(GS-VER-PDD) THE GOLD STANDARD: Project Design Document for Gold Standard Voluntary Offset projects

Transcription

1 THE GOLD STANDARD: Project Design Document for Gold Standard Voluntary Offset projects (GS-VER-PDD) For more information, please contact The Gold Standard: Telephone Fax Grid-connected electricity generation from renewable sources: MAZI-3 30 MW Wind Power Plant Project, Turkey

2 VOLUNTARY OFFSET PROJECTS (Version 01 - in effect as of: January 2006) page 2 CONTENTS A. General description of project activity B. Application of a baseline methodology C. Duration of the project activity / Crediting period D. Application of a monitoring methodology and plan E. Estimation of GHG emissions by sources F. Environmental impacts G. Stakeholders comments Annexes Annex 1: Contact information on participants in the project activity Annex 2: Baseline information Annex 3: Monitoring plan Annex 4: Initial Stakeholder Meeting Invitation List Annex 5: EIA exemption letter

3 page 3 SECTION A. General description of project activity A.1 Title of the project activity Title: MAZI-3 30 MW Wind Power Plant Project, Turkey Version: 02 Date: June 09 th, 2008 A.2. Description of the project activity The objective of the project activity is to supply electricity from renewable sources to the highly growing Turkish electricity market. The project is expected to generate about 118,500 MWh electricity and result in about tons of CO2 emission reductions per year. The MAZI-3 Wind Power Plant (WPP) project involves the establishment of a 30 MW wind farm at Zeytineli Village - Urla District of Izmir which is located at the Aegean Coast of Turkey. The owner of the WPP will be MAZI-3 Rüzgar Enerjisi Santrali Elektrik Üretim A.Ş. The Wind farm is planned to consist of 12 wind turbines each having a capacity of 2.5 MW. Connection to the grid will be made via an 8 kilometre transmission line. Since the project results in green house gas (GHG) emission reduction by increasing the renewable electricity in the Turkish grid, in order to improve the project financial viability, it is proposed to register and implement the project as a Gold Standard Voluntary Emission Reduction (GS-VER) project. Since the financial incentives for the provision of renewable electricity are not satisfying, the financial inflows provided by the sales of emission reduction credits will increase the internal rate of return of the project to an attractive level for investors. The project will definitely have positive influences on sustainable development in the region and in Turkey. The MAZI-3 WPP will enable the use of local resources for energy production and thus decrease dependency on imported fossil fuels as an energy source. In addition, the project will have a significant effect on air quality in the region; directly and indirectly, create new jobs for local inhabitants during the construction and operation phases. Scores for the sustainable development matrix are given in the table below. Details and explanations are determined according to the section 3.4 of the Gold standard VER Project Developer s Manual. Table 1 - Sustainable Development Matrix

4 Component Indicators Score (-2 to Rationale 2)/(-, 0, +) Local/regional/global environment Water quality and quantity 0 Access to water by the community will not be affected by the project activity Air quality (emissions other than GHGs) +1 The project has positive impacts on air quality associated with using clean energy Replacing fossil fuel, project will contribute air quality by decreasing SOx, NOx etc. country level. Other pollutants (including, where relevant, toxicity, radioactivity, POPs, stratospheric ozone layer depleting gases) Soil condition (quality and quantity) page 4 +1 Project will replace use of fossil fuels therefore it will inhibit formation of pollutants(like ash etc) which form as a result of combustion. 0 The project will not have an impact on soil nutrients since it will not interfere with soil regimes. Area around the turbines can be used for grazing or agricultural activities. 0 The project has no impact on biodiversity. No trees Biodiversity (species and habitat conservation) will be cut or replaced for project. Existing roads will be renovated for transport of turbines. Sub total +2 Social sustainability and development +1 Significant amount of people work in fish farms in the *Employment (including job quality, fulfilment of labour region. Project will create new opportunities for both standards) skilled and unskilled people. Livelihood of the poor (including poverty alleviation, distributional equity, and access to essential services) Access to energy services +1 Project will contribute to poverty alleviation by creating direct and indirect employment opportunities and improve infrastructure of the village (renovation of roads, schools etc) +1 Electricity delivered to the grid will contribute to the use of local/renewable resources and strengthen security in electricity supply side. +1 Employees will be trained during construction and *Human and institutional capacity (including empowerment, operational phases. Technicians will be trained education involvement, gender) by the turbine manufacturers and by TEIAS as stated by the regulations. Sub total +4 Economic and technological development +1 During operation phase, project is expected to create about 15 new job opportunities. This *Employment (numbers) number will increase up to 60 during construction phase. +1 Turkey is heavily dependent on imported oil and natural gas for electricity generation. Use of local Balance of payments (sustainability) sources like wind and hydro helps in decreasing the external deficit. +1 Project will contribute to dissemination of wind Technological self reliance energy technology and development of (including project reliability, hard currency liability, skills supporting sectors in Turkey. This will promote development, institutional capacity, technology transfer) the technological capacity and skills of the local industry. Sub total +3 TOTAL +9 A.3. Project participants:

5 page 5 Name of Party involved (*) ((host) indicates a host Party) Turkey (Host) Private and/or public entity(ies) project participants (*) (as applicable) MAZI-3 Rüzgar Enerjisi Santrali Elektrik Üretim A.Ş. JP Morgan Ventures Energy Corporation Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) No Pioneer Carbon is a business unit of JP Morgan Chase. A.4. Technical description of the project activity: A.4.1. Location of the project activity: The Project will be implemented near Zeytineli Village Urla District of Izmir A Host Party (ies): Host country is Republic of TURKEY and she does not have a quantitative reduction target under the Kyoto Protocol. Therefore; the project is eligible for the VER application. A Region / State / Province etc.: Aegean Region, Province of Izmir, District of Urla A City / Town / Community etc: Project is located at Zeytineli Village Urla District of Izmir. A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): Project will be implemented at about 80km of west of Izmir and in south of Çesme peninsula. Location of the project activity is shown in maps below (Figure.1&Figure2). N The geographical coordinates have been given in Table.2. Table 2 - Coordinates Figure 1. Project of the Turbines Location

6 Turbine East North ' " 38 14' " ' " 38 14' " ' " 38 14' " ' " 38 14' " ' " 38 14' " ' " 38 14' " ' " 38 13' " ' " 38 13' " ' " 38 13' " ' " 38 13' " ' " 38 13' " ' " 38 13' " page 6 Figure 2. Location of Turbines A.4.2. Size of the project: Proposed project activity is considered as large scale according to both CDM and Gold Standard rules since the installed capacity is above 15 MW and annual emission reduction by the project activity is far above 15,000 tco2 per year. A.4.3. Category(ies) of project activity:

