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PROJECT DESIGN DOCUMENT FORM (CDM-PDD) - Version 03
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CLEAN DEVELOPMENT MECHANISM
PROJECT DESIGN DOCUMENT FORM (CDM-PDD)
Version 03 - in effect as of: 28 July 2006
CONTENTS
A. General description of project activity
B. Application of a baseline and monitoring methodology
C. Duration of the project activity / crediting period
D. Environmental impacts
E. 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
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SECTION A. General description of project activity
A.1. Title of the project activity:
Title: Za Hung Hydropower Project
Version: 2.4
Date: 29/11/2011
A.2. Description of the project activity:
The project activity is being developed by Za Hung Joint Stock Company. It involves the construction of
a new gird connected hydropower plant including a dam, intakes, tunnels, power house with 02 units
(each unit has a turbine and a power generator) and discharge channels located in Za Hung and Ma Cooihcommunes, Dong Giang district, Quang Nam province of Viet Nam.
Electricity in Viet Nam is generated mainly from fossil fuel sources and is solely distributed to consumers
via the unique national electricity grid.
The projects purpose is to generate hydroelectricity by installation of water turbines and generators from
a clean and renewable source (hydropower of the AVuong stream) to supply to the national grid via a
Power Purchase Agreement (PPA) signed with the Electricity of Viet Nam (EVN). The project's installed
capacity and estimated annual gross power generation is 30 MW and 122,700 MWh1, respectively. The
net electricity generated (with an estimated annual volume of 120,246 MWh2) will be supplied to the
national grid via a newly constructed 110kV transmission line which will connect the plant and the Thanh
My transformer station.
The baseline scenario of the project activity is the same as the scenario existing prior to the start of
implementation of the project activity.
The project activity will generate renewable power with negligible GHG emissions, which will displace
part of the electricity otherwise supplied by grid-connected fossil fuel fired power plants. The project
involves the construction of reservoir with area of 0.22993km
2and the power density of the diversion
reservoir of 130.54W/m
2. As the power density of reservoir is above 10 W/m
2, no GHG emissions from
the reservoirs need to be accounted in the project activity as per the methodology applied ACM0002
version 12.2.0. Thus, GHG emission reductions can be achieved via this proposed project activity. Total
expected CO2emission reduction is 485,163 tCO2e over the first crediting period of 7 years.
The projects contributions to the sustainable development of the local area as well as the host country are
as follows:
General contributions towards national sustainable development:
In recent years, Viet Nam has suffered a critical electricity shortage as a consequence from rapidly
increasing demand and insufficient supply, thereby imposing negative impacts on economic growth
as well as on daily lives of people. This project activity will be a contribution towards balancing the
supply and demand gap. By exporting electricity directly to the grid, it will help to reduce
electricity losses across the national grid and to lessen the risks of cascading national grid collapse
due to overload.
Reducing reliance on exhaustible fossil fuel based power sources and also reducing the import of
fuels for the purpose of power generation.
1Technical Design Report, Explainable Additional Volume2 The gross power generation subtracts 2% for internal use, parasitic and loss load. Technical Design Report.3Technical Design Report, Explainable Additional Volume4Please refer to Section B.6
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Modern and highly efficient turbines and generators are imported from China. The profession
technicians and engineers will train the hydropower plant staffs on the operation and maintenance
procedures before the starting operation of the project. The power transmission will also be at highvoltage to ensure low losses. The project will accelerate the deployment of renewable energy
technologies in Viet Nam.
Contributions towards local sustainable development:
a) Economic well-being
Once commissioning, this proposed project will increase the industrial share in the economic structure of
Quang Nam province a poor province in the Central of Viet Nam. This proposed project will pay annual
enterprises revenue tax and the natural resource tax5and CER tax6to the state budget.
By supplying a stable electricity output, this project will facilitate the industrialisation process of the
province and support economic development of local villages through fostering tourism, trade and
services inside the province.
b) Social well-being
This project will contribute directly to improve the low-quality infrastructure systems of the Za Hung and
Ma Cooih communes. The communes are categorised as a mountainous commune with thin population,
less developed and autarky agricultural economy. The project will upgrade roads that then will be
integrated into the traffic system of the communes. The project will construct a new 110 kV transmission
line together with a hydropower plant, which will reduce electricity losses and improve the electricity
quality supplied in the region.
The project will newly construct and upgrade roads that then will be integrated into the traffic system of
the communes. The project will construct a new 110kV transmission line to export electricity to national
grid. The volume of Za Hung hydropower plant dispatches to grid will reduce electricity losses andimprove the electricity quality supplied in the region.
The project activity could result in the employment of the local people for the construction and operation
later on. Therefore, this project activity will contribute directly to alleviate poverty in the region.
This demonstrates that the project activity will contribute positively towards sustainable
development in term of environmental well-being (off setting fossil fuel use and lowering GHG
emission), socially (upgrading infrastructure, ensuring reliable electricity supply, improving
employment), technologically (technology transfer) and economically (satisfying growing energy
demands to allow the country and region to develop and alleviate poverty). Thus the project
activity is consistent with the energy policies set by the Government of Viet Nam andit satisfies the
sustainable development criteria for CDM projects set by the DNA of Viet Nam.
A.3. Project participants:
Name of Party involved (*)
((host) indicates a host Party)
Private and/or public entity(ies)
project participants(*) (as
applicable)
Kindly indicate if the Party
involved wishes to be
considered as project
participant (Yes/No)
Viet Nam (host) Za Hung Joint Stock Company
(Private Entity)
No
Switzerland Vietnam Carbon Assets Ltd. No
5According to the Investment law and Natural resource law6According to Circular No. 58/2008/TTLT-BTC-BTN&MT issued by Ministry of Finance and Ministry of Natural Resource and
Environment on 04 July 2008
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(Private Entity)
(*) In accordance with the CDM modalities and procedures, at the time of making the PDD public at the
stage of validation, a Party involved may or may not have provided its approval. At the time of requestingregistration, the approval by the Party(ies) involved is required.
A.4. Technical description of the project activity:
A.4.1. Location of the project activity:
A.4.1.1. Host Party(ies):
Viet Nam
A.4.1.2. Region/State/Province etc.:
Quang Nam province
A.4.1.3. City/Town/Community etc.:
Za Hung and Ma Cooih communes, Dong Giang district
A.4.1.4. Details of physical location, including information allowing the
unique identification of this project activity (maximum one page):
The proposed project activity involves the construction of Za Hung powerhouse which is located on the A
Vuong stream in Za Hung and Ma Cooih communes, Dong Giang district, Quang Nam province of VietNam. The dam of project has the following coordinates:
Coordinates Dam Power House
Northern latitude 1505143 15
05135
Eastern longitude 10703915 107
03912
The site of the project is showed in Figure below:
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Figure 1: Map of the location of the project activity
A.4.2. Category(ies) of project activity:
Sectoral scope/ Category: 1: Energy industries (renewable sources)
Grid-connected electricity generation from renewable sources
A.4.3. Technology to be employed by the project activity:
Electricity in Viet Nam supplied to the national grid is generated by the operation of grid-connected
power plants and mainly firing coal, oil or gas and is solely distributed via the unique national electricity
grid. All fuel fired power plants connected to the national grid use boiler rooms, steam heating boilers and
steam turbines to generate electricity so GHGs are emitted during these processes. By contrast, hydro
power generation is a renewable electricity generation technology which does not generate significant
GHG emissions and displaces electricity supplied to the grid from fossil-fuel-fired power generationsources. Therefore the implementation of this project activity will reduce GHGs emissions.
