Wigton Wind Farm Project Project Design Document

Transcription

1 EcoSecurities Environmental Finance Solutions Mauritskade HD Den Haag The Netherlands Telephone (31) Fax (31) Web site: Wigton Wind Farm Project Project Design Document Prepared for Renewable Energy Systems April 2003 Offices in Oxford, Los Angeles, Sydney, London, Rio de Janeiro, The Hague Registered Kamer van Koophandel Haaglanden, The Netherlands, Nr VAT Registration No B.01

2 EcoSecurities Ltd, Project Design Document TABLE OF CONTENTS A. GENERAL DESCRIPTION OF PROJECT ACTIVITY...3 B. BASELINE METHODOLOGY...8 C. DURATION OF THE PROJECT ACTIVITY / CREDITING PERIOD...19 D. MONITORING METHODOLOGY AND PLAN...20 E. CALCULATION OF GHG EMISSIONS BY SOURCES...26 F. ENVIRONMENTAL IMPACTS...29 G. STAKEHOLDERS COMMENTS...30 ANNEX 1: CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY...32 ANNEX 2: INFORMATION REGARDING PUBLIC FUNDING...35 ANNEX 3: NEW BASELINE METHODOLOGY...36 ANNEX 4: NEW MONITORING METHODOLOGY...44 ANNEX 5: BASELINE DATA...47 Offices in Oxford, Los Angeles, Sydney, London, Rio de Janeiro, Den Hague Registered in England and Wales No VAT Registration No

3 EcoSecurities Ltd, Project Design Document A. GENERAL DESCRIPTION OF PROJECT ACTIVITY A.1 Title of the project activity: Wigton Wind Farm project (WWF). A.2. Description of the project activity: The purpose of the project is to implement the first commercial scale grid connected wind power plant in Jamaica and the Caribbean region. The project will lead to reduced greenhouse gas emissions because it will be displacing a largely fossil fuel based electricity generating system. The project will also support the Governments objectives of: Fostering, facilitating and encouraging the development of new renewable energy sources, with one of the key renewable technologies listed being wind. Reducing reliance on fossil fuel imports and developing indigenous power resources, which will have added economic benefits. The 20.7 MW project will comprise 23 turbines, with each machine having a capacity of 900kW. The planned output is million kw hours. The turbine supplier will be NEG Micon Holland bv. The plant will be grid connected. The purpose of the project is to generate competitively priced renewable electricity. The 20.7 MW project should generate enough electricity to feed 25,000 homes. The fact that the electricity is renewable and does not require imports of fuel makes the project even more important to Jamaica. Contribution to sustainable development Many of the benefits of wind energy are strategic and long term and are therefore difficult to ascribe a particular value to. However, strong Government support shows that the economic rationale for developing wind energy is a central component of the overall strategy. The Government's energy policy objective is to ensure secure, diverse and sustainable supplies of energy at competitive prices. Another advantage of the project is that is produces renewable energy that does not contribute to global warming, has a never-ending supply of, and uses, free fuel. It has no requirement for the transportation of fuel. As the wind energy displaces the use of imported fossil fuels, the Jamaican economy will benefit through a corresponding saving of imports. Other benefits include: Increase of employment. The Wigton Wind Farm will endeavour to ensure that wherever possible local contractors and employees are used in all aspects of the wind farm development. Employment would be created during the construction phase when local firms would be invited to bid for a significant portion of the construction work on roads, foundations and the building. Construction materials would be sourced locally and local Wigton Wind Farm project 3

4 EcoSecurities Ltd, Project Design Document transport and plant hire companies used wherever possible. Up to 40 jobs would be created during the 6 month construction stage and 2 equivalent full-time jobs during operation. It is anticipated that over 80% of the construction jobs would be filled locally and the operation and maintenance jobs. Foreign investment is likely to attract other investors. Around a quarter of the approximately US$ 20 million to construct project would be invested in Jamaica through local contractors for civil engineering works, purchase of local materials, electrical installation and the grid connection. Local shops and hotels will benefit from increased customers during the construction and operational phase. Wind farm developments are an ideal form of farm diversification and an excellent environmentally beneficial use for an area designated for mining. It is expected that the wind farm leads to interest to tourists as it will be the first commercially operational wind farm in Jamaica and the Caribbean. The visiting of tourists will benefit the local economy. Economic benefit accrues to the local area both directly and indirectly and the effect of the wind farm on the local economy is considered to be a positive benefit. The wind farm will act as a valuable educational resource. Most schools and colleges now have energy and the environment on the curriculum, and wind farms make an ideal study for technical, social and environmental projects. RES regularly hosts school and college groups at its existing wind farms in the UK, and similar arrangements will be made in Jamaica. A.3. Project participants: Renewable Energy Systems (RES) Limited and the Petroleum Corporation of Jamaica (PCJ) are working together to develop a wind farm in Jamaica. They have established a project company Wigton Wind Farm Limited (WWF) to own this wind project. The company is registered in Jamaica. RES will be representing Wigton Wind Farm Limited in this offer of Certified Emission Reductions (CERs) to Senter. Renewable Energy Systems Limited (RES) Renewable Energy Systems Ltd (RES) which is the leading UK developer of wind energy projects and wind project construction company, having completed in excess of 30 wind farm projects. RES is a specialist wind engineering, consulting, and development company. Projects have been completed in England, Scotland, Wales, Northern and Southern Ireland, France, Portugal, Spain, and the USA. Projects are currently in the construction phase in the UK, France, USA, and Portugal, while the development portfolio extends to include additionally Spain, Switzerland, China, Africa and Jamaica. RES has maintained an ownership interest in many of the projects, which it has developed. RES is a wholly owned subsidiary of the major UK Wigton Wind Farm project 4