7 page 7 Project category is included in the sectoral scope 1 Energy Industry Renewable Sources according to the UNFCCC definition whereas it is included in category A.1 Renewable Energy (Electricity/Heat) according to the GS VER manual. A.4.4. Brief explanation of how the anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed project activity, including 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: In the absence of the project activity, corresponding amount of electricity would have been supplied by the grid. As the Turkish grid is mainly fed by fossil fuel sources, which is expected to continue in the coming years, emissions per unit of electricity generation will continue to increase. According to the applied methodology (ACM0002, version 7), the baseline scenario for the proposed project has been defined as: Electricity delivered to the grid by the project would have otherwise been generated by the operation of gridconnected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the Tool to calculate the emission factor for an electricity system Based on this baseline scenario, the baseline emission factor has been calculated using the combined margin (CM) approach as defined in the Tool to calculate the emission factor for an electricity system. The baseline emissions factor for the Turkish electricity grid has been determined conservatively. As indicated in the First National Communication (FNC) of Turkey over the period of , Turkey s energy / electricity demand has increased at an annual rate of 7.2% and this demand has been supplied (mainly) by thermal and hydro power plants. In 2004, electricity generation resulted in the emission of about 167, 800 ktco2 of green house gases which was equivalent to about 76.7% of total net GHG emission of Turkey. With the GDP projected to grow at over at 6% per year for the next 15 years, gross electricity demand is expected to increase from 166 TWh in 2005 to 499 TWh in 2020 against an expected total generation capacity of 520TWh in As it can be seen from Figure.3 below, fossil fuels dominate as primary sources for the actual and expected generation capacity. 1 Chapter.5.Projections and Mitigations Scenarios, First National Communication of Turkey on Climate Change, January 2007, (pg ) (

8 page 8 Figure 3. Breakdown of actual and expected generating capacity by primary sources1 A Estimated amount of emission reductions over the crediting period: The estimated annual electricity generation of 118,500 MWh, will result in tco2e per year of emission reductions over a 7 year crediting period. The total emission reduction by project activity will be 537,138 tco2e over the full 7 year crediting period. Table 3 - Expected emission reduction by the project activity Years September 2009-August 2010 September August 2011 September August 2012 September August 2013 September August 2014 September August 2015 September August 2016 Total emission reductions (tonnes of CO2 e) Total number of crediting years Annual average over the crediting period of estimated reductions (tonnes of CO2e) Annual estimation of emission reductions In tonnes of CO2 e 537,138 7 Years

9 page 9 SECTION B. Application of a baseline methodology The baseline methodology has been applied in a conservative manner, particularly in calculation of the fuel emission factors as stated by the methodology. B.1. Title and reference of the approved baseline methodology applied to the project activity: The approved consolidated baseline and monitoring methodology ACM0002, version 7 has been applied for this project. The baseline methodology is applicable for grid connected electricity generation from renewable sources. The methodology applied also draws upon: Tool for assessment and demonstration of additionality, ver. 5 Tool to calculate the emission factor for an electricity system, ver. 01 B.1.1. Justification of the choice of the methodology and why it is applicable to the project activity: The choice of methodology ACM0002, Version 7, is justified as the project activity meets its applicability criteria: The MAZI-3 WPP Project activity is the installation of a 30 MW wind power plant. The geographic and system boundaries for the relevant electricity grid can be clearly identified and information on the characteristics of the grid is available. B.2. Description of how the methodology is applied in the context of the project activity: ACM0002, version 7 requires the application of the following tools which have been applied for this project as explained below: Tool to calculate the emission factor for an electricity system, ver. 01 Tool for assessment and demonstration of additionality, ver. 5 The baseline scenario has been identified as Electricity delivered to the grid by the project would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the Tool to calculate the emission factor for an electricity system The baseline methodology has been applied in a conservative manner even though it is expected that the use of fossil fuels for electricity generation for the Turkish grid will increase overtime due to utilization of new domestic coal reserves. Basic assumptions made are; Weight of thermal power plants (and thus the emission factor) will remain same over the crediting period. When there is no data about the emission factor of fuels sources, it has been accepted as 0 or the lowest value has been used The additionality of the project activity has been demonstrated using the latest version (version 5) of the Tool for assessment and demonstration of additionality obtained from the UNFCCC website. The main gases included in the project boundary are summarised in Table 4 below while the other key data and parameters used in the calculations are given in Annex 2. Table 4 - Main gases included in the project boundary

10 page 10 Source Electricity generation in baseline (Turkey Grid) Baselin e Project Activity Emission from the reservoir of the proposed project (inside project boundary) Gas CO2 CH4 Included? Yes No N 2O No CO2 Yes CH4 N 2O No No Justification/Explanation Main Emission Source Minor emission source. Excluded for simplification Minor emission source. Excluded for simplification Although it is negligible, emission from use of auxiliary power unit is considered No emission Zero-emission electricity generation According to ACM0002, version 7 requires the emission factor for the grid system is calculated in accordance with the Tool to calculate the emission factor for an electricity system, ver. 01. According to the tool, the following four methods may be used to calculate the operating margin: a) Simple OM, b) Simple adjusted OM, c) Dispatch Data Analysis OM and d) Average OM. In the Turkish electricity grid system, the share of low-cost / must-run sources is below 50%, method (d) is therefore eliminated. Also due to insufficient data methods (b) and (c) are not considered and thus (a) Simple OM method is used in calculations. The following table is used for demonstrating the share of low cost/must run resources. Only hydro and other renewable are accepted as low cost/must run sources. Table 5 - Share of primary sources in electricity generation, YEAR THERMAL MW ,569 22,974 24,145 25,902 27,420 HYDRO % MW 12,241 12,579 12,645 12,906 13,063 GEOTHERM.WIND % MW TOTAL % MW ,846 35,587 36,824 38,844 40,565 The following steps explain show the Simple Operating Margin approach provided in the Tool to calculate the emission factor for an electricity system ; Version 01 has been used to calculate the combined margin emission factor for Turkey. Step 1. Identify the relevant electric power system 2

11 page 11 The spatial extent of the project boundary includes the project power plants (wind mills) and all power plants that are connected physically to the Turkish national electricity grid system. The total installed capacity of the Turkish electricity grid system has reached to 40,565 MW in 2006 whereas the total annual generation has become 176,299.8 GWh 3,4 Step 2. Select an operating margin method The Simple Operating Margin (OM) emission factor (EFGRI, OMsimple, y) is calculated as the generation-weighted average CO2 emissions per unit net electricity generation (tco2/mwh) of all the generating plants serving the system, excluding low-cost/must-run power plants. As electricity generation from solar and low cost biomass facilities is insignificant and there is no nuclear plant in Turkey, the only low cost /must run plants are hydro, wind and geothermal facilities. Step 3. Calculate the operating margin emission factor according to the selected method Since only available data for the Turkish grid system is total amount of fuels used together with According to the Tool to calculate the emission factor for an electricity system, Version 01, the following equation in option C is applied: EFgrid, OMsimple, y = FCi,,y. NCVi,y. EFco2,i,y / EG,y (1) i Where: EFgrid,OMsimple,y FCi,y NCVi,y EFCO2,i,y EGm,y i y = Simple operating margin CO2 emission factor in year y (tco2/mwh) = Amount of fossil fuel type i consumed in the project electricity in year y (mass or volume unit) = Net calorific value (energy content) of fossil fuel type i in year y (GJ / mass or volume unit) = CO2 emission factor of fossil fuel type i in year y (tco2/gj) = Net electricity generated and delivered to the grid by power plant / unit m in year y (MWh) = All fossil fuel types combusted in power sources in the project electricity system m in year y = Either the three most recent years for which data is available at the time of submission of the CDM-PDD to the DOE for validation (ex ante option) or the applicable year during monitoring (ex post option), following the guidance on data vintage in step 2 Data about the fuel consumption for electricity generation, electricity generation by fuel type, import and export were obtained from the Turkish Electricity Distribution Company (TEİAŞ) web site5. Operating and Build Margin calculation have been based on data for Other data required for calculation of CO2 emission coefficient has been obtained through IPCC 2006 guidelines for GHG inventories. Details of the data used for the calculations are given in Annex 2. Using the available data and ACM0002 methodology, overall CO2 production by electricity generation is calculated using IPCC values as given in Table 6 and Table 7 below

