is thus clearly below one year.

5.

The biomass residues used by the project facility are not obtained from chemically processedbiomass prior to combustion. Moreover, the preparation of biomass-derived fuel do not involvesignificant energy quantities, except from transportation or mechanical treatment so as not tocause significant GHG emissions

The biomass residues used at the site are not obtained from chemically processed biomass,

but are directly recovered from the field (cane trash) or as bagasse. Transportation and

mechanical treatment is necessary for the cane trash, but no significant GHG emissions will

be entailed by these activities.

6. In the case of fuel switch activities, the use of biomass residues or the increase in the use ofbiomass residues as compared to the baseline scenario is technically not possible at the projectsite without capital investment.


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The proposed project activity also includes fuel switch components. The increased used of

biomass residues in the project scenario compared to the baseline scenario requires

significant capital investment. The additional use of cane trash requires investment inharvesting and transport equipment, preparation equipment and fuel stock-piling and

reclaiming equipment. The baseline plant does not have the capacity to process the forecast

quantity of cane trash and the stock-piling and reclaiming facilities required.

Finally, the methodology is only applicable if the most plausible baseline scenario is a combination ofcertain predefined baseline alternatives. This will be discussed in section B.4.

Disregarding the discussion in section B.4., up to here it can be concluded that ACM0006,

version 11, is applicable to the proposed project activity.

B.3. Description of the sources and gases included in the project boundary:

According to ACM0006, the proposed project activity includes the following GHG emission sources:

1. CO2emissions from on-site fossil fuel consumption that is attributable to the project activity. Thisincludes fossil fuels co-fired in the project plant, fossil fuels used for on-site transportation orfossil fuels used for the preparation of the biomass residues, e.g., the operation of shredders orother equipment, as well as any other sources that are attributable to the project activity; and

2. CO2emissions from off-site transportation of biomass residues that are combusted in the projectplant;

For the purpose of determining baseline emissions, the following emission sources are included:3. CO2emissions from fossil fuel fired power-and-heat plants at the project site and/or connected to

the electricity system, as far as displaced by the proposed project activity;

The project participants decided to exclude CH4emissions from the uncontrolled burning or decay

of surplus biomass residues.

The spatial extent of the project boundaryencompasses:

1. The sugar mill with all its heat-and-power plant at the project site;

2. All power plants connected physically to the electricity system that the CDM project power plantis connected to. The spatial extent of the project electricity system, including issues related to the

calculation of the build margin (BM) and operating margin (OM), is defined in section B.6.,where the Tool to calculate the emission factor for an electricity systemis applied;

3. The means of transportation of cane trash to the site (bagasse accrues at the site);

4. The site where cane trash would have been left for decay (bagasse has a different baseline).


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Table 4: Overview of Emission Sources in-/excluded in the Project Boundary

Case Source Gas Decision Justification / Explanation

Baseline

Electricity and heatgeneration

CO2 Included Main emission source

CH4 Excluded Excluded for simplification. This is conservative

N2O Excluded Excluded for simplification. This is conservative

Uncontrolled burningor decay of surplusbiomass residues

CO2 Excluded Carbon pools remains unchanged as CO2originates from renewable resources

CH4 Excluded Project participants decided to exclude thisemission source

N2O Excluded Conservatively excluded

ProjectActivity

On-site fossil fuel

consumption

CO2 Included May be an important emission source

CH4 Excluded Excluded for simplification. This emission sourceis assumed to be small

N2O Excluded Excluded for simplification. This emission sourceis assumed to be very small

Off-sitetransportation ofbiomass residues

CO2 Included May be an important emission source

CH4 Excluded Excluded for simplification. This emission sourceis assumed to be very small


Combustion ofbiomass residues for

electricity and heat

CO2 Excluded Carbon pools remains unchanged as CO2originates from renewable resources

CH4 Excluded Excluded because CH4emissions fromuncontrolled burning or decay of biomass in the

baseline scenario are also excludedN2O Excluded Excluded for simplification. This emission source

is assumed to be very small

Storage of biomassresidue

CO2 Excluded It is assumed that CO2emissions from surplusbiomass do not lead to changes of carbon pools inthe LULUCF sector

CH4 Excluded Excluded for simplification. Since biomassresidues are stored for not longer than one year,this emission source is assumed to be small


Wastewater from thetreatment of biomassresidues

CO2 Excluded It is assumed that CO2emissions from surplusbiomass do not lead to changes of carbon pools inthe LULUCF sector

CH4 Excluded Not applicable to the proposed activity



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B.4. Description of how the baseline scenario is identified and description of the identifiedbaseline scenario:

The baseline scenario is identified by assessing plausible alternatives to the proposed project activity.

Project Description:

The project heat-and-power plant is established at an agro-industrial facility, the Ubombo sugar mill inSwaziland. The main purpose of the heat-and-power plant is to deliver process steam to the sugarprocessing activities of the mill. In co-generation mode some electricity is generated, mainly for on-siteconsumption of the mill. The heat-and-power-plant comprises heat generators and heat engines in theform of backpressure and one small condensing turbine that operates as a backpressure turbine. A gridconnection to the national electricity grid of Swaziland does exist for power import purposes and thuspower production is of lower priority than process heat production.

In the heat generators (boilers) historically coal and bagasse is combusted to generate steam. The steamleaves the boilers at 32 bar(a) and 365C. Some of this superheat steam is utilised directly by steamdriven prime movers such as shredders, mills, and the ID-fan of a boiler. The remainder of superheatedsteam, excluding losses and let-down steam, is utilised by turbine alternators, where pressure andtemperature are reduced while electricity is generated. From there, the saturated exhaust steam, now at2.15 bar(a) and ~125C is used for sugar processing.

