CDM APPLICATION ON POWER SECTOR PROJECTS

2. CDM APPLICATION ON POWER SECTOR PROJECTS ENGR ARSHAD CHUGHTAI CONSULTANT PLANNING (POWER) NTDC

3. Background • Only a portion of the solar energy hits the Earth • The remainder either returns to space • Or is absorbed by the atmosphere • Upon contact with the incident radiation, the Earth heats up and emits this energy in the form of infrared radiant heat • Directed towards space, a portion of this radiation is intercepted and absorbed by the greenhouse gases.

4. The Greenhouse Effect The Greenhouse Effect is a natural phenomenon that allows us to survive on Earth. Without the greenhouse effect, average global temperatures would be – 18oC rather than the current 15oC. The green house effect is the process by which absorption and emission of infrared radiation by the gasses in the atmosphere warm planets lower atmosphere and surface. It was proposed by Joseph Fourier in 1824 and investigated quantitatively by Svante Arrhenius in 1896. Global Warming is an increase in the average global temperatures caused by an increase in concentration of gases that trap the sun’s energy. The global mean surface temperature increased over the 20th century by about 0.6oC.

5. Resulting Impact • Snow cover and ice extent have decreased; • Global average sea level has risen and ocean heat content has increased. • Higher maximum temperatures and more hot days over nearly all land areas; • Higher minimum temperatures and fewer cold days and frost days over nearly all land areas; • More intense precipitation over numerous regions; • Increased summer continental drying and associated risk of drought over most middle latitude continental land areas; • Increase in number of infectious diseases due to higher nocturnal temperatures (malaria already reaching higher altitudes where it was previously unknown). • Fall in agricultural production of staple crops such as wheat and corn due to higher temperatures.

6. Sources Green House Gasses • Carbon Dioxide (CO2) – Stems from combustion of fossil fuels, linked to transport and the production of heat or electricity, certain industrial process; deforestation. • Methane (CH4) – Stems from agriculture, oil and gas activities, and waste management activities. • Nitrous Oxide (N2O) – Stems from agriculture, the chemical industry and combustion activities. • Sulfur Hexafluoride (SF6), Per fluorocarbon (PFC), and Hydro fluorocarbon (HFC) stem from specific industrial processes (manufacture of aluminum, or magnesium, the semi-conductor industry), and from aerosols, air conditioning and insulating foam.

7. The Kyoto Protocol • 1997 International treaty signed in Kyoto Japan: • Sets an emission reduction target for 40 industrialized nations: Overall, nations must reduce GHG emissions by 5% below 1990 levels. • Because each GHG is different and has different global warming impacts, emission reductions described in tCO2-eq. • 1 tonne of CO2 = 1 tCO2-eq=1 carbon credit • 1 tonne of CH4 = 21 tCO2-eq=21 carbon credits • 1 tonne of N2O=310 tCO2-eq=310 carbon credits • 1 tonne of PFC = 9,200 tCO2-eq= 9,200 carbon credits. • 1 tonne of SF6 = 23,900 tCO2-eq=23,900 carbon credits

8. IMPACT OF EMISSIONS FROM ELECTRICITY GENERATED On average, each Mega Watt hour (Mwh) of electricity generated in the U.S results in the emission of 1,341 pounds of carbon dioxide (CO2), 7.5 pounds of sulphur dioxide (SO2) and 3.55 pounds nitrogen oxide (NOx). Thus the 10 million Mwh of electricity generated annually by US. Wind farms represents about 6.7 million tons in avoided CO2 emissions, 37,500 tons of SO2 and 17,750 tons of NOx. This avoided CO2 equals over 1.8 million tons of carbon, enough to fill 180 trains, each 100 cars long, with each car holding 100 tons of carbon every year.

9. EMISSIONS FROM FUEL ENERGY CHAIN

10. Kyoto Protocol and Carbon Credits • Provides financial incentives for investors in developing countries to invest in most efficient and environmentally friendly technologies; • Facilitate the most cost-effective reductions of GHGs • It costs comparatively less to reduce one tonne of CO2 in developing Countries than in the developed countries. • It helps developing countries continue on path of industrialization and leapfrog over most pollution-intensive stages;

11. How to Implement Carbon Credit Projects • Invest in new, cleaner, more efficient technologies, such as the following: • Construct and operate a wind farm or hydropower plant – will displace electricity produced from fossil fuels; • Application of biomass fuels instead of fossil fuels, such as rice husk, biogases, or MSW instead of coal; • Capture waste heat to produce additional electricity, thereby reducing overall fuel consumption; • Replace older, less efficient equipment with newest models available in the market. • It is to ensure that investment in technology goes above and beyond the environmental performance of the business-as-usual scenario in the country.