The project activity involves the construction of a dam, intake, tunnel, power house containing two
turbines and generators with a total capacity of 30MW and a discharge channel in order to convert
potential flowing energy from A Vuong River into clean electrical energy, which will be supplied to the
national grid though 110 kV transmission line. It also involves the construction of a reservoir with a
power density of 130.5 W/m2. Accordingly, no GHG emissions from the reservoir need to be accounted
under this project activity.
At the connection point, the power meter systems will be installed. They are digital and bi-directional
type to measure the export and import electricity of Za Hung hydropower plant.
The project's installed capacity is 30 MW and the estimated annual gross and net power generation are
122,700 MWh7 and 120,246 MWh8respectively.
7Technical Design Report, Explainable Additional Volume8 The gross power generation subtracts 2% for internal use, parasitic and loss load. Technical Design Report.
Pro ects site
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Figure below shows the layout of the project.
Figure 2: Project lay-out
The main technical parameters of the Za Hung Hydropower Project are shown in Table below.
Table 1: Main technical parameters of the proposed project activity9
Main parameters Units Values
1. Turbine
Type Francis Vertical shaft
Rated net head m 66.5
Number of turbine set 02
Turbine discharge m3/s 25.76
Efficiency % 92.3
Capacity MW 15.544
Speed rpm 375
Expected lifetime10 hour 150,000
2. Generator
Number set 02
Type Synchronous, 3 phases, vertical axis
Rated voltage kV 10.5
Rated capacity MW 15.0
Efficiency at 100% load, Cos= 0.8 % 96.8
Expected lifetime11 year 30
3. Transformer
Number set 02
9The contract on supplying equipment and technical equipment document
10The default lifetime in the EB 50, Annex 1511The default lifetime in the EB 50, Annex 15
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Primary voltage kV 10.5
Secondary voltage kV 121
Expected lifetime12 year 304. Annual river flow m
3/s 34.1
The main equipment utilized in this project is imported from China via Equipment Supply Contract
No.08-ZH-TB1-CTZH dated 05 May 2007 between the Project Owner and Associate Representation
LOGITIC Company Limited. All the turbines, alternators, transformers and other equipments are state-of-
the-art technology and meeting the criteria of the tender document. The professional technicians and
engineers from the equipment supplier will train the operational staff of the Za Hung Hydropower plant
on the monitoring procedures, operation regulations, maintenance procedures, and other relevant
operational knowledge before operating the power plant. Furthermore, there will be regularly internal
training courses on monitoring and operation for the staff during the operation period. So the modern
technology would be transferred to the host country.
The baseline scenario of this project activity is identical to the existing scenario mentioned above, where
electricity is generated Vietnamese national grid system which is mainly composed of GHG intensive
fossil fuel based power station.
A.4.4. Estimated amount of emission reductions over the chosen crediting period:
The project activity will achieve GHG emission reduction by replacing part of power generated mainly by
fossil fuel fired plants connected to the national grid. The project will apply three renewable seven-
crediting-year periods. The estimated emission reductions of the first crediting period are presented in
Table below.
Table 2: Emission reduction of the proposed project during the first crediting period
Years Annual estimation of emission reductions in
tonnes of CO2 e
2012 69,309
2013 69,309
2014 69,309
2015 69,309
2016 69,309
2017 69,309
2018 69,309
Total estimated reductions
(tonnes of CO2e)485,163
Total number of crediting years 7
Annual average over the crediting period of
estimated reductions (tonnes of CO2e)
69,309
A.4.5. Public funding of the project activity:
No public funds13
from Annex I countries is involved in this project.
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:
12The default lifetime in the EB 50 Annex 1513
The Project owner has official letter to declare no ODA fund
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Applied methodology:
Version 12.2.0 of ACM0002: Consolidated baseline methodology for grid-connected electricitygeneration from renewable sources
Related tools:
Version 02.2.1 of the Tool to calculate the emission factor for an electricity system
Version 06.0.0 of the Tool for the demonstration and assessment of additionality
Version 02 of the Tool to calculate project or leakage CO2 emission from fossil fuelconsumption
The methodology and the related tools are available on the UNFCCC website:
http://cdm.unfccc.int/methodologies/DB/C505BVV9P8VSNNV3LTK1BP3OR24Y5L
B.2. Justification of the choice of the methodology and why it is applicable to the project activity:
This proposed project is a grid-connected renewable power generation that is then eligible to apply
Version 12.2.0 of ACM0002. More details of the comparison of the projects characteristics and the
applicability criteria as specified in, Version 12.2.0 of ACM0002 is given in Table below.
Table 3: Comparison of projects characteristics and eligibility criteria of Version 12.2.0 of
ACM0002
Applicability conditions in Version 12.2.0 of
ACM0002
Characteristics of the project
activity
Applicability
criterion met?
This methodology is applicable to grid-connected
renewable power generation project activities that
(a) install a new power plant at a site where no
renewable power plant was operated prior to the
implementation of the project activity (green field
plant); (b) involve a capacity addition; (c) involve a
retrofit of (an) existing plant(s); or (d) involve a
replacement of (an) existing plant(s).
The project activity consists in
the installation of a new grid
connected renewable power
plants at a site where no
renewable power plant was
operated prior to the
implementation of the project
activity (green field plant).
Yes
The project activity is the installation, capacity
addition, retrofit or replacement of a power
plant/unit of one of the following types: hydro
power plant/unit (either with a run of river reservoiror an accumulation reservoir), wind power
plant/unit, geothermal power plant/unit, solar
power plant/unit, wave power plant/unit or tidal
power plant/unit;
The project activity involves the
installation of a new
hydropower plant.
Yes
In the case of the capacity additions, retrofits or
replacements (except for wind, solar, wave or tidal
power capacity addition projects which use Option
2: on page 11 to calculate the parameter EGPJ,y): the
existing plant started commercial operation prior to
the start of a minimum historical reference period
of five years, used for the calculation of baseline
emissions and defined in the baseline emissionsection, and no capacity expansion or retrofit of the
plant has been undertaken between the start of this
minimum historical reference period and the
The project activity is to install
a new hydro power plant.
Not applicable
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implementation of the project activity;
In case of hydro power plants, one of the following
conditions must apply:
The project activity is implemented in anexisting single or multiple reservoirs, with no
change in the volume of any of reservoirs; or
The project activity is to create
a new reservoir.Not applicable
The project activity is implemented in anexisting single or multiple reservoirs, where
the volume of any of reservoirs is increased
and the power density of each reservoir, as
per definitions given in the project emissions
section, is greater than 4 W/m2; or
The project activity is to create
a new reservoir.
Not applicable
The project activity results in new single or
multiple reservoirs and the power density ofeach reservoir, as per definitions given in the
project Emissions section, is greater than 4
W/m2.
The project activity results in a
new reservoir, with a powerdensity of 130.5 W/m
2, which is
greater than 4 W/m2.
Yes
In case of hydro power plants using multiple
reservoirs where the power density of any of the
reservoirs is lower than 4 W/m2
all the following
conditions must apply:
The project activity results in a
new reservoir, with a power
density of 130.5 W/m2, which is
greater than 4 W/m2.
Not applicable
The power density calculated for the entireproject activity using equation 5 is greater
than 4 W/m2;
Multiple reservoirs and hydro power plantslocated at the same river and where are
designed together to function as an
integrated project1 that collectively
constitute the generation capacity of the
combined power plant;
Water flow between multiple reservoirs isnot used by any other hydropower unit
which is not a part of the project activity;
Total installed capacity of the power units,which are driven using water from the
reservoirs with power density lower than 4
W/m2, is lower than 15MW;
Total installed capacity of the power units,which are driven using water from
reservoirs with power density lower than 4
W/m2, is less than 10% of the total
installed capacity of the project activity
from multiple reservoirs.
This methodology is not applicable to the
following:
Project activities that involve switchingfrom fossil fuels to renewable energy
sources at the site of the project activity,since in this case the baseline may be the
continued use of the fossil fuels at the site.