Historic Fuel Utilization:

Historically, coal and bagasse are combusted at the Ubombo sugar mill for energy generation. In terms ofCDM historic refers to the last three years prior to the start of the CDM-activity. In the proposed projectactivity historic must be defined in a different way. This is due to the following circumstance:

Up to the season 2004/05 coal was added to the extent necessary to balance the sum between energydemand and energy supply from bagasse. Since the quantity and quality of bagasse is proportional to theamount and quality of cane crushed, coal had to be added in varying amounts. Alternative fuels to coallike bagasse from other sites or other biomass were and are not available at significant amounts.

In order to seek more sustainable ways of development and to ultimately become independent from coalimports, the Ubombo sugar mill has initiated first of its kind trials on the co-firing of cane trash at its mill.Cane trash, representing leaves and tops of the sugar cane, was taken from own plantations. In the region,cane trash is usually left to decay in the fields or burnt in the field before harvest on the standing cane inorder to facilitate manual harvesting operations. Cane trash in comparison to bagasse or other typicalbiomass fuels like wood chips features high contents of potash and low ash melting points and can

therefore cause serious problems when combusted such as extensive fire-side fouling. The handling ofcane trash as biomass fuel compares better to the combustion of cereal straw than to the combustion ofbagasse or wood. The combustion of cereal straw has even in the technically advanced Europeancountries caused many problems and a large number of studies have been conducted during the last yearsto find out on the optimal preparation of straw in the field, best combustion conditions, boilermodifications, and maximally acceptable boiler damage.

Against the aforementioned background, the trial phase has to be seen as a necessary step before theimplementation of the proposed project activity. Since the season 2004/05, varying shares of cane trashwere co-fired and various types of equipment used in efforts to prepare the tops and trash for firing, theimpact on combustion efficiency, boiler fouling and different cane trash harvesting methods andtransporting logistics were analysed. The trials have been continued up into the year 2010 and have


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delivered the necessary results. The co-firing of cane trash in the quantities required by the project plant isa first of its kind in Swaziland and Southern Africa and can be initiated at the Ubombo sugar mill

following a design developed from the extensive trails. Without the trials, co-firing of cane trash wouldnot have been possible at the Ubombo sugar mill.

Table 5 illustrates the long trial phase on the combustion of cane trash entailed by the problematiccharacteristics this biomass. It can be seen that cane trash has only gradually been introduced and that theinitial share was far from the final share to be co-fired in the proposed project activity, i.e. around 10%.

Table 5: Cane Trash Trial Phase

Season Bagasse (t fresh) Cane trash (t fresh) Trash in total fuel (energy basis)

2005/06 515,044 4,225 0.8%

2006/07 503,663 12,474 2.3%

2007/08 501,729 16,885 3.1%

2008/09 463,511 22,604 4.9%2009/10 473,907 20,140 4.2%

The trial phase has been long and extensive, but necessary due to the significant associated technical andfinancial risks. In case of unsuccessful trial phase, the co-firing of cane trash and therefore the proposedproject activity would NOT occur and the combustion of coal would be continuedat historic levels.

Since during the trial phase, coal was only added in such quantities as to balance the gap between energydemand and energy supply from bagasse and co-fired cane trash, the levels of coal combusted during theperiod 2005/06 and 2010/11 do not represent the historic level. It is therefore considered reasonable toclaim the 3-years prior to the start of the trial phase on cane trash co-firing as historic situation, i.e.2002/032004/05. A Request for Deviation has been submitted together with this PDD.

Reference Plant:

Currently the sugar mills cane crushing capacity is 410 tch. With the LUSIP-obligations (describedearlier on in the document), the mill committed to expand its crushing capacity to 500 tch. Because theLUSIP contract has nothing to do with the CDM-project, but is an agricultural development programme,this expansion would have happened anyway, i.e. also in absence of the proposed project activity. Theexpansion of the crushing capacity entails an energy demand exceeding current demand. Thus, thisincreased demand is the baseline, and not the current or historic one. Therefore areference plant has beendefined in order to reflect this situation.

Technically the reference plantis obtained through a retrofit of the existing plant, but without installation

of a new boiler and other equipment related to energy generation (e.g., turbine alternators, cane trashharvesting and preparation, and biomass fuel conveying systems). Only equipment related purely toincreased sugar processing throughput, such as sucrose extraction equipment and sugar processingequipment would have to be expanded/ renewed. The reference plant represents an economicallyattractive course of action (taking into account barriers to investment). Costs would be significantly lowerthan for the project plant. The reference plant allows for the binding LUSIP capacity expansion.

In the definition of the reference plant it is taken into account that due to decreased (relative) powergeneration in combination with increased absolute amounts of bagasse, more superheated steam would belet-down to provide sufficient steam for process. Only the absolute amount of bagasse increases over thecurrent set-up while the relation between sugar cane crushing and bagasse accrual is a fixed one andremains constant.


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The capacities and load factors of the existing mill would allow hosting the increased energy demand of

the expanded sugar mill (in the reference plant). However, because of limited availability of energygeneration capacity, after increasing boiler load factor to their limits, electricity generation in relativevalues would decrease. This is a plausible alternative since electricity can be easily imported through theexisting grid connection. These imports would remain insignificantly small and would NOT justify theinvestment into additional power generation capacities.

In summary and if disregarding the demand-side energy efficiency improvement proposed by the projectplant, then the reference plantwould deliver the same heat service as the project plant, but reduced powerservice. The fuels combusted would be bagasse and coal. The combustion of coal would continue sincethe availability of biomass residues or biomass is very limited in Swaziland. So far, no other biomassbased power plants are operated in the Swaziland.

