Guaracachi PDD Version 3.1 061106 - Rurelec PLC Version 3.1_061106.pdfcycle GE Frame 6FA gas turbine...

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 1

CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD)

Version 03 - in effect as of: 28 July 2006

CONTENTS A. General description of project activity B. Application of a baseline and monitoring methodology C. Duration of the project activity / crediting period D. Environmental impacts E. Stakeholders’ comments

Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information

Annex 4: Monitoring plan

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 2 SECTION A. General description of project activity A.1 Title of the project activity: Conversion of existing open cycle gas turbine to combined cycle at Guaracachi power station, Santa Cruz, Bolivia

Version 3.1

Date of completion: 03/11/06 A.2. Description of the project activity: The project activity will convert two General Electric 6FA gas turbines currently operating in open cycle mode (GCH9 and GCH10) to combined cycle operation at Guaracachi power station in Santa Cruz, Bolivia. This will involve the installation of two heat recovery steam generating boilers which utilise the waste heat from the gas turbine to raise steam. The steam will be used to generate electricity using an associated steam turbine of 68 MW capacity; operating the 6FA gas turbines in combined cycle mode results in significant efficiency gains. The project will not involve any upgrade or modification to the existing turbines themselves that would impact their technical operating life. This is the first project of its type in Bolivia and will be able to deliver a reduction in emissions of around 352,557 tCO2e (tons of carbon dioxide equivalent) per annum on average during the crediting period. Although Combined Cycle Gas Turbine (CCGT) operation is a widely used technology in developed countries there is no experience of CCGT in Bolivia. The operation of CCGT plant is more complex than the operation of an Open Cycle Gas Turbine (OCGT) and the retrofit of CCGT technology requires high capital costs. With low gas prices in Bolivia, a country rich in natural gas, there is little incentive to develop CCGT projects1. All existing thermal power plants in Bolivia are OCGT with the exception of a power station which operates gas fired reciprocating engines (which are less efficient even than OCGT). At the time of writing this PDD both the national dispatch organisation for the Bolivian electricity grid and the electricity regulator were unaware of any other planned conversions of existing open cycle plants to combined cycle2. Power consumption in Bolivia has steadily increased since the early 1990s with an average annual growth rate of 5.4% between 1993 and 2004, mainly on the Bolivian national grid (Sistema Interconectado Nacional - SIN) as shown in Figure 1. Electricity generation in Bolivia amounted to a total of

1 At the beginning of 2006 the project developer commenced the installation at Guaracachi of another 62MW open cycle GE Frame 6FA gas turbine (GCH11) to face recent power shortage in the Bolivian national grid. Expected commissioning date is January 2007. 2 Exhibit A: Plan de Expansión de la Generación y Transmisión en el Sistema Interconectado Nacional; Unidad Operativa del CNDC.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 3 3,994GWh in 2005, this figure does not include electricity generated in rural areas not connected to the national grid3.

Figure 1: Power generation (Generación Bruta) and annual growth rate (Crecimiento) in the Bolivian grid (SIN) between 1992 and 2004. According to Bolivia’s Superintendencia de Electricidad4 the country had approximately 1.38GW of installed capacity at the end of 2005, of which 1.14GW was connected to the national grid. Of the total installed capacity connected to the SIN, 60.4% was conventional thermal power (amounting to 691.66 MW) with the remainder consisting of hydroelectric power (approximately 453 MW). Figure 2 shows the split of installed capacity per generation source in 2005 while Table 1 shows the installed capacity per generating company in Bolivia. The majority of the installed thermal capacity burns natural gas, though a few plants also use diesel as a backup fuel. Bolivia has the second-largest natural gas reserves in South America, after Venezuela, amounting to an estimated 24 trillion cubic feet in 20055. The abundance in natural gas availability has allowed the Bolivian thermal power sector to develop without much attention devolved to generation efficiency. All thermal plants in the SIN are gas turbines operating in open cycle configuration, except for the Aranjuez units, which are, all but one, reciprocating engines, hence characterised by even lower efficiency.

3 CNDC data. Bolivia has two principle electricity systems: the Sistema Interconectado Nacional (SIN) and the Aislado. The Aislado system consists of numerous auto-producers and independent power plants, mainly in rural and isolated areas not served by the SIN. 4 2004 and 2005 statistics for the Bolivian power sector are available online at http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=51 5 EIA (Oct, 2005) “Bolivia Country Analysis Brief “ available online at www.eia.doe.gov


Hydro Thermal TotalCORANI 147.3 147.3EGSA 347.41 347.41EVH 213.25 213.25COBEE 192.78 29.8 222.58CECBB 101.2 101.2ERESA 19.78 19.78HB 85.54 85.54SYNERGIA 7.6 7.6Total 453 691.66 1,144.66

Company Installed capacity (MW)

Figure 2: Installed capacity per type of generation in the SIN in 2005 (Termo – thermal capacity; Hidro – hydroelectric capacity).

Table 1: Split of installed capacity in the Bolivian grid per generating company in 2005. (Source: Superintendencia de Electricidad – Anuario Estadistico 2005)

The proposed project will utilise the waste heat from two gas turbines to generate electricity, thus improving the efficiency of electricity production at the site. This improvement lowers the emission factor for the electricity generated when compared to existing open cycle operation at the site. It is expected that the power plant conversion to combined cycle will be able to deliver approximately 352,557 tonnes of CO2 equivalent a year during the crediting period. The amount of GHG savings claimable by the project is estimated using the baseline methodology and monitoring plan which make up this project design document. The emissions reductions would not occur in the absence of the proposed project activity because of the following national circumstances and barriers to the project:

• in Bolivia there are no national or sectoral policies that require the conversion of OCGT to combined cycle;

• the previous major international shareholder in EGSA (GPU International) considered a CCGT expansion project but rejected it due to the poor financial returns achievable6;

• the other electricity generating companies running fossil fuel generating assets connected to the national grid in Bolivia all operate open cycle plants and none are planning CCGT conversions;

• gas prices in Bolivia are extremely low and therefore investments in efficiency are not typically a priority; and

• at the time of sourcing the project finance, access to debt finance even on a recourse basis was extremely difficult in Bolivia. Specialist funds focusing on Latin America did not invest in Bolivia due to high political risk and uncertainties which resulted in a government change at the last country elections in 2005. Foreign banks were not financing projects in Bolivia unless the financial return of the projects was enhanced by carbon credits.

The proposed project will contribute to sustainable development in Bolivia in several ways:

6 A 1997 memorandum from GPU International states the decision to install two open cycle gas turbines rather than a CCGT system due to the poor returns expected. The memorandum is available for viewing upon request.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 5 1) Projections from the national grid operator in Bolivia suggest that due to increases in power demand

the reserve capacity on the Bolivian grid will be mostly eroded by 20077. Figure 3 and 4 show the impact on power availability of the CCGT investment at Guaracachi in a scenario where no additional investments in power generation will be made. This scenario matches the lack of generation expansion offers from existing operators in the Bolivian electricity sector for the period May 2006 – April 2010 as explained in the Expansion Plan, although the CNDC has devised a capacity expansion plan to meet the expected demand increase (see Section B.4). Either ways, the proposed project will help ensure that Bolivia’s development is based on high efficiency reliable generation.

Offer - Demand (CNDC)

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Figure 3: Future Offer - Demand in the SIN without CCGT (no expansion plan)

Figure 4: Future Offer - Demand in the SIN with CCGT (no expansion plan)

2) Better use will be made of the natural gas resources of Bolivia through the efficiency gains of the

project. The proposed CCGT conversion is the first in Bolivia. Technology transfer to Bolivia will be facilitated through the UK based project developer and Guaracachi shareholder Independent Power Corporation (IPC).

3) The proposed CCGT project will increase the skilled workforce required at the generating station. The CCGT will result both in training of local workers and in new jobs (it is expected that during the construction period approximately 150 new jobs will be created – see Section E).

4) Guaracachi power station is very close to a major load centre of Bolivia (Santa Cruz, a city of approximately 1 million people). Increasing capacity at Guaracachi will reduce the need to import power to the city, thus reducing transmission losses.

5) There is the potential for other CCGT conversion projects in Bolivia. The proposed project at Guaracachi will be a landmark project which will result in the transfer of technology and knowledge to Bolivia to help facilitate other efficiency improvements across the grid.

In addition, it is worth mentioning that the Guaracachi project is the second CDM project that has requested registration in Bolivia, therefore the Empresa Guaracachi is leading the way in establishing CDM in the country. A.3. Project participants:

7 Exhibit A: Plan de Expansión de la Generación y Transmisión en el Sistema Interconectado Nacional; Unidad Operativa del CNDC.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 6 Name of Party involved (*)

((host) indicates a host Party)

Private and/or public entity(ies) project participants (*)

(as applicable)

Party involved wishes to be considered as

project participant (Yes/No)

Bolivia (Host) Empresa Guaracachi S.A. (EGSA) (Project owner) No

Bolivia is a party to the Kyoto Protocol, and ratified the protocol on 30/11/99. A.4. Technical description of the project activity: A.4.1. Location of the project activity: The location of the project activity will be the Guaracachi power station in Santa Cruz. Figure 5 shows the location of the project site in Bolivia. Empresa Guaracachi S.A. Avenida Brasil y Tercer Anillo Intero Casilla 336 Santa Cruz de la Sierra Bolivia

Figure 5: Project location in Bolivia. A.4.1.1. Host Party(ies): Bolivia A.4.1.2. Region/State/Province etc.:

Project site in Bolivia

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 7 Santa Cruz A.4.1.3. City/Town/Community etc: Santa Cruz de la Sierra A.4.1.4. Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): The project activity is restricted to the site of the existing Guaracachi power station. The power station is located to the east of the city of Santa Cruz de la Sierra, the largest city in Bolivia, in an industrial area that includes a major electricity transformer station and rail yards. Figure 6 shows the location of the Guaracachi power station in Santa Cruz de la Sierra. Site Latitude: S 17 degrees 47.172 minutes Site Longitude: W 63 degrees 9.224 minutes Site Altitude: 427 metres

Figure 6: Map of the project location (Ubicación del Sitio) in Santa Cruz de la Sierra.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 8 A.4.2. Category(ies) of project activity: Category: Energy industries (non-renewable sources) A.4.3. Technology to be employed by the project activity: The existing generating facility in Guaracachi is a 290 MW plant and the largest in the country. It comprises eight open cycle gas turbines8. The current project will convert two General Electric PG 6101 FA gas turbines (GCH9 and GCH10) currently operating in open cycle configuration. This part of the plant was commissioned in 1999. The other six Frame 5 gas turbines operating in open cycle on site will not be included in the project activity. The proposed project is to convert the two Frame 6 gas turbines to combined cycle operation and will comprise the addition of:

• two heat recovery steam generators (HRSGs), one per gas turbine; • one steam turbine-generator & condenser; • mechanical draught wet cooling towers; • water treatment plant; • connections to electrical grid.

In addition the existing 6FA outlet stacks will be modified to become a bypass stack.

Current Project Capacity Capacity [MW] GCH 9 Declared Net Capacity 60 GCH 10 Declared Net Capacity 60

Additional Project Capacity GCH 12 Declared Net Capacity 68 Total Project Declared Net Capacity 188

The two 6FA gas turbines have a combined installed capacity of 120MW. The project will result in the installation of a further 68MW of effective generating capacity. The technology to be employed uses the waste heat from the existing 6FA plant to generate steam to run in combined cycle. As a result electricity will be generated more efficiently and less gas will be combusted per unit of generated electricity. This will result in two main environmental benefits:

• CO2 emission reduction per unit of generated power; and • reduction of local pollutants such as NOx which contribute to smog formation.

8 The gas turbines at the Guaracachi facility are GCH1, GCH2, GCH4, GCH6, GCH7, GCH8, GCH9 and GCH10. The project will convert to closed cycle operation the two Frame 6 gas turbines, GCH9 and GCH10. All the other turbines are Frame 5 and were commissioned between 1975 and 1992.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 9 The project design does not include any supplementary or auxiliary firing9, to maintain steam generation from the HRSGs should the gas turbine output reduce. This is the first project of its type in Bolivia and the technical know how to develop a CCGT project and operate the more complex CCGT system will be transferred from the UK company IPC to the management and staff at EGSA. IPC is a shareholder of EGSA and has wide experience in the installation and operation of combined cycle generating units. This knowledge transfer includes the knowledge required to design the plant, arrange finance, acquire the necessary equipment, install and operate the more complex steam cycle. Knowledge transfer is being assisted through a number of site visits by the UK engineering team during which training workshops are being run.