12. Carbon Credit Project Process • The project must first be approved by host country and validated by a third-party auditor. • After validation, the project is submitted to the United Nations for approval by the Clean Development Mechanism Executive Board. • For validation and approval, the project must first meet certain eligibility criteria, as well as use an approved methodology for determining emission reductions. • Subsequent approval, the project is closely monitored to ensure that emission reductions are achieved. Monitoring data will be evaluated by a third-party auditor. • Carbon Credits are only issued once monitoring data are verified by the auditor and the issuance is approved by the United Nations.

13. Carbon Credit application process involves many steps and transaction costs Carbon credit process- steps

14. Criteria • Country is a signatory to the international treaty to climate change and has ratified Kyoto Protocol and set up DNA for approve projects. • Project must reduce/displace one of the six greenhouse gases. • Project must not have been commissioned yet. • Emission reductions should be additional to emission reductions that would occur under normal business-as-usual scenario. • Required funding must not divert official development assistance. • Project must contribute to the country’s sustainable development. • Project must use technology that is readily available in a market.

15. Criteria • Carbon Credit revenue essentially to be a part of feasibility study. If a project has already commissioned – and it has not got carbon credits– that means it did not need carbon credits in the first place. • Carbon credits are intended to provide a financial incentive to invest. But if one has already invested without considering carbon credits, apparently such incentive was not required.

16. Additionality • The Clean Development Mechanism provide financial incentives to invest in new / more efficient / cleaner technologies. • It is essential to prove Additionality. • Carbon credit revenue need to play a role in decision-making while considering investing in a project! • What are the barriers to your investment? • Barriers on Investment: Cost, financial penalties, lack of available service providers, lack of skilled technicians, etc.

17. POWER SECTOR CARBON CREDIT PROJECTS 1. Replacement of Incandescent Bulbs/ Tube-lights with Energy Savers on Domestic and Commercial Consumers 2. Provision of Capacitors on Industrial and Agricultural Loads 3. Conversion of Street Lights to Solar Power System 4. RMS/AMR Smart Metering 5. Revamping of Thermal Plants 6. SF-6 Gas Leakage Reduction • Replacement of Energy Inefficient Irrigation Tube wells pump / motors with energy efficient standard agricultural pumps / motors • Installation of Energy Efficient Distribution Transformers

18. CDM PROJECT COMPONENTS/ STEPS

19. Minimum Project Requirements

20. Project Cycle

21. Project Idea Note (PIN) PIN – Project sponsors / proponents submit potential projects for consideration to the CFU in the form of a Project Idea Note (PIN).

22. Early Notification and Letter of Endorsement (LoE) LOE – If the PIN was submitted by a third-party project sponsor, and the CFU decides to develop it further, the Host Country (e.g the UNFCCC National Focal Point) will be notified of the project.

23. Carbon Finance Document (CFD) CFD – CFU experts will investigate further and evaluate particular aspects of the project in discussions with the project proponent and prepare a CFD with the risk assessment.

24. Letter of Intent LoI LOI – The CFU formally signals its intention to purchase emission reductions generated by a specific project under terms agreed in return for the exclusive right to contract for the purchase of emission reductions.

25. World Bank Due Diligence World Bank Due Diligence – All projects must comply with World Bank Group Operational Policies and Procedures, including those on environmental assessment. An Integrated Safeguard Policies review and Environmental Assessment (EA) is performed as a standard part of the appraisal of World Bank Group Projects.

26. Baseline Study (BLS) and Monitoring Plan (MP) BLS and MP – Once the CFU has decided to include the project in the Portfolio, it will commission a Baseline Study and Monitoring Plan, if the project is not applying an approved methodology.

27. Project Design Document (PDD) • PDD – A project – specific document required under the CDM which will enable the Operational Entity (OE) to determine whether the project: • (i) has been approved by the parties involved in a project, • (ii) would result in reductions of greenhouse gas emissions that are additional, • (iii) has an appropriate Baseline and Monitoring Plan. The PDD is prepared by the CFU and project sponsor.

28. Validation Validation – After the BLS, MP and PDD have been satisfactory developed, the CFU engages an Independent Validator (Designated Operational Entity, DOE) to validate them. This means that the Validator agrees that the ERs are additional to the baseline, the MP is sufficient, and that the ERs have a high chance of being certified under the Kyoto Protocol.