In the project plant coal will be displaced by cane trash and through increased energy efficiency.

Comparison of Historic, Reference, and Project Plant:

The schematic shown earlier on in this document, illustrates the links between the historic, the reference,and the project plant including major replacement activities of equipment and modified operationconditions. Only the parameters of the historic plant can be taken as metered values from recorded data.The parameters of the reference and the project plant, as both are not or are not yet existing, have to becalculated. This was done by means of an Energy and Mass Balance (EMB)-model of the Ubombosugar mill provided for by Illovo Sugar, South Africa. The design of the reference plant is fully in linewith the standard in the sugar sector in the region and it takes conservative assumptions, whereverapplicable.

According to ACM0006 plausible alternatives should be separately determined, regarding:

(A)How power would be generated in the absence of the project activity;(B)How heat would be generated in the absence of the project activity;(C)What would happen to the biomass residues in the absence of the project activity.


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Table 6: Analysed Alternatives for Power Generation

No. Description Alternative Project Justification/Explanation

P1 The proposed project activity notundertaken as a CDMproject activity.

No Not plausible because of the barriersdescribed in the PDD section B.5.

P2 In case of existing plants, the continuation ofpower generation in existing power plantsat the project site. The existing plants wouldoperate at the same conditions(e.g. installedcapacity, average load factors, fuel mixes) asthose observed in the most recent three yearsprior to the starting date of the projectactivity.

No Not plausible because the processingcapacity will be increased over theone observed during the most recentthree years. The operation of theexisting heat-and-power plant, also asreference plant, would be underdifferent conditions (load factors,heat-to-power-ratio, etc.).

P3 In case of existing plants, the continuation of

power generation in existing power plantsat the project site. The existing plants wouldoperate with different conditionsfrom thoseobserved in the most recent three years priorto the starting date of the project activity.

Yes Plausible for part of the electricity. In

the reference plant electricityproduction would occur, but wouldbe lower than in the project activity.

P4 In case of existing plants, the retrofitting ofexisting power plants. The retrofitting mayor may not include a change in fuel mix.

No This is the project activity.

P5 The installation of newpower plants at theproject site different from those installedunder the project activity.

No Not plausible because the installationof new power plants (or heat-and-power plants) without building on theexisting heat-and-power plant would

be more costly than the projectactivity and is thus disregarded.

P6 The generation of power in specific off-siteplants, excluding the power grid.

No So far, this alternative has not beentaken up by Swazi based entities orforeign entities for Swaziland. In theproximity to the project site no suchactivities can be found.

P7 The generation of power in the power grid. Yes Plausible for two parts of theelectricity generated in the projectactivity: 1. The power imported fromthe grid in the reference plant, and2. The power exported to the grid bythe project activity.


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Table 7: Analysed Alternatives for Heat Generation

No. Description Alternative Project Justification/ExplanationH1 The proposed project activity not

undertaken as a CDMproject activity.No Not plausible because of the barriers

described in PDD section B.5.

H2 In case of existing plants, the continuationof heat generation in existing plants at theproject site. The existing plants wouldoperate at the same conditions(e.g. installedcapacities, or average energy efficiencies,fuel mixes, and equipment configuration) asthose observed in the most recent three yearsprior to the project activity.

No Not plausible because the processingcapacity will be increased over theone observed during the most recentthree years. As a consequence alsothe operation of the existing heat-and-power plant would be at differentconditions (load factors etc.) asdefined for the reference plant.

H3 In case of existing plants, the continuation

of heat generation in existing plants at theproject site. The existing plants wouldoperate with different conditionsfrom thoseobserved in the most recent three years priorto the project activity.

Yes The existing heat-and-power plant

would be operated at similar but notthe same conditions: higher loadrates, higher heat-to-power-ratio, anda changed fuel mix (see descriptionof reference plant).

H4 In case of existing plants, the retrofittingofexisting plants at the project site. Theretrofitting may or may not include a changein fuel mix.

No This is the project activity.

H5 The installation of newplants at the projectsite different from those installed under the

project activity.

No Not plausible because theconstruction of a new heat plant (or

heat-and-power) without building onthe existing plant would be morecostly than the project activity and isthus disregarded.

H6 The generation of heat in specific off-siteplants.

No Off-site heat plants are not availablein the region. Constructing one is lesscost efficient than the project activity.

H7 The production of heat from districtheating.

No There is no district heating system orother external heat system ofsufficient extent in the country.


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The proposed project activity will use two categories of biomass residues, bagasse and cane trash. Theplausible alternative fate is different for both (seeTable 88).

Table 8: Analysed Alternatives for Biomass Residues

No. Description Alternative Baga* Trash* Justification/Explanation

B1 The biomass residues are dumped orleft to decay under mainly aerobicconditions. This applies, for example,to dumping and decay of biomassresidues on fields.

No Yes Cane Trash: It would be partly leftin the field to decay.Bagasse: Would be used in the plantfor energy purposes.

B2 The biomass residues are dumped orleft to decay under clearly anaerobicconditions. This applies, for example,to deep landfills with more than 5

meters. This does not apply tobiomass residues that are stock-piledor left to decay on fields.

No No Neither bagasse nor cane trash: Nodeep landfills or other accumulationswith anaerobic conditions exist orwill be established.

B3 The biomass residues are burnt in anuncontrolled manner without utilizingit for energy purposes.

No Yes Cane trash: It would be partly left inthe field and be burnt standingbefore harvest.