It is a renewable energy project
with no fuel-switch involved.
Yes
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Biomass fired power plants. The project activity is to installa new hydro power plant.
Yes
Hydropower plants that result in new singlereservoirs or in the increase in an existing
single reservoir where the power density of
the power plant is less than 4 W/m2.
The project activity results in anew reservoir, with a power
density of 130.5 W/m2, which is
greater than 4 W/m2.
Yes
This comparison shows clearly that Version 12.2.0 of ACM0002 is applicable to the proposed project
activity.
B.3. Description of the sources and gases included in the project boundary:
According to Version 12.2.0 of ACM0002, the spatial extent of the project boundary includes the Za
Hung hydro power plant and all power plants connected physically to the national electricity grid towhich the proposed project is also connected.
The flow diagram of the project boundary is shown in Figure below.
Figure 3: Project boundary
The GHGs and emission sources included in or excluded from the project boundary are shown in Table
below.
Table 4: Sources and gases included in or excluded from the project boundary
Source Gas Included? Justification/Explanation
Baseline
CO2 emission
from electricity
generation in
fossil fuel fired
power plants that
is displaced due
to the project
activity
CO2 Yes Main emission source
CH4 No Minor emission source
N2O No Minor emission source
GHGs Emission represent by EFCM
Viet NamNational
Electricity grid
Turbines
Generators
Transformers
Fossil fuel fired power
plants
ReservoirsGHGs Emission
Water flow
Electric Energy
Kinetic Energy
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ProjectActivity
For hydro power
plants, emissions
of CH4 from theReservoir
CO2 No Minor emission source
CH4 No Main emission source.
However, the power density of the project isgreater than 10 W/m
2 so CH4 emissions are
neglected, according to ACM0002, Version
12.2.0.
N2O No Minor emission source
B.4. Description of how the baseline scenario is identified and description of the identified baseline
scenario:
According to Version 12.2.0 of ACM0002, if the project activity is the installation of a new grid-
connected renewable power plant, the baseline scenario is the following:
Electricity delivered to the grid by the project activity would have otherwise been generated by the
operation of grid-connected power plants and by the addition of new generation sources, as reflected in
the combined margin calculations described in the Tool to calculate the emission factor for an electricity
system.
The Viet Nam national electricity grid, which is operated and monopolized by the EVN and is the unique
transmission and distribution line, to which all power plants in Viet Nam are physically connected is the
project electricity system.
Thus the baseline scenario of the proposed project is the delivery of equivalent amount of annual power
output from the Viet Nam national grid to which the proposed project is also connected. The database for
calculating the baseline is published by the DNA of Vietnam.
The analysis and description in B.6 will support the baseline scenario shown above.
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):
According to Version 12.2.0 of ACM0002, the latest version of the Tool for the demonstration andassessment of additionality shall be used to demonstrate the additionality of this project activity. Version
06.0.0of the additionality tool includes the following steps:
Step 1: Identification of alternatives to the project activity consistent with current laws and
regulations
Sub-step 1a: Define alternatives to the project activity
Version 06.0.0 of the additionality tool states: Project activities that apply this tool in context of
approved consolidated methodology ACM0002, only need to identify that there is at least one credible
and feasible alternative that would be more attractive than the proposed project activity.
We will therefore consider the two scenarios in the following analysis:
Alternative 1: the proposed project undertaken without the CDM
Alternative 2: continuation of the current situation. In this case, the proposed project will not be
constructed and the power will be solely supplied from the Vietnam national grid.
Sub-step 1b: Consistency with mandatory laws and regulations
The alternative 2 continuation of the current situation alternative does not face with any barrier from
the current law and regulation in Vietnam because it is the do-nothing alternative. The project owner of
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a proposed project has no obligation to build or invest in the power plant to supply electricity for the local
area. Hence this alternative is consistent with mandatory laws and regulations.
The alternative 1 is consistent with mandatory laws and regulations of Vietnam14.
Step 2: Investment analysis
Sub-step 2a: Determine appropriate analysis method
The proposed project activity generates financial and economic benefits other than CER revenues, so the
simple cost analysis (Option I) is not applicable. Out of the two remaining options, Option II is also not
applicable as there are no other credible and realistic baseline scenario alternatives other than electricity
supply from the grid. Thus, the benchmark analysis (Option III) is chosen to prove additionality.
Sub-step 2b Option III: Apply benchmark analysis
In the following, Project IRR is used to demonstrate the Additionality of the project. Provided that the
proposed project is financed by both equity and loan sources, the appropriate benchmark is WACC
which represents the weighted average of the costs of various sources of financing in the financing
structure. This benchmark represents the minimal required project IRR of the project to be economically
attractive.
The WACC benchmark is indicated in Annex: Guidance on Assessment of Investment Analysis, Version
05, Annex 05, EB62, Local commercial lending rates or weighted average costs of capital (WACC) are
appropriate benchmarks for a project IRR. Thus the project participant applies the following WACC
equation to estimate the required return on capitalas a benchmark for this project IRR:
eR R (1 )d cWACC E D T = + (1)
Where:
Re : cost of equity
Rd : cost of debt
E : equity ratio
D : debt ratio
Tc : average enterprise tax rate
This WACC is the the cost of financing and required return on capital which is based on private
equity investors/fundrequired return on comparable projects as presented in Option III, Item (30)(b) ofTool for the demonstration and assessment of additionality version 06.0.0
Determine the equity ratio
Decision No 30/2006/QD-BCN issued on 31 August 2006 by the Ministry of Industry requires that the
investment capital of project owner (equity) in an IPP project must be accounted for at least 30%. So the
average industry equity ratio is determined as 30%.
E= 0.3Determine the debt ratio
Because industry projects are financed by equity and debt so D = 1-E
D= 0.7
14This project owner received the investment license for this project on 16 May 2007. This proved that this project complies withthe law and regulation in Viet Nam.
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Determine the cost of debt
The cost of debt is the interest rate for a long-term loan prevailed at the time of making the investment
decision. The project participant chooses the lowest value of the range from 12.6% to 16.2% of the
interest rates for long-term credit published in the Annual Report of the State Bank of Viet Nam in 2005.
This report is published at the website of the State Bank annually (www.sbv.gov.vn/). So the cost of debt
used for benchmark derivation is conservative and standard value.
The applied cost of debt is 12.6% at the date of making the investment decision.
Determine the cost of equity
To derive an appropriate cost of equity for electricity generation project type in Vietnam, the following
well-known CAPM15
standard formula, which describes the relationship between risk and expectedreturn, is employed:
Re = Rf+ *(Rm,- Rf) (2)
Where:
Re, cost of equity for electricity generation project type
Rf Risk free rate return
Beta of the security for electricity generation project type
Rm,- Rf, Market risk premium
Risk free rate:
The risk free rate is understood as the rate of return on an asset that is theoretically free of any risks,
therefore the rate of interest on government bonds are considered as risk free rates. Accordingly the risk
free rate has been taken from long term Vietnamese government bond rates available at the date of
making the investment decision. The data on government bond rates is published on Asia Commercial
Bank securities company website.
The risk free rate applied is 9.25% for 15 years term16
.