5 EcoSecurities Ltd, Project Design Document construction and engineering company, Sir Robert McAlpine Group, which is itself a subsidiary of Newarthill. Petroleum Corporation of Jamaica (PCJ) PCJ is owned by the Government of Jamaica. It is the national oil company and has also been given the responsibility of developing renewable energy projects. In 1995, the Petroleum Corporation of Jamaica PCJ was mandated by the Government to develop indigenous renewable energy resources, to prevent adverse effects on the environment and to assist the government in realizing the goals of the Jamaica Energy Sector Policy. NEG Micon NEG Micon are a leading turbine manufacturer and is the wind turbine supplier for the Wigton Wind Farm project. At the end of 2000 NEG Micon had the largest cumulative installed capacity of any turbine manufacturer in the world. At the end of 2001 NEG Micon had installed more than 350 of the 900 kw model worldwide, which is the model to be used by Wigton. This 900kW turbine is a development of the 750kW and 600kW turbines. Host Party- Ministry of Land Environment in Jamaica The Ministry of Land Environment of Jamaica is acting as the representative of the Government in connection with the CDM aspects of the project. The Jamaican Government was involved in the CDM aspects of the Wigton project from the spring of the year Participation of the Government was through the following: Miss Barnaby and colleagues provided information and guidelines on local stakeholder, EIA process, and the emerging CDM approval process; an ad hoc inter ministerial CDM committee to assess the project for approval. This as a result of the requirements included in the Marrakech Accords on procedures and need for approval of CDM projects from a DNA; the Attorney General (government lawyers) to evaluate legal aspects of providing CDM approval from DNA; Provision of DNA approval, after appointment of an interim DNA through the agreement of the Cabinet of Ministers. Please see Appendix A for the Letter of Approval for the Wigton project. Investor Party No contract on the sale of potential CERs has been agreed, and so there is no formal involvement of an investor Party at the time of writing this PDD. The project proponents are in the process of securing CER purchase agreement, but since no contract has been entered into this is subject to change. Further details on the main project participants are provided in Annex I. A.4. Technical description of the project activity: A.4.1. Location of the project activity: Wigton Wind Farm project 5

6 EcoSecurities Ltd, Project Design Document A Host country Party(ies): Jamaica A Region/State/Province etc.: The project will be located at the Manchester Plateau area, about 15km SSW of Mandeville in Jamaica. A City/Town/Community etc: The project will be located at Wigton, Manchester Plateau area. A Detail on physical location, including information allowing the unique identification of this project activity: The project will be located within a bauxite mining area on land owned by the mining company - ALCOA Minerals of Jamaica LLC A.4.2. Category of project activity Energy & Power grid connected power generation. A.4.3. Technology to be employed by the project activity: State-of-the-art wind power technology. Horizontal axis wind turbines with upwind rotors will be utilised on this site and rotor power control will be by stall regulation The 20.7 MW project will comprise 23 turbines. The supplier of the wind turbines, NEG Micon, was selected by competitive bidding, and will supply 23 of its NM900/52 model wind turbines. These turbines are rated at 900kW and have a rotor of 52m diameter at a hub height of 49m. The planned output is million kw hours. The plant will be grid connected cabling underground leading to a substation on the site, housing metering, switchgear, and protection equipment. NEG MICON will provide operational training for the owner of the wind farm. They will also provide a full operations and maintenance contract for the owner of the wind farm for the first 5 years (renewable for further periods). A maintenance base will be set up in the vicinity of the site and local staff employed and suitably trained. This base is likely to be the base for his support to other Caribbean installations. A.4.4. Brief explanation of how the anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed CDM project activity, including why the emission reductions would not occur in the Wigton Wind Farm project 6