B4 The biomass residues are used forpower or heat generation at theproject site in new and/or existingplants.

Yes No Bagasse: It would be used on-site inthe reference plant for energypurposes.

B5 The biomass residues are used for

power or heat generation at other sitesin new and/or existing plants.

No No Bagasse is not sold. Experience with

the utilization and the logistics ofcane trash are not available in theregion outside the proposed projectactivity. Cane trash is thus notavailable to other energy plants.

B6 The biomass residues are used forother energy purposes, such as thegeneration of biofuels.

No No Neither bagasse nor cane trash areused for other energy purposes.

B7 The biomass residues are used fornon-energy purposes, e.g. as fertilizeror as feedstock in processes (e.g. inthe pulp and paper industry).

No No Neither bagasse nor cane trash areused for non-energy purposes.

B8 The biomass residues are used fornon-energy purposes, e.g. as fertilizeror as feedstock in processes (e.g. inthe pulp and paper industry).

No No Neither bagasse nor cane trash areused for non-energy purposes.

*The two types of residues: baga: bagasse, trash: cane trash.

Bagasse and cane trash are two different biomass categories. The three attributes, type, source, and fate,are different in the absence of the project activity. Bagasse accrues on-site from the production processand is currently used for energy purposes. Cane trash accrues on the cane fields and is currently burnt orleft for decay in the field (see Table 9).


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Table 9: Biomass Categories and their Uses with/without the Project Activity

Category Type SourceOutcome withoutProject

Outcome withProject

1 Bagasse Sugar extraction Energy generation Energy generation

2 Cane trash Field Field decay or burnt Energy generation

Table 10: Quantities of Biomass Residues for Energy Generation (in 1,000t fresh)

Season

Reference Project Activity

Bagasse Cane trash Bagasse Cane trash

2011/12 579.6 0.0 579.6 67.8

2012/13 617.0 0.0 617.0 70.8

2013/14 647.3 0.0 647.3 74.5

2014/15 653.4 0.0 653.4 75.22015/16 666.3 0.0 666.3 76.6

As previous 666.3 0.0 666.3 76.6

ACM0006 remains applicable since the plausible alternatives represent an allowed combination ofalternatives for power, heat, and biomass residues:

For power: P3 and P7For heat: H3For biomass residues: B4 (bagasse), B1 and B3 (cane trash)


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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 (assessmentand demonstration of additionality):

Prior consideration of CDM:During its 48thmeeting the EB decided that for all projects with a start date on or after 2August 2008 thatthe project participants must inform the Host Party DNA and the UNFCCC secretariat in writing of thecommencement of the project activity and the intention to seek CDM status (EB48, Annex 61). Thisregulation applies in case the PDD has not been published for global stakeholder consultation before theproject activity start date.

For the planned project activity, the project participants informed the DNA of Swaziland and theUNFCCC secretariat in writing about the activity. The UNFCCC confirmed the receipt of the officialform F-CDM-Prior Consideration on 15December 2009. The Swaziland DNA was informed on18 December 2009.

Earlier the project participants had successfully applied for a Letter of No Objection from the SwazilandDNA received on 2 March 2009. The Letter of No Objection refers to the submitted Project IdeaNote (PIN) Fuel Switch, Energy Efficiency and Renewable Electricity to the Grid at the Ubombo SugarLimited, Swaziland.

Table 11: Schedule of CDM Consideration

Action Type Date From/ To

Site visit CDM Consultants 09.09.2008 GFA ENVEST

Submit Project Idea Note 12.02.2009 DNA Swaziland

Receive Letter of No Objection 02.03.2009 DNA Swaziland

Board meeting Project approval 01.09.2009 Ubombo SugarIndustries Ltd. Board

Submit Request for Revision AM_REV_0169 04.09.2009 UNFCCC Secretariat

Order long leadequipment

Project Start 17.10.2009 ---

Submit Form F-CDM-Prior Consideration 15.12.2009 UNFCCC Secretariat

Submit Form F-CDM-Prior Consideration 18.12.2009 DNA Swaziland

Receive Final Response to AM_REV_0169 13.08.2010 CDM Meth Panel

Lifetime Aspects:

Since the project activity builds on an existing heat-and-power plant, lifetime aspects of the existingequipment are relevant to the baseline. The existing equipment forms the baseline only until the point intime when it would have been replaced or retrofitted in the absence of the project activity:

- The existing heat-and-power plant at the Ubombo sugar mill comprises boilers installed betweenthe years 1961 and 1999. All existing boilers could continue operation for at least another25 years, as is the case with other boilers in the industry. This is because of constant overhaul andmaintenance activities. In terms of boiler lifetimes the most important variable is not the year ofinstallation/ commissioning, but the regularity and degree of maintenance activities. Theregularity and the dates of these activities will be proven to the DOE by details of maintenanceexpenditure.


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- The existing heat-and-power plant at the Ubombo sugar mill comprises turbine alternators (TAs)

installed between the years 1964 and 1976. Like the boilers, at the site the TAs are subject toregular and duly maintenance and overhaul services. This fact will be proven to the DOE bycapital expenditure plans and details of maintenance expenditure.

Additionality:

In line with ACM0006 a stepwise approach is taken to select the baseline scenario and to demonstrateadditionality:

Step 1: Identification of alternative scenariosStep 2: Barrier analysisStep 3: Investment analysis (if applicable)Step 4: Common practice analysis

Step1: IDENTIFICATION OF ALTERNATIVE SCENARIOSSub-Step 1a: Define alternative scenarios to the proposed CDM project activity

This step has already been begun above. The identifiedplausible baseline scenariosare:1) For power: P3, P4, and P7; for heat: H3 and H4; for biomass residues: B4 (bagasse), B1 and B3

(cane trash)

To these plausible scenarios, the scenario The project activity not undertaken as CDM activity is to beadded for power and heat, i.e. P1 and H1.