Beta:
Beta () indicates the sensitivity of the company to market risk factors. Beta represents the market risk for
an asset and is calculated as the statistical measure of volatility of a specific asset/investment relative to
the movement of a market group. The conventional approach for estimating beta of an investment is a
regression of returns on investment against returns on a market index. For companies that are not publicly
listed like Za Hung Joint Stock Company, the beta is determined by referring to beta values of publicly
listed companies that are engaged in similar types of business. The project activity type is power
15In finance, the Capital Asset Pricing Model (CAPM) is used to determine a theoretically appropriate required rate of returnof an asset, if that asset is to be added to an already well-diversified portfolio, given that asset's non-diversifiable risk. The model
takes into account the asset's sensitivity to non-diversifiable risk (also known as systemic risk or market risk), often represented
by the quantity beta () in the financial industry, as well as the expected return of the market and the expected return of atheoretical risk-free asset.16
http://hnx.vn/Danhsach_TCDKGD_TraiPhieu.asp?actType=1&menuup=402000&TypeGrp=1&menuid=114000&menulink=400000&menupage=Danhsach_TCDKGD_TraiPhieu.asp&stocktype=1
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generation; therefore the applied beta for this project should be based on the beta values of listed power
generation companies in Vietnam.
Due to the difference in capital structure (Debt/Equity) between these companies and Za Hung JointStock Company, the Beta applied for this CDM project has to be adjusted according to the following
steps:
Step 1 It is obtained the Levered Betas of hydropower companies published in stock market withits own capital structures;
Step 2 The Beta is Unlevered according the average capital structure of the companies; Theunlevered beta is the beta of a company without any debt. Unlevering a beta removes the financial
effects from leverage17
.
Step 3 The Unlevered Beta is levered again according to the capital structure of the Za HungHydropower project. This Levered Beta was used for calculation of cost of equity of the Za Hung
Project
Table 5: Betas of similar companies in hydro power generation18
Company nameLevered Beta
of similar
projects
D/EUnlevered
Beta
Levered
Beta for
CDM
project
Vinh Son Song Hinh
Hydropower Company
0.75 0.44 0.57 1.52
According to the source from Bloomberg19
, the average beta of electricity generation companies in from
other companies in emerging countries (which are in the process of rapid growth and industrializationhaving similar economic conditions to Viet Nam) in the year 2002, 2003, 2004, 2005 is 0.83, 0, 91, 0.97,
1.39 respectively.
So conservative, the project participant chose 0.83 as the applied beta for return on equity calculation.
Risk Premium:
The most common approach for estimating the risk premium is to base it on historical data, in the CAPM
model, the premium is estimated by looking at the difference between average return on stocks and the
risk free rate return. The average return on stocks is defined as the compounded annual return.
Table 6: Market expected return calculation.
Market index (VN Index) as on 28-
Jul-2000 100.00
Market index (VN Index) as on 17-
July-2006 506.10
No. of years 5.97
Market Expected Return 31.19%
17http://www.investopedia.com/terms/u/unleveredbeta.asp 18 At time of decision making, there was only one hydropower generation company which was listed. The betas of Vinh SonSong Hinh HPP has been calculated by the project developer based on the published daily data. The link of sources is
http://www.cophieu68.com/incomestatementq.php?id=VSH 19http://www.stern.nyu.edu/~adamodar/
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Substituting
Rf = 9.25%;
Rm = 31.19%;
= 0.83
in(2), we get the cost of equity for power generation projects in Viet Nam at the date of decision
making of the proposed projectas follows:
Re = 27.46%
This rate of the cost of equity for power generation sector meets the EB rules because it reflects a sector
specific approach. It is calculated based on similar companies operating in power generation sector in
Viet Nam therefore it reflects standard in the market, considering the specific characteristics of the
project type () as stipulated in the guidance given in the latest additionality tool under sub-step 2b(29).
Another survey by a securities company in Viet Nam recommends the range of 25% to 30% for cost of
equity for power generation companies in Vietnam market20
. Therefore, the rate of 27.46% applied as
the cost of equity for power generation projects in Viet Nam at the date of decision making of the
proposed project is the appropriate benchmark.
The table below presents key assumption to calculate the benchmark - WACC according to formula (1)
Table 7: Key assumptions to calculate the benchmark
No Parameter Symbol Unit Value
1 Average industry equity ratio E % 30
21
2 Cost of equity Re % 27.46
3 Average industry debt ratio D % 7022
5 Cost of debt Rd % 12.623
6Average enterprise revenue tax during the
lifetimeTc % 18.68
24
7Weighted Average Financial Discounting
Rate of Capital (Benchmark)WACC % 15.41
Sub-step 2c: Calculation and comparison of financial indicators
The key assumptions used to calculate the project IRR of the proposed project are presented in Table
below:
Table 8: Key assumption for investment analysis
No Parameter Unit Value Source
20The report by Anpha Securities Company has been submitted to the DOE.21Decision No. 709/QD-NLDK issued by the Ministry of Industry provides temporary guidelines for conducting the economic,financial and investment analysis and providing the purchasing-selling price frame for power generation projects.22Calculated from Equity ratio D = 1- E23The Annual Report 2005. The Annual Report 2005 is published at the website of the State Bank annually in 200624Based on Decree No 164/2003/ND-CP issued on 22 Dec 2003 by the Government
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1 Gross capacity MW 30 Technical Design Report,
Explainable Additional Volume
2Annual net electricity
generationMWh 122.246
The gross power generation subtracts
2 % for parasitic and loss load.
Technical Design Report,
Explainable Additional Volume
3 Total investment costbillion
VND507.087
Technical Design Report,
Explainable Additional Volume
4 Total annual O&M cost % 1.5Technical Design Report,
Explainable Additional Volume
5Preparation and
construction periodyear 4
Technical Design Report,
Explainable Additional Volume
6 Life time year 37
Tool to determine the remaining
lifetime of equipment/ Annex 15, EB50.
7Depreciation period for
constructionyear 20
Decision No. 206/2003/QD-BTC
issued on 12 December 2003by the
Ministry of Finance
8Depreciation period for
equipmentyear 10
Decision No. 206/2003/QD-BTC
issued on 12 December 2003by the
Ministry of Finance
9 Fair value 0
The project participants chose a
lifetime of 37 years to assess the cash
flows for the project IRR while a
linear depreciation over 20 yearsperiod is chosen as regulated by the
government. Full value of assets has
been completely depreciated.
No fair value remains.
10 Electricity price. VND/kWh 608
The estimation of tariff for the
proposed project is based on the
electricity price of the other
hydropower plants which are
accessible by the project owner at the
time of making the investment
decision. The project owner expected
to negotiate with EVN to get thehighest price among the prices
available. The applied electricity price
is mentioned the same value in
Explainable Additional report.
11 Resources tax % 2
The Circular No 05/2006/TT-BTC
was issued by Ministry of Finance on
19 Jan 2006 regulates that the resource
tax will be calculated as the net
electricity outputs supplied to the
national electricity grid x 2% x 700
VND.
12 Project IRR % 9.43
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This table shows that the project IRR of the project was lower than the benchmark at the time of decision
making which is defined as the date of issuing the Decision to pursue the CDM application for the
investment project by the Board of Director on 17 July 2006.All financial data are available to the DOE for Validation.
Sub-step 2d: Sensitivity analysis
A sensitivity analysis of the project activity has been conducted to test the robustness of the above
calculations. Because the O&M cost accounted less than 20% of total investment cost, thus according to
EB 62, Annex 05, paragraph 20:only variables, including the initial investment cost, that constitute more
than 20% of either total project costs or total project revenue should be subjected to reasonable variation
this parameters was ignored in the project sensitivity analysis. So the following parameters are used in the
sensitivity analysis of the project activity:
Annual amount of electricity exported to the national grid
Investment costs
Electric price set by EVN
Table below shows the impact of variations in key factors on the project IRR considering a 10%
variation in the parameters.
Table 9: Sensitivity analysis
No Parameter Variation25
Project
IRRLikelihoods to happen
1Annual amount of electricity
exported to the national grid
10.00% 10.47% Lower than the benchmark
63.26% 15.41%
The probability of a 63.26%
increase in annual export to the
national grid is very unlikely. This
is because the potential hydrology
has been surveyed in long term
basis. It is concluded that the
hydrological condition is not
possible to sustain a 63.24%
annual increase compared with the
current estimation for the entire
crediting period. This option shallbe discarded.