7 EcoSecurities Ltd, Project Design Document absence of the proposed project activity, taking into account national and/or sectoral policies and circumstances: Explanation of how the projects anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed CDM project activity: The electricity generated by the Wigton Wind Farm will displace grid electricity generated from existing fossil fuel plants. Wind generated electricity does not produce greenhouse gas emissions, therefore the project will reduce greenhouse gas emissions by displacing more carbon intensive electricity from the grid i.e. electricity generated from fossil fuels. This has been demonstrated in the baseline analysis (see sections B and E below). Why the emission reductions would not occur in the absence of the proposed project activity, taking into account national and/or sectoral policies and circumstances: The purpose of the project is to implement the first commercial grid connected wind power plant in Jamaica. There is no evidence of other renewable energy projects being planned in Jamaica that could provide an alternative option to reduce greenhouse gas emissions by displacing fossil fuel based grid electricity. Whilst the Jamaican Governments environmental and energy strategy objectives call for the development of renewable energy, there is no policy framework or system of support measures to realize this objective. Since the project is the first commercial scale wind project in Jamaica this can be considered a risky investment. The additional support, in terms of financial revenues from the CER sales and the political commitment that CDM registration provides, gives the project investors greater confidence in implementing a risky first time activity. A.4.5. Public funding of the project activity: The Dutch Development and Environment Related Export Transactions Programme (ORET/MILIEV) awarded a grant to the Wigton Wind Farm project. The grant equates to approximately 20% of the total turnkey price for the Project. The grant is at a rate of 35% of the value of the supply of wind turbines and ancillaries from Holland. The ORET/MILIEV programme aims to promote employment and enterprise in developing countries. ORET/MILIEV channels grants (in the form of donations) to developing countries, enabling them to import capital goods, works, and services from the Netherlands. Its budget amounts to 100 million per year. The ORET/MILIEV grant from The Netherlands is a grant and they do not claim or require any compensation in the form of Certified Emission Reductions. The ORET/MILIEV grant does not constitute a diversion of official assistance and is not counted towards any financial obligation from The Netherlands. Wigton Wind Farm project 7

8 EcoSecurities Ltd, Project Design Document B. BASELINE METHODOLOGY B.1 Title and reference of the methodology applied to the project activity: According to the UNFCCC s Drafting Group on Technical Issues text on CDM (Mechanisms) (Decision-/CP.7 Article 12, Paragraph 48) a project must select a baseline approach relevant to the activity. The baseline approach adopted for the Wigton project is option 48(a) of the Marrakech text, which makes use of existing actual or historical emissions. This approach cannot readily be applied as baseline methodology and must be interpreted and made operational in view of the project circumstances. The following name is proposed for a new methodology following this approach: Recent Additions to the Grid methodology. An explanation of this new methodology and the condition under which it can be applied are provided in Annex 3. A justification of the method s appropriateness given the project circumstances is given in section B.2 below. A description of how this Recent Additions to the Grid methodology is applied for the specific project activity of Wigton is provided in Section B.3 B.2. Justification of the choice of the methodology and why it is applicable to the project activity The Recent Additions to the Grid methodology appears to be most appropriate for projecting what would have happened in absence of the Wigton Wind Farm (WWF) project. This is concluded from an analysis of four different scenarios. A description of these scenarios and the argumentation to choose for the Recent Additions to the Grid methodology is provided below. General situation What will the Wigton project displace? Wigton is connected to the national grid and will thus have an impact on the dispatch of the Jamaican grid. The key question when developing the baseline is what electricity supplied to the Jamaican grid will be displaced due to the Wigton project. In Jamaica, JPSCo is responsible for programming the national grid dispatch. As a general rule, the dispatch will be organised based on marginal costs of the power plants connected to the grid. Marginal costs include the variable costs related to the production of electricity, and exclude fixed costs and investment costs. JPSCo states that Wigton will be fully dispatched (Moss, 2002). At the moment, the plant operating at the highest costs is the Bogue plant, which therefore operates mainly during peak hours. Wigton will thus most likely displace power currently produced by Bogue. However, to develop a baseline scenario for Wigton, an analysis of the total existing grid and projections of the grid mix for the future have been made. In the future, the Wigton project could: a) Change the existing situation by altering the dispatch of the existing plants. This implies the Wigton project would displace power from existing plants. Wigton Wind Farm project 8

9 EcoSecurities Ltd, Project Design Document b) Compete with alternative new power plant developments. In this case, the Wigton project results in a delay of or exclusion of the construction of a new to be built plant. It is most likely that the Wigton project will mainly have an impact on the power plants that are currently operational. Because of its size, it is unlikely that Wigton will delay any investments in new power plants. However, it can be expected that in the next 10 to 15 years new facilities will be built. The baseline scenario should reflect potential changes in the power mix. This implies that, in order to estimate which power plants will be displaced by the power produced by the Wigton project, the following information is needed: 1. Presentation of the current situation. This will be presented by indicating the mix of power generated by the currently operational power plants connected to the grid. The most recent data available on the power generated by plants connected to the grid is from the year Estimate future changes to the power and technology mix of Taking this into account, the baseline should at least include data on existing power plants. Presentation of the current situation The mix of technologies of operational plants providing electricity to the grid in Jamaica in the year 2001 includes: hydropower small scale wind (total of 225 kw) oil fired steam generating units diesel fired gas turbine oil fired cogeneration oil fired slow speed diesel generators oil fired medium speed diesel generators At present the majority of electricity is generated by burning diesel and bunker oil. To establish the baseline, the wind and hydropower plants are not taken into account. Wigton will not affect the dispatch of these plants, as they will always be fully dispatched because they are basically free sources of energy (Moss, 2002). Moreover, wind and hydropower contribute less than 2% of the total electricity provided to the grid. To estimate what will be displaced by the Wigton project, the operating margin has been presented. The simplest way to present this is to determine the weighted average of all resources, except zero fuel costs and must run facilities. This methodology is also recommended by a recent study on baseline recommendation for the electricity sector (Kartha, 2002). In Jamaica, only the hydropower plants and the small scale wind Munroe plant are considered must run facilities. Wigton will displace a mix of the existing thermal power plants. Wigton Wind Farm project 9