Table 12: List of Potential Baseline Scenarios

Name Power Heat Bagasse Cane Trash

Proposed Activity P4 H4 B4 B41

st P1 H1 B4 B4

2nd

P3 and P7 H3 B4 B1 and B3

1st

alternative: This is the proposed project activity not undertaken as CDM activity. Bagasse and canetrash would be used for energy purposes.2

ndalternative: This is the generation of heat and power in the reference plant. The reference plantis the

retrofitted existing plant delivering a higher heat service due to the increased process heat demand of theexpanded cane crushing capacity at the adjacent sugar mill. Due to the increased heat generation with theexisting equipment, which has limited available capacities, there is still electricity generation, but nopower export and even more some small amounts of electricity are imported to the reference plant. This

means that the electricity exported to the grid by the proposed project activity plus the electricityimported by the reference plantwould be continued to be generated by grid connected fossil fuel firedpower plants.

Sub-Step 1b: Consistency with mandatory applicable laws and regulations

The first alternative is the proposed project activity without CDM and is, similar to the proposed projectactivity, consistent with applicable laws and regulations.

The second alternative involves scenarios P3 and P7 for power generation and H3 for heat generation.This would mean the continued combustion of coal and bagasse in the existing heat-and-power-plant. Thecombustion of coal and bagasse is consistent with mandatory applicable laws and regulations.Construction activities are not involved in this alternative and thus no permits for construction are


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indicated. In terms of biomass, bagasse would have the same fate as in the proposed project activity, i.e. itwould be used for energy purposes. This is in line with mandatory applicable laws and regulations. Cane

trash would be partially burned in the cane fields and be partially left to decay. Both practices arecommon in the region and are in line with mandatory laws and regulations. The government of Swazilanddoes not have plans to change regulations and laws concerning this subject. Although the National EnergyPolicy (2002) of Swaziland generally recommendsthe use of renewable energy, it does not stipulate itsuse for energy production.

Table 13: List of Potential Baseline Scenarios that Comply with Mandatory Laws/Regulations

Name Power Heat Bagasse Cane Trash

Proposed Activity P4 H4 B4 B4

1st P1 H1 B4 B4

2nd

P3 and P7 H3 B4 B1 and B3

Further investigations into other biomass residues are ongoing and could be considered in the future asadditional supplementary fuel to sugarcane trash. In this case, the baseline and the monitoring for thisother biomass residue would be defined according to the stipulations in the utilized approved baselinemethodology.

Step 2: BARRIER ANALYSISSub-Step 2a: Identify barriers that would prevent the implementation of alternative scenarios

The identified barriers that prevent one or more of the above baseline scenarios are:a) Technological barriersb) Lack of prevailing practice

a) Technological barriers:Proposed Activity:The risk of technological failure for the proposed project activity is significant. This is due to two factors.Firstly, the operation of a pure biomass cogeneration plant including cane trash is risky. In contrast to thecombustion of bagasse, the combustion of cane trash is problematic due to the properties of cane trash.The chemical and physical properties of cane trash compare best to cereal straw and hence to a materialthat even in the technically advanced European Union is difficult to handle in combustion processes.Cereal straw has a long and difficult history of trials in combustion processes in the European Union.Major problems involve but do not restrict to slagging, boiler tube fire-side fouling, and dust emissions.The second factor representing a technological barrier is the cane trash logistics. Cane trash is contrast tobagasse does not accrue from the sugar extraction at the sugar mill, but accrues in the cane fields. Incomparison to harvested sugar cane, its specific density is significantly lower (by more than 30%). This

increases costs of transport. Further, cane trash in the majority of cases is burned in the fields in thebaseline. Avoiding the burning of cane trash means exploring a new way of harvesting and collectingcane and cane trash. A cost effective and practicable means of cane trash and cane harvesting and haulagelogistics has thus to be established. The experience in this field is not available in the region, but had to begathered by the Ubombo Sugar Industries itself. The concept has so far only been tested at trial level atthe project site. Therefore quite a number of uncertainties persist.

The significance of this barrier can be read from the started activities of the second sugar companyestablished in Swaziland, the Royal Swazi Sugar Company (RSSC). It had developed a similar projectidea involving cane trash, incentivised by the CDM, and got developed a PDD, but ultimately due to thetechnological barriers refrained from implementing this activity.


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At Ubombo Sugar Industries Ltd. a long history of trials on both, the co-firing of cane trash and on thecane trash logistics was necessary. This history of trials lasted for more than 5 years. The logistics of cane

trash provision including harvesting, transportation and preparation had to be modified several times.Several completely different concepts of harvesting and preparation were investigated over the years frombaling of cut cane trash on the field and subsequent preparation at the mill with various types ofpreparation equipment to partial preparation on the field with silage machines. For the co-firing of canetrash different shares of cane trash in the fuel mix were explored and the combustion of differentcomponents of the cane trash was analysed in order to minimize on boiler problems (slagging, fouling,etc.).

In the proposed project activity there still remains a high degree of risk in terms of processing the canetrash, despite these years of trials. Although improvements to the initial concept and some technical andnon-technical solutions have been identified, there still persists the risk of technical failure. The trainingof staff and the cautious handling of technology with constant maintenance and control services will form

a key element of the operation of the project plant for at least several years.