-10% 8.34% Lower than the benchmark
2 Investment costs 10.00% 8.54% Lower than the benchmark
25 10% is selected according to the Decision No. 709/Q NLDK issued by the Ministry of Industry, dated 13 April 2004 toprovide temporary guidelines for conducting the economic, financial and investment analysis and providing the purchasing-
selling price frame for power generation projects. It is also common-practice for sensitivity analysis for additionalitydemonstration. Furthermore, 10% is also a common practice rate for sensitivity analysis of a CDM project
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-41.06% 15.41%
The probability of a 41.06%
decrease in the total investment
cost is not likely to happen becausethe inflation, average consumer
prices 200826
show an annual
increase of 24% respectively.
-10.00% 10.48% Lower than the benchmark
3 Electric price set by EVN
10.00% 10.50% Lower than the benchmark
61.80% 15.41%
The probability of a 61.80%
increase in feed in tariff annually is
very unlikely because the PPA
contract will be signed with EVN
with a fixed feed in tariff for longterm. However it should be
comparable with the tariffs applied
for other hydropower projects
under fixed feed-in tariffs applied
for long-term PPAs for other
hydropower projects that are
around 602 VND/kWh27
. This
option shall be discarded.
-10.00% 8.32% Lower than the benchmark
The sensitivity analysis shows that there is unlikely to be happened the case in which the variation of a
parameter can improve the Project IRR without CDM above the benchmark.
In conclusion, the proposed CDM project activity is unlikely to be financially attractive.
Step 3: Barrier analysis
Not applied.
Step 4: Common practice analysis
Sub-step 4a: Analyse other activities similar to the proposed project activity
Government Decree No 45/2001/ND-CP on power generation and consumption, which was issued on 2
August 2001 and was entered into force 15 days after the issuance date, created a legal basis to allow
other entities to invest in and generate electricity rather than only state-owned entities as previously
regulated. Before that time, all power plants have been invested from the state budget sources and
operated by state owned companies. Hence, any hydropower projects that have started the construction
activities before August 2001 are not subject to this analysis.
26http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/weoreptc.aspx?sy=1980&ey=2013&scsm=1&ssd=1&sort=country&d
s=.&br=1&c=582&s=PCPIPCH&grp=0&a=&pr1.x=77&pr1.y=10 27The statistic data of the feed-in tariffs applied for other hydropower projects is submitted to the DOE
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According to Vietnam Construction Code - TCXDVN 285:2002 "Irrigation projects - Major standards on
designing"28
hydropower projects are categorized as follows:
Table 10: Groups of hydropower projects according to Vietnam Construction Code - TCXDVN285:2002
Group Installed capacity
I equal and larger 300 MW
II equal and larger 50 MW but smaller 300 MW
III smaller 50 MW but equal and larger 5MW
IV smaller 5 MW but equal and larger 0.2MW
V up to 0.2MW
According to Table above, this proposed project activity falls into Group III which are similar scale and
take place in a comparable environment to the proposed project activity.
Table 11: Hydropower plants which belong to range (5MW to 50MW) were developed in Viet
Nam29
No NameCapacity
MW
Construction
starting year
Commissioning
year
Developed as CDM
project
1 Nam Mu 12 2002 2004 No
2 Ea Krong Rou 28 2003 2007 No
3 Suoi Sap 14.4 2004 2007 No
4 Nam Tha 6 6.0 2006 2007 Yes
5 Ngoi Xan 1 8.1 2006 2007 Yes
6 Na Loi 9.3 2000 2003 No
Because the Na Loi hydropower project started construction from 2000, it is excluded from this common
practise analysis. It is also applied to Nam Tha 6 and Ngoi Xan 1 as they are developed as CDM projects.
Thus, only 3 projects are relevant in this analysis.
The comparison of the three remaining hydropower plants and the proposed project activity is presented
in Table below.
Table 12: Hydropower plants which belong to group III (5 < Pdm30 MW) were developed in
Vietnam
No Name Capacity
MW
Elec.
outputs
103MWh
Load
factor
Construc-
tion
starting
year
Commi-
ssioning
year
Investor during the investment
and construction period
0 The
propos
ed
project
30 122.7 46.69% 2006 2009 Za Hung Joint Stock Company
(private owned company)
28Construction Code regulates the basic technical standards that are mandatory for construction activities in Viet Nam 29
List of powerplants supplied by Institute of Energy
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A. Invested and constructed by state-owned companies or joint stock companies which are either state-
owned or whose major shares held by the government
1 Nam
Mu
12 55.7 53.0 Jan.
2002
2004 Song Da Construction
Corporation - one of the largest
state-owned construction
corporation belongs to Ministry
of Construction (Nam Mu
Hydropower JSC was set up on
29 May 2003 to take over the
continuing construction and to
operate the Nam Mu plant)30
2 Ea
Krong
Rou
28 110.7 45.1 Otc.
2003
2007 Mien Trung Power Investment
and Development Joint Stock
Company (Song Da
Construction Corporation and
Power Company No.3 hold
85% of shares. Power Company
No.3 belongs to EVN)31
. In
addition, this project has
received ODA loan from
India32
B. Invested and constructed by private companies
3 Suoi
Sap
14.4 65.7 52.1 Jul. 2004 2007 Truong Thanh Construction
Company Limited
Sub-step 4b: Discuss any similar options that are occurring
The existence of these hydropower plants does not contradict the result of the benchmark analysis stating
that the proposed project is financially unattractive, because of the following reasons:
For projects from 1 - 2: As can be seen in the Table above, these projects have been invested in byeither large state-owned corporations or joint stock companies whose majority shares held by large
state-owned corporations. These projects do not face the barriers that the proposed project faces
because:
1. The state-owned corporations mentioned above are among the largest state-owned power and
construction corporations in Vietnam. They are financed by the state budget as well as theirinvestment activities. In 1990s, Song Da Construction Corporation have been assigned by
the government to construct national hydropower plants like Hoa Binh - Song Da (1920
MW), Yaly (720 MW), Tri An (400 MW), Ham Thuan (300 MW), Thac Ba (108 MW). ).
And from 2000, Song Da Corporation had been studying and investing in a series of
hydropower plants like: Ry Ninh 2, Na Loi, Can Don, Se San 3A33
Therefore, they have
substantial experiences in designing, investing, constructing and operating hydropower
plants.
2. The state-owned corporations mentioned above were established according to the PrimeMinister's Decisions No 90/TTg and 91/TTg dated on 07th March 1994. The formulation of
30 Prospectus of Nam Mu Hydropower Joint Stock Companyhttp://images1.cafef.vn/Images/Uploaded/DuLieuDownload/Ban%20Cao%20Bach/HJS_BCB.doc
31http://vincomsc.com.vn/vi/Pages/ReportFileDownload.aspx?id=8338 32 http://www.mientrungpid.com.vn/?page=13 33http://www.songda.com.vn/info/info.do?info=intro
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these corporations is to aim at developing power and construction industries in order to meet
national socio-economical development goals and strategies and to implement development
tasks assigned by their ministries and/or Prime Minister in certain development periods.Therefore, the key target of these corporations is to serve as the governmental tool for
macroeconomic interferences rather a profit making34
.
Project 3: The initial main objective of this project by the government was to invest in an irrigation
project to provide water for 700 ha commercial plantation and rice fields in order to alleviate
poverty and to develop local agriculture and rural targeted communes in Phu Yen District, Son La
Province. Then the project owner decided to synergise this objective with the construction of a
hydropower plant. According to the Government Decree No. 17/2001/N-CP, this project is givenpriorities to access ODA. Therefore, this project has borrowed ODA soft-loan from India at a very
favourable interest rate35
while the proposed project has to take loans from domestic banks without
such a favourable condition. The circumstances of this project thus clearly show that this project
has not been facing a similar barrier as the proposed project.