12 page 12 Table 6 - Calculation of Emission factors for fuels COEF (NCV*EF) (tco2/kt6) Hard Coal Imported Coal Lignite Fuel Oil Diesel Oil LPG Naphtha Natural Gas Total Emissions 2,069 2, ,029 3,095 2,833 3,056 2,013 Consumption ( ) (tons or 1000m3) 8,647,694 6,793, ,679,613 6,155, ,084 25, ,683 46,117,033 Total Emission ( ) (tco2) 17,888,860 14,054,133 82,201,282 18,643, ,600 72, ,273 92,829, ,996,333 Net electricity generated and supplied to the grid by thermal plants has been calculated using data obtained from the TEİAŞ web page7,8. The ratio between gross and net generation has been calculated first, and assuming that the same ratio is valid for thermal plants, gross generation by thermal power plants has been multiplied by this ratio in order to find net generation by thermal plants. Summing up this with the imported electricity, total supply excluding low cost / must run sources are determined as given in table below. Table 7 - Net Electricity Generation from thermal power plants (units in GWh) Year Gross generation ,698 Net generatio n 145, , , , , Net/Gross Gross Gen. Thermal ,464 Import Total Supply to the grid 100, , , , , , , , ,688 1, ,360 Total Net Thermal Gen. Net Gen Thermal Finally, using the data tabulated in the previous two tables, OM emission factor considering years has been calculated dividing the total CO2 emission by total electricity supply to the grid which is (from equation (1) above; EFgrid, OMsimple, y = = 226,996,333 tco2 / 346,360.2 GWh tco2/mwh. 6 Vol.2. Energy, 2006 IPCC Guidelines for National Greenhouse Gas Inventories, ( -nggip.iges.or.jp/public/2006gl/pdf/ 2_Volume2/V2_2_Ch2_Stationary_Combustion.pdf)

13 page 13 This Operating Margin emission factor will stay constant throughout the first 7-year crediting period. Step 4. Identify the cohort of power units to be included in the build margin (BM) BM has been calculated ex-ante using the most recent data available (Option 1). The build margin emissions factor is the generation-weighted average emission factor (tco2/mwh) of all power units m during the most recent year y for which power generation data is available. According to the Tool to calculate the emission factor for an electricity system, Version 01, the sample group of power units m used to calculate the built margin consists of either: The five power plants that have been built most recently, or The set of power capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. If 20% falls on part capacity of a unit, that unit is fully included in the calculations. From these two options the sample group that comprises of the larger annual generation has been used. List of most recent capacity additions to the grid and their average and firm generation capacities are available at the TEİAŞ web page9,10,11. For determination of plants that comprise 20% of the system generation, generation in year 2006 which is ,8 GWh has been taken as reference and its 20% has been determined as about GWh. Summing up all the plants built in 2006, 2005 and 2004 together we add up to 35,289,8 GWh for the selected plants. Step 5. Calculate the build margin emission factor The Build Margin emission factor EFgrid, BMs, y is calculated as the generation-weighted average emission factor of a sample of power plants m for a specific year y as follows: EFgrid, BM, y Where: EFgrid,BM,y EGm,y EFEL,m,y m y = = = = = = EG,m,y. EFEL,m,y / EG,m,y (12) Build margin CO2 emission factor in year y (tco2/mwh) Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) CO2 emission factor of power unit m in year y (tco2/mwh) Power units included in the build margin Most recent historical year for which power generation data is available Data for generation efficiency has been calculated using average values obtained from environmental map of Turkey12 (p197). For LPG and naphtha whose weights are not very significant, best available techniques (EFBAT) TabloX.3.1. Türkiyedeki termik santrallerin adları, bulunduğu yer ve diğer bilgiler, Türkiye Çevre Atlası, MoEF, Ankara 2004, pg.197, ( 10

14 page 14 data from European Integrated Pollution Prevention and Control Bureau has been used (p405)13. For EF values of fuels consumed, IPCC default values at lower limit of 95% confidence interval have been used. Table 8 - Calculation of emission factor from most recent plants. B D EF CO2 (tco2/tj) Generation Efficiency % 32.8% 35.1% 27.5% 45.0% 45.0% 46.0% Coal Lignite Fuel Oil Diesel LPG Naphtha Natural Gas E (=3.6/D/1000*B*C) EF (tco2/mwh) Build margin emission factor has been determined for most recent capacity additions as shown in table below. For electricity generation from renewable and solid wastes, the emission factors have been taken as zero since data is not available and contribution of these plants are insignificant. The Build margin emission factor in the last column has been determined by multiplying each EF value with the corresponding electricity generation for that fuel and dividing by the total generation by most recent capacity additions. Table 9 - Distribution of most recent capacity additions by fuel source. G Fuel Source H (=G/35,289.8) Percent Generation E EFW (=G*H) Weighted EF Generation EF (MWh) Coal 1, % Lignite 11, % Fuel Oil % Diesel oil 6 0.0% LPG % Naphtha % Natural Gas 19, % Renewable and wastes % Solid 5 0.0% Total Renewable 1, % TOTAL Capacity additions 35,289.8 Finally, by summing up the weighted EFBAT values, overall build margin emission factor have been calculated as: EFgrid, BM, y 13 = EIPPCB, Reference Document on Best Available Techniques for Large Combustion Plants, (