Because of the considerable level of risk associated to the new concept of cane trash provision andcombustion, Ubombo Sugar Industries Ltd. might be required to further investigate and combust otherbiomass residues in smaller quantities especially in unforeseen cases where the cane trash qualitydecreases significantly (e.g. due to adverse weather conditions) or due to unforeseen logistical problemsexperienced during cane trash harvest or haulage. This, however, requires the availability of biomassresidues featuring appropriate combustion properties. So far, the availability of biomass residues is notgiven in significant amounts and no other biomass based power plants are operated in Swaziland.

Also against this background, the Ubombo Sugar Industries Ltd. has been looking for additional means toalleviate the technological barrier. This is one of the reasons why the CDM has been included in thedesign of the proposed project activity since the beginning. The CDM through the CER-revenues isassumed to substantially alleviate the technological barrier.

1stAlternative:The technological barrier is the same as for the proposed project activity. The difference isonly that the incentives given by the CDM cannot be utilized and that in consequence the technologicalbarrier is not alleviated.

2nd

Alternative:The second alternative is not facing any technological barriers and is thus not preventedby any barrier.

In summary, a significant technological barrier is identified for the proposed project activity and

for the proposed project activity without being undertaken as CDM-activity (1

st

alternative).Table 14: List of Potential Baseline Scenarios not facing Technological Barrier

Name Technological Barrier

Proposed Activity Significant barrier; The barrier is, however, alleviated by the CDM.

1st Significant barrier exists that would prevent this alternative.

2nd

No technological barrier.


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b) Lack of prevailing practice barriers:The proposed project activity is the co-firing of cane trash with bagasse in the cogeneration plant of a

sugar mill. In Swaziland this practice is not conducted by any of the other existing sugar mills. Also otherpower or power and heat plants in Swaziland do not utilize sugar cane trash as fuel.

Therefore, it is considered that a first of its kind barrierexists.

Table 15: List of Potential Baseline Scenarios not facinga First-of-Its-Kind Barrier

Name Technological Barrier

Proposed Activity Significant barrier; The barrier is, however, alleviated by the CDM.

1st Significant barrier exists that would prevent this alternative.

2nd

No technological barrier.


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Sub-Step 2b: Eliminate alternative scenarios which are prevented by the identified barriers

This step is to eliminate those alternative scenarios from further consideration which are prevented by one

or more of the identified barriers.

For the proposed project activity, the barrier analysis showed that two alternatives remain including theproposed project activity, but excluding the proposed project activity undertaken without being registeredas CDM project activity.

For the case there are still several alternative scenarios remaining, but which do not include the

proposed project activity undertaken without being registered as CDM project activity ACM0006,version 11, stipulates to show by means of qualitative and quantitative arguments how the CDM willalleviate the barriers identified.

Already in 2008, as has already been illustrated inTable 11,the Ubombo Sugar Industries has begun to

seek CDM-status for the proposed project activity. Through the incentives given by the CDM, UbomboSugar Industries continued the trials on the combustion of sugar cane trash and the trials on the sugar canetrash logistics. The incentives of the CDM allowed for continuation of the trials and will ultimatelyalleviate the barriers that prevent the implementation of the proposed project activity.

ACM0006, version 11, says If the CDM alleviates the identified barriers that prevent the proposedproject activity from occurring, project participants may choose to either:

Option 1: Go to Step 3 (Investment Analysis); orOption 2: Identify the alternative with the lowest emissions as the baseline scenario, and

proceed to Step 4.

The alternative with the lowest emissions that is not prevented by any barrier is the 2ndalternative. Theproposed project activity undertaken without being registered as CDM project activity is prevented bythe identified barriers.The baseline scenario is thus the 2nd alternative, i.e. the generation of heat and power in thereference plantand the continued generation of the part of electricity exported by the proposed projectactivity in the fossil fuel fired power plants connected to the electricity grid.

Since the CDM significantly alleviates the identified barriers that prevent the proposed project

activity, the proposed project activity is additional.

Step 3: INVESTMENT ANALYSIS

The investment analysis is not necessary following the steps defined by ACM0006, version 11, todemonstrate the additionality of the proposed project activity. However, the project participants wouldlike to utilize the investment analysis to support the additionality argumentation presented in the previoussteps.Generally, investment analyses are applied to explain how the registration as CDM project activity willalleviate the barriers that prevent the proposed project activity from occurring. It is to show that theproposed project activity is not economically or financially feasible without the revenue from the sale ofCERs. Here, the investment analysis is implemented following the guidance provided in Step 2 of theTool for the demonstration and assessment of additionality,version 05.2. Following this guidance abenchmark analysis is applied.


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The proposed project activity will be assessed with and without CDM revenues on basis of the indicatorInternal Rate of Return (IRR):

- The IRR is taken as after-tax-IRR (excluding depreciation as non-cash flow items);- The investment analysis is for a consideration period of 20 years; and- The benchmark is the company internal benchmark of 25% (inflated IRR).

The application of a company internal benchmark is consistent with the guidance provided in the tool incases the company is the only possible project developer. This is the case for the proposed projectactivity. No other company in the region or country would be willing to take up the substantial technicaland financial risk associated to this new activity. This also applies to the national electricity companywhich would also face the technological barrier. Further, the Ubombo Sugar Industries Ltd. would notlike to outsource the generation of process heat to a third party. The heat-and-power-plant forms anintegral part of the Ubombo sugar mill. The dependency on the services of the heat-and-power-plant for

the sugar mill operations is too large. No outsourcing or joint ventures of sections of the sugar mill planthave ever been done before either at Ubombo or the major share holder Illovo Sugar Ltd.