10 EcoSecurities Ltd, Project Design Document Estimate of future changes to the electricity mix and technologies The ultimate objective when developing a baseline is to come up with an accurate estimate as possible of the future grid mix during the defined crediting period. Different options exist to assess changes in the existing power mix and technologies. One important decision to make when projecting the future is whether to use historic or forward looking data. Historic sources include information from existing, or past, performance of facilities. These could be projected into the future by extrapolating past trends or by assuming a constant use of the grid mix in one specific year or specific point in time prior to the project implementation. However, the most preferred option for projecting the future grid mix would be to use projections from official institutes. From this the following options can be defined to develop the baseline methodology for the Wigton project; 1. The conditions applicable in the year 2001 are assumed to remain constant during the total crediting period (Fossil Fuel 2001); 2. The scenario is developed by using data on projections for the future (Future Additions); 3. The scenario is developed by using data on recent additions only ( Recent Additions to the Grid ); 4. The scenario is developed by combining data on the existing fossil fuel grid mix in 2001 with most recent additions (Combined Margin). Selection of the baseline methodology This section will discuss the above options and then justify the selection of the baseline methodology that is deemed most appropriate for the Wigton project. General assumptions all methodologies Baselines are hypothetical and therefore they are unlikely to occur exactly as predicted. Consequently, each of the presented baselines methodologies below is based on a range of assumptions. However, there are some general assumptions that apply to all scenarios. The general assumptions underpinning each of the baseline scenarios are: The project output serves as the basis for the baseline scenario. The estimated project output for Wigton is GWh per year. It is assumed that the project output remains constant during the crediting period. As the project is grid connected we assume that the project will be displacing grid connected generation and capacity. Load factor conditions do not form part of our baseline analysis. The starting point of the baseline is the current situation, being the year The most recent data on fuel use by the operational power plants in Jamaica are for the year The data are provided by JPSCo (JPSCo, 2002). The data from JPSCo for the year 2001 serve as the basis to determine the starting point of the baseline (i.e. the year 2003). Wigton Wind Farm project 10

11 EcoSecurities Ltd, Project Design Document JPSCo does not provide data on fuel consumption for the plants operated by independent power producers. To take a conservative approach, these plants are assumed to have the same emission factor as the most efficient plant operated by JPSCo, which is the Rockfort plant. Information on generated output per plant has been used to calculate the emission factors for each year in the baseline, rather than data on installed capacity. This because data on electric output more accurately reflects the actual contribution of each plant in the mix. Only public utilities, being facilities that generate electricity as their primary activity, have been included in the baseline scenario. Autoproducers are enterprises, which generate electricity partly or wholly for their own use as an activity to support their primary activity. Because the generation of electricity by autoproducers is dependent on their primary activity rather than on the demand for electricity, it is assumed Wigton will not displace any electricity generated by autoproducers. Therefore, data on electricity generated by autoproducers are excluded from the baseline study. To calculate the emissions of the existing power plants, the default carbon emission factors for fossil fuels as provided by IPCC have been applied (IPPC, 1996). The sections below further mention if any methodology specific assumptions are made in addition to the above mentioned general assumptions. Fossil Fuel 2001 mix (option 1) The first option is that the existing situation remains constant during the total crediting period. Although this has been the case in Jamaica during the past 10 years, it is not very likely that this situation remains during the next years. Plans exist to develop new power plants to meet increased energy demand. Moreover, it can be expected that the existing technology mix will alter. For example, it is expected that in 2002 the first combined cycle technology will become operational in Jamaica (JPSCo, 2002). Based on the technical, economic and political factors it can also be expected that the existing mix and technologies will alter. The Jamaican government would like to import natural gas from Trinidad. If the import of natural gas indeed turns out to be a viable option, it can be expected that there will be a switch from diesel and bunker oil to natural gas, from 2007 onwards. The first feasibility study to import natural gas has just been completed. The most preferred option is to liquefy the gas and ship it to Jamaica, rather than piping it. Importing the gas requires the construction of facilities to process the imported liquefied gas and burning it to generate electricity. This requires time and investments and thus it is impossible to switch all existing plants to natural gas within the duration of the selected crediting period. It should be noted that the fundamental economics for developing the idea of importing natural gas are still lacking. Whether the import of natural gas is indeed a viable option is largely dependent on the price that has to be paid for natural gas. If Trinidad is indeed willing to offer natural gas at a price of Wigton Wind Farm project 11