15 page 15 STEP 6 - Calculate the combined margin emission factor Based on ACM0002, weighted average baseline emission factor is calculated as follows; EFgrid, CM, y Where: EFgrid,BM,y EFgrid,OM,y wom wbm = = = = = wom* EFgrid, OMsimple, y + wbm* EFgrid, BM, y (13) Build margin CO2 emission factor in year y (tco2/mwh) as calculated from equation (12) above. Operating margin CO2 emission factor in year y (tco2/mwh) as calculated from equation (1) above. Weighting of operating margin emissions factor (%) Weighting of build margin emissions factor (%) The default values of the weights, wom and wbm, as recommended by the selected methodology are 0.75 and 0.25, respectively. These default values have been used in calculating CM emission factor together without rounding the values of EFOM and EFBM. Based on the formula above, baseline emission factor is calculated as; EFgrid, CM, y = 0.75 * * = The combined margin emission factor is therefore tco2/mwh, which will be used as therefore as the baseline emission factor as recommended by the methodology ACM0002, version 7. B.3. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered VER project activity: In the absence of the project activity, a corresponding amount of electricity will be supplied by the grid through the current power plants. For each unit of electricity supplied from the proposed project, corresponding amount of fossil fuel based component will be displaced from the grid. That component when replaced by the renewable electricity will result in equivalent emission reductions. Step 1 - Identification of Alternatives to the project activity consistent with current laws and regulations Sub-step 1a - Define alternatives to the project activity: Within this framework, most realistic and reliable alternatives to the project activity are: 1. Proposed project not undertaken as a VER project activity 2. Supply of equal amount of electricity in the grid but generated by fossil fuels. 3. No project activity First alternative, which is the implementation of the project without VER income is not financially attractive as discussed in investment analysis section below. The Second alternative (Scenario 2) is the baseline scenario and implementation of the proposed project as a VER activity would be additional to this scenario. Since the solid fuel reliance of Turkish grid is expected to continue, the emission factor per MWh of electricity generated is expected to increase over time. However, for the calculation of emission reductions, the emission factor is taken as constant at the current level during the activity period. Third alternative, no project activity; is not a realistic alternative as the demand for energy is increasing.

16 page 16 Sub-step 1b - Enforcement of applicable laws and regulations: The above discussed scenarios are in compliance with the applicable legal and regulatory requirements. Step 2 - Investment analysis The investment analysis has been done in order to make an economic and financial evaluation of the project. No public funding or ODA are available in Turkey for project finance. MAZI-3 WPP has been financed through loans from commercial banks and their own resources. Sub-step 2a - Determine appropriate analysis method There are three options for the determination of analysis method which are: Simple Cost Analysis Investment Comparison Analysis and Benchmark Analysis Since Project generates economic benefits from sales of electricity, the simple cost analysis is not applicable. Also, since the baseline of the project is generation of electricity by the grid, no alternative investment is considered at issue. So, it has been decided to use benchmark analysis for evaluation of the project investment Sub-step 2b - Option III-Apply benchmark analysis Since there is no pre-determined value for IRR or any other financial indicator for wind power plants in Turkey, Benchmark value has been selected as the Eurobond rates. Eurobond Rates in Turkish market for ten and twenty year periods have been determined as14: Table 10 - Eurobond Rates in Turkey for various due dates. Code-Due date Currency EUR EUR USD Interest Rate % Sub-step 2c - Calculation and comparison of financial indicators Main parameters used for evaluation of the investment are as follows; Table 11 - Financial parameters used in investment analysis Installed Capacity Expected annual Electricity Generation Emission current Reduction(ER) Total Investment Loan Loan Period Income Tax MW GWh tco2e 40,753,565 Euro 34,640,530 Euro 10 20%

17 page 17 Wind Power investment is a capital intensive sector and initial investment cost constitute about 75% of the electricity cost whereas in conventional fuel fired power plants, 40 to 60% of the costs are related to the fuel costs. Since it is a capital intensive sector, the cost of capital is a major factor determining the return of investments15. For the MAZI-3 WPP project, Internal the Rate of Return is calculated as 9.49% without the carbon revenue. Acceptable IRR values for energy investments in Turkey are about 13-16% according to the report of government auditing board published in Compared with the Eurobond interest rates shown above and IRR values in Turkey, it is seen that the investment is not financially attractive without VER revenue. One can get the revenue through other financial instruments and without undertaking any project risks. Considering the carbon revenue, IRR increases to 14.47% and becomes more attractive financially. Since the project having IRR values below have difficulty in getting loan from the banks, VER revenue will also help the investors for getting loans with better rates as stated in web page of Clean Energy Foundation17. Sub-step 2d - Sensitivity Analysis In order to determine whether investment decision is the most attractive alternative financially, a sensitivity analysis has been done. Three parameters for analysis are: Investment Cost Operating Cost Electricity Sales revenue For a range of ±10% fluctuations in parameters above, table 4 below has been obtained. Table 12 - Sensitivity analysis for the project % Fluctuation ,5 0 2, Investment Operating El. Sale Revenue Table 12 above includes IRRs without VER revenue. As seen from the table, the project becomes competitive only if the marginal fluctuations occur in investment cost or electricity prices. In the absence of VER revenue, IRR becomes 15.3 and 16.0 for a 10% decrease in investment cost or 10% increase in sales revenue respectively. Also, it should be considered that calculations do not reflect the project risks which are difficult to quantify (such as generation below estimations etc). When these risks are also considered, it is seen that project activity is not the most attractive financial alternative, and is therefore additional to baseline scenario. Details of the Investment analysis and calculations are available as spread sheet however, since it is commercially sensitive information, details are not given here but can be submitted if requested during validation. Step 3 - Barrier Analysis Sub-step 3a - Identify barriers that would prevent the implementation of type of the proposed GS-VER project activity 15 Wind Energy-The Facts, Volume 2-Costs&Prices (p103. Available at (p36-accessed on 06th June 2008) 17 (p 3-accessed on 06th June 2008)

18 page 18 (a) Investment barriers: The main barriers for renewable energy investments in Turkey are lack of financial incentives, uncertainty about the national energy and economic parameters. Within this framework, the voluntary carbon market provides an innovative and effective element for creating an enabling environment for investment in renewable sources in Turkey. While national economic policy can concentrate on how to support the country s rapidly developing economy, funds from international carbon credit buyers help the simultaneously fast growing electricity market to pursue a sustainable path by alleviating barriers faced by project developers. (b) Technological barriers: Wind energy is a new technology compared to conventional technologies used for energy generation. The equipment or wind turbines are imported from European Countries. This will require maintenance service from specialists and will raise the operational cost. (c) In addition to the general barriers mentioned above, a specific barrier faced by the project is the construction barriers. Since the project location is very close to the fault line, additional measurements will be issued in order to eliminate the effects of a potential earthquake. The Project also includes construction of 8 km transmission line from MAZI-3 WPP to the nearest transmission station which also requires significant amount of investment as given in financial calculations. Sub-step 3b - Show that the identified barriers would not prevent the implementation of at least one of the alternatives (except the proposed project activity) The most probable alternative to the proposed project activity is defined as either supplying an equal amount of electricity generated by fossil fuels to the grid. There are a few points to be clarified in case of implementing that option in return of wind power plant. Wind energy is intermittent and wind power plants have the risk of inadequate wind to operate even at high peak periods. This makes wind energy less compatible with conventional energy as the electricity is not continuously fed from wind power plants and needs to be balanced in pool of energy sources. The initial capital outlay per MWh generated is significantly higher compared to the fossil fuel-based plants which can be constructed and get in operation in a shorter time. Step.4. Common practice analysis Sub-step 4a: Analyse other activities similar to the proposed project activity: The wind power plant projects in Turkey, either under operation or construction, have been listed in Table.13.with the basic information. The investments to wind power have increased in 2006 and populated in 2008 as it can be seen from the table. The capacities of the plants which became operational in 2006 are much higher than the plants previously commissioned in 1998 and The power plants in İzmir province have been shaded in the table. Most of the projects constructed in 2006 and thereafter are benefiting carbon finance. Gold Standard validated projects have been presented in bold while Verified Emission Reduction (VER) projects are underlined in the table.