- The benchmark for the IRR of 25% (inflated IRR) is a company internal hurdle rate for non-corebusiness or first of its kind projects. Due to the higher risk nature of this kind of projects thebenchmark is above the benchmark for core business projects which is 20%.

- The company internal benchmark of 25% was predefined by the major shareholders of theUbombo Sugar Limited.

- In the report of the Ubombo Board Meeting from 20 October 2009 it is stated that thehurdle rate shall be 20% (inflated IRR) for conventional projects and 25% (inflated IRR)for new activities (Meeting Report, 20 October 2009, p. 14).

- The application of these two hurdle rates can be supported with historic examples. Forexample, the new activity of pivot irrigation had to pass the 25% benchmark in order to beapproved by the Ubombo Board (Meeting Report, 15 April 2009, Pivot ConversionProject).

The values in the feasibility study are as by the year 2009, the year when the board decided on theproposed project activity. This is in line with 6, Annex 58, CDM EB 51 Guidelines on the Assessmentof Investment Analysis.

The investment cost for the relevant parts of the project is above 500 million ZAR (South African Rand).The major equipment parts are a 24 MW condensing turbine and a 105 t of steam/h biomass boiler.Without carbon revenues the inflated IRR is 1.4%-point below the benchmark, i.e. at 23.6%. Without

carbon revenues the proposed project activity would thus not be implemented. Including carbon revenuesat 13.00 US$/CER (and for the consideration period of 20 years) and as conservatively estimated beforethe calculation of the emission factor of the national electricity grid the IRR improves to 25.2%. This wasthe IRR including CER revenues at the time of the investment decision. Based on updated values for thegrid emission factor and other factors (i.e. the ex-antevalues as described in this PDD), the IRR includingCER revenues is 26.0%. The CDM thus significantly alleviates the investment barrier.

To check on the stability of the before conclusions, a sensitivity analysis has been applied to the mainvariables: a) cost of cane trash provision, b) electricity generation and c) investment costs. The electricityprice is not varied since it is fixed and only subject to modification in accordance with inflation. TheGuidance on the Assessment of Investment Analysis (EB39, Annex 10, version02) suggests varying themain variables at least by 10%. The results are shown in the following table:


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Table 16: Inflated IRR (excl. CDM) for Variations in Main Variables (Sensitivity Analysis)

Variable -20% -10% Initial +10% +20%

Cane trash provision 24.6 24.1

23.6

23.1 22.6Electricity (amount) 22.4 23.0 24.2 24.8

New 105t/h Boiler n/a 24.6 22.8 n/a

New 24 MW Turbine n/a 24.6 22.7 n/a

The interpretation of the results of the sensitivity is the following:- Cane trash provision: The project is sensitive to costs of cane trash provision. If the costs of cane

trash provision are 10% higher than assumed in the initial calculation, then the inflated IRRwould go down to 23.1% (If the costs are 20% higher, then the IRR goes even down to 22.6%).On the opposite side, a decrease of the costs of cane trash provision by 10% would result in anIRR of 24.1% which is still below the benchmark (If the costs are 20% lower, then the IRR still

achieves 24.6% only).- Electricity amount: The influence of an assumed 10% variation of the electricity generationshows that the IRR would vary between 23.0% and 24.2%. The benchmark would not beachieved in any case. (Even for the unrealistic case of 20% more electricity than assumed, theIRR would still remain below the benchmark and be at 24.8%. A 20% lower electricityproduction would mean an IRR of 22.4%).

- Biomass boiler: The investment costs in the new boiler are more than 30% of the totalinvestment. A 10% deviation of the real investment costs from the assumed investment costsvaries the IRR from 22.8% to 24.6%. The benchmark is thus not achieved even if the boiler is10% less expensive.

- Condensing turbine: The investment costs in the new condensing turbine are more than 30% ofthe total investment. A 10% deviation of the real investment costs from the assumed investment

costs varies the IRR from 22.7% to 24.6%. The benchmark is thus not achieved even if theturbine is 10% less expensive.

From the sensitivity analysis, it can be concluded that the requirement for CERs for the project to meetthe company IRR is robust. Even though variations in the main variables of up to 10% would occur, thebenchmark of 25% inflated IRR would still not be achieved! Only through the CER-revenues whichincrease the IRR by 3%-points, the project participants have a financially and economically attractiveinvestment project.

The investment analysis showed that the proposed project activity without being registered as

CDM project activity does not achieve the companys internal benchmark of 25% IRR (post tax,

inflated). Only when including revenues from CERs the benchmark is achieved. The investment

analysis thus supports the before additionality argumentation.

Remark: The investment analysis is for the proposed activity involving the supply-side energy efficiencyimprovements, the fuel switch, the renewable energy generation and export to the grid, and the demand-side energy efficiency improvements. Excluding the demand-side energy efficiency improvements, theIRR is by far lower. In this case the inflated IRR is 12.6% without CER-revenues and 15.8% with CER-revenues (assuming a conservative attribution of emission reductions to the demand-side components).


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Step 4: Common Practice Analysis

The common practice analysis is a credibility check whether and to which extent similar activities have

already diffused in the relevant sector and geographical area.

In Swaziland the controlled combustion of cane trash for energy purposes is not practiced at all. Thebiomass boiler that shall be installed under the proposed project activity is more efficient and specificallydesigned to fire cane trash at a limited share in the fuel mix. The Ubombo Sugar Industries, however, isnot an electricity producer. The main activity of the company is sugar cane cultivation and sugarproduction. Electricity production, so far, has only been for company needs with excess utilised for thecompanys agricultural activitiesvia a dedicated electrical bus. The export of electricity to the nationalelectricity grid is a new activity. The proposed project activity will also expand electricity production intothe sugar cane off-seasons. During this period biomass (bagasse and cane trash) will be taken from abiomass storage constructed within the proposed project activity. This venture is also new to the UbomboSugar Industries.