12 EcoSecurities Ltd, Project Design Document 30% below market price, then the first calculations indicate the use of natural gas for electricity generation in Jamaica would be viable, if more than 500 MW of installed capacity would use natural gas. If it turns out not to be feasible, Jamaica plans to build conventional steam coalfired facilities to meet increased demand (Moss, 2002). In conclusion, it can be said that the mix at the end of the crediting period is still likely to consist of oil and diesel fired plants, but that the proportions in fuel use will alter. This should be represented in the baseline. A baseline methodology assuming there are no changes in the conditions of the situation in 2001 is thus not the most accurate. Future Additions (Option 2) An alternative to a static scenario of the situation in 2001 is to combine data on the existing fuel mix and develop a scenario using data on projections of fossil fuel plants and their technologies that will be added to the grid. The baseline for Wigton is then formed by connecting the carbon emission factor for the mix in 2001 with the projected mix for the Jamaican grid in This is a preferred option, because Wigton is likely to displace both existing operational plants and from future plants to be added to the grid. This section describes the various options for estimating the grid mix in JPSCo has not published any official expansion plan for meeting the expected increased demand of 5-6% per year. But according to JPSCo there are two options for expanding existing electric capacity; using of natural gas or coal. At the moment, expanding capacity through natural gas is the preferred option for the Jamaican government. But natural gas could in the most optimistic scenario be used in However, it is more likely to be Moreover, the fundamental economics for developing this scenario are still lacking and the feasibility is largely dependent on the price of the natural gas. At this moment, it is unclear whether this option is viable. Considering the natural gas could at first be used in 2007/2008 the most likely option to expand in the short term is to use diesel fired combined cycle technology (Hay, 2002). It is expected that in 2004, the recently built extra turbines of the Bogue plant will be converted into combined cycle. Based on this information the following assumptions were made for the electricity mix in 2014 (end of the crediting period): 1. The future additions are an equal mix (50% - 50%) of natural gas fired combined cycle plants and diesel fired combined cycle plants Option 2.1; 2. The future additions are an equal mix of diesel fired combined cycle plants and conventional coal Option 2.2. A more advanced scenario for option 2.1 is to look at which of the existing plants will switch to natural gas once it becomes available in Jamaica. The plan is to switch existing plants to natural gas once it is available, because of the economies of scale. It has been estimated that at least 500 MW of installed capacity should use natural gas in order to make it feasible. Wigton Wind Farm project 12

13 EcoSecurities Ltd, Project Design Document The following assumptions have been made to develop this staggered natural gas (option 2.3) scenario: In 2004, the 120 MW diesel fired combined cycle plant will become operational The facility for processing the liquefied gas is going to be built at the south coast of Jamaica. No gas will be transported to the north coast. Firstly, because of the costs and secondly because of the pristine environmental values at the north coast (Moss, 2002). This implies that the Bogue plant in Montego Bay will not switch to natural gas. The switch to natural gas should be technically feasible. This implies that the Rockfort, JPCC and EAL plants will not switch to natural gas and continue to use bunker oil. Burning diesel is more expensive than burning bunker oil. It is expected that natural gas, when offered at 30% below market price as currently assumed, can compete with diesel (Moss, Hay, Watson, 2002). It is assumed that all diesel fired plants switch to natural gas, i.e. the gas turbines at Hunts Bay. 1 It is assumed that a year later natural gas can also compete with bunker oil. In 2009 all bunker oil fired plants switch to natural gas, i.e. Hunts Bay steam turbines, Old Harbour, Jamalco and JEP. It is assumed a new 150 MW combined cycle gas plant will be added to the grid. Because of its high efficiency, it has been assumed the plant will operate 75% of the time. No data on fuel use for the natural gas fired plants is available. To calculate the emissions, default carbon emission factors for natural gas fired technologies from the Öko institute have been used (Öko, 1998). Recent Additions to the Grid (option 3) The methodology is based on only including data on plants that are added to the grid during the past 5 years. This methodology has been selected for the Wigton Wind project (see justification below). Therefore, a general description of this methodology is provided in Annex 3. Section B.3 described how this methodology has been applied to the specific case of the Wigton project. Combined Margin (option 4) The combined margin baseline methodology combines data on recent additions with the fossil fuel mix determined for the year Similar to the methodology of future additions, the fossil fuel mix for 2001 forms the starting point of the baseline and the mix of recent additions forms the reference point for the end of the crediting period (the year 2014). The baseline scenario is then formed by connecting the points of the mix determined for 2001 with the mix defined for the year 2014 (end of the crediting period). Assumptions: 1 Bogue is the other plant that contains generators fired by diesel, but is located at the north coast and thus will not switch to natural gas. Wigton Wind Farm project 13