A.4.4 Estimated amount of emission reductions over the chosen crediting period: The crediting period chosen for the Guaracachi combined cycle conversion project is renewable - 7 years, renewable twice. The total emissions reductions due to the project are estimated to be approximately 2,467,897 tCO2 over the first 7 years of the crediting period. The calculated average annual emission reductions achievable through the proposed project are conservative estimates based on an estimated grid emission factor of 0.49 tCO2/MWh. This factor was calculated according to the selected consolidated baseline methodology ACM0007, which uses ACM0002 for the calculation of the grid emission factor. Annual emissions reductions were then estimated using projected power generated by the combined cycle steam turbine and historical data for the performance of the OCGT. The actual CERs will be calculated ex-post following the fulfilment of the project monitoring activities. Annual estimates of emissions reductions over the first crediting period (7 years) are given in the table below:

Year Estimated emission reductions (tonnes CO2)

2008 (9 months) 264,418 2009 352,557 2010 352,557 2011 352,557 2012 352,557 2013 352,557 2014 352,557

2015 (3 months) 88,139 Total (tonnes CO2 – first 7 years) 2,467,897

Number of crediting years 21 Annual average over crediting period (tonnes CO2) 352,557

A.4.5. Public funding of the project activity: There is no public funding for the project activity. 9 ‘Supplementary firing’ describes the incorporation of a gas burner to add heat to the HRSGs to supplement that from the gas turbines, the HRSG cannot operate without the heat input from the gas turbine in this case. ‘Auxiliary firing’ is the incorporation of a burner to provide sufficient heat to run the HRSGs without the gas turbine input.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 11 SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity: The approved consolidated methodology ACM0007: “Baseline methodology for conversion from single cycle to combined cycle power generation” Version 1 and ACM0007: “Consolidated monitoring methodology for conversion from single cycle to combined cycle power generation” are used for the Guaracachi combined cycle conversion project10. B.2 Justification of the choice of the methodology and why it is applicable to the project activity: The ACM0007 baseline and monitoring methodology was developed as a new methodology (NM0070) in conjunction with the Guaracachi CCGT conversion project activity and as such the Guaracachi project meets all the applicability criteria of the methodology as outlined below. ACM0007 is therefore selected as the appropriate methodology for the determination of the project’s baseline and monitoring activities. ACM0007 is applicable when: 1. When project developers utilize previously-unused waste heat from a power plant, with a single-

cycle capacity, and utilize the heat to produce steam for another turbine – thus making the system combined-cycle;

The Guaracachi project will install two heat recovery steam generating boilers to utilise the waste heat from the existing open-cycle gas turbines to raise steam and thus to generate additional electricity.

2. When waste heat generated on site is not utilizable for any other purpose on-site;

Currently there is no practical use for the heat generated on site, which is dispersed through two outlet stacks.

3. Where the project activity does not increase the lifetime of the existing gas turbine during the

crediting period (i.e. this methodology is applicable up to the end of the lifetime of existing gas turbine, if shorter than crediting period);

The project will utilise the exhaust heat of the existing gas turbines but will not involve any upgrade or modification to the turbines themselves that would impact their technical operating life.

4. Where project developers have access to appropriate data to estimate the combined margin

emission factor, as described in ACM0002 “Consolidated baseline methodology for grid-connected electricity.

10 The consolidated methodology ACM0007 is available on the UNFCCC-CDM website at http://cdm.unfccc.int/UserManagement/FileStorage/CDMWF_ACM_GR5DZKC3ZP8I7LEFCOQNBETEAD51F6


The electricity grid in Bolivia is centrally despatched by the Comité Nacional de Despacho de Carga (CNDC). The efficiencies of all plants on the grid are available from CNDC, as are data related to the power exported to the grid from each generating plant over the year.

. B.3. Description of the sources and gases included in the project boundary The spatial extent of the project boundaries encompasses the two gas turbines at the project site being converted to closed cycle (GCH9 and GCH10) and the associated HRSG and steam turbine and all power plants physically connected to the electricity system that the proposed CDM project is connected to. Bolivia has two main electricity systems: the Sistema Interconectado Nacional (SIN) and the Aislado. The SIN connects major population centres and represents approximately 87% of generated power. The grid extends for over 1,200 miles and covers the central and southern parts of the country, while the Aislado system consists of numerous auto-producers and independent power plants in rural or isolated areas not connected to the SIN. The Guaracachi power station is located in Santa Cruz de la Sierra, a major city in Bolivia connected to the SIN, and therefore the SIN is selected to be included in the project boundaries for the calculation of the combined margin emission factor according to the consolidated methodology ACM0002. Figure 7 shows the extension of SIN in Bolivia and the project location.

Figure 7: Map of the Bolivian Sistema Interconectado Nacional (SIN)

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 13 Only the emissions of CO2 from the combustion of fossil fuel to generate electricity within the project boundary are included as shown in the table below.

Source Gas Included/ Excluded Comments

CO2 Included Main emission source CH4 Excluded Excluded for simplification. This is conservative Open cycle fuel use N2O Excluded Excluded for simplification. This is conservative CO2 Included Main emission source CH4 Excluded Excluded for simplification. This is conservative B

asel

ine

Grid electricity generation N2O Excluded Excluded for simplification. This is conservative

CO2 Included Main emission source CH4 Excluded Excluded for simplification. This emission source is

assumed to be very small. Project fuel use fuel use N2O Excluded Excluded for simplification. This emission source is

assumed to be very small. CO2 Excluded There is no additional gas use for the operation of the

steam turbine CH4 Excluded There is no additional gas use for the operation of the

steam turbine Proj

ect A

ctiv

ity

Closed cycle steam turbine fuel use

N2O Excluded There is no additional gas use for the operation of the steam turbine

B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: The ACM0007 methodology is only applicable to projects where it can be demonstrated that the baseline scenario is the continuation of current practice (i.e. in the absence of the proposed project electricity to meet the demand in the grid system will be generated by the continued operation of the existing gas turbines in open cycle, by the operation of existing grid-connected power plants and by the addition of new generation sources to the grid). The methodology requires all plausible alternative options to the project activity to be identified and a detailed barrier analysis to be performed on each option according to the steps highlighted in the “Tool for the demonstration and assessment of additionality”11 and described in Section B.5. The option with the fewest barriers is taken to be the baseline scenario. These steps are followed below. 1) Identification of alternatives to the project activity consistent with current laws and regulations Under the current circumstances of the Bolivian power sector there are four plausible alternatives to the project activity capable of delivering similar outputs and services, available to the Empresa Guaracachi S.A., these are:

1. No project activity undertaken (continuation of current practice).

11 The “Tool for the demonstration and assessment of additionality (version 2)” (28 Nov 2005) is available online at http://cdm.unfccc.int/methodologies/PAmethodologies/AdditionalityTools/Additionality_tool.pdf.


Under this scenario power to meet the grid demand is generated and supplied by the existing gas turbines at the site running in open cycle configuration, by other existing grid-connected power plants, and by the addition of new generation sources to the grid. 2. Investment in a new fossil fuel power plant of annual output equivalent to the proposed project. Under this scenario the project developer would invest in a new Frame 6 open cycle gas turbine of power output equivalent to the proposed steam turbine in order to increase the power generation of the Guaracachi power station. 3. The proposed project activity NOT undertaken as a CDM project activity.

Under this scenario EGSA would commission a steam turbine of the same capacity (68 MW) to operate in a closed cycle configuration without the support of the CDM. 4. Commercial renewable power plant of equivalent capacity to the proposed project NOT

undertaken as a CDM activity. Since grid connected hydropower is the only renewable technology to be firmly established in the Bolivian power sector, this alternative refers to hydropower plant of equivalent output.

2) Conduct a barrier test analysis A detailed barrier analysis to demonstrate that the project activity is additional and therefore not the baseline scenario, is performed in Section B.5. Table 2 below presents a summary of the results of the barrier analysis.

Table 2: Results of the barrier analysis

Bar

rier

s Scenario 1: Continuation of current practice

Scenario 2: New fossil fuel power investment of equivalent capacity

Scenario 3: Project activity NOT undertaken as a CDM project

Scenario 4: Renewable power plant of equivalent output

Cur

rent

law

s &

reg

ulat

ions

• N/A • N/A

• There is no regulation that requires upgrading existing OCGT to operate in closed cycle.

• N/A


Inve

stm

ent b

arri

ers

• N/A • EGSA is installing a new F6 gas turbine at Guaracachi (GCH11) which is expected to become operational in January 2007, in order to meet grid demand. A further investment in that direction is unlikely in the near future.

• Raising capital for power projects in Bolivia is very difficult, investment funds targeting Latin America will not consider Bolivia because of country risk.

• Finance banks are not willing to finance projects in Bolivia unless the projects’ return is enhanced by carbon financing.

• Raising capital for power projects in Bolivia is very difficult; investment funds targeting Latin America will not consider Bolivia because of country risk.


• Despite hydropower is the only renewable source of energy for which there is comparable technical know-how in Bolivia, with limited available hydropower resources to be developed around Santa Cruz, the economic return of a hydropower plant of similar capacity is less attractive.


Tec

hnol

ogic

al

Bar

rier

s

• • As a result of the availability of natural resources in Bolivia no other fossil fuel options are practical apart from natural gas

• Same as for the proposed project.

• The technology for CCGT conversion is new to Bolivia.

• There are no suitable exploitable hydropower resources available in the area of Santa Cruz.

• The project developer does not have any technical experience in the development of hydropower plants.


Cur

rent

pra

ctic

e B

arri

ers

• N/A • N/A

• The dispatch order of the Bolivian grid is calculated six monthly based on costs of generation as calculated by CNDC combining the predicted gas price for each generator; node value and generation efficiency. Cheaper units are higher in the dispatch order and receive higher capacity payments for maintenance. This has lead generators to bid low gas prices to ensure their position in the dispatch order. Since 2005 the capacity of the grid has doubled making Guaracachi vulnerable to this practice.

• N/A

3) Justify the selection of baseline scenario As shown in the summary table above and as described in more detail in Section B.5, it is clear that one or more of the barriers identified in the barrier analysis affect the project scenario as well as all of the other alternative scenarios apart from Scenario 1: continuation of current practice, which is therefore selected as the most plausible baseline scenario. As such this project meets the requirements of the baseline methodology for the purpose of determining both the baseline and project emissions. Furthermore the baseline scenario is expected to remain unchanged throughout the project’s lifetime due to the current stagnant situation of the Bolivian power sector as described in the following paragraphs and in Section A.2. Despite the lack of firm commitment to expand existing generation facilities from power operators, CNDC Expansion Plan12 until 2010 calls for approximately 370 MW new open cycle gas turbines to be installed on the grid, to integrate the installation of GCH11 at Guaracachi and a planned 43MW cogeneration unit using sugar cane bagasse. No hydroelectric expansion is included in the short to medium term due to the lack of offer in this direction. The expansion plan includes the minimum capacity required to meet the expected increased demand in La Paz, Cochabamba, Carrasco and Santa Cruz and is based on a set of conditions happening simultaneously:

• Expansion of the grid to include the currently isolated generating units at Tarija and Trinidad; • Availability of gas for the existing and future power plants at the locations where power is

required; • Construction of pipelines to bring natural gas to the locations where power is required.

12 Exhibit A: Plan de Expansión de la Generación y Transmisión en el Sistema Interconectado Nacional; Unidad Operativa del CNDC.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 17 Figure 8 shows that, even in the event that all the conditions will be met and the new units will be installed, demand will exceed offer already by 2008. It is clear from Figure 9 (which shows the impact of the CCGT unit) that the investment at Guaracachi is extremely important for Bolivia, especially given that:

• La Paz is situated at approximately 4,000 m a.s.l. therefore gas turbines efficiency is seriously limited; furthermore there is no natural gas availability in La Paz are.

• In Cochabamba there is no availability of natural gas. it is highly unlikely that all three conditions for the current expansion plan will materialise and the most likely situation is the one shown previously in Figure 3 and Figure 4.

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Figure 8: Future Offer - Demand in the SIN without CCGT (including increased power offer according to CNDC expansion plan)

Figure 9: Future Offer - Demand in the SIN with CCGT (including increased power offer according to CNDC expansion plan)

Of the discussed alternative baseline scenarios, Scenario 2 is discounted because EGSA has recently invested in an additional Frame 6 gas turbine at the site (planned to be commissioned in January 2007) and is not planning to invest in another gas turbine in the near future, whereas the generation of renewable energy at the site (Scenario 4) is not a viable option due to the location near the centre of Santa Cruz. Furthermore EGSA do not have any in-house experience in the installation and running of hydropower plants. Scenario 3 is discounted mainly on grounds of technical and financial barriers. The CCGT technology is new to Bolivia, and in addition to this the recent investment in a new F6 gas turbine has weakened EGSA financial position in a way that the investment would not happen without the financial input from CERs. EGSA factored the additional financial flow of CDM into the business plan for the Guaracachi CCGT upgrade since the inception of the project in order to achieve a better financial performance of the investment and to attract the necessary technological know-how of IPC. B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity (assessment and demonstration of additionality):

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 18 The consolidated tool for the demonstration and assessment of additionality is applied in ACM0007. The tool provides a set of steps to demonstrate and assess additionality. These steps, with reference to the Guaracachi project, are illustrated in the following paragraphs. Step 0: Preliminary screening of projects based on the starting date of the project activity The proposed project does not wish to have the crediting period start prior to the registration of their project activity. Step 1. Identification of alternatives to the project activity consistent with current laws and regulations

Step 1 includes two components: Step 1a requires the identification of alternatives available to the project participants, and Step 1b requires these alternatives to be assessed to determine whether they meet all legal and regulatory requirements.