The sugar sector in the geographical area, even if not restricted to the host country Swaziland, does notutilize sugar cane trash for energy purposes, although trials in this respect are undertaken and neither ispower generation of this magnitude practiced.

Thus, the proposed project activity cannot be deemed as common practice in Swaziland and is thus

additional.

Conclusion:

With the steps 14 the additionality of the proposed project activity has been demonstrated. Further, the2nd alternative (reference plant and electricity generation by grid connected power plants) has beenidentified as baseline scenario.


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B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

The emission reductions calculate according to Equation 1 of ACM0006, version 11:

Emission reductions are calculated as follows:

yyyy LEPEBEER (1)

Where:

ERy = Emissions reductions in yeary(tCO2)

BEy = Baseline emissions in yeary (tCO2)

PEy = Project emissions in yeary(tCO2)LEy = Leakage emissions in yeary(tCO2)

ACM0006 adopts a conservative approach and assumes that biomass residues would be used in thebaseline as a priority for the generation of power and heat and that the heat provided by heat generators isused first in heat engines (operated in cogeneration mode), then second in thermal applications to satisfythe heat demand, and then third in heat engines which operate for the generation of power only. Thisassumption is in line with the heat utilization priorities in the baseline of the proposed activity.

Based on these assumptions, baseline emissions are calculated as follows:

)EF,EFmin(ELEFFFEFELBE yFF,EG,yGR,EG,y,GR/FF,BLf

fy,FF,fy,HG,BL,yGR,EG,yGR,BL,y (2)

Where:

BEy = Baseline emissions in yeary(tCO2)

ELBL,GR,y = Baseline minimum electricity generation in the grid in yeary(MWh)

EFEG,GR,y = Grid emission factor in yeary(tCO2/MWh)

FFBL,HG,y,f = Baseline fossil fuel demand for process heat in yeary(GJ)

EFFF,f,y = CO2emission factor for fossil fuel type f in yeary(tCO2/GJ)

ELBL,FF/GR,y = Baseline uncertain electricity generation in the grid or on-site in yeary(MWh)

EFEG,FF,y = CO2emission factor for electricity generation with fossil fuels at the project sitein the baseline in yeary(tCO2/MWh)

y = Year of the crediting period

f = Fossil fuel type

Baseline emissions due to disposal of biomass residues (BEBR,y) are not considered by the projectparticipants. Otherwise this would have to be added to the total baseline emissions (BEy).

The algorithm used to determine the data above can be summarized as follows:


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Step 1: Determine biomass availability, generation and capacity constraints, efficiencies and poweremission factors;

Step 2: Determine the minimum baseline electricity generation in the grid;Step 3: Determine the baseline biomass-based heat and power generation;Step 4: Determine the baseline demand for fossil fuels to meet the balance of process heat and the

corresponding electricity generation;Step 5: Determine the baseline emissions due to uncontrolled burning or decay of biomass residues;Step 6: Calculate baseline emissions.

Step1: Biomass availability, Generation and Capacity Constraints, Efficiencies and EF(power)

Step 1.1: Baseline Process Heat Generation [HC(BL,y)]The amount of process heat that would be generated in the baseline in year y [HC(BL,y)] is determined as

the difference of the enthalpy of the process heat in the project activity minus the enthalpy of the feed-water, the boiler blow-down and any condensate return to the heat generators. At the sugar mill no heat isused for the drying of biomass which otherwise would have to be subtracted.The parameter HC(BL,y) is relevant as for the reference plant. This subject is also addressed in thesubmitted Request for Deviation. The parameter cannot be taken from the project plant in whichprocess efficiency measures will be involved that altogether could not be implemented in the referenceplantdue to technical reasons as argued above. HC(BL,y) is monitored in the project plant and is translatedaccurately for the reference plantby the applied EMB model.

Step 1.2: Baseline Electricity Generation [EL(BL,y)]

yaux,PJ,y,imp,PJygross,PJ,yBL, ELELLEEL (3)

Where:

ELBL,y = Baseline electricity generation in yeary(MWh)

ELPJ,gross,y = Gross quantity of electricity generated in all power plants which are located at theproject site and included in the project boundary in yeary(MWh)

ELPJ,imp,y = Project electricity imports from the grid in yeary(MWh)

ELPJ,aux,y = Total auxiliary electricity consumption required for the operation of the power plantsat the project site in yeary(MWh)

y = Year of the crediting period

ELPJ,aux,y will include all electricity required for the operation of equipment related to the preparation,storage and transport of cane trash in the project activity and electricity required for the operation of allpower or heat generating plants which are located at the project site and included in the project boundary(e.g. for pumps, fans, cooling towers, instrumentation and control, etc.).

Step 1.3: Baseline Capacity of Electricity Generation [CAP(EG,total,y)]

The heat engines at the Ubombo sugar mill (including the baseline reference plant) are all of thecogeneration-type i. One heat engine is installed as a condensing type machine, however, it is run in co-generation mode and only the necessary steam to drive the backend blades is passed through. The steam


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going via the backend blades is condensed. This heat engine has and will never be operated in power-onlymode.

The heat engines load factors take into account seasonal operational constraints, i.e. only the load factorsduring the crushing season are taken into account. Depending on the year the crushing season is around35 weeks. Accordingly the

project design document sugar

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