14 EcoSecurities Ltd, Project Design Document For the plants added to the grid in the period only data on electric output is available for each year the specific plant has been operational. To calculate the weighted average for the new additions, data on electric output in the year 2001 have been used. The weighted average of new additions in the period is assumed to be the grid mix in The combined margin baseline scenario is formed by connecting the mix defined for the starting point (fossil fuel 2001, or baseline option 1) with the mix defined for 2014 ( Recent Additions to the Grid, or baseline option 3). The results of all methodologies are presented in the graph below Static FF 2001 Future NG CF NG CF Coal BM - 5 years CM Recent Add Static FF 2001 = option 1, Future NG = option 2.3, CF NG = option 2.1, CF Coal = option 2.2, BM = plants last 5 years, CM = option 4, Recent Additions to the Grid = selected methodology for Wigton. Justification for selection of the Recent Additions to the Grid methodology In order to best reflect what the Wigton project is likely to displace, information from both the current situation and power plants and technologies that will become operational in the future need to be included in the baseline scenario. The following factors have been taken into account for selection of the baseline methodology: During the past 10 years, no real improvements have been made to the efficiency of the operational power plants. However, it is unlikely that the existing grid and technology mix will not alter at all during the next 10 to 15 years. The power plants operated by the independent power producers (i.e. not JPSCo) are the most efficient. These plants have been added during the past 10 years. The Recent Additions to the Grid sensitivity approach thus reflects an improvement of the weighted Wigton Wind Farm project 14

15 EcoSecurities Ltd, Project Design Document average carbon emission factor compared to the emissions factor of all existing operational fossil fuel plants (Fossil Fuel 2001). The baseline methodology that best meets this demand would be a scenario using both historic data and information on future projections. However, no official plans or documents on future projections exist in Jamaica. Conversations were held with the three main institutes dealing with planning and organisation of the electricity sector, being the Ministry of Energy and Mining, JPSCo and the Office of Utility Regulations. All three institutes could only estimate what would happen in the future, but no real decisions have been made so far. Moreover, different opinions exist as to how increased demand would be fulfilled in the future. Based on the existing information it impossible for any of the three institutes to make any statements about the chances for new additions through natural gas or coal fired plants. The projections made for the future cannot be supported by any official documents. For the situation in Jamaica, the Recent Additions to the Grid approach is a more conservative approach than the combined margin approach. Taking into account the above factors and the availability, reliability and detail of data on future projections, the Recent Additions to the Grid approach does best reflect what would have happened without the Wigton project. To take a conservative approach, the most conservative baseline scenario following the Recent Additions to the Grid methodology has been selected. See Annex 3 for further details. B.3. Description of how the methodology is applied in the context of the project activity: Description of the Wigton Recent Additions to the Grid methodology The following project specific assumptions are made for the standard Recent Additions to the Grid methodology This Recent Addition methodology advises to use the average emissions of similar project activities undertaken in the previous 5 years. The selection of 5 years is based on the baseline approach described under option 48 under c) of Decision-/CP.7 Article 12, Paragraph 48 of the Marrakech Accord. The reasoning for selecting data on plants that were recently added, is that as a general rule the plants that are recently built are more efficient. Therefore, using data on these plants is considered a more conservative approach. In Jamaica only one new power plant and one unit to an existing plant were built in the last 5 years. This implies that the baseline for Wigton would be based on the performance of these 2 plants only. It was therefore decided to carry out a so-called sensitivity analysis and also develop and calculate the baseline when including plants that were built in the last 10 years. The methodology was implemented as follows: The fossil fuel mix of recent additions during the past 5 years defines the mix for the starting point of the baseline the year This includes the extra unit built for the Wigton Wind Farm project 15

16 EcoSecurities Ltd, Project Design Document Bogue plant (a diesel fired simple gas turbine in 2001) and the EAL power plant (a bunker oil fired cogeneration plant from 1998). The 20 MW gas turbine at Bogue only became operational in August This data has been adjusted to an annual output, determined based on the 5 month output. As an alternative, data on power plants constructed during the past 10 years ( ) have been used. For all plants, data on the plant performance for the year 2001 have been used. The methodology has been applied by executing the following steps: Step 1: Determine which plants are included in the baseline In the energy mix of the baseline, renewable energy plants that make use of free energy sources such as wind farms and hydropower plants are not taken into account. Since these plants basically use free sources of energy, the electricity generated by these plants will always be fully dispatched. As a consequence, the project will never replace one of these plants and therefore these plants are excluded from the fuel mix considered for the baseline emissions. Step 2: Determine period from which new plants are included The fuel mix of recent additions to the grid during the past 5 years forms the basis for defining the starting point of the baseline. Data are collected for the year for which the performance data of all plants are complete. For the situation in Jamaica this is the year However, for the Wigton project the Recent Additions to the Grid methodology will then turn out to be based on data from two plants only. Therefore, data on power plants constructed during the past 10 years ( ) have been used. Step 3: Extrapolate output of plants added in the most recent year A 20 MW gas turbine at Bogue became operational in August In order to determine its share in the total baseline the electrical output has been extrapolated to an annual output. The extrapolation is based on data on the output of the 5 months operation period of the plant. Step 4: Assessment of emission factors For each of the plants included in the baseline, the emission factors of the involved greenhouse gases have been determined. This has been based on data on fuel use for each of the plants. Step 5: Calculate the weighted average emission factor The weighted average is determined based on the proportional contribution and plant specific emission factors for each plant of the selected mix of plants. The weighted average is calculated by using the amount of electrical output per plant as weighting factors. Step 6: Calculate emissions of the baseline The resulting emission factor is multiplied by the annual electrical output of the project activity. This is again multiplied by the total amount of years within the crediting period, in order to achieve the total amount of baseline emissions. Wigton Wind Farm project 16