Sub-step 1a. Define alternatives to the project activity In this step alternatives to the CCGT conversion need to be identified. As reported in Section B.4 the possible alternatives to undertaking the proposed project are: Scenario 1: Continuation of current practice

Scenario 2: Implementation of a new fossil fuel power plant of equivalent capacity Scenario 3: Implementation of the CCGT conversion without the CDM incentive Scenario 4: Implementation of a renewable power plant of equivalent output. Sub-step 1b. Enforcement with applicable laws and regulations Scenario 1 is clearly consistent with prevailing laws and regulations. There is no regulation in Bolivia to prevent the continuation of current practice. Scenario 2: There is no regulation that specifies what type of fossil fuel must be used for new generation additions. Hence, any power plant using fossil fuel would be in compliance with current regulations. Scenario 3 is also consistent with prevailing laws and regulations since the project was proposed by the project developer under the current laws and regulations governing the Bolivian power sector. There is no legal requirement to register projects such as this under the CDM. Scenario 4: It is assumed for the purposes of this exercise that any hydropower development is made respecting the prevailing laws and regulations of the Bolivian energy sector. Step 2. Investment Analysis

The aim of the investment analysis step is to “determine whether the proposed project activity is economically or financially less attractive than other alternatives without the revenue from the sale of CERs”. This step requires the economics of the baseline alternatives to be compared (before the addition of CDM revenue). The rationale behind this step is that a project developer would most likely choose the

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 19 scenario representing the most economically attractive course of action. If the project is shown to be the most economically attractive (excluding the impact of carbon credits) then the project is not additional. Sub-step 2a. Determine Appropriate Analysis Method There are several methods available to perform this analysis, these are: 1 Simple cost analysis for projects where the only revenue is CDM related;

2 Investment comparison analysis for projects where the alternatives include investments of comparable scale to the project activity; and

3 Benchmark analysis, for projects which do not involve investments of comparable scale or timing.

The simple cost analysis is not relevant to the Guaracachi project, and because the alternative scenarios are not comparable in terms of investment requirements it is therefore appropriate to conduct a benchmark analysis. Sub-step 2b – Option 3. Apply benchmark analysis The benchmark analysis compares the baseline scenario alternative (i.e. the CCGT conversion without the CDM incentive) to an appropriate investment hurdle rate, which must represent “standard returns in the market, considering the specific risk of the project type, but not linked to the subjective profitability expectation or risk profile of a particular project developer”. The hurdle rate can be obtained from: • government bond rates, adjusted by a risk premium to reflect private investment, and substantiated by

an independent financial expert, and • estimates of the cost of financing and required return on capital, based on bankers’ views and private

equity investors/funds required return on comparable projects. Equity based IRR has been selected as financial indicator to use for the Guaracachi project for the following reasons: • It is very unlikely that any debt will be available to the project even on a recourse basis. Banks are

reluctant to take Bolivian counterparty risk due to the general economic position of the country13 and due to the instability of the power sector in recent years14. Bolivia is not a market for the US Export-Import Bank nor is Bolivia covered by the UK or Canadian export credit guarantee. Therefore, the project is facing several hurdles to raise debt to finance the project and at the time of writing the PDD the CCGT investment will likely be funded 100% equity by EGSA. Hence the IRR will be an equity IRR.

13 Bolivia currently has a short term credit rating of ‘C’, and a long term rating of ‘B-’ from Standard and Poor’s credit analysis system (www.standardandpoors.com). 14 With the collapse of President Gonzalo Sanchez de Lozada’s government in 2003 US based power companies, which dominated the power sector in Bolivia (the top three power companies were all US based), sold all interests in Bolivia, predominantly due to concerns over the stability of the country. Subsequently, after the election of President Evo Morales in January 2006 and his nationalisation of the country’s natural gas resources, the situation of the power sector in Bolivia is even more uncertain. As a consequence all foreign investments in the energy and gas sector have been halted and Bolivia is shown to be the second worst country to do business in after Haiti. http://www.latinbusinesschronicle.com/app/article.aspx?id=107

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 20 • EGSA is controlled by a UK based company (IPC) (51%), and other shareholders, predominantly

Bolivian based pension funds. The decision to invest in EGSA from these shareholders is driven by required returns on equity.

Furthermore, the equity IRR will be calculated on an incremental basis using only the incremental cash-flow (i.e. that cash-flow from the Guaracachi power station above the baseline scenario of continuation of current practice) to calculate the IRR. The benchmark IRR selected for this project is 25%, although 30% is more likely for Bolivia. It is appropriate to use this benchmarked value in this case because it is the average return on equity required by investment funds considering investing in comparable greenfield power generation projects in emerging markets15. It should nonetheless be noted that presently no foreign investment fund consider investing in Bolivia even if this minimum rate was met, due to the concern raised amongst foreign investors by the nationalisation of the gas industry and the current generalised perception of nationalisation of the energy sector. For comparison EGSA’s Weight Adjusted Cost of Capital (WACC) was included in the benchmark analysis. Typically WACC plus a risk premium is used for a company’s investment hurdle rate; therefore using WACC alone provides a very conservative comparison. Table 3 gives a summary of the results of the benchmark analysis for two baseline options, the continuation of current practice (business as usual) and the CCGT investment undertaken without CDM. Table 3: Summary of the benchmark analysis, two hurdle rate values are given Baseline Options

Benchmark (Equity IRR)

1. CCGT conversion 2. Business as usual16

Hurdle rate 25% EGSA’s WACC 15%

9.4% N/A

For comparison a calculation of the Net Present Value (NPV) has also been conducted. NPV has been calculated using the same cash-flows as for the IRR calculations and employs WACC as EGSA’s cost of capital. NPV for the project is US$ -12.8 million. The cash-flows used to calculate IRR and NPV are determined assuming:

• a project lifetime of twentyfive years; • capacity payment17 to EGSA based on the 2005 capacity price in the Bolivian electricity market

(6.10 US$/kW); and

15 A statement by Hichens Harrison & Co is available for the DOE to support the choice of the benchmark. 16 This alternative does not require investment and therefore IRR cannot be calculated 17 In Bolivia generators are funded both by payment for the actual electricity generated and for the maintenance costs of the plant. The maintenance costs are funded with ‘capacity payments’ every six months. These capacity payments are determined by the forecast running hours of a specific plant given by its position in the dispatch order (which is in turn given by the cost of cost of generation from the plant). The capacity payments are calculated by reference to standard maintenance costs of US gas turbines. See also Step 3: Barrier Analysis – Current Practice Barriers.


• gas price including VAT of 1.08 US$/mft3 (,000 cubic feet) From this analysis it is clear that the CCGT conversion without the CDM incentive does not meet the benchmarked hurdle rate, and does not even meet EGSA’s WACC, and therefore would be unlikely to be financially attractive. It should also be noted that even if the project did meet the benchmarked hurdle rate it would be very unlikely that an investment fund would be interested in an investment in Bolivia due to the concerns over credit worthiness. Furthermore the NPV of the project is negative, which suggests that the project is not financially attractive. Sub-step 2d. Sensitivity analysis The sensitivity analysis is run to determine whether the economic conclusions are robust under reasonable variations in the critical assumptions. The investment analysis step can only provide a valid argument for additionality if it consistently supports the conclusion that the project is unlikely to be financially attractive (i.e. it doesn’t meet the benchmark hurdle rate). Sensitivity analyses have been performed for the proposed CCGT conversion for the key variables of capacity payments and gas price. Table 4: Sensitivity analysis for the CCGT conversion Sensitivity IRR (%) NPV (US$ Millions) Comments

Base case 9.4 -12.8 The base case is the most likely situation as outlined above. It assumes that capacity payments to generators in Bolivia will remain at current levels (6.1US$/KW).

Low case 8.4 -14.9

The low case is where capacity payments to generators may decline. In this case capacity payments are decreased to 5.5US$/KW, this is thought to be the maximum likely reduction in capacity payments.

High case 10.6 -10.1 The high case is a scenario where capacity prices are increased to 6.8US$/KW, however, an increase is thought to be very unlikely to occur.

High gas case 10.3 -10.7 The maximum potential gas price to be paid is raised to US$1.20/mft3 (‘000s cubic feet), above the maximum price used in the Base case of US$1.08/ mft3.

The results of the sensitivity analysis are presented in Table 4 which shows the impact on IRR and NPV of modifications to the predicted values for the key variables. There is only a case presented for the potential increase in gas prices as the potential for decreasing gas prices is very difficult to predict and if gas price were to reduce this would reduce the advantage of the high efficiency CCGT plant and hence the IRR and NPV would be likely to be lower than the base case. In all cases presented the project is not financially attractive, both because the IRRs do not meet either EGSA’s WACC or the benchmarked required IRR, and because NPV is negative in all cases. The financial data used to calculate the values presented above are presented in Appendix 3. The financial analysis shows that the CCGT conversion project without CDM (Scenario 3) does not meet the benchmark hurdle rate value for IRR under a range of likely scenarios. Furthermore the NPV of the

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 22 project is negative in all cases; therefore the project is not financially attractive. As a consequence alternative Scenario 3 cannot be considered a possible baseline scenario. Step 3. Barrier Analysis

The following barrier analysis highlights the barriers that have been identified to be hurdles to the development of the proposed project activity. Investment and technical barriers also apply to the alternative Scenarios 2 and 4 identified in Step 1, hence leaving the “current practice - no project” option as the only available alternative and, as such, the baseline scenario for the project.

Sub-step 3a: Identify barriers that would prevent implementation of type of the proposed project activity (a) Investment Barriers There is a clear difficulty of raising debt (even on a recourse basis) for any kind of project due to most banks’ reluctance to take Bolivian counterparty risk. Also finance banks are not willing to finance projects in Bolivia unless the projects’ return is enhanced by carbon financing. In addition to this, the Guaracachi project has a strong impact on EGSA’s balance sheet and without raising debt the company would need to spend from its own cash reserves that have been reduced by the investment in the new F6 gas turbine in 2005/07. Without the CDM incentive to increase the potential to raise debt and thus reduce the cost of capital, the CCGT investment would not be possible. The current value of the CCGT investment at Guaracachi is presented in Table 5 below. Table 5: Current capital cost of the Guaracachi CCGT investment (in ,000 US$)_ Combined Cycle Guaracachi PlantCapital costs Comb. Cycle

FOB cost 35,000$ Insurance and Transportat 909$ Civil Works 1,329$ Construction 2,797$ EPCM Services 699$

Duties & Taxes 1,225$ Sub total 41,959$ $000VAT (effective rate) 6,087$

Total 48,046$ 641$ $/kW

There is also a risk that the exchange rate for the Bolivian currency will continue to weaken against the US dollar18. If the Boliviano continues to devalue against the dollar, the risk of defaulting on any US$ loan is greater, and this will make it more difficult to raise debt through banks or credit export agencies. (b) Technology Barriers

18 The Boliviano has devalued approximately by 35% against the US Dollar from Sept 1999 (1 Dollar = 5.8 Bolivianos), to June 2006 (1 Dollar = 8.3 Bolivianos). Source: Central Bank of Bolivia