As can be seen from the above analysis, no similar projects facing the same barriers as the proposed
project have been developed without the aid of CDM.
Implementation timeline of the proposed project activity
The incentive from the CDM was seriously considered in the official letter to notify and request the
People Committee of Quang Nam province (the highest provincial authority) and DNA Viet Nam on 30
December 2005 by Za Hung Joint Stock Company (Project owner). Later on, the Peoples Committee
sent an official letter to the DNA Viet Nam on 05 January 2006 for verifying and supporting CDM
project development. Subsequently, the CDM development contract was signed between Project owner
and Asia Carbon International B.V on 14 April 2006. The Letter of Endorsement was issued on 05 May
2006. After that the project owner officially decided to pursue CDM implementation project on 17 July2006.
This was prior to the starting date of the project which is defined as the date of signing the contract for
construction tunnel on 28 December 2006.
CDM Consideration
CDM early consideration and the serious actions to secure the CDM status for the project are reflected in
the key milestones in the development of the project listed below:
Table 13: Major milestones in developing the investment project and CDM application
NoItem
Date NoteInvestment project
developmentCDM project development
1
Approving Environment
Protection Commitment
report by Quang Nam
People Committee
18 May 2005
2Finalizing Technical
design report20 Dec 2005
3Submitting a formal letter by
the project sponsor to notify 30 Dec 2005CDM early
consideration
34http://vi.wikipedia.org/wiki/Tng_cng_ty_9135Source: Interview with Truong Thanh Construction Company Limited and confidential documentation provided to DOE
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the CDM project activity and
to request the People
Committee for theirverification and support
evidence
4
Submitting a formal letter by
the project sponsor to notify
the CDM project activity and
to request the DNA Viet Nam
for their verification and
support
30 Dec 2005
CDM early
consideration
evidence
5
Submitting an official letter by
Provinces People Committee
to DNA to verify and support
for the CDM development
5 Jan 2006
CDM early
consideration
evidence
Signing the CDM developmentcontract with the first
consultant
14 Apr 2006CDM earlyconsideration
evidence
6Issuing the Letter of
Endorsement5 May 2006
CDM early
consideration
evidence
7
Finalizing the adjusted
design project report by the
technical consultant
20 Jun 2006
9 Issuing the Decision on CDM 17 Jul 2006
Date of
makingInvestment
Decision
10 Signing the credit contract 26 Jul 2006
11
Starting the validation
process: uploading the PDD
for global stakeholder
comment
7 Sep 2006
13 Signing the Contract forconstruction of tunnel
28 Dec 2006 Start date ofthe project
activity
14 Issuing the LoA 29 Dec 2006
15
Signing the Contract for
construction of dams and
power house
30 Dec 2006
16Signing the ERPA with the
first Buyer9 Mar 2007
17 Starting date of construction 22 Mar 2007
18
Signing the Contract for
supply of technological
equipment and technicalservices
05 May 2007
19Issuing Certificate of
Investment by Provincial16 May 2007
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Peoples Committee
20
Responding to the Draft
Validation Report from DOEby the first CDM consultant
09 April
2008
21Signing the Power Purchase
AgreementJun 2009
22
Terminating the CDM
development and registration
contract with the first CDM
consultant
29 Jun 2009
23Terminating the ERPA with
the CDM buyer29 Jun 2009
24
Signing the CDM
development and registration
contract with the new CDMconsultant (CDM
consultancy contract) -
The Project Design
Document (PDD) started to
develop again
02 Jul 2009
25
Starting the commercial
operation of the project of
unit 1 (commissioning)
28 Jul 2009
26Negotiating the ERPA with
the second Buyer22 Dec 2009
27 Signing the ERPA with thesecond Buyer 07 Jul 2010
In conclusion, the proposed project is additional.
B.6. Emission reductions:
B.6.1. Explanation of methodological choices:
The reduced emission is calculated in accordance with the approved consolidated baseline methodology
Version 12.2.0 of ACM0002.
I. Project emissions (PEy)
According to the ACM0002 Version 12.2.0, for most renewable power generation project activities, PEy
= 0. However, some project activities may involve project emissions that can be significant. These
emissions shall be accounted for as project emissions shall be accounted for as project emissions by using
the following equation:
PEy = PEFF,y + PEGP,y + PEHP,y
Where:
PEy = Project emissions in year y (tCO2e/yr)
PEFF,y = Project emissions from fossil fuel consumption in year y (tCO2/yr)
PEGP,y = Project emissions from the operation of geothermal power plants due to the
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release of non-condensable gases in year y (tCO2e/yr)
PEHP,y = Project emissions from water reservoirs of hydro power plants in yeary (tCO2e/yr)
Fossil Fuel Combustion (PEFF,y)
This proposal project is hydropower project, so the project does not use fossil fuels for electricity
generation, CO2 emissions from the combustion of fossil fuels is not relevant.
PEFF,y= 0
Emissions of non-condensable gases from the operation of geothermal power plants (PEGP,y)
This emissions only apply for geothermal project activities, so this emissions (PEGP,y) is not relevant.
Therefore, the project emissions are:
PEy= PEHP,y
Where:
PEHP,y Emission from water reservoirs (tCO2/year)
Emission from water reservoir:
For hydropower project activity that results in new single or multiple reservoirs and/or the increase of
single or multiple existing reservoirs, the power density (PD) of the project activity shall be calculated as
follows:
PJ
PJ BL
BL
Cap CapPD
A A
=
Where:
PD Power density of the project activity, in W/m2.
CapPJ Installed capacity of the hydro power plant after the implementation of the project activity (W).
CapBL Installed capacity of the hydro power plant before the implementation of the project activity (W).
For new hydro power plants, this value is zero.
APJ Area of the single or multiple reservoirs measured in the surface of the water, after the
implementation of the project activity, when the reservoir is full (m2).
ABL Area of the single or multiple reservoirs measured in the surface of the water, before the
implementation of the project activity, when the reservoir is full (m2). For new reservoirs, this value
is zero.
If thePDis greater than 4 W/m2and less than or equal to 10 W/m
2:
Re,
1000
s YHP y
EF TEGPE
=
Where:
PEy Project emissions from water reservoirs expressed as tCO2e/year
EFRes Default emission factor for emissions from reservoirs of hydropower plants in year y, and
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the default value as per EB23 is 90 Kg CO2e /MWh.
TEGy Total electricity produced by the project activity, including the electricity supplied to the
grid and the electricity supplied to internal loads, in yeary (MWh).
IfPDis greater than 10 W/m2, then:
PEHP,y = 0
II. Baseline emissions (BEy)
The project activity is the installation of a new baseline emissions include only CO2 emissions from
electricity generation from fossil fuel fired power plants that are displaced due to the project activity,
calculated as follows:
BEy= EGPJ,y. EFgrid,CM,y
Where:
BEy Baseline emissions in yeary (tCO2/yr).
EGPJ,y Quantity of net electricity generation that is produced and fed into the grid as a result
of the implementation of the CDM project activity in yeary (MWh/yr)
EFgrid,CM,y The combined margin CO2emission factor for grid connected power generation in
year y and the applied value36
Calculation of EGPJ,y
Because the project activity is the installation of a new grid-connected renewable power plant/unit at a
site where no renewable power plant was operated prior to the implementation of the project activity,
then:
EGPJ,y= EGfacility,y
Where:
EGPJ,y = Quantity of net electricity generation that is produced and fed into the grid as a result of
the implementation of the CDM project activity in year y (MWh/yr)
EGfacility,y = Quantity of net electricity generation supplied by the project plant/unit to the grid in year y
(MWh/yr)
Therefore, the baseline emissions are calculated as follows:
BEy= EGfacility,y .EFgrid,CM,y
Calculation of the emission factor (EF) of the national electricity grid
The Version 02.2.1 of Tool to calculate the emission factor for an electricity system determines the CO 2
emission factor for the displacement of electricity generated by power plants in an electricity system, by
calculating the operating margin and build margin as well as the combined margin, including 6
steps as follows:
STEP 1. Identify the relevant electric power system.