19 page 19 Table.13. Wind Projects in Turkey18 N O 1 2 Location ÇanakkaleBozcaada İstanbul- Hadımköy Balıkesir-Bandırma İstanbul-Silivri İzmir-Çeşme Manisa-Akhisar Çanakkale-İntepe 10 Çanakkale-Gelibolu İzmir-Çeşme İzmir- Çeşme Wind Projects in Turkey (as of 22 January, 2008) Company Comm. Installed Turbine Date capacity (MW) Manufacturer Alize A.Ş ,5 Enercon Güçbirliği ,2 Vestas A.Ş. Bores A.Ş ,2 Enercon Sunjüt A.Ş. Bares A.Ş. Ertürk A.Ş. Mare A.Ş. Deniz A.Ş. Anemon A.Ş. Doğal A.Ş. Turbine capacity 3 turbines, 500 kw 12 turbines, 600kW 17 turbines, 600kW 2003 I/2006 II/2006 I/2007 I/2007 I/2007 1,2 30 0,85 39,2 10,8 30,4 Enercon GE Vestas Enercon Vestas Enercon 2 turbines, 600kW 20 turbines, 1500 kw 1 turbine, 850 kw 49 turbines, 800 kw 6 turbines, 1800 kw 38 turbines, 800 kw II/ ,9 Enercon 13 turbines, 800 kw+ 5 turbines 900 kw 30 30,4 24 Vestas Enercon Enercon 15 turbines, 2000 kw 38 turbines, 800 kw 12 turbines, 2000 kw 60 42,5 Vestas Nordex 20 turbines, 3000 kw 17 turbines, 2500 kw Vestas 30 turbines, 3000 kw CAPACITY UNDER OPERATION Hatay-Samandağ Deniz A.Ş. I/2008 Manisa-Sayalar Doğal A.Ş. I/2008 İstanbulLodos A.Ş. I/2008 Gaziosmanpaşa İstanbul- Çatalca Ertürk A.Ş. I/2008 İzmir- Aliağa Innores I/2008 A.Ş. Balıkesir- Şamlı Baki A.Ş. I/2008 CAPACITY UNDER CONSTRUCTION 146, ,9 Sub-step 4b: Discuss any similar Options that are occurring: Most of the wind power plant projects in the area are benefiting the carbon finance and excluded from consideration. On the other hand, the first four projects utilise old technology and they, together with the 6 th İstanbul-Silivri project, have rather small installed capacities compared to Mazi-3 Wind Power Plant. The 15th project, recently built in İzmir-Aliağa Wind Power Plant Project has a comparable size and location to the project activity, however; it is already developed as Gold Standard project. B.4. Description of how the definition of the project boundary related to the baseline methodology selected is applied to the project activity: The Project boundary consists of the Turkish National Electricity Grid. All of Turkish electricity network is interconnected and there is no separate regional electricity grid. The emission factor for electricity imported from neighbouring countries has been taken as 0 during the calculations. Türkiye Elektrik Piyasasında RES projelerinin Son Durumu, Murat Durak, Chairman of Turkish Wind Energy Association, Turkish- American Clean Energy Conference, İstanbul, Turkey ( 18

20 page 20 B.5. Details of baseline information, including the date of completion of the baseline study and the name of person (s)/entity (ies) determining the baseline: Date of completion of the baseline study: 20th December 2007 Baseline determined by JP Morgan Ventures Energy Corporation Telephone: Fax: Address: Refik Belendir Sokak 35/3 Y. Ayrancı - ANKARA / TURKEY SECTION C. C.1 Duration of the project activity / Crediting period Duration of the project activity: C.1.1. Starting date of the project activity: Construction of the project is expected to start in early Estimated commissioning date is September C.1.2. Expected operational lifetime of the project activity: Expected operational lifetime of the project activity is 20 years

21 page 21 C.2 Choice of the crediting period and related information: Renewable crediting period of three times seven years will be used. C.2.1. Renewable crediting period: C Starting date of the first crediting period: First crediting period of the project is expected to start in 01/09/ C Length of the first crediting period: Length of first crediting period is 7 years C.2.2. >>NA Fixed crediting period: C Starting date: >>NA C Length: >>NA

22 page 22 SECTION D. Application of a monitoring methodology and plan D.1. Name and reference of approved monitoring methodology applied to the project activity: Monitoring methodology applied to the project is ACM0002 version 7, Approved consolidated baseline and monitoring methodology for grid connected electricity generation from renewable resources D.2. Justification of the choice of the methodology and why it is applicable to the project activity: The Project activity fulfils the criteria of the selected methodology: Project is a grid connected electricity generation project using wind power Project boundary is clearly identified and information about characteristic of the grid is available Project does not involve fuel switching activity. The selected baseline is the grid supplied electricity and the project activity is zero emission electricity generation from wind power. Since, no leakage is estimated from the project activities, the main data to be monitored is the power generation by the project activity. Some parameters listed below under data and parameters either need to be monitored continuously during the crediting period or to be calculated only once for the crediting period, depending on the data vintage chosen, following the provisions in the baseline methodology procedure outlined above and the guidance on monitoring frequency for the parameter. Such data are appropriately identified in the tables below. The calculation of the operating margin and build margin emission factors has been documented electronically in a spreadsheet that will be attached to the PDD for validation. This includes all data used to calculate the emission factors. D OPTION 1: Monitoring of the emissions in the project scenario and the baseline scenario: D Data to be collected in order to monitor emissions from the project activity and how this data will be archived: NA D Data to be collected in order to monitor project performance on the most sensitive sustainable development indicators: Sustainable Development Indicator Data type Data variable Data unit Measured (m), calculated (c) or estimated (e) N/A D Description of formulae used to estimate project emissions (for each gas, source, formulae/algorithm, emissions units of CO2 eq.):

23 page 23 N/A. D Relevant data necessary for determining the baseline of anthropogenic emissions by sources of GHGs within the project boundary and how such data will be collected and archived: ID number (Please use numbers to ease cross-referencing to table D.3) Data variable Source of data Data unit Measured (m), calculated (c), estimated (e), Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment D Description of formulae used to estimate baseline emissions (for each gas, source, formulae/algorithm, emissions units of CO2 equ.) N/A