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 23 CCGT technology is new to Bolivia; all existing major generation technologies on the Bolivian grid are either OCGT or hydro. Even the current Expansion Plan for the power sector in Bolivia assumes that all generation expansion investments required to meet the expected electricity demand increase until 2010 will be either open cycle gas turbines or hydro. Following the collapse of President Gonzalo Sanchez de Lozada’s government in 2003 the top three international power companies operating in Bolivia sold all their interests and withdrew from the country. This has left a situation where the power sector in Bolivia does not have the necessary experience to design, build, or operate CCGTs. Thanks to the CDM incentive EGSA was able to make the business case to implement the CCGT conversion project that resulted in the involvement of the Independent Power Company (IPC) in the project. As already stated IPC is a shareholder in EGSA and has extensive experience in designing, building and operating CCGTs around the world. Without the financial incentive represented by the CDM IPC would not have invested in the Guaracachi project. As a consequence the necessary skills and technology to implement a CCGT project would not be imported into Bolivia, and the Guaracachi conversion would not occur. (c) Current Practice Barriers Because the Bolivian grid is dispatched economically there is an incentive to reduce generating costs at the Guaracachi site. The payment structure for the Bolivian grid is organised in a way that every six months the dispatch order is calculated by the CNDC. This dispatch order is based on the costs of generation of each generating station on the Bolivian grid. The key costs are the variable operating costs, i.e. gas costs (hence the dispatch cost of hydro is zero). Each operator bids a gas price to CNDC for each six month period. CNDC combine this cost with generating efficiencies and node value19 to determine generating costs, and this is used to calculate dispatch order. Generating stations then receive ‘capacity payments’ for each six month period, which relates to the expected maintenance costs of the station and is linked to the forecasted running hours. Generating stations higher up the merit order (i.e. with cheaper generation potential) therefore receive greater capacity payments. Generating stations also receive payment for the MWh they generate and put on the grid, related to the generating costs bid to CNDC for each six month period. However, the capacity payments are considered the most valuable, and therefore many generators bid excessively low gas prices each six month period to ensure their position in the dispatch order. This has the effect that many generating stations actually generate power at a loss. In some cases the capacity payments are used to subsidise power generation costs, rather than being used to pay for plant maintenance. Guaracachi has been largely protected from this effect because of its position (very close to a centre of load), and by a lack of competition (the grid connection to Santa Cruz is of relatively low capacity). Since May 2005 the capacity of the grid connection has doubled, hence Guaracachi was opened to greater competition and therefore reducing costs of generation will be beneficial to EGSA to ensure it continues to receive capacity payments. Sub-step 3b: Show that the identified barriers would not prevent the implementation of at least one of the alternatives Scenario 1: Relative investment costs of developing OCGT and reciprocating engine thermal power plants are lower than for any other technology. Local capital markets (debt and equity) are familiar with 19 The node value is the distance of the generating station to a load centre. The closer the source of power to the load centre, the higher the node value.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 24 the costs and risks of power sector investments and capital continues to flow into reliable and rewarding investments in new conventional power additions under the current climate of sustained rises in electricity demand across the economy. The investment barriers to the continuation of current practice are lower than for the other options identified and help to define Scenario 1 as the most likely business-as-usual scenario. From a technology point of view, the power sector in Bolivia is dominated by OCGT and hydro power plants20. As such the technology know-how for the design, manufacturing, installation and operation of those technologies is widely available in Bolivia. Thus there are not deemed to be any technology barriers to the continuation of current practice. Scenario 2: EGSA is currently installing a new F6 gas turbine at Guaracachi, in order to meet grid demand. This unit is included in the current CNDC expansion plan21 to meet increasing power demand. A further investment from EGSA in that direction is very unlikely in the near future. Furthermore raising capital for power projects in Bolivia is very difficult as investment funds targeting Latin America will not consider Bolivia because of country risk. Also, due to the availability of gas, any other fossil fuel option does not represent a viable course of action in Bolivia. On the other hand, there are no technological barriers to the development of new gas turbines in Bolivia as the technology is well known and established in the country. Scenario 3 identified in Step 1 is the investment in a CCGT equivalent to the proposed project activity, but without registering it as a CDM project activity. This scenario has already been ruled out based on the results of the financial analysis conducted in Step 2 and cannot be considered as the project baseline. Scenario 4: Grid-connected hydropower is the only renewable technology option which could provide a technically plausible alternative to the project. Due to the limited availability of usable hydropower resources in the area of Santa Cruz there is no potential for the development of large size hydropower plants. Furthermore, EGSA does not have experience in developing and running hydropower plants. The lack of viable hydro resources and the lack of in-house experience contribute in making the investment in a large size hydropower plant a non financially attractive alternative to the proposed project. Furthermore, the general investment barriers in Bolivia are valid for this type of investment too. As a consequence alternative Scenario 4 is discarded on grounds of both financial and technological barriers. In conclusion, the only alternative option available is the no project/current practice option (Scenario 1). As such the provision by the Bolivian grid of an amount of electricity equivalent to the project output will be taken as baseline for the Guaracachi CCGT project. The project scenario is the conversion of two 6FA OCGTs by the addition of a HRSG and a steam turbine connected to the grid. Under the project case 80MW of additional electrical power is added to the grid without an associated increase in fossil fuel combustion. In the baseline scenario this power would be generated largely from other gas turbines. Step 4: Common practice analysis

20 CNDC annual report: http://www.cnb.net/cndc/estad/memoria03.pdf 21 Exhibit A: Plan de Expansión de la Generación y Transmisión en el Sistema Interconectado Nacional; Unidad Operativa del CNDC.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 25 The common practice step requires the project developers to review whether the proposed technology has already diffused in the relevant sector and region. Given that there are no other CCGT installations in Bolivia it is obvious that this technology is not common practice. Step 5: Impact of CDM registration The plan to register the Guaracachi project with the CDM has a number of benefits, including:

• The CDM incentive has helped mitigating the investment barriers by providing an additional revenue stream from the sale of carbon credits. A CER purchase agreement with an organisation from an Annex I country will diversify the income of the project to sources external to Bolivia and had the effect of reducing the overall risk profile of the project. As a consequence offers of debt were obtained, contingent on CDM status for the CCGT conversion project22. Furthermore, if the additional revenue stream from the sale of CERs is recognised by debt providers, has increased the Debt Service Coverage Ratio (DSCR) of the project.

• The additional revenue from carbon credits contributes to the incremental IRR and NPV of the project. The results of the calculations of the impact of CERs on both the Equity IRR and NPV are presented in Table 6 and are based on the following assumptions23:

o base case capacity payments to generators in Bolivia at current levels (6.1US$/KW); o base gas price at current levels (1.08 US$/mft3) o 350,000 tCO2/y (conservative assumption); o price of carbon set at 12 US$/tCO2; o 7 years crediting period starting in April 2008.

Table 6: Impact of Carbon Finance on the project's IRR and NPV

Baseline Options

1. CCGT conversion without CDM incentive – Base case

2. CCGT conversion project with CDM incentive


IRR NPV IRR NPV


9.4% US$ -12.8m 15.9% US$ 1.8 m

Clearly the CDM incentive has a large impact on the equity IRR. The IRR is pushed slightly above EGSA’s WACC, although not above the benchmark hurdle rate. The increase in IRR makes the project a more attractive option to EGSA and will enable the project developer to proceed with obtaining an adequate amount of debt to fund the entire project activity. Also of crucial importance is that the NPV becomes positive thanks to carbon finance, thus making the project financially attractive to EGSA.

• The additional revenue stream stemming from the CDM registration will help mitigating the

exchange rate risks. A CER purchase agreement paid in US$ (or other stable currency) will mitigate the exchange rate risk and hence decrease the risk profile of the project from the

22 See loan agreements, these are confidential, but will be provided to the validating DOE. 23 Exhibit B: Financial Analysis Calculation Sheet


perspective of foreign lenders, and has the potential to make the project eligible for credit export agency support.

• The CDM incentive contributed to the business case to implement the CCGT conversion project

that resulted in the involvement of IPC in the project. IPC has extensive experience in designing, building and operating CCGTs around the world and without the CDM incentive it would not have invested in the Guaracachi project. As a consequence the necessary skills and technology to implement a CCGT project would not have been imported into Bolivia, and the Guaracachi conversion would not have occurred.

• The Electricity Superintendent demanded that EGSA conduct an in-depth system impacts study

of the potential effects of the additional capacity for the grid stability. Such studies are expensive and the CDM raised the financial attractiveness of the CCGT conversion project and hence assisted the business case for investing in such a study.

• In Bolivia there are little legal and financial incentives to increase efficiency of existing power

plants compared to building new ones, despite the current situation of suppressed demand. The CDM incentive assists greatly in the business case for the CCGT conversion project in this situation.

The use of the CDM in this project to overcome the barriers identified above was decided at an early stage. As a result the CDM played an important role in the decision making process to proceed with the CCGT conversion at Guaracachi. There is a range of evidence to support this: • IPC approached consultants in January 2004 to advise on undertaking the CCGT conversion as a

CDM project activity; • the eligibility assessment and PDD development started in October 2004, prior to financial closure of

the project; • IPC and EGSA board submissions in October and November 2004 clearly state that the decision to

proceed with the CCGT conversion is subject to the project meeting the criteria of the CDM and that the CDM incentive is a crucial factor in the decision making to proceed with the project; and

• various official communications from banks clearly state that any debt raised for the purpose of the

CCGT conversion is contingent to the project gaining CDM status. Conclusions The proposed project faces many barriers: it is the first of a kind in a country dominated by low efficiency gas power on its grid, and the project has very poor returns without the CDM incentive. The CDM has a significant impact on the project finance and makes the project a reasonable investment opportunity for EGSA. Furthermore, IPC, the project sponsor has identified the CDM as a critical issue, and therefore without the CDM incentive IPC would not be implementing the project, and technology and skills transfer to Bolivia would be unlikely to occur. B.6. Emission reductions:


B.6.1. Explanation of methodological choices: ACM0007 requires the emission reduction (ERy) by the project activity to be calculated as the difference between the baseline emissions (BEy), project emissions (PEy) and emissions due to leakage (Ly). ERy = BEy - PEy - Ly Project emissions in tonnes of CO2 include emissions from use of fossil fuel to operate the gas turbine (PEGTy) and supplementary fossil fuel used in order to operate the steam turbine (PESTy). Determination of the project activity emissions (PEy) PEy (tCO2) = PEGTy + PESTy At Guaracachi there will not be any over-firing, hence no additional gas will be required to operate the steam turbine. As a consequence the emissions from fossil fuel used to operate the steam turbine is zero. PESTy = 0 In order to calculate the project emissions linked to the operation of the gas turbines (PEGTy) the amount of gas used by the project to operate the gas turbine (in volume units) is multiplied by the GHG coefficient of gas (COEFi), in tons of CO2 per unit volume of fuel ‘i’ according to the equation below: PEGTy = COEFi,y * FGTi,y COEFi,y takes into account the carbon content of the fuel used by the project during the year and is calculated by: COEFi = NCVi * EFCO2,i * OXIDi Where NCVi is the net calorific value of gas expressed in BTU/ft3; EFCO2,i is the CO2 emission factor of natural gas expressed in gCO2/BTU; and OXIDi is the oxidation factor for natural gas. Determination of the baseline emissions (BEy) The baseline scenario for the proposed project as outlined in ACM0007 is that power to meet the grid demand would be generated and supplied by the existing gas turbines at the site running in open cycle configuration, by other existing grid-connected power plants, and by the addition of new generation sources to the grid. Hence the baseline emissions are calculated as the sum of emissions of the current power plant operating in open cycle mode and the emissions that would be generated by the grid (existing and future plants) if it was generating an amount of power equal to that generated by the proposed project operating in closed cycle mode. As such the baseline emissions are calculated as follows: BEy (tCO2) = (EFOC * OGy) + (EFgrid,y * CGy) where EFOC and EFgrid are respectively the emission factor for the plant operating in open cycle mode and the emission factor of the grid in tCO2/MWh; while OG and CG are respectively the electricity in MWh generated by the open cycle and that generated from the use of waste heat.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 28 Step 1: Estimating OGy In order to estimate the annual electricity generation by the plant in open cycle mode (OGy) the following equation is applied: OGy (MWh)= PLF * OC * T Where PLF is the plant load factor expressed as a fraction; OC (MW) is the net capacity of the open cycle plant; and T is the operating hours during the year. PLF can be calculated both ex-ante, using historical data for the OCGT and ex-post utilising actual data from the project (including both gas and steam turbine) using either Option 1 or Options 2, whichever gives the more conservative value of baseline emissions.

HGOC,x Option 1 PLF = OCx * 8760 Where HGOC,x (MWh) is the average annual electricity generated by the power plant operating in open cycle mode based on x years of generation records previous to start of the project and OCx (MW) is the net historic capacity of the OCGT.

PGy Option 2 PLF = PC * 8760 Where PGy (MWh) is the actual electricity generated by the project in year y and PC (MW) is the net installed capacity of the project (both gas turbine and steam turbine). Step 2: Estimating EFOC the emission factor for OCGT generation in the baseline The emission factor for the open cycle generation (tCO2/MWh) in the baseline is given by historical performance of the plant when it operated in open cycle using data for 5 most recent years24 previous to the start of the project. The emission factor is calculated as follows:

FCHIST EFOC = HGOC,x * COEFi,HIST

Where FCHIST (ft3) is the historical annual average fuel consumption; HGOC,x (MWh) is the net annual generation from the operation of the power plant in open cycle mode based on x years of generation25; and COEFi,HIST (tCO2/ft3) is the GHG coefficient for fuel i (in Bolivia natural gas is the main fossil fuel used to generate power on the grid, there are some dual fuel engines that utilise diesel and gas) used in the project for operating the open cycle gas turbine. The CO2 emission coefficient COEFi,HIST for gas is obtained as:

24 HIST = 5 years. If five years data is not available, then data for the most number of complete years available should be used, with a minimum of one full year. 25 x = 5 years. If five years data is not available, then data for the most number of complete years available should be used, with a minimum of three full years.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 29 COEFi,HIST = NCVi,HIST * EFCO2,i,HIST * OXIDi, The parameters are the same as described previously but averaged over the historical period. Step 3: Estimating CGy In order to estimate the annual electricity generation attributable to waste heat use in the steam turbine the following equation is applied: CGy = PGy – OGy where PGy (MWh) is the electricity generated by the project. This will be calculated ex-post. Step 4: Determine the emission factor for the grid The baseline emission factor for grid connected electricity is calculated as a combined margin according to the guidelines in the approved methodology ACM000226. An operating margin OM and a build margin BM are calculated for the grid; these are then averaged applying appropriate weights to derive the combined grid margin. The OM is calculated using the Dispatch Data Analysis approach and is obtained as follows:

EOM,y EFOM,Dispatch Data, y = PGy

Where PGy (MWh) is the annual generation of the project; and EOM,y (tCO2) are the annual emissions associated with the OM. EOM,y is calculated as:

EOM,y = ∑ (PGh * EFDD,h) h Where PGh (MWh) is the generation of the project in each hour h; and EFDD,h (tCO2/MWh) is the hourly generation-weighted average emissions per electricity unit of a set of power plants ‘n’. According to ACM0007 the group ‘n’ of power plants is the set power plants in the top x% of grid system dispatch order during hour h. x% is equal to the greater of either:

• 10%; or • the project generation during hour h expressed as a percentage of total generation for that hour.