29. Registration Registration – The designated Operational Entity (DOE) contracted to undertake validation, upon the request of the CFU, submits the validation report and validation opinion to the Executive Board, along with a request for registration, together with the PDD, Baseline Study, MP, stakeholder consultation documentation and LoA, plus any other appropriate supporting documentation.

30. Negotiation of Emission Reduction Purchase Agreement (ERPA) Negotiation of ERPA – After the consultations, the CFU legal team prepares a ‘term sheet’ and/or a draft ERPA for further discussion the project sponsor.

31. Initial Verification / project commissioning Initial Verification / Project Commissioning – After the project’s construction and before its commissioning to produce ERs, the CFU contracts an Independent Third Party (a Verifier) for the project (different from the Validator). The Verifier will establish contact with the project and undertake an Initial Verification, which should confirm that the project is ready to generate verifiable and certifiable ERs. This will trigger the CFU acceptance of ERs from the project.

32. Monitoring • Monitoring – As part of project implementation, the project operator must implement the MP, which provides a methodology and a tool for measuring and calculating the emission reductions generated by the project. Once the project starts to generate emission reductions, the project entity monitors the project in accordance with the MP.

33. Verification and Certification • Verification and Certification–Verification and certification of the emission reductions will be undertaken periodically in accordance with the MP and other applicable guidelines by a DOE, who is contracted for the project by the CFU. The verifier will submit a verification report to the UNFCCC CDM Executive Board (EB) for a certification, which will confirm that the ERs have been achieved in the verification period in compliance with applicable CDM rules.

34. Transfer of Certified Emission Reductions (CERs) • Transfer of CERs – Once the ERs are certified, the CFU will pay for the amount of ERs as agreed in the ERPA and the ERs are transferred to Participants in accordance with the ERPA and / or Host Country Agreement and applicable UNFCCC or other rules.

35. POWER SECTOR CARBON CREDIT PROJECT • REVAMPING OF THERMAL PLANTS, ENHANCEMENT OF EXISTING THERMAL GENERATION CAPACITY OF GENCO’S • Rehabilitation / Efficiency Improvement Plans of GENCO’s • Jamshoro Unit 1-4: • Capacity to be Regained: 95MW • Heat rate to be improved: 4% • Additional Energy: 530MKWH / Year, • Fuel savings: 11.4 million US $ year • Availability to be increased by 4-5%. • Muzaffargarh Unit 1-6 • Capacity to be Regained: 165MW • Heat rate to be improved :12% • Additional Energy 930MKWH/year • Fuel saving: 17 million US $ / year • Availability to be increased by 3-4%. • Guddu Unit 1– 4 • Capacity to be Regained: 180MW • Unit 11,12 & 13 • Capacity to be Regained 125MW • Unit 5,7 & 8 • Capacity to be Regained 55MW • Total Optimization of GENCOs • 620 MW

36. ENVIRONMENTAL IMPACT (APPROXIMATE)

37. POWER SECTOR CARBON CREDIT PROJECTCONVERSION OF THE EXISTING 366MW STREET LIGHTING LOAD TO SOLAR POWER SYSTEM. • The Solar Lighting Systems consist of Lighting Equipment (lamp) with a rechargeable battery and a photovoltaic module. Photovoltaic (pv) modules consist of solar cells which can convert sunlight directly into electricity. • Solar LED street lights present the perfect and cost-effective solution for residential streets, roadways, and other general area lighting applications. • Solar street lights can be economically viable and efficient in a number of applications. Due to their low power consumption and very long life-span, solar LED street lights are a good alternative to LPS (Low Pressure Sodium) • Unlike LPS lamps that produce a yellow-orange light, Solar street lights using LED technology generate a very powerful and targeted crisp white light of excellent quality, which significantly improves color rendition and night visibility. • Project Highlights. • PEPCO intends to convert the existing street lightning load to solar power system. • PEPCO has jurisdiction over 10 Distribution Companies (DISCO’S) • LESCO, FESCO, CEPCO, MEPCO, IESCO, PESCO, TESCO, QESCO, HESCO & SEPCO. • Total number of Street Light Connections in Disco’s is 83302. • Load of street lights : 366 MW • DISCO wise break up of street light connections is as under:

38. LESCO: 1837 • GEPCO: 458 • FESCO: 1375 • MEPCO: 1255 • IESCO: 1438 • PESCO: 838 • HESCO&SEPCO: 863 • QESCO: 238 • TOTAL: 8302 • Number of Lighting Points: 639704* • Local Bodies involved are also being dovetailed into the project.