24 page 24 D OPTION 2: Direct monitoring of emission reductions from the project activity (values should be consistent with those in section E): D Data to be collected in order to monitor emissions from the project activity and how this data will be archived: ID number (Please use numbers to ease crossreferencing to table D.3) D1 D2 Data variable Source of data Data unit Measured (m), calculated (c), estimated (e), Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment GENy-Net electricity generated by the plant TEİAŞ and Project Owner MWh m Continuou s 100% Electronic and Paper Electricity generated by the project activity and supplied to the grid can be monitored through metering devices and invoices GDy Equipment counter and project owner Liter m Continuou s 100% Paper Although the amount is negligible, emission from auxiliary power source is considered for a more accurate result. D Description of formulae used to calculate project emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.): The only project emission will be originated from use of diesel generator as auxiliary power equipment. The amount of fuel consumed will be monitored annually in order to calculate the emission from use of auxiliary equipment. Following formula will be used: Pe = (FDy) NCVdiesel x COEFdiesel Pe: Project emissions from diesel generator (tco2) FDy : Annual diesel fuel consumption (Litres) NCVdiesel: Net Calorific Value for diesel oil (TJ/m3) COEFdiesel: CO2 emission coefficient for diesel oil (tco2/tj) The generator will be used for power outage and therefore fuel consumption is expected to be low. The emissions due to diesel consumption will be determined during verification process.

25 page 25 D.2.3. Treatment of leakage in the monitoring plan No source of leakage is determined within the project boundary. D If applicable, please describe the data and information that will be collected in order to monitor leakage effects of the project activity ID number (Please use numbers to ease cross-referencing to table D.3) N/A Data variable Source of data Data unit Measured (m), calculated (c) or estimated (e) Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment D Description of formulae used to estimate leakage (for each gas, source, formulae/algorithm, emissions units of CO2 equ.) N/A. Since no leakage is determined within the project boundary D.2.4. Description of formulae used to estimate emission reductions for the project activity (for each gas, source, formulae/algorithm, emissions units of CO 2equ.) Details of the calculations for baseline emission have been given in section B.2. D.3. Quality control (QC) and quality assurance (QA) procedures are being undertaken for data monitored The main data to be monitored in order to determine the emission reduction by the project activity is the electricity generated by the project activity. The amount of electricity generated will be recorded by Turkish Transmission Company (TEİAŞ) and will be billed by the project owner as the electricity supplied to the grid. TEIAS officer will visit the plant every month in order to record the electricity generation and check the metering devices. Either the manager of the plant or the electrical engineer will company the officer during recording process. A standard form used by TEİAŞ will be filled and signed by both parties after each measurement. Two metering devices will be used, one of them being separate. The maintenance and the calibration of the meters will be done periodically every two years by TEİAŞ. In case the difference in the readings of two metering devices exceeds 0.2%, the maintenance will be done immediately. The data from both of the metering devices will also be cross checked. Another source of data source to be used for cross-checking is the software embedded on each turbine which shows the individual generation by each turbine. The amount of fuel consumed by the auxiliary power source, i.e. existing generators, will be monitored during crediting period. Using the counter on the equipment and hourly consumption data, amount of diesel fuel consumed and corresponding emission will be calculated. Consumption data will also be cross-checked by the invoices for purchase of diesel fuel and the logbooks kept in the plant for internal monitoring purposes. All the data collected as part of monitoring will be archived electronically and be kept at least for 2 years after the end of the last crediting period. 100% of the data will be monitored. All measurements will be conducted with calibrated measurement equipment according to relevant industry standards.

26 page 26 Data (Indicate table and ID number e.g ; 3.2.) D1 Uncertainty level of data (High/Medium/Low) Explain QA/QC procedures planned for these data, or why such procedures are not necessary. Low FDy Low The data will be measured and cross-checked by two metering devices by both TEİAŞ and the project owner for billing purposes. The amount of electricity generated by each turbine can be monitored through the software used as well. Those lower the uncertainty level. The data can be obtained from equipment s counter and the invoices. Also, the logbook kept in plant for internal monitoring process can be used as a proof.

27 page 27 D.4. Please describe the operational and management structure that the project operator will implement in order to monitor emission reductions and any leakage effects, generated by the project activity Roles and Responsibilities In order to demonstrate the emission reduction, only the required data is the amount of electricity generated by the project activity. This will already be measured and recorded by both TEİAŞ and project owner, therefore; no new additional protocol will be needed monitoring emission reduction. The plant manager or the electrical engineer will be responsible for the electricity generated, gathering all relevant data and keeping the records. They will be informed about VER concepts and mechanisms and how to monitor and collect the data which will be used for emission reduction calculations. The generation data collected during crediting period will be submitted to JP Morgan Ventures Energy Corporation who will be responsible for calculating the emission reduction. The generation data will be used to prepare monitoring reports which will be used to determine the vintage from the project activity. These reports will be submitted to DOE before each verification period. VER Team Members Include; Plant Manager: Overall responsibility of compliance with VER monitoring plan Chief Electrical Engineer: Responsible for day to day running of plant, recording and monitoring of relevant data and periodic reporting Accounting Manager: Responsible for keeping data about power sales, invoicing and purchasing. JP Morgan Ventures Energy Corporation: Responsible for emission reduction calculations, preparing monitoring report and periodical verification process. Figure 4. MAZI-3 WPP Organization Chart Since no source of leakage is determined within the project boundary, no management structure is required for monitoring the leakage from the project activity.

28 page 28 D.5 Name of person/entity determining the monitoring methodology: JP Morgan Ventures Energy Corporation (Project Partner) Telephone: Fax:

29 page 29 SECTION E. Estimation of GHG emissions by sources E.1. Estimate of GHG emissions by sources: The Project activity involves zero emission electricity generation using wind power so there will not be any GHG generation by project activities. E.2. Estimated leakage: No leakage is expected for project activities. E.3. The sum of E.1 and E.2 representing the project activity emissions: GHG emission by project activities is zero. E.4. Estimated anthropogenic emissions by sources of greenhouse gases of the baseline: Source of baseline emission is thermal power plants in the national grid. The emission factor for baseline has been calculated as explained in Annex 2. The Calculated combined margin emission factor is tco2/mwh and expected electricity generation is 118,500 MWh which makes a total of about tco2e per annum. E.5. Difference between E.4 and E.3 representing the emission reductions of the project activity: Since the project activity will not cause any GHG emission, all emission by baseline scenario will be equal to emission reduction by the project. E.6. Table providing values obtained when applying formulae above: Year September September September September September September September Total August 2010 August 2011 August 2012 August 2013 August 2014 August 2015 August 2016 Estimation of project activity emission reductions (tco2 e) Estimation of baseline emission reduction(tco2 e) Estimation of leakage (tco2 e) Estimation of emission reductions (tco2 e) , ,138