In the case of Bolivia on average the 10% of the total power dispatched on the grid each hour is well above what the project generation can be for the same hour, therefore 10% is always chosen for the calculations. EFDD,h is calculated as:

∑ Fi,n,h * COEFi,n i,n

EFDD,h =

∑ GENn,h

26 ACM0002 Version 6 http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html


n Where Fi,n,h (m3 or l) is the amount of fuel i (either gas or diesel) consumed by the set of power plants n in the hour h; GENn,h (MWh) is the electricity delivered to the grid by the sources n during hour h and COEFi,n (tCO2/volume unit) is the CO2 emission coefficient of fuel i used by the power plants n and calculated as:. COEFi = NCVi * EFCO2,i * OXIDi The values of the parameters used for the calculation of COEF for the gas turbines are different from unit to unit, given that the NCV of gas depends on the climatic conditions at the site where the power plant is installed, whereas for diesel (which is only used in the Aranjuez dual fuel engines) the values are constant. The amount of fuel used by the power plants is back calculated based on the efficiency (rendimiento termico) ηi,n (BTU/kWh) for plant n dispatching power when using fuel i as published by the Superintendencia de Electricidad. The following equation is used: Fi,n,h = GENn, h * % fueli * ηi n * (1/ NCVi,n ) All thermal units in Bolivia are gas turbines using 100% natural gas apart from the units ARJ1, ARJ2, ARJ3, ARJ5 and ARJ6, which are reciprocating engines that use both diesel (10% of the total fuel used) and gas (90%). These units are only dispatched during peak time. In the calculations it is assumed that they work at peak load of 91%. The calculations of fuel used are based on this figure and on the above mentioned proportions of diesel and gas using the equation above. To determine the set of plants n, the grid dispatch order of operation for each power plant of the system is obtained from Superintendencia de Electricidad. This dispatch order is set every six months in Bolivia (November-March, and April-October) based on the cost of generation bid by the different generators. The dispatch order varies throughout the day depending upon the time of the day and the amount of “reserva” (power reserve) that CNDC requires from each plant during each hour of the day. The dispatch order will be calculated for each hour of the day based on the US$/MWh cost of generation as provided by the Superintendencia de Electricidad in its six monthly reports available online at http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=40. For each hour of the year the amount of power each unit connected to the Bolivian grid generates is recorded by CNDC. This data is input into the software OM calculation program which identifies the units with least merit which contribute 10% of the electricity generated during that hour. The BM emission factor (EFBM,y) is the generation-weighted average emission factor (tCO2/MWh) of a sample of new build plants m, excluding power plants registered as CDM project:

∑ Fi,m,y * COEFi,m i,m

∑ GENm,y EFBM,y =

m where Fi,m,y, COEFi,m and GENm,y are analogous to the variables described for the operating margin above.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 31 For the Guaracachi project the BM emission factor will be calculated ex-post and will be updated annually for the year in which actual project generation and associated emission reductions occur, as described in Option 2 in ACM0002. The sample group m consists of either:

• the five power plants that have been built most recently, or • the power plants capacity additions in the electricity system that comprise 20% of the system

generation (in MWh) and that have been built most recently. The project developer will assess every year which one of the two options gives a sample group m that comprises the larger annual generation. In 2005 the sample group of power plants comprising 20% of total system generation comprised the larger annual generation. The combined margin is then calculated as the weighted average of the OM emission factor (EFOM,y) and the BM emission factor (EFBM,y) using the suggested weights wOM = wBM = 0.5 EFgrid,y = wOM * EFOM,y + wBM * EFBM,y = 1/2 (EFOM,y + EFBM,y)

B.6.2. Data and parameters that are available at validation: Data / Parameter: OC Data unit: MW Description: Net capacity of the gas turbine in the open cycle operations Source of data used: Licence of the GT Value applied: MW Justification of the choice of data:

This value is available from generation licences and is only recorded once when the baseline is set.

Any comment: Data / Parameter: OXIDGAS & OXID HIST, GAS Data unit: % or fraction Description: oxidation factor for natural gas Source of data used: TABLE 1-4, “Revised 1996 IPCC Guidelines for National Greenhouse Gas

Inventories: Workbook” (Volume 2) Value applied: 0.995 Justification of the choice of data:

Data available internationally. Specific data for Bolivia are not available

Any comment: Data / Parameter: OXIDDIESEL & OXID HIST, DIESEL Data unit: % or fraction Description: oxidation factor for natural gas Source of data used: TABLE 1-4, “Revised 1996 IPCC Guidelines for National Greenhouse Gas


Data available internationally. Specific data for Bolivia are not available

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 32 Any comment: Data / Parameter: NCVGAS Data unit: GJ/m3 Description: Net Calorific Value for gas consumed at Guaracachi Source of data used: Superintendencia de Electricidad data specific to each generating unit Value applied: 0.0349 Justification of the choice of data:

Data specific to each generating unit in Bolivia (in BTU/ft3) is publicly available form the Superintendencia de Electricidad website http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=40

Any comment:

Data / Parameter: NCVDIESEL Data unit: GJ/l Description: Net Calorific Value for diesel Source of data used: Superintendencia de Electricidad data specific to each generating unit Value applied: 0.0356 Justification of the choice of data:

Data specific to each generating unit in Bolivia (in BTU/l) is publicly available form the Superintendencia de Electricidad website http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=40

Any comment:

Data / Parameter: EFCO2, GAS Data unit: tCO2/GJ Description: Emission Coefficient for gas Source of data used: TABLE 1-2, “Revised 1996 IPCC Guidelines for National Greenhouse Gas


Data specific to Bolivia is not available

Any comment: The parameter value on the IPCC workbook is in tC/TJ.

Data / Parameter: EFCO2, DIESEL Data unit: tCO2/GJ Description: Emission Coefficient for diesel Source of data used: TABLE 1-2, “Revised 1996 IPCC Guidelines for National Greenhouse Gas


Data specific to Bolivia is not available

Any comment: The parameter value on the IPCC workbook is in tC/TJ. Data / Parameter: wOM Data unit: fraction Description: weighting Source of data used: ACM0002

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 33 Value applied: 0.5 Justification of the choice of data:

Default weighting for the operating margin taken from ACM0002.

Any comment:

Data / Parameter: wBM Data unit: fraction Description: weighting Source of data used: ACM0002 Value applied: 0.5 Justification of the choice of data:

Default weighting for the build margin taken from ACM0002.

Any comment: B.6.3 Ex-ante calculation of emission reductions:

Emissions from the project activity (PEy) calculated for year 2005 by: PEy = PEGTy = COEFi,y * FGTi,y FGTi,y = 236,702,978 m3 COEFi,y = NCVi * EFCO2,i * OXIDi = 1.946 kgCO2/m3 Error! Reference source not found. shows the values and source of data used for the calculation of the CO2 coefficient for natural gas. There is no Bolivia specific EFCO2,GAS for natural gas; therefore the default IPCC factor is used. Table 7: Data for the calculation of the CO2 coefficient for natural gas Data Value Source NCVGAS 936.8 BTU/ft3 = 0.0349 GJ/m3 Supplier Data, value for 2005 OXIDGAS 0.995 TABLE 1-4, “Revised 1996 IPCC Guidelines for

National Greenhouse Gas Inventories: Workbook” (Volume 2)

EFCO2,GAS 0.056 tCO2/GJ TABLE 1-2, “Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Workbook” (Volume 2)

PEy = 458,145 tCO2 eq p.a. Leakage is not considered. Ly = 0 Step 1: Estimating OGy OGy = PLF * OC * T = 840,960 MWh

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 34 For the GHG emission reduction estimates presented in this PDD the plant load factor is assumed to be 80%27 as would be when calculated using Option 2 as described in Section B.6.1. In the case of Guaracachi the selection of Option 2 instead of Option 1 is justified by the fact that a PLF based on historical generation (and performance) of the OCGT would be heavily affected by:

• forced outage of GCH 9 in 2003 caused by a breakdown; and • logistics problems with the overhaul of GCH 10 in 2004.

It is envisaged that during monitoring PLF will be calculated ex-post using actual project data. T has been set to 8760 hours (during monitoring T will reflect the actual operating hours of the plant in open cycle mode) and OC 120 MW. Step 2: Estimating EFOC the emission factor for OCGT generation in the baseline

FCHIST EFOC = HGOC,x * COEFi,HIST = 0.688 tCO2/MWh

In this case, the above mentioned problem due to the forced outage of the two gas turbines only minimally affects the final value of EFOC because the historical amount of gas is divided by the corresponding generated power; therefore the historical annual fuel consumption of the gas turbines in open cycle has been obtained as an average of 3 years of operation. For GCH9 the years 2002, 2004 and 2005 were used, excluding 2003 because the unit was unavailable due to breakdown for most part of the year. For GCH10 the years 2002, 2003 and 2005 were used, excluding 2004 from the calculations because the unit was off line for 6 months. FCHIST = 7,667,557 kft3 = 217,121,061 m3 The historical generation of the gas turbines in open cycle has been calculated based on an average of 3 years of operation, using the same criteria as explained above for FCHIST. HGOC,x = 631,090 MWh COEFi,HIST = NCVi,HIST * EFCO2,i,HIST * OXIDi,HIST = 0.002 tCO2/m3 The only value to change in the calculations of the historical greenhous gas coefficient for gas is the net calorific value of natural gas used at the Guaracachi power plant. The average NCV calculated over 4 years of operation is: Data Value Source NCVGAS,HIST 963.3 BTU/ft3 = 0.0359 GJ/m3 Supplier Data, average over 4 years of operation

2002-05 Step 3: Estimating CGy

27 The reason for choosing a PLF of 80% reflects the current limited power availability in the Bolivian grid which forces all existing generation units to run at near full power.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 35 CGy = PGy - OGy PGy was estimated using a load factor for the project of 80%, based on EGSA assumption for the operation of the project during the first year of operation. The assumption is based on the current limited power availability in the Santa Cruz area. In subsequent years, the load factor for the CCGT is expected to be even higher. PGy = 1,317,504 MWh OGy = 840,960 MWh CGy = 476,544 MWh Step 4: Determine the emission factor for the grid The model for the calculation of the grid’s combined margin as per ACM0002 was run to estimate EFgrid,y using CNDC grid data from 2005. More details of the calculations are available in Annex 3. The estimated value for the Operating Margin and the Build Margin emission factors are conservative compared to what will be calculated ex-post because of the following:

• The units ARJ1, ARJ2, ARJ3, ARJ5 and ARJ6 are reciprocating engines using both diesel (10%) and gas (90%). These units are only dispatched during peak time. It is assumed that they work at peak load of 91%. The calculations of fuel used are based on this figure and on the above mentioned proportion of diesel and gas.

• The dispatch data for 2005 do not account for the power generation from the new gas turbine GCH11, which is expected to be dispatched in January 2007; and

• The calculation of the BM does not account for GCH11 which was not operational at the time of completing the PDD.

The emission coefficient for diesel was calculated using the following values: Table 8: Data for the calculation of the CO2 coefficient for diesel Data Value Source NCVDIESEL 33,710 BTU/l = 0.0356 GJ/l Superintendencia de Electricidad for years 2004, 2005

and 2006 OXIDDIESEL, 0.99 TABLE 1-4, “Revised 1996 IPCC Guidelines for

National Greenhouse Gas Inventories: Workbook” (Volume 2)

EFCO2, DIESEL 0.074 tCO2/GJ TABLE 1-2, “Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Workbook” (Volume 2)

COEFDIESEL = NCVDIESEL * EFCO2, DIESEL * OXIDDIESEL = 2.606 kgCO2/l The Operating Margin emission factor EFOM,y was calculated running a data model that calculates for every hour in the year an emission factor based on the units with least merit that are running on the grid during that year. The units GCH9 and GCH10 are not included in the calculation of the OM because

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 36 they will be part of the project units (open cycle) once the CCGT conversion takes place, and as such will not be offset by the closed cycle unit GCH12. The OM obtained for 200528 is: EFOM,Dispatch Data, y = 0.67 tCO2/MWh The BM emission factor (EFBM,y) is the generation-weighted average emission factor (tCO2/MWh) of a sample of power plants m. The sample group m based on most recent data29 includes the following units: Table 9: Newest generating units in the Bolivian grid

Unit Build date Capacity (MW)

Power generated 2005(MWh)

Technology

Santa Isabel SIS5 (Corani) Jun-04* 21.30 88,453 Hydro Chojlla CHJ3 (Taquesi) Jun-02 33.00 109,893 Hydro Yanacachi YAN1 (Taquesi) Jun-02 51.00 179,705 Hydro Kilpani KIL3 (Yura) May-01 5 37,321** Hydro Landara LAN1&3 (Yura) 2001 5 15,924 Hydro BUL1 & 2 (Bulo Bulo) May-00 85.88 525,478 OCGT

Notes: * The Santa Isabel SIS5 hydro turbine became operational on 10th May 2005. ** Power generated by all three units at Kilpani is reported. Specific data for KIL3 is not available. The carbon intensity factor for the units is calculated based on the efficiencies of the units and the COEF. These are then weighted by the MWh generated to date (for the purpose of PDD estimates, 2005 data were used). EFBM,y = 0.305 tCO2/MWh The annual grid factor is calculated as the weighted average of the OM and the BM emission factors: EFgrid,y = wOM * EFOM,y + wBM * EFBM,y = 0.49 tCO2/MWh

Operating Margin Build Margin Combined Margin wOM = 0.5 wBM = 0.5 EFOM, y = 0.67 tCO2/MWh EFBM, y = 0.305 tCO2/MWh EFgrid, y = 0.49 tCO2/MWh

Step 5: Calculate the baseline emissions BEy BEy = (EFOC . OGy) + (EFCM,y . CGy) EFOC = 0.688 tCO2/MWh OGy = 840,960 MWh EFgrid,y = 0.49 tCO2/MWh

28 Data for 30-08-05 were not included because they are not conform to all other dispatch data. 29 In mid July 2006 the second unit of the Hydro plant of Santa Rosa (COBEE) came online to test the reception of 4 gas engines of the Aranjuez plant. Due to the lack of generation data at the time of writing the PDD it was not inserted in the calculation of the Build Margin.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 37 CGy = 476,544 MWh BEy = 810,702 tCO2 Step 6: Calculate the emission reductions ERy As a result of the above calculations, the estimated annual emission reductions will be: ERy = BEy – PEy – Ly = BEy – PEy = 352,557 tCO2eq p.a.