STEP 2. Choose whether to include off-grid power plants in the project electricity system (optional).
STEP 3. Select a method to determine the operating margin (OM)
36EFCM has been published by DNA Viet Nam according to the link:http://www.noccop.org.vn/Data/vbpq/Airvariable_ldoc_vnHe%20so%20phat%20thai.pdf
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STEP 4. Calculate the operating margin emission factor according to the selected method.
STEP 5. Calculate the build margin (BM) emission factor.
STEP 6. Calculate the combined margin (CM) emission factor.
Step 1. Identify the relevant electricity systems
This hydropower project will be connected to the national electricity grid of Viet Nam, which is operated
and monopolized by the EVN. This national electricity grid is the unique transmission and distribution
line, to which all power plants in Viet Nam are physically connected. Hence the national electricity grid is
the project electricity system.
There are electricity imports to the national electricity grid from China - another host country, thus the
China Power Grid is the connected electricity system and the emission factor for the imported electricity
is zero tons CO2per MWh by default.
Step 2: Choose whether to include off-grid power plants in the project electricity system (optional)
There are 2 options in the tools to choose, including:
Option I: Only grid power plants are included in the calculation.
Option II: Both grid power plants and off-grid power plants are included in the calculation.
Because only the data of grid connected power plants is available, so Option I will be chosen for
calculating the grid emission factor.
Step 3. Select a method to determine the operating margin (OM)
The calculation of the operating margin emission factor (EFgrid,OM,y) is based on one of the following
methods:a) Simple OM; or
b) Simple adjusted OM; or
c) Dispatch data analysis OM; or
d) Average OM.
The method (a) can be used in the project because low-cost/must-run resources in Viet Nam is 34.77 %
that constitute less than 50% of total grid generation in average of the five most recent years (details see
the table below).
Table 14: Rate of low cost/must-run sources based on generation37
Year 2004 2005 2006 2007 2008
Total
Value for
2004-2008
Hydro Power
(MWh) 17,858,651 16,365,438 19,508,244 22,385,232 25,933,762
102,051,32
7
Total Power
(MWh) 44,974,169 50,330,468 57,160,493 66,348,589 74,689,636
293,503,35
5
Low-
cost/Must-run
Ratio 39.71% 32.52% 34.13% 33.74% 34.72% 34.77%
37Data source from DNA Viet Nam
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The data vintage which is used to calculation the Simple OM emission factor is the Ex-ante option of a 3-
year generation-weighted average (2006, 2007 and 2008) that is the most recent data available at the time
of submission of the CDM-PDD to the DOE for validation, without requirement to monitor andrecalculate the emissions factor during the crediting period.
Step 4. Calculate the OM emission factor according to the selected method
The simple OM emission factor is calculated as the generation-weighted average CO2emissions per unit
net electricity generation (tCO2/MWh) of all generating power plants serving the system, not including
low-cost/must-run power plants units.
There are two Options proposed, including:
Option A: Based on data on the net electricity generation and a CO2 emission factor of each power unit,
or
Option B: Based on the total net electricity generation of all power plants serving the system and the fueltypes and total fuel consumption of the project electricity system.
Because the data for Option A is available, Option A Calculation based on average efficiency and
electricity generation of each plant is used and then the simple OM emission factor is calculated as
follows:
, ,
, , ,
,
grid OMsimple y
m y EL m ym
m ym
EG EFEF
EG
=
Where:
EFgrid,OM,y
= Simple operating margin CO2emission factor in yeary(tCO
2/MWh)
EGm,y
= Net quantity of electricity generated and delivered to the grid by power unit
min yeary(MWh)
EFEL,m,y
= CO2emission factor of power unit min yeary(tCO
2/MWh)
m = All power plants/units serving the grid in yearyexcept low-cost/must-run
power plants/units
y Either the three most recent years for which data is available at the time of
submission of the CDM-PDD to the DOE for validation (ex ante option)
Because the data on fuel consumption and electricity generation of power unit m is available, so the
emission factor (EFEL,m,y) should be determined as Option A1:
, ,
, , , 2, ,
,
EL m y
i m y i y CO i yi
m y
FC NCV EFEF
EG
=
Where:
EFEL,m,y
= CO2emission factor of power unit min yeary(tCO
2/MWh)
FCi,m,y
= Amount of fossil fuel type i consumed by power plant/unit m in year y (mass or
volume unit)
NCVi,y
= Net calorific value (energy content) of fossil fuel type iin yeary (GJ/mass or volume
unit)
EFCO2,i,y
= CO2emission factor of fossil fuel typeiin yeary(tCO
2/GJ)
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EGm,y
= Net electricity generated and delivered to the grid by all power sources serving the
system, not including low-cost/must-run power plants/units,in yeary (MWh)
i = All fossil fuel types combusted in power unit m in yeary
y = The relevant year as per the data vintage chosen in Step 3
Table 15: OM emission factor in 2008
Year Total output (MWh) Total emission (tCO2e) OM 2008 (tCO2e/MWh)
A B (B/A)
2006 37,618,199.00 25,702,918.00
2007 43,921,501.00 28,544,173.00
2008 48,719,874.00 29,963,699.00
Total 130,259,574.00 84,210,790.00 0.6465
SoEFgrid,OMsimple,y
is derived as follows:
EFgrid,OMsimple,y
= 0.6465 tCO2/MWh
Step 5. Calculate the BM emission factor
In terms of vintage of data, one of the following two options can be chosen:
Option 1:For the first crediting period, calculate the build margin emission factor ex antebased on themost recent information available on units already built for sample group m at the time of CDM-PDD
submission to the DOE for validation. For the second crediting period, the build margin emission factor
should be updated based on the most recent information available on units already built at the time of
submission of the request for renewal of the crediting period to the DOE. For the third crediting period,
the build margin emission factor calculated for the second crediting period should be used. This option
does not require monitoring the emission factor during the crediting period, or
Option 2:For the first crediting period, the build margin emission factor shall be updated annually, ex
post, including those units built up to the year of registration of the project activity or, if information up to
the year of registration is not yet available, including those units built up to the latest year for which
information is available. For the second crediting period, the build margin emissions factor shall be
calculated ex ante, as described in Option 1 above. For the third crediting period, the build marginemission factor calculated for the second crediting period should be used..
The most recent information on units already built for sample group mis available, so Option 1 shall be
chosen for the proposed project.
The sample group of power units mused to determine as per the following procedure, consistent with the
data vintage selected above:
(a) Identify the set of five power units, excluding power units registered as CDM project activities,that started to supply electricity to the grid most recently (SET5-units) and determine their annual
electricity generation (AEGSET-5-units, in MWh);
In 2008, the set of five power units that have been built most recently (SET5-units) is indicated in
Annex 3 has annual generation (AEGSET-5-units) of 7,829,812.02 MWh.
(b) Determine the annual electricity generation of the project electricity system, excluding powerunits registered as CDM project activities (AEGtotal, in MWh). Identify the set of power units,
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excluding power units registered as CDM project activities, that started to supply electricity to the
grid most recently and that comprise 20% of AEG total(if 20% falls on part of the generation of a
unit, the generation of that unit is fully included in the calculation) (SET 20%) and determine theirannual electricity generation (AEGSET-20%, in MWh);
The total output of Viet Nam electricity grid (AEGtotal) in 2008 is 74,689,635.97 MWh then 20%
of the total output of Viet Nam electricity grid in 2008 is 14,937,927.19 MWh.