17 EcoSecurities Ltd, Project Design Document The calculations of steps 5 and 6 can be executed by the following formula: Total emissions year x = Σ t (Op * Pt) * CEF t Where: t = Fuel used per technology used Op = Output of the Project Pt = Proportion of technology and fuel use as compared to the total mix. CEFt = Carbon emissions factor for the fuel use per technology (The same formula will be used to calculate the emissions of the project case.) B.4. 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: A CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would occur in the absence of the registered CDM project activity, i.e. in the baseline scenario. The electricity generated by the Wigton Wind Farm will displace grid electricity generated from existing fossil fuel plants. Wind generated electricity does not produce greenhouse gas emissions, therefore the project will reduce greenhouse gas emissions by displacing more carbon intensive electricity from the grid i.e. electricity generated from fossil fuels. If the wind project is not implemented it is likely that the existing most recently built fossil fuel plants will continue to generate greenhouse gas emissions. Jamaican grid dispatch managers indicated that the demand from fossil plants with the highest marginal costs would be reduced as a consequence of any wind generated electricity production becoming available for dispatch. Therefore if the wind plant is not built fossil plants would continue to provide electricity to the grid. The baseline is therefore comprised on the emission from fossil fuel plants. Wind generated electricity can be considered to produce zero emission, and therefore when the project is compared to the baseline scenario emission reductions are generated. B.5. Description of how the definition of the project boundary related to the baseline methodology is applied to the project activity: The definition of the project boundary related to the new proposed baseline methodology is described in Section 4 of Annex 3. In the baseline methodology applied to the Wigton project only the direct on-site emissions of each plant in the baseline are included in the system boundary. This implies that for the power Wigton Wind Farm project 17

18 EcoSecurities Ltd, Project Design Document plants in the baseline scenario only emissions related to the generation of net electricity will be included as well. Emissions related to transmission and distribution losses, emissions related to the mining, processing etc. of fossil fuels, to transport of materials to the project site etc. are excluded. Moreover, on-site emissions related to the construction of new power plants are excluded as well, as these are difficult to measure. Concluding, only those emissions that are related to the burning of fossil fuels at the project sites to generate net electricity are included in the baseline. B.6. Details of baseline development B.6.1 Date of completing the final draft of this baseline section: 11/04/2003 B.6.2 Name of person/entity determining the baseline: Véronique Bovée EcoSecurities B.V. Mauritskade HD Den Haag The Netherlands Telephone (31) Fax: (31) Wigton Wind Farm project 18

19 EcoSecurities Ltd, Project Design Document C. DURATION OF THE PROJECT ACTIVITY / CREDITING PERIOD C.1 Duration of the project activity: C.1.1. Starting date of the project activity: The project will start construction in the summer of It is expected that the project will start operating in September of the year C.1.2. Expected operational lifetime of the project activity: The expected lifetime of the Wigton Wind Farm is 20 years. C.2 Choice of the crediting period and related information: A fixed crediting period of 10 years has been selected for the Wigton Wind Farm. C.2.2. Fixed crediting period (at most ten (10) years) C Starting date: January 2005 C Length: 10 years Wigton Wind Farm project 19

20 EcoSecurities Ltd, Project Design Document D. MONITORING METHODOLOGY AND PLAN D.1. Name and reference of approved methodology applied to the project activity: There is no methodology choice available in the UNFCCC website yet, but this project requires only a straight forward monitoring methodology. The following name is suggested for the monitoring approach used here: Direct monitoring of electrical output of wind farms. D.2. Justification of the choice of the methodology and why it is applicable to the project activity: The only significant emission source identified in the Baseline Study relates to the generation of electricity. Emission reductions will be achieved through avoided power generation of fossil -fuel based electricity in Jamaica due to the power generated by the WWF project. The amount of electrical output from the WWF project is therefore defined as the key activity to monitor. The monitoring plan provides the requirements and instructions for: Establishing and maintaining the appropriate monitoring systems for kwh generated by the project; Quality control of the measurements; Procedures for the periodic calculation of GHG emission reductions; Assigning monitoring responsibilities to personnel; Data storage and filing system; Preparing for the requirements of an independent, third party auditor/verifier. Wigton Wind Farm project 20