B.6.4 Summary of the ex-ante estimation of emission reductions: The CERs estimations are based on a renewable crediting period of 7 years renewable twice. The estimated project emissions, baseline emissions and emissions reductions for the first crediting period are reported in the table below.

Year Estimation of

project activity emissions (tCO2 e)

Estimation of baseline emissions

(tCO2 e)

Estimation of leakage (tCO2 e)

Estimation of overall emission

reductions (tCO2 e)

2008 (9 months) 343,609 608,026 0 264,4182009 458,145 810,702 0 352,557 2010 458,145 810,702 0 352,557 2011 458,145 810,702 0 352,557 2012 458,145 810,702 0 352,557 2013 458,145 810,702 0 352,557 2014 458,145 810,702 0 352,557 2015 (3 months) 114,536 202,675 0 88,139 Total 3,207,014 5,674,911 0 2,467,897 B.7 Application of the monitoring methodology and description of the monitoring plan:

B.7.1 Data and parameters monitored:

Data / Parameter: PEy Data unit: tCO2 Description: Project Emissions Source of data to be used:

Calculated as PEGTy + PESTy using the variables described below

Value of data applied for the purpose of calculating expected emission reductions in section B.5

458,145 tCO2

Description of measurement methods and procedures to be

Parameter calculated

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 38 applied: QA/QC procedures to be applied:

N/A

Any comment: Data shall be archived for 2 years following the end of the crediting period.

Data / Parameter: PEGTy Data unit: tCO2 Description: Project emissions from the use of fossil fuel to operate the gas turbine Source of data to be used:



458,145 tCO2

Description of measurement methods and procedures to be applied:

Calculated as (COEFGAS * FGTGAS,y)

QA/QC procedures to be applied:

N/A


Data / Parameter: PESTy Data unit: tCO2 Description: Project emissions from the use of fossil fuel to operate the steam turbine Source of data to be used:



0 tCO2


At Guaracachi there is no over firing in the HRGS


N/A


Data / Parameter: FGTi,y Data unit: ft3 Description: Consumption of natural gas during the year for operating the gas turbines Source of data to be used:

Meter reading

Value of data applied 236,703 m3

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 39 for the purpose of calculating expected emission reductions in section B.5


Data will be downloaded from meters and stored within the site’s existing gas consumption control sheet. The project developer will monitor gas consumption for the existing gas turbines at Guaracachi


Fuel consumption data for the project will be based on meter readings and where appropriate reconciled to third party data such as gas invoicing


Data / Parameter: BEy Data unit: tCO2 Description: Baseline emissions Source of data to be used:



810,702 tCO2


Calculated as (EFOC . OGy) + (EFCM,y . CGy)


N/A


Data / Parameter: OGy Data unit: MWh Description: Electricity generation attributable to open cycle operation Source of data to be used:



840,960 MWh


The parameter will be calculated as (PLF * OC * T)


N/A



Data / Parameter: PLFy Data unit: % Description: Project load factor Source of data to be used:



80% based on a conservative estimation of the expected load factor.


Calculated either using ex-post or ex-ante data as specified in Section B.6.1. The value that provides the most conservative baseline will be chosen for the monitoring activities unless valid justification is given.


N/A


Data / Parameter: T Data unit: Hours Description: Plant operating hours Source of data to be used:

CNDC records of operation of units GCH9, GCH10 and GCH12 at Guaracachi


8760


The operating hours of the project will be obtained from CNDC and Superintendencia de Electricidad records. The monitoring software program will generate this value as one of the outputs from the calculation of the grid operating margin


The operating hours of the project will be double checked against records of operation at the project site.


Data / Parameter: PGy Data unit: MWh Description: Electricity generated by the project (OCGT and CCGT) during one year and

exported to the grid Source of data to be used:

CNDC and Superintendencia de Electricidad records of operation of units GCH9, GCH10 and GCH12 at Guaracachi

Value of data applied for the purpose of calculating expected emission reductions in

1,317,504 MWh (based on forecasted 80% load factor for the project)

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 41 section B.5 Description of measurement methods and procedures to be applied:

The power generated by the project will be obtained from CNDC and Superintendencia de Electricidad records. The monitoring software program will generate this value as one of the outputs from the calculation of the grid operating margin


Electricity dispatch data from the project site will be recorded from meter readings and reconciled to the records of the central dispatch organisation. The historical data might not be corroborated.


Data / Parameter: PC Data unit: MW Description: Net installed capacity of the project Source of data to be used:

Licence plate


188 MW


Parameter based on the expected capacity of equipment to be installed


Value of net installed capacity will be checked against data available from CNDC and Superintendencia de Electricidad.


Data / Parameter: EFOC Data unit: tCO2/MWh Description: Emission factor for the open cycle gas turbine Source of data to be used:



0.688 tCO2/MWh


Parameter calculated based on the efficiency of the turbines from historical records of the fuel consumed per unit of electricity dispatched and on the emissions coefficient of fuel consumed


N/A


Data / Parameter: FCHIST

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 42 Data unit: m3 Description: Historical gas turbine fuel consumption Source of data to be used:

Historical site records of meter readings


217,121,051 m3


Fuel consumption data from the project site will be recorded from meter readings and reconciled to the records of fuel purchase invoices. The historical data might not be corroborated.


Historical site records of fuel consumed based on meter readings and where available checked to third party evidence such as invoices


Data / Parameter: HGOC,x Data unit: MWh Description: Net annual electricity generated by the plant operating in open cycle Source of data to be used:

Historical site records of meter readings


631,090 MWh


Electricity generation data from the project site will be recorded from meter readings and reconciled to the records of CNDC and Superintendencia de Electricidad.


Historical site records of dispatched electricity are based on meter readings and where available checked against CNDC and Superintendencia de Electricidad records. The historical data might not be corroborated.


Data / Parameter: CGy Data unit: MWh Description: Electricity generation attributable to the use of waste heat Source of data to be used:



476,544 MWh

Description of The power generated by the project will be obtained from CNDC and

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 43 measurement methods and procedures to be applied:

Superintendencia de Electricidad records. The monitoring software program will generate this value as one of the outputs from the calculation of the grid operating margin


The parameter will be calculate, but it will also be checked against CNDC records for power dispatched from GCH12


Data / Parameter: EFOM, Dispatch Data Data unit: tCO2/MWh Description: Emission factor associated with the grid operating margin Source of data to be used:



0.667 tCO2/MWh


Parameter calculated as EOM,y /PGy


N/A


Data / Parameter: EFDD,h Data unit: tCO2/MWh Description: Hourly emission factor for a set of power plants n in the top 10% of grid system

dispatch order Source of data to be used:

Parameter calculated by the software calculation program using CNDC and Superintendencia de Electricidad data


N/A


Parameter calculated as Σ (Fi,n,h ) * COEFi,n) / Σ GENn,h


All the dispatch data necessary to calculate the emission factor associated with the OM will be obtained from the CNDC website http://www.cndc.bo/estadisticas/index.php and used in the calculation spreadsheet to generate the grid’s OM


Data / Parameter: Fi,n,h

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 44 Data unit: Volume of fuel used Description: Hourly amount of fuel used to generate power by a set of generating units n in

the top 10% of the Bolivian grid generation Source of data to be used:

Parameter calculated as Σ (GENn, h * %fuel i,n * ηi, n * (1/ NCVi,n )


N/A


Parameter calculated for each generating unit using CNDC and Superintendencia de Electricidad data.




Data / Parameter: NCVi, n Data unit: GJ/m3 Description: Net Calorific Value for fuel used by generating units on the grid Source of data used: CNDC data specific to each generating unit Value of data applied for the purpose of calculating expected emission reductions in section B.5

N/A


Monthly data specific to each generating unit in Bolivia are publicly available form the CNDC website http://www.cndc.bo/estadisticas/anual.php Estadística Anual. The project developer will calculate the annual average starting from the monthly data


All the dispatch data necessary to calculate the emission factor associated with the OM will be obtained from the CNDC website and used in the calculation spreadsheet to generate the grid’s OM


Data / Parameter: COEFi, n Data unit: tCO2/volume unit Description: GHG coefficient for fuel used by generating units on the grid Source of data used: Parameter calculated Value of data applied for the purpose of calculating expected emission reductions in section B.5

N/A Each generating unit in Bolivia has a specific value for the fuel NCV, hence each plant (including the project units) is characterised by its specific GHG emission coefficient calculated as NCVi * OXIDi * EFCO2, i

Description of measurement methods

The project developer will calculate the annual COEF using NCV data from the CNDC website (see above) and OXID and EF parameters from the IPCC

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 45 and procedures to be applied: QA/QC procedures to be applied:

All the dispatch data necessary to calculate the emission factor associated with the OM will be obtained from the CNDC website and used in the calculation spreadsheet to generate the grid’s OM


Data / Parameter: ηi, n Data unit: BTU/kWh Description: Efficiency of generation for a set of power plants n in the top 10% of grid

system dispatch order Source of data to be used:

CNDC and Superintendencia de Electricidad records for efficiency of generation for thermal power plants in the Bolivian grid


N/A


For the calculations of OM the efficiency at 85% load factor is required for the gas turbines. In the case of reciprocating engines (dual fuel – diesel and gas) efficiency at 91% is used because they are run only during peak loads. In both cases, the thermal efficiency of the generating units is calculated applying the least squares method, interpolating values at different load factors that are publicly available from the Superintendencia de Electricidad


The calculated values will be entered in the calculation software program to generate the grid’s OM.


Data / Parameter: GENn, h Data unit: MWh Description: Power generated by a set of power plants n in the top 10% of grid system

dispatch order Source of data to be used:

Data available from the CNDC dispatch records


N/A


All the dispatch data necessary to calculate the emission factor associated with the OM will be obtained from the CNDC website http://www.cndc.bo/estadisticas/index.php and used in the calculation software program to generate the grid’s OM


N/A


PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 46 Data / Parameter: EFBM, y Data unit: tCO2/MWh Description: Emission factor associated with the grid build margin Source of data to be used:

Parameter calculated using 2005 generation data from the grid.


0.305 tCO2/MWh


Parameter calculated as Σ ( Fi, m, y * COEFi,m) / Σ GENm, y


N/A


Data / Parameter: Fi, m, y Data unit: Volume or mass unit Description: Annual amount of fuel used to generate power by a set of generating units m

that comprise 20% of the Bolivian grid generation Source of data to be used:

parameters calculated


N/A


Data calculated for each generating unit using CNDC and Superintendencia de Electricidad data.


Data calculated


Data / Parameter: GENm, y Data unit: MWh Description: Annual power generated by a set of generating units m that comprise 20% of

the Bolivian grid generation Source of data to be used:

CNDC records

Value of data applied for the purpose of calculating expected emission reductions in

N/A

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 47 section B.5 Description of measurement methods and procedures to be applied:

Data available from CNDC


N/A


Data / Parameter: Plant commissioning Data unit: date Description: Date of plant commissioning Source of data to be used:

CNDC


N/A


Date of commissioning is available from CNDC and is used to identify the most recently built plants connected to the grid


N/A

Any comment: Data shall be archived for 2 years following the end of the crediting period. B.7.2 Description of the monitoring plan:

The management and operational structure of EGSA is designed to ensure that electricity generation, export, and gas usage is tightly controlled, as all are used for accounting purposes. This tight operational and management structure will continue under the project. All the measurements regarding the CDM monitoring activities will be incorporated in the current Environmental Management System according to ISO 12001 and ISO 9001 at EGSA and international quality standards will be adopted. EGSA will continue to have access to CNDC and Superintendencia de Electricidad data relating to the output of all thermal plants connected to the Bolivian grid for every hour of the year, and data on the efficiency of the thermal plant and the position within the dispatch order. These data will be used directly to obtain the parameters required to calculate the annual CERs. The responsibilities for carrying out these tasks within EGSA have been reported in Table 10 below. Table 10: Monitoring responsibilities with EGSA

Monitoring Responsibilities Technical responsibility Contact person: Ing. Enrique Alvarez A.