39. ENVIRONMENTAL IMPACT (APPROXIMATE)

40. POWER SECTOR CARBON CREDIT PROJECTINSTALLATION OF ENERGY EFFICIENT DISTRIBUTION TRANSFORMERS. • Recently PEPCO has amended specification for Oil immersed Hermetically sealed type distribution Transformers, rated voltage 11/0.415 KV reducing the maximum allowable iron and copper losses on KVA ratings of 5, 10, 15, 25, 50, 100, 200, 400 and 630. • Following table indicate the maximum allowable losses before and after the amendment and the impact of amendment in reduction of allowable losses resulting in increased efficiency.

42. Impact (Power Saving) • Reduction in Iron losses (No load losses) in the Energy Efficient Transformers will effect MW saving of 1.701 MW (On total number of 34080 Transformers Installed and Replaced during 2010-2011) • Reduction in Copper Losses (Load Losses at 60% load factor) in the Energy Efficient Transformer will effect MW saving of 5.2901 MW. • Total Power of Saving = 1.701 + 5.2901 • = 6.9911 MW (Say 7MW)

43. ENVIRONMENTAL IMPACT (APPROXIMATE)

44. POWER SECTOR CARBON CREDIT PROJECTPROVISION OF LT CAPACITORS ON INDUSTRIAL AND AGRICULTURAL LOADS • Among the various energy conservation measures, improvement of low power factor is an area where significant potential for saving exist. The power factor on the Industrial and Agricultural loads can be improved easily by the use of power factor equipment and is normally achieved by a suitable amount of capacitors load to compensate for the presence of inductive load in the system. Poor power factor on the system is also main cause of energy losses. • To improve the low power factor on LT side PEPCO has envisaged a plan to install LT capacitors on Agricultural Tube well and small industrial connections as well having load up to 40KW. • Total Number of Agriculture Tube well Connections in to DISCO’s :27875 • Load on Agricultural Tube well Connections in DISCO’s: 3511 MW. • Total Number of Industrial Connections up to 40KW load in to DISCO’s: 239266.

45. Load on Industrial Connections in DISCO’s: 2575 MW. • Agricultural Connections in DISCO’s • LESCO: 51600 • GEPCO: 35093 • FESCO: 34183 • IESCO: 7385 • MEPCO: 67374 • PESCO: 26651 • TESCO: 8377 • HESCO&SEPCO: 26555 • QESCO: 21055

46. Impact of Power Factor Improvement • Generally the existing Power Factor is 0.8 and which is required to be improved to 0.95. • The improvement can be achieved by installation of LT Capacitors. By following calculations impact of Power factor improvement on agricultural and industrial loads (up to 40 KW) can be derived concluding that as to how much gainful active power will be achieved or increased. • Agriculture tube well connections No : 278475 • Load : 3511 MW • Gainful Active Power or Active Power Difference: 554.37 MW • Reactive Power Difference or MVAR required to improve Power Factor from 0.8 to 0.95 • = 1480.16 MVAR • Small Industrial Connections NO: 239866, Load: 2575 KW • Gainful Active Power or Active Power Difference: 406.58

47. Reactive Power Difference or MVAR Required to Improve the Power Factor from 0.8 to 0.95 lagging = 1085057 MVAR • Total Gainful Active Power/Capacity Increase by Installation of Capacitors = 554.37+406.58 MW = 960.95 MW • Annual Energy Savings by Gainful Active Power/Capacity Increase • = 960.95x8760 MWH • = 8417922000KWH

48. ENVIRONMENTAL IMPACT (APPROXIMATE)

49. POWER SECTOR CARBON CREDIT PROJECTSF6 GAS LEAKAGE REDUCTION • SF6 is a nonflammable, colorless, nontoxic, chemically very stable gas which is five times as heavy as air. At atmospheric pressure, its dielectric strength is 2.5 times higher than that of air. • SF6 circuit breakers are installed in NTDC and DISCO’s (LESCO, FESCO, GEPCO, MEPCO, IESCO, PESCO, TESCO, HESCO, SEPCO & QESCO) Transmission Network. • At present there are 12 NOs of 500 KV, 26 NOs of 220 KV, 508 NOs of 132 KV and 173 NOs of 66 KV & 33 KV Grid Stations catering Power to the System. • PEPCO has introduced new technology and old oil and Air CB’s are being replaced with SF6-Gas Type. However during operations leakage is being experienced at different stations, this leakage needs to be reduced / minimized.

50. SF6 GAS CONSUMPTION ON RECYCLING & REFILLING AGAINST LEKEAGESAND DURINGMAINTENANCE & SERVICE OF INSTALLED CIRCUIT BREAKERS IN ONE YEAR