21 EcoSecurities Ltd, Project Design Document D.3. Data to be collected in order to monitor emissions from the project activity, and how this data will be archived: ID number 1 Electrical output Data type Data unit Measured (m), calculated (c) or estimated (e) Recording Proportion How will the For how long frequency of data to data be is archived be archived? data to be monitored (electronic/ paper) kept? kwh / yr M continuous 100% Electronic Until two years after the last issuance of CERs for this project activity Comment Data will be aggregated monthly and yearly Wigton Wind Farm project 21

22 D.4. Potential sources of emissions which are significant and reasonably attributable to the project activity, but which are not included in the project boundary, and identification if and how data will be collected and archived on these emission sources. The indirect on-site and off-site emissions that are excluded from the project boundaries are not identified as potential significant and therefore not as potential leakage. Therefore, these emissions will not be monitored. D.5. Relevant data necessary for determining the baseline of anthropogenic emissions by sources of GHG within the project boundary and identification if and how such data will be collected and archived. ID Nu mbe r 1 Electrical output of thermal plants added to the Jamaican fuel mix in the past ten years 2 Carbon emission factors of relevant fuel types 3 Data type Data unit Will data be collected on this item? kwh / yr Tonne CO 2 e / MWh Data already collected Data already collected How is data archived? (electronic /paper) Both electronic and paper Both electronic and paper For how long is data archived to be kept? Until two years after the last issuance of CERs for this project activity Until two years after the last issuance of CERs for this project activity Comment Wigton Wind Farm project 22

23 D.6. Quality control (QC) and quality assurance (QA) procedures are being undertaken for data monitored. Data (Indicate table and ID number e.g. D.4-1; D.4-2.) Uncertainty level of data (High/Medium/Low) Are QA/QC procedures planned for these data? Outline explanation why QA/QC procedures are or are not being planned. D3 1 Low Yes The metering equipment will be properly calibrated and checked periodically for accuracy, to ensure that any error resulting from such equipment shall not exceed +0.5% of full-scale rating. Further explanation see below. D5 1 Low Yes Data already collected from the following source: Jamaica Public Service Company Limited (JPSCo) D5 2 Low Yes Data already collected from the following source: the Environmental Manual for Power Development (EM model) of the Öko institute. (See point 3 of Annex 3 for more information) Wigton Wind Farm project 23

24 Measurement of electricity output Project electricity generation will be monitored through the use of on site metering equipment at the substation (interconnection facility connecting the facility to the grid). The Main Metering System equipment will be owned, operated and maintained by JPSCo, and the Backup Metering System equipment will be owned, operated and maintained by WWF. Both meters will have the capability to be read remotely through a communication line. Both JPSCo and WWF have the right to read either meter. Both meters will have the provisions to record on memory the accumulated kilowatt-hours. Both meters will be read. The results from the Main Meter will be supplied by JPSCo to WWF on a monthly basis. The monitoring tasks are to measure WWF s electric output, and steps to derive the emissions reductions are: JPSCo reads main meter and records result monthly within 3 working days of month end JPSCo supplies reading to WWF WWF supply reading to RES and file for Verifier RES accumulates readings for payment period, calculate CERs for sale, and invoice Senter RES file paperwork for Verifier The meter reading records will be readily accessible for auditors, Calibration tests records will be maintained for the auditors. Calibration of meters & metering dispute resolution procedures The Power Interchange Agreement between WWF and JPSCo defines the metering arrangements and the required quality control procedures to ensure accuracy. These are copied below: The metering equipment will be properly calibrated and checked periodically for accuracy. The metering equipment shall have sufficient accuracy so that any error resulting from such equipment shall not exceed +0.5% of full-scale rating. Both Meters shall be jointly inspected and sealed on behalf of the parties concerned and shall not be interfered with by either party except in the presence of the other party or its accredited representatives. All the meters installed shall be tested by JPSCo within 10 days after (a) the detection of a difference larger than the allowable error in the readings of both meters, (b) the repair of all or part of meter caused by the failure of one or more parts to operated in accordance with the specifications, and/or each anniversary of the Commercial operations date. If any errors are detected the party owning the meter shall repair, recalibrate or replace the meter giving the other party sufficient notice to allow a representative to attend during any corrective activity. Should any previous months reading of the Main Meter be inaccurate by more than the allowable error, or otherwise functioned improperly, the Net Energy output shall be determined by (a) first, by reading Backup Meter, unless a test by either party reveals it is inaccurate; (b) if the backup system is not with acceptable limits of accuracy or is otherwise performing improperly the WWF and JPSCo shall jointly Wigton Wind Farm project 24