Address: Av. Brazil/3er. Anillo


Phone/fax: 00-591-33464632 E-mail: [email protected]

Commercial responsibility Contact person: Ing. Juan Carlos Andrade Address: Av. Brazil/3er. Anillo Phone/fax: 00-591-33464632 E-mail: [email protected]

Responsibility for data acquisition (Continuous, monthly and yearly)

Contact person: Ing. Enrique Alvarez A. Address: Av. Brazil/3er. Anillo Phone/fax: 00-591-33464632 E-mail: [email protected]

Responsibility for calculation of emission reductions (Monthly and yearly)


Responsibility for monitoring supervision (Continuous)


B.8 Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies) Date of completion of the application of Baseline and Monitoring methodology: 03/11/2006 Name of person/entity responsible for the application: Ottavia Mazzoni Energy for Sustainable Development Ltd

Overmoor, Neston, Corsham, Wiltshire, SN13 9TZ, UK Tel: +44 1225 816831 Fax: +44 1225 812103 email: [email protected] WWW: http://www.esd.co.uk

ESD are not a project participant. SECTION C. Duration of the project activity / crediting period C.1 Duration of the project activity: C.1.1. Starting date of the project activity: 01/04/2007 C.1.2. Expected operational lifetime of the project activity:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 49 25 years C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period C.2.1.1. Starting date of the first crediting period: 01/04/2008 C.2.1.2. Length of the first crediting period: 7 years 0 months C.2.2. Fixed crediting period: C.2.2.1. Starting date: N/A C.2.2.2. Length: N/A SECTION D. Environmental impacts At the time of writing this PDD the project developer EGSA had not undertaken a formal Environmental Impact Assessment study. This will be done at a later stage according to the Bolivian environmental rules and regulations. D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: In compliance with the criteria established by the Ley de Electricidad N° 1604 and the Ley de Medio Ambiente N° 1333 the project developer will commission a study to assess the environmental impacts of the expected gaseous emissions from the closed cycle turbine. D.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: >> SECTION E. Stakeholders’ comments

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 50 E.1. Brief description how comments by local stakeholders have been invited and compiled: The public consultation was carried out at the end of May 2006. The following stakeholders, from a combination of interest areas, were invited to comment on the possible impacts of the project. Public Sector

Local Government (Office at environment) Municipality (Office at environment)

NOG (Non-governmental organizations)

FAN – Bolivia: Fundación Amigos de la Naturaleza (Foundation Friends of Nature) EGSA`s Employee

Five employees Trade Union

CAINCO (General Manager) Federación de Empresarios Privados de Bolivia (General Manager)

Shareholders

Guaracachi America Inc. AFP (General Manager)

Suppliers of gas

Empresa Petrolera Chaco S.A. Neighbours

A sample of 51 neighbours (people living within 500 meters to the project location). After an initial briefing on the background and characteristics of the project, the stakeholders were given a questionnaire to complete30. The summary table of the responses is shown in Exhibit C. EGSA followed up the process with a letter sent to all respondents in September 200631, which acknowledged the participation in the “consulta publica” and described once again the characteristics of the conversion project, which is expected to generate at least 150 new jobs for a period of one year during the construction phase. The letter was also used to let the respondents know that, once EGSA has agreed with the Bolivian DNA to a program of social activities, they will be informed about it. E.2. Summary of the comments received: Exhibit D shows the summary table of the responses collected during the Public Consultation held in May 2006. E.3. Report on how due account was taken of any comments received: 30 Exhibit B: Questionnaire to collect the stakeholders views on the project’s impacts. 31 Exhibit E – Carta informativa vecinos

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 51 Given the early stages of project advancement, at the time of writing this PDD, the project developer didn’t have a specific action plan to take into account the comments received during the public hearing for the collection of stakeholders comments. Nonetheless EGSA is planning to take into account the issues relevant to the project activity raised by the stakeholders and collected in the summary table during the identification of appropriate mitigation measures to the identified impacts. It was nonetheless concluded that the project will have either a positive or negligible impact on the community from both economic and environmental points of view. It will also have a positive impact on the grounds of providing a permanent source of clean electricity to the area and a temporary increase in jobs (EGSA estimates that approximately 150 new jobs will be created), especially during the construction phase. Due account will be taken of the local people’s expectations over the latter perceived benefit. EGSA has also created the Guaracachi Foundation, which will conduct several activities in the field of social responsibility and which will be financed by CERs revenues. The terms under which this Foundation will operate were being discussed with the Bolivian DNA. This is in line with the new guidelines for local CDM projects, which also require CDM project developers to devolve 10% of the CDM revenues to social activities32.

32 The Carbon Law Project, Version 6.2, Art. 30 was still under legal debate at the time of writing this PDD.


Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Empresa Guaracachi S.A.

Street/P.O.Box: Avenida Basil y Tercer Anillo Interno Building: Casilla 336 City: Santa Cruz State/Region: Postfix/ZIP: Country: Bolivia Telephone: +591 3 346 4632 FAX: +591 3 348 7274 E-Mail: [email protected] URL: Represented by: Marcelo Blanco Quintanilla Title: Administrative and Financial Manager Salutation: Lic. Last Name: Blanco Q. Middle Name: First Name: Marcelo Department: Mobile: Direct FAX: Direct tel: +591 3 346 4632 Personal E-Mail: [email protected]


Annex 2

INFORMATION REGARDING PUBLIC FUNDING Not applicable


Annex 3

BASELINE INFORMATION

The data parameters to determine the baseline consist of: 1) the parameters used to demonstrate additionality of the baseline scenario (i.e. continuation of current

practice); 2) the parameters used for ex-ante baseline emission calculation; and 3) the parameters to be used for the ex-post baseline emission calculation. 1) PARAMETERS USED TO DEMONSTRATE ADDITIONALITY

Baseline Options 1. CCGT conversion without CDM incentive

2. CCGT conversion project with CDM incentive33


IRR NPV IRR NPV


9.4% -12.8 MUS$ 15.9% 1.8 MUS$

2) PARAMETERS USED IN EX-ANTE BASELINE EMISSION CALCULATION The baseline emissions will be calculated ex-post during the life of the project based on actual performance of the gas turbines, and the characteristics of the grid. An ex-ante estimation has been undertaken for the purpose of this PDD. The data used in the ex-ante estimation are given in the table below. Parameter Value Unit Baseline Generation Project Load PLFy 80% Operation hours Ty 8760 Hours Capacity of Gas Turbines (OCGT) OC 120 MW Capacity of project (both gas and steam turbine) PC 188 MW Project Generation PGy 1,317,504 MWh Open cycle baseline generation OGy 840,960 MWh Generation attributable to the use of waste heat in the steam turbine

CGy 476,544 MWh

Emission Factors EF Open Cycle EFOC 0.688 tCO2/MW

h

EF Build Margin EFBM,y 0.305 tCO2/MWh

EF Operating Margin EFOM, dispatch data, y 0.67 tCO2/MW

33 Assuming a price of US$12/CER


h Grid EF (Combined Margin) EFgrid, y 0.49 tCO2/MW

h

Baseline Emissions Baseline Emissions BEy 810,702 tCO2 Project Emissions Emissions from the project PEy 458,145 tCO2 Emissions Reductions Emissions reductions ERy 352,557 tCO2

3) PARAMETERS TO BE USED IN EX-POST BASELINE EMISSION CALCULATION The baseline will be calculated ex-post during the life of the project. HOURLY DATA Below is an example of the hourly data that will be recorded each day ex-post throughout the project life. These data will be used to calculate the operating margin of the grid. The data will be downloaded on a daily basis from the CNDC website http://www.cndc.bo/estadisticas/index.php


HORA 01:00 02:00 03:00 04:00 05:00 06:00 07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 MWh

SISTEMA ZONGO 100.6 100.9 100.4 100.5 100.3 125.7 126.9 132.1 140.1 141.1 141.3 141.3 139.2 141.6 141.3 141.6 141.4 140.7 149.6 149.5 149.9 149.9 146.8 130.7 3183.6CHOJLLA 0.0 0.0 0.0 0.0 0.0 0.0 18.7 23.5 31.7 31.7 31.8 31.8 31.8 31.8 31.8 31.8 31.8 31.8 33.8 31.0 31.0 31.0 30.8 26.2 523.2YANACACHI 26.4 26.4 26.1 26.1 26.2 26.1 30.2 43.5 43.6 43.6 43.6 43.6 43.3 43.6 43.6 43.6 43.6 43.5 46.1 49.2 49.2 49.0 49.2 49.2 952.3CHOJLLA ANTIGUA 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 19.2SISTEMA MIGUILLA 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.9 4.2 5.9 6.0 6.4 7.5 6.6 6.5 6.3 6.3 6.3 15.7 15.7 15.7 15.8 13.5 8.2 178.7CORANI 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 3.8 4.0 4.0 4.0 4.0 4.0 4.0 87.2SANTA ISABEL 35.9 35.8 36.0 36.0 56.6 60.8 26.4 27.4 36.0 6.1 8.0 6.0 5.9 6.1 6.1 6.6 6.3 6.1 6.0 6.0 6.1 6.1 11.8 5.1 462.1KANATA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.9 4.0 3.9 3.9 3.9 3.9 5.0 6.4 6.4 6.8 6.8 6.8 6.8 0.0 0.0 68.8SISTEMA YURA 3.4 3.4 4.9 4.9 4.9 4.9 4.9 5.3 5.3 4.9 4.9 4.7 4.7 4.7 4.7 4.7 4.3 10.7 12.4 12.4 12.4 12.4 3.4 3.4 150.1SUBTOTAL HIDRO 174.5 174.8 175.7 175.8 196.3 225.8 215.4 240.3 265.6 241.8 244.2 242.3 240.8 242.9 242.5 244.2 244.7 250.1 275.2 275.4 276.0 275.8 260.3 227.6 5625.2

GCH1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0GCH2-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0GCH6-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0GCH7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0GCH8 0.0 20.4 14.6 14.6 19.3 14.0 14.4 14.1 15.1 15.0 14.2 15.0 14.7 14.5 14.9 14.1 20.0 19.0 15.0 14.4 0.0 0.0 0.0 0.0 292.0GCH9 47.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.5 50.0 55.7 55.2 50.6 46.1 37.4 373.0GCH10 47.2 51.5 49.2 48.4 50.5 42.1 37.7 45.8 47.8 53.5 53.5 53.5 49.3 50.4 51.8 53.1 52.7 52.7 50.3 56.1 55.8 50.9 47.5 37.6 1186.4BUL1 35.3 36.5 35.7 33.2 0.0 0.0 0.0 0.0 0.0 29.5 32.6 30.0 33.9 38.6 38.3 38.4 38.2 34.4 40.8 40.5 40.1 40.7 40.1 27.8 693.0BUL2 35.6 36.7 36.1 33.4 37.0 27.1 27.6 26.9 27.0 29.5 33.1 29.9 12.1 0.0 0.0 0.0 0.0 34.7 40.9 40.7 40.9 40.7 40.3 28.0 662.0CAR1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 51.5 51.7 52.3 52.7 0.0 0.0 227.0CAR2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 VHE1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.5 16.4 16.3 0.0 0.0 0.0 54.1 VHE2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.9 16.9 16.7 0.0 0.0 0.0 40.5 VHE3-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.9 16.6 16.7 0.0 0.0 0.0 44.3 VHE4-PPG 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.9 16.7 16.8 16.9 0.0 0.0 58.2 KEN1-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 8.3 0.0 0.0 0.0 0.0 10.6 KEN2-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 8.1 0.0 0.0 0.0 0.0 9.7 ARJ8 11.4 11.1 11.1 11.2 10.3 9.5 11.0 10.2 10.7 11.2 11.0 10.6 11.2 11.0 11.1 15.3 16.0 11.7 16.9 17.0 17.3 18.4 17.4 9.3 299.4 ARJ1-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ARJ2-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ARJ3-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ARJ5-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ARJ6-RF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0SUBTOTAL TERMO 177.0 156.2 146.7 140.8 117.1 92.7 90.7 97.0 100.6 138.7 144.4 139.0 121.2 114.5 116.1 120.9 126.9 160.0 340.6 359.1 328.1 270.9 191.4 140.1 3950.2

POSTDESPACHO DE PRODUCCIONFECHA:Sunday, 03 de April de 2005

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 57 PERFORMANCE DATA FOR RECIPROCATING ENGINES AND GAS TURBINES CONNECTED TO THE GRID The table below shows the operational characteristics for both the dual fuel engines and the gas turbine connected to the Bolivian grid. Data is available from the website of the Superintendencia de Electricidad http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=40 as Annexes to the six monthly reports (from November to April and from May to October). The information from three reports has been collated to generate the table below which refers to 2005 and was used in the calculations of the Operating Margin. Potencia En Bornes: Installed Capacity (MW) Potencia Inyectada: Effective Capacity (MW) Rendimiento Termico: Efficiency of the generating units at the temperature at the site. The efficiencies refer to three different load factors. The project developer will calculate the efficiency for each unit at 85%, which is the average load factor required by the grid utility at each time of the day. This load factor is an approximation from 84.5% obtained as the average of the following required reserves: From 24:00 pm to 06:00 am = 19% power reserve = 81% factor From 07:00 am to 17:00 pm = 15% power reserve = 85% factor From 18:00 pm to 22:00 pm = 10% power reserve = 90% factor At 23:00 pm = 15% power reserve = 85% factor The efficiency for the generating units at 85% is calculated using the least squared method, utilising the efficiency data publicly available at 50%; 75% and 100%.