30 page 30 SECTION F. Environmental impacts F.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: According to national legislation, an Environmental Impact Assessment is not mandatory for wind power plants unless requested by the relevant agency after the project introductory document is submitted to Ministry of environment and Forestry (MoEF). For the MAZI-3 project, the MoEF has confirmed in that EIA is not required for the project activity after reviewing the introductory project document. A copy of the letter from MoEF is given in Annex 5. The Gold Standard sustainable development matrix of the project activity (See Section A2) has a total score of +9 with no negative effects. F.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: No significant environmental impact has been determined. For the transport of the turbines and access to the turbines, main roads will be renovated; which will also serve to other residents in the vicinity. Length of new roads which will be constructed between main road and turbines will be very low. No trees will be cut at any stage of the construction and, since the land in the project site is mainly formed of rocks, project will not have any adverse effect on agricultural activity or land use. Grid connection will be made through 8 km transmission line. According to the local regulations, transmission line below 10km does not need EIA assessment. The transmission line build for the MAZI-3 WPP project will be used for other WPPs which are planned to be built in the same region. As mentioned above, due to the flora of the site, no trees will be cut in the region and the area will be open to grazing activities of the local habitants. SECTION G. Stakeholders comments

31 page 31 G.1. Brief description how comments by local stakeholders have been invited and compiled: The initial stakeholder meeting was held on the 21st February 2008 and the main stakeholder consultation has been conducted on 14th April 2008 in Zeytineli Village according to the GS requirements. The meetings have been announced in local (Yeni Asır and Demokrat Urla) and national (Milliyet) newspapers and through Village heads of Zeytineli and Zeytinler. Also, representatives from local and central government, local NGOs and GS-endorsed NGOs were invited and GS was informed by . List and contact info of the NGOs have been determined using the database of Civil Society Development Center19. NGOs have been sent via fax or if they don t have fax number. Residents in the village have been announced through the village heads of both Zeytineli and Zeytinler. The invitation list is given in annex 4. Figure 5. MAZI-3 WPP ISC meeting 21 people have participated the meeting ISC meeting whereas about 13 people have participated to the main consultation meeting. Invitation list is given below whereas the participation list of first and second meeting are given in meeting reports in detail. During the first meeting, a non technical summary of the PDD has been distributed and Mrs. G. Aslı Sezer ÖZÇELİK from JP Morgan Ventures Energy Corporation informed the participants about the project, emission reduction achieved by the project and carbon finance. Yaşar KUŞ, from MAZI-3 A.Ş., (the project investor) made a more detailed explanation about wind power plants and answered questions raised by the participants. In the Main stakeholder consultation, G.Aslı Sezer Özçelik from Pioneer Carbon has explained the project and summarized the PDD in Turkish once more. Abdullah Özdemir from MAZI-3 Elektrik Üretim A.Ş (YAPISAN) has given technical information about the project and technology used in wind power plants. After technical explanation of the project, G.Aslı Sezer Özçelik has gone through the questions in the checklist which has been translated to 19

32 page 32 Turkish and simplified so that participants can better follow the questions. Later, comments from the project participants have been invited which have been given the meeting report. Since EIA is not required by local regulations, only pre-eia report is prepared for wind power plants. The pre-eia report for MAZI-3 points no significant issue about the project as summarized during the meeting. The environmental and social impact checklist of GS has been translated to Turkish and distributed to the participants. Each question in the checklist has also been by Mrs. G.Aslı Sezer Özçelik and explained to the participants and they have been invited to fill the questionnaire. G.2. Summary of the comments received: No significant issue has been raised during the meeting. Since there are other wind power plants in the vicinity of the village, local people were familiar with this type of plants in the region. During the meeting, participants asked some questions about the exact location of the towers, when they will be constructed, any detrimental effects and benefits to the village such as employment opportunities. Technical questions such as height, location etc. of the tower were been answered by Yaşar KUŞ. He also informed the villagers that noise will not be a problem to the habitants since the location of the plant is far from the houses in the village. In terms of benefits to the village, Mr. KUŞ explained that about 15 people will be employed during the operation phase and local people will be given priority in recruitment. In general, attitudes of the villagers were positive and they seemed keen on construction of the WPP near their village. Details of the comments and questions received has been sent to invitee list and submitted to GS and validator. G.3. Report on how due account was taken of any comments received: Comments by the participants were noted during meeting. As no significant issues were raised there is no significant issue raised, no revision in the project design will be required. The only request from the local people was giving priority to people in recruiting, which was positively responded by the MAZI-3 A.Ş. Summary of both meetings and all the questions and comments raised during these meetings has been sent to the institutions in the invitation list via fax or mail. The meeting reports have also been published on GS web page together with the draft PDD of the project for review GS and other users.

33 page 33 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Street / P.O. Box: Building: City: Postfix / ZIP: Country: Telephone: Fax: URL: Represented by: Title: Salutation: Last Name: Middle Name: First Name: Department: Mobile: Personal JP Morgan Ventures Energy Corporation Refik Belendir Sokak Y. Ayrancı - Çankaya 35/3 ANKARA Organization: Street / P.O. Box: Building: City: State / Region: Postfix / ZIP: Country: Telephone: Fax: URL: Represented by: Title: Salutation: Last Name: Middle Name: First Name: Direct Fax: Direct Tel.: Personal Bilgin Enerji Yatırım Holding A.Ş. Kuleli Sokak No: 87 ANKARA TURKEY / [email protected] Country Manager Sezer Özçelik Ganime Aslı [email protected] TURKEY [email protected] Manager Bilgin Tolga [email protected] Annex 2

34 page 34 BASELINE INFORMATION Data Used in calculation of OM for Turkish Electricity Grid Table 13 - Values used in calculation of OM 20 NCV (Tj/kt) (1000m3 for gas) EF (tco2/tj) COEF(tCO2/kt) Hard Coal ,069 Imported Coal ,069 Lignite Fuel Oil ,029 Diesel Oil ,095 LPG ,833 Naphtha ,056 Natural Gas ,013 Table 14 - Amount of fuels used for electricity generation21, Total Fuel Consumption Total Emission Hard Coal 1,327,603 1,702,228 5,617,863 8,647,694 17,888,860 Imported Coal 3,237,110 3,556, ,793,940 14,054,133 Lignite 33,776,660 48,319,143 50,583, ,679,613 82,201,282 Fuel Oil 2,403,338 2,005,899 1,746,370 6,155,607 18,643,834 Diesel Oil 29,141 28,442 61, , ,600 LPG 12,673 12, ,614 72, ,749 84,481 13, , ,273 13,325,721 15,756,764 17,034,548 46,117,033 92,829,786 Naphtha Natural Gas Vol.2. Energy, 2006 IPCC Guidelines for National Greenhouse Gas Inventories, ( /2006gl/pdf/2_Volume2/V2_2_Ch2_Stationary_Combustion.pdf)

35 page 35 Table 15 - Net Electricity supply to the grid by thermal plants and imports (GWh).23 Gross generation Net generation Net/Gross Gross Gen. Thermal , , , , , , , , , , , , , , ,356 1, ,360.2 Year Net Gen Thermal Total Net Thermal Gen. 344,687.6 Import Total Data Used in calculation of BM for Turkish Electricity Grid Table 16 - Values used in BM calculation 24 Coal Lignite Fuel Oil Diesel LPG Naphtha Natural Gas 23 A NCV (Tj/kt or m3 for gas) B EF CO2 (tco2/tj) D Generation Efficiency % 32.8% 35.1% 27.5% 45.0% 45.0% 46.0% E (=3.6/D/1000*B*C) EF 25 tco2/mwh Vol.2. Energy, 2006 IPCC Guidelines for National Greenhouse Gas Inventories, ( /2006gl/pdf/2_Volume2/V2_2_Ch2_Stationary_Combustion.pdf) 25 EIPPCB, Reference Document on Best Available Techniques for Large Combustion Plants, ( 24