ηX X X Y Y Y Capacity Ren Termico

50% 75% 100% 100% 75% 50% 100% 75% 50% 85% 85%MW MW BTU/KWh BTU/KWh BTU/KWh MW MW MW BTU/hr BTU/hr BTU/hr a b MW BTU/KWh

GCH1 22.76 22.19 14,880 12,944 11,971 22.76 17.07 11.38 272,460 220,954 169,334 66,228 9,062 19.35 12,485GCH2 19.96 19.46 16,372 13,671 12,595 19.96 14.97 9.98 251,396 204,655 163,393 74,476 8,818 16.97 13,208GCH4 20.33 19.82 16,843 13,897 12,834 20.33 15.25 10.17 260,915 211,895 171,209 80,114 8,825 17.28 13,461GCH6 21.25 20.72 16,435 13,725 12,644 21.25 15.94 10.63 268,685 218,742 174,622 79,588 8,853 18.06 13,259GCH7 21.91 21.36 14,798 12,748 11,850 21.91 16.43 10.96 259,634 209,482 162,112 64,127 8,902 18.62 12,345GCH8 22.92 22.35 14,576 12,557 11,672 22.92 17.19 11.46 267,522 215,855 167,041 66,084 8,768 19.48 12,160GCH9 59.85 58.35 13,653 11,260 10,070 59.85 44.89 29.93 602,690 505,433 408,566 214,378 6,487 50.87 10,701GCH10 59.85 58.35 13,653 11,260 10,070 59.85 44.89 29.93 602,690 505,433 408,566 214,378 6,487 50.87 10,701BUL1 45.09 42.93 10,516 9,420 8,715 45.09 33.82 22.55 392,959 318,561 237,083 82,387 6,914 38.33 9,064BUL2 45.09 42.93 10,516 9,420 8,715 45.09 33.82 22.55 392,959 318,561 237,083 82,387 6,914 38.33 9,064CAR1 55.93 54.20 11,916 10,406 9,830 55.93 41.95 27.97 549,792 436,506 333,231 115,001 7,744 47.54 10,163CAR2 55.93 54.20 11,916 10,406 9,830 55.93 41.95 27.97 549,792 436,506 333,231 115,001 7,744 47.54 10,163VHE1 18.49 18.18 15,006 13,078 12,113 18.49 13.87 9.25 223,969 181,359 138,730 53,495 9,220 15.72 12,624VHE2 18.58 18.26 14,989 12,837 11,908 18.58 13.94 9.29 221,251 178,884 139,248 56,790 8,827 15.79 12,423VHE3 18.58 18.26 14,989 12,837 11,908 18.58 13.94 9.29 221,251 178,884 139,248 56,790 8,827 15.79 12,423VHE4 18.58 18.26 14,989 12,837 11,908 18.58 13.94 9.29 221,251 178,884 139,248 56,790 8,827 15.79 12,423KEN1 9.00 8.85 16,028 13,051 12,145 9.00 6.75 4.50 109,305 88,094 72,126 34,073 8,262 7.65 12,716KEN2 9.00 8.85 16,028 13,051 12,145 9.00 6.75 4.50 109,305 88,094 72,126 34,073 8,262 7.65 12,716KAR1 14.30 14.20 13,441 12,149 11,231 14.30 10.73 7.15 160,603 130,298 96,103 32,251 9,021 12.16 11,674ARJ8 18.49 18.18 14,130 12,400 11,497 18.49 13.87 9.25 212,580 171,957 130,632 48,801 8,864 15.72 11,969

POTENCIA INYECTADAUNIDAD POTENCIA EN

BORNES

CARACTERISTICAS DE UNIDADES TERMICAS PARA LA TEMPERATURA MEDIA ANUALTURBINAS A GAS Y DE MOTORES DUAL FUEL

Periodo Jan/05 - Dec/05

y = (a + bx) / xRENDIMIENTO TERMICO

GAS

The units ARJ1, ARJ2, ARJ3, ARJ5 and ARJ6 are reciprocating engines using both diesel and gas to generate electricity. The proportion of diesel/gas is 10/90. For these units the thermal efficiency (rendimiento termico) is calculated at 91% using the least squared method, interpolating the efficiency data publicly available at 75% and 100% only (ignoring the efficiency at 50%) given that operation at 50% indicates the use of 100% diesel, which is highly unlikely.


ηX X Y Y Capacity Ren Termico

50% 75% 100% 100% 75% 100% 75% 91% 91%MW MW BTU/KWh BTU/KWh BTU/KWh MW MW BTU/hr BTU/hr a b MW BTU/KWh

ARJ1 2.70 2.67 13,779 2,898 1,739 2.70 2.03 4,695 5,869 9,390 -1,739 2.46 2,083ARJ2 2.70 2.67 13,779 2,898 1,739 2.70 2.03 4,695 5,869 9,390 -1,739 2.46 2,083ARJ3 2.70 2.67 13,779 2,898 1,739 2.70 2.03 4,695 5,869 9,390 -1,739 2.46 2,083ARJ5 2.70 2.67 14,361 3,026 1,815 2.70 2.03 4,901 6,127 9,805 -1,816 2.46 2,174ARJ6 2.70 2.67 14,361 3,026 1,815 2.70 2.03 4,901 6,127 9,805 -1,816 2.46 2,174

ARJ1 2.70 2.67 0 8,559 8,462 2.70 2.03 22,847 17,331 783 8,172 2.46 8,491ARJ2 2.70 2.67 0 8,559 8,462 2.70 2.03 22,847 17,331 783 8,172 2.46 8,491ARJ3 2.70 2.67 0 8,559 8,462 2.70 2.03 22,847 17,331 783 8,172 2.46 8,491ARJ5 2.70 2.67 0 8,912 8,811 2.70 2.03 23,791 18,047 814 8,510 2.46 8,841ARJ6 2.70 2.67 0 8,912 8,811 2.70 2.03 23,791 18,047 814 8,510 2.46 8,841Source: Anexo 3C for data Period Nov/04 - Apr/05; Anexo 5C for period May/05 - Oct/05; Anexo 5E for period Nov/05 - Dec/05http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=40

CARACTERISTICAS DE UNIDADES TERMICAS PARA LA TEMPERATURA MEDIA ANUALDE MOTORES DUAL FUEL

Periodo Jan/05 - Dec/05

RENDIMIENTO TERMICO

GAS

y = (a + bx) / x

DIESEL

UNIDAD POTENCIA EN BORNES

POTENCIA INYECTADA

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 60 DISPATCH COST INFORMATION FOR UNITS CONNECTED TO THE GRID Below is an example of the dispatch costs of the various reciprocating engines and gas turbines on the grid. Cost data are posted on the website of the Superintendencia de Electricidad http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=40 as Annexes to the six monthly reports (Nov - April and May - Oct). Dispatch cost are in US$/MWh. There are three costs attached to each unit corresponding to the different load factors of the units (90%, 85% and 81%) at any given hour of the day. As explained above the dispatch system in Bolivia is organised in such a way that each unit is required to have "reserve" power at any time. This compulsory reserve changes with the hour of the day according to a forward plan (see "Performance data" above). The project developer will have to prepare a table including the dispatch cost for every unit dispatching power (including hydro units, which have a dispatch cost of zero) at each time of the day during every monitoring year. Cost data vary three times during one solar year. The information presented in the table below refers to the period November 2004 – April 2005 and was used in the calculations of the Operating Margin.

Al 90% Al 85% Al 81%

GCH1 17.37 17.60 17.81GCH2 18.20 18.50 18.76GCH4 18.49 18.81 19.09GCH6 18.26 18.56 18.83GCH7 17.19 17.43 17.64GCH8 16.26 16.50 16.70GCH9 13.99 14.28 14.53GCH10 13.99 14.28 14.53BUL1 3.45 3.49 3.53BUL2 3.45 3.49 3.53CAR1 3.88 3.93 3.98CAR2 3.88 3.93 3.98VHE1 10.14 10.26 10.37VHE2 10.23 10.36 10.48VHE3 10.23 10.36 10.48VHE4 10.23 10.36 10.48KEN1 15.68 15.95 16.19KEN2 15.68 15.95 16.19KAR1 15.26 15.42 15.57ARJ1 34.66 36.57 38.35ARJ2 34.66 36.57 38.35ARJ3 34.66 36.57 38.35ARJ5 36.01 37.99 39.85ARJ6 36.01 37.99 39.85ARJ8 14.65 14.85 15.03

UNIDAD COSTO (US$/MWh)

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 61 BUILD DATES AND CAPACITY OF LATEST ADDITIONS TO THE GRID

Capacity Power generated 2005

MW MWhSanta Isabel SIS5 Jun-04* 21.3 88,453 HydroChojlla CHJ3 Jun-02 33 109,893 HydroYanacachi YAN1 Jun-02 51 179,705 HydroKilpani KIL3 May-01 5 37,321** HydroLandara LAN1&3 2001 5 15,924 HydroBUL1 & 2 May-00 85.88 525,478 OCGT

Total 919,453* The Santa Isabel SIS5 hydro turbine became operational on 10th May 2005.** Power generated by all three units at Kilpani is reported. Specific data for KIL3 is not available.§ Average NCV for the plant is in BTU/ft3 from CNDC annual statistics, converted to BTU/m3

Unit Build date Technology


Annex 4

MONITORING INFORMATION A monitoring manual has been provided to the project operator describing all the steps required and the parameters to be monitored throughout the project’s crediting period. Following is a brief description in addition to the information available in the PDD. Background The electricity generation from EGSA’s CCGT conversion project at the Guaracachi plant, derives from the installation of a new steam turbine GCH12. The generation of electricity in the steam turbine does not cause any additional GHG emissions. The new investment from EGSA will displace the generation of marginal generating units in the Bolivian electricity wholesale market and as a consequence of its higher efficiency will offset a certain amount of CO2 emissions. The steps highlighted below are a guideline of how the GHG emission reductions arising from the project can be calculated using both the OM calculation program and the Monitoring excel spreadsheet. The software program records, calculates and provides the archive for all data necessary to calculate the grid Operating Margin. The operating margin is then entered into an excel workbook that allows calculating the Build Margin and the GHG emissions reductions due to the project over each verification period. This monitoring plan describes the usage of the program and of the workbook in day to day operations. Source of data The data used in these calculations comes from different sources, mainly:

• CNDC http://www.cndc.bo/estadisticas/index.php; • Bolivian Superintendencia de Electricidad

http://www.superele.gov.bo/index.php?option=com_wrapper&Itemid=40; and • IPCC.

In all cases the most conservative approach is considered. CNDC regulates the electricity market in Bolivia by dispatching units according to their declared marginal cost. The cheaper unit is dispatched first. CNDC provides one report for each hour of operation of the grid. The generation dispatch reports available on the CNDC website provide for each hour of the year the power dispatch information (Despacho de Carga Realizado) for each unit in the Bolivian connected grid system (SIN). When units are not-available (ND) or under maintenance (M) the generation for that hour is considered to be zero by the program. The Bolivian Superintendencia de Electricidad provides the information about the units dispatch cost and the operational characteristics of all the units. Each unit in the Bolivian grid is operated with natural gas, apart from the dual fuel engines ARJ1, ARJ2, ARJ3, ARJ5 and ARJ6, which operate using both diesel and natural gas. The proportion of diesel is 10% of the total fuel used. The amount of fuel consumed is not reported; therefore it is back calculated using the provided data of power generation and thermal efficiency of the units.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1. CDM – Executive Board page 63 Steps to calculate the grid emission factor For every hour during the monitoring year it is required to: 1) Obtain the total generation for that hour from all generating units in the grid from CNDC; 2) State the most expensive 10% out of the total MW generated at that hour using dispatch cost; 3) Estimate the emission factor for that 10%; 4) Calculate the CO2 tonnes displaced by EGSA project for that hour. The values calculated for all the hours in the previous set of operations must be added up in order to obtain the total tonnes of CO2 displaced by the project during the monitoring period. Obtain the “Operating Margin” emission factor for the analyzed year by dividing the total tonnes of CO2

produced during the year by the total power generated by the project. Calculate the “Build Margin” using the following steps: Select a set of power plants choosing the group that comprises the larger annual generation among the following two options: 1) the 5 power plants that have been build more recently (in the case of Bolivia this is very unlikely to

be the case); or 2) the most recent power plants whose cumulative generation comprises 20% of the entire system

generation. Then calculate the average annual emissions (tCO2/MWh) of the set, dividing the emissions of the set (calculated as the efficiency times the generation times the fuel emission factor for each plant in the group) by the total power generated by the set in the monitoring period. Once both OM and BM have been calculated, the grid combined margin is obtained using the chosen standard weights.

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