36 page 36 Table 17 - Most recent capacity additions corresponding to 20%.11,12,13,14 Fuel Source Coal Lignite Fuel Oil Diesel oil LPG Naphtha Natural Gas Renewable and wastes Solid total Renewable TURKEY'S TOTAL Electricity Generated (MWh) 1,463 11, , ,502 35,289.8 EF Share in total generation % 32.5% 1.6% 0.0% 0.1% 0.9% 56.1% 0.2% 0.0% 4.3% 100%

37 page 37 Annex 3 MONITORING PLAN The Monitoring Plan (MP) used for determining the emission reduction by the project is based on the approved methodology ACM0002. Since the project activity involves electricity generation from renewable sources and there is no significant leakage source or environmental impacts, MP will mainly include monitoring electricity generation by the project activity and key sustainable development indicators. MP will be implemented by MAZI-3 Elektrik Üretim A.Ş. during all stages of the project activity in conjunction with the PDD of the project. The plant manager or electrical engineer will be responsible for monitoring the generation in the plant. Two Am-meters issued in the plant will be used as primary source of generation data. This will also be monitored by the head quarter of the MAZI-3 A.Ş. located in Ankara. Generation can be checked with the invoices, and the software used in turbines which shows the actual generation by each turbine. Since the diesel generator will be used very rarely, it is not expected to create a significant emission during monitoring period however it will be included in calculations. Sustainable Development Indicators Public consultations did not raise any significant issues which should be included in the monitoring plan. Key sustainable development indicators have been determined as employment (both quality and number of jobs) and contribution to human and institutional capacity. Number of people employed in the plant can be easily determined during operation of the plants. Since plant operation requires skilled technician trained for working in high voltage environment, local people will mainly recruited as support staff( security, logistic, etc) which will still be a better opportunity for local people working in fish farms. Training of Monitoring Personnel For the training of the personnel, a five day course will be organized by the turbine manufacturer in Germany. All technical staff in the plant will be trained for being eligible to work in high voltage environment, as required by TEİAŞ. Staff in the VER team will also be trained about emission reduction project activity. Emission Reductions A spreadsheet prepared in excel will be used in order to calculate emission reduction. The Project owner will collect data for EGy, net electricity supplied to the grid by the MAZI-3 WPP and FDy, diesel fuel consumption. Generation will be measured and recorded monthly through two high precision measuring devices sealed and controlled by TEİAŞ according to the regulations issued of the TEIAS. Data can also be checked from electricity sales invoices and records kept by MAZI-3 A.Ş. for cross-checking. Emission from the diesel generator will be tracked from the counter on the equipment showing the total period equipment has been used and the invoices for purchased diesel. Data will be multiplied by hourly consumption and diesel fuel emission factor to find the actual emission. Data / parameter: Data unit: Description: FCi,y m3 or tons Amount of fossil fuel type i consumed by the project electricity system

38 page 38 Source of data: Measurement procedures (if any): Monitoring frequency: TEİAŞ web page ( - Once for each crediting period QA/QC procedures: Any comment: Data / parameter: Data unit: Description: Source of data: Measurement procedures (if any): Monitoring frequency: Data is published by the transmission company (TEİAŞ) annually. Data will be used only once for the crediting period NCVi,y Tj/kt Net calorific value (energy content) of fossil fuel type i in year y Calculated using data in TEİAŞ web page using fuel consumption and heating values data - Once for each crediting period QA/QC procedures: Any comment: Data / parameter: Data unit: Description: Source of data: Measurement procedures (if any): Monitoring frequency: Applied in the calculation of the simple OM, where fuel consumption data is available for all power plants. EFCO2, i, y i tco2/tj CO2 emission factor of fossil fuel type i in year y 2006 IPCC Guidelines for National Greenhouse Inventories - Once for each crediting period QA/QC procedures: Any comment: Applied in the calculation of the simple OM, where fuel consumption data is available for all power plants.

39 page 39 Data / Parameter: Data unit: Description: Source of data: Measurement procedures : Monitoring frequency QA/QC procedures to be applied: EGy MWh Net Electricity generated and delivered to the grid by the power plant in year y Metering devices measuring the electricity generated at the exit of the plant and invoices Prepared for billing by the transmission company Data will be monitored continuously by redundant metering devices, which will provide the data for the monthly invoicing to TEİAŞ. The collected data will be kept by MAZI-3 A.Ş. During the crediting period and until two years after the last issuance of VERs for the MAZI-3 WPP project activity for that crediting period. Data will be measured continuously using metering devices and software used for operating the wind turbines. There will be two ammeters that will backup each other. Maintenance and calibration of the metering devices will be made by TEİAŞ every two years. If the difference between the readings of two devices exceeds 0.2%, maintenance will be done before waiting for two years. Any comment: Data / Parameter: FDy Data unit: liter Description: Amount of diesel fuel consumed by the auxiliary power equipment (Diesel Generator) Counter on the equipment showing the operation hour which can be used to calculate volume consumed. Data Can be cross checked with invoices of diesel fuel. Consumption data will be calculated from equipment s counter. During the crediting period and until two years after the last issuance of VERs for the MAZI-3 WPP project activity for that crediting period. Source of data: Measurement procedures : Monitoring frequency Data will be measured continuously using counter on the equipment. QA/QC procedures to be applied: Cross check can be made with using fuel invoices. Also, dates and periods will be recorded on a notebook as a part of internal procedures which can also be used for comparison of the data. Any comment:

40 page 40 Annex 4 INITIAL STAKEHOLDER MEETING INVITATION LIST Ministry of Environment and Forestry Ministry of Energy and Natural Resources Directorate of IZMIR Environment and Forestry Governor of IZMIR Directorate of Environmental Impact Assessment ÇEŞME Mayor ÇEŞME Young Businessman Association Environmental protection and Research Foundation IZMIR Chamber of Environmental Engineers WWF TURKEY Aegean Region Businessman Association Greenpeace TURKEY Agricultural Directorate of IZMIR URLA Association Consumer Rights URLA Municipality Governor of URLA Yunus ARIKAN (Regional Environmental Centre, REEEP Representative)

41 page 41 Annex 5 EIA EXEMPTION LETTER Following document states that according to the article 17 of the Regulation on Environmental Impact Assessment that is issued in 16 December 2003 and published in official gazette # 25318, EIA is not requested for the MAZI-3 WPP consisting 15 Wind Turbines. The Document has been issued in 18 June 2007 by the Directorate of Environment and Forestry in İzmir