Most recent-built power plants (SET20%) addition in the electricity system that comprise 20% of
the system generation in 2008 is shown in the annex 3 have annual electricity generation
(AEGSET-20%) of 16,514,761.12 MWh.
(c) From SET5-units and SET20% select the set of power units that comprises the larger annualelectricity generation (SETsample).
The comparison carried out by the project participants shows that the set of power capacity
additions in the electricity system that comprise 20% of the system generation (in MWh) that havebeen built most recently has the larger annual generation (14,937,927.19 MWh) than the set of
five power units that have been built most recently in 2008 does (7,829,812.02 MWh), and hence
it is employed and SETsample.
There is no plant in SETsampleis started to supply electricity to the grid more than 10 years ago, then use
SETsample to calculate the build margin.
The BM emissions factor is the generation-weighted average emission factor (tCO2/MWh) of all power
units m during the most recent year y for which power generation data is available. It is calculated as
follows:
, , ,
, ,
,
m y EL m y
m
grid BM y
m y
m
EG EF
EF EG
=
Where:
EFgrid,BM,y
= Build margin CO2emission factor in yeary(tCO
2/MWh)
EGm,y
= Net quantity of electricity generated and delivered to the grid by power unit min yeary
(MWh)
EFEL,m,y
= CO2emission factor of power unit min yeary(tCO
2/MWh)
m = Power units included in the build margin
y = Most recent historical year for which electricity generation data is available
ThenEFgrid,BM,y
is derived as follows:
EFgrid,BM,y
= 0.5064 tCO2/MWh
Step 6. Calculate the combined margin emissions factor
According to the tool, the calculation of the combined margin (CM) emission factor (EFgrid, CM,y) is based
on one of the following methods:
(a) Weighted average CM; or
(b) Simplified CM
As the project is located in Viet Nam a developing country and having more than 10 registered projects at
starting date of validation, the PP chooses the weighted average CM method to calculate CM emissionfactor for the proposed project.
The CM emissions factor is calculated as follows:
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grid,CM,y grid,OM,y OM grid,BM,y BMEF = EF w + EF w
Where:
EFgrid,BM,y = Build margin CO2emission factor in yeary (tCO2/MWh)
EFgrid,OM,y = Operating margin CO2emission factor in yeary (tCO2/MWh)
wOM
= Weighting of OM emissions factor (%)
wBM
= Weighting of BM emissions factor (%)
For the proposed project, the following default values are used: wOM
= 0.5 and wBM
= 0.5 in the first
crediting period, and wOM
= 0.25 and wBM
= 0.75 in the second and third crediting period.
So in the first crediting period, the CM emission factor is derived as follows:
EFgrid,CM,y= 0.5 0.6465 + 0.5 0.5064 = 0.5764 tCO2/MWh
The baseline emission factor EF shall be fixed for the crediting period.
III. Leakage (LEy)
According to ACM0002, version 12.2.0, no leakage emissions are considered. These emission sources are
neglected orLEy = 0.
IV. Emission reductions (ERy)
Emission reductions are calculated as follows:
ERy = BEy - PEy- LEy
Where:
ERy Emission reductions in yeary (tCO2e/yr).
BEy Baseline emissions in yeary (tCO2e/yr)
PEy
LEy
Project emissions in yeary (tCO2/yr).
Leakage emissions in yeary (tCO2/yr).
B.6.2. Data and parameters that are available at validation:
Data / Parameter: CapBL
Data unit: MW
Description: Installed capacity of hydropower plant before the implementation of the project
activity.
Source of data used: This is a green-field project. This value does not exist prior to the
implementation of the project activity
Value applied: 0
Justification of the
choice of data or
description of
measurement methods
and procedures actuallyapplied :
The project activity constructs a new hydropower plant, so CapBLis considered
by zero according to Version 12.2.0 of ACM0002.
Any comment: Use for calculating the power density (PD)
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Data / Parameter: ABL
Data unit: m2
Description: Area of the single or multiple reservoirs measured in the surface of the water,before the implementation of the project activity, when the reservoir is full. For
new reservoirs, this value is zero.
Source of data used: This is a green-field project. This value does not exist prior to the
implementation of the project activity.
Value applied: 0
Justification of the
choice of data or
description of
measurement methods
and procedures actually
applied :
The project activity builds a new reservoir, so ABL is considered by zero
according to Version 12.2.0 of ACM0002.
Any comment: Use for calculating the power density
Data / Parameter: EFgrid,OM,y
Data unit: tCO2/MWh
Description: Operating margin CO2emission factor for grid connected power generation
in year y calculated using the Tool to calculate the emission factor for an
electricity system
Source of data used: Data published by DNA Viet Nam
Value applied: 0.6465
Justification of the
choice of data or
description of
measurement methods
and procedures actually
applied:
As per the Tool to calculate the emission factor for an electricity system
Any comment: For calculation ofEFgrid,CM,y
Data / Parameter: EFgrid,BM,y
Data unit: tCO2/MWh
Description: Build margin CO2 emission factor for grid connected power generation in
year y calculated using the Tool to calculate the emission factor for an
electricity system
Source of data used: Data published by DNA Viet Nam
Value applied: 0.5064
Justification of the
choice of data or
description of
measurement methods
and procedures actually
applied:
As per the Tool to calculate the emission factor for an electricity system
Any comment: For calculation ofEFgrid,CM,y
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Data / Parameter: EFgrid,CM,y
Data unit: tCO2/MWh
Description: Combined margin CO2emission factor for grid connected power generation
in year y calculated using the Tool to calculate the emission factor for an
electricity system
Source of data used: Data published by DNA Viet Nam
Value applied: 0.5764
Justification of the
choice of data or
description of
measurement methods
and procedures actually
applied:
As per the Tool to calculate the emission factor for an electricity system
Any comment: Fixed for crediting period.
B.6.3. Ex-ante calculation of emission reductions:
Project emissions (PEy)
Emission from reservoir:
The proposed project activity involves the construction of a new hydropower plant with capacity (CapPJ)
of 30 MW and two new reservoirs with total surface (APJ) of 22.99 ha, thusABL= 0 andCapBL= 0.
The power density of the project activity is derived as follows:
2
4
6
/5.13001099.22
01030mW
AA
CapCapPD
BLPJ
BLPJ =
=
=
As power density of two reservoirs is greater than 10 W/m2, thus the project emission is zero:PEHP,y= 0
Baseline emissions (BEy)
Baseline emissions are calculated as follows:
,y facility y grid,CM,y
BE = EG EF
Where: EGfacility,y= 120,246 MWh;
EFgrid,CM,y= 0.5764 tCO2/MWh
Therefore:
BEy= 69,309 tCO2e
Leakage (LEy)
According to ACM0002, version 12.2.0, no leakage emissions are considered. These emission sources are
neglected orLEy = 0.
Reduction emissions (ERy)
Emission reductions are calculated as follows:
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ERy= BEy- PEy= 69,309 tCO2e/year
B.6.4. Summary of the ex-ante estimation of emission reductions:
The estimated emission reduction of the project activity is provided in Table below.
Table 16: Emission reduction of the project activity
Year Estimation of
project activity
emissions
(tonnes of CO2 e)
Estimation of
baseline
emissions
(tonnes of CO2e)
Estimation of
leakage
(tonnes of CO2e)
Estimation of
overall emission
reductions
(tonnes of CO2e)
2012 0 69,309 0 69,309
2013 0 69,309 0 69,3092014 0 69,309 0 69,309
2015 0 69,309 0 69,309
2016 0 69,309 0 69,309
2017 0 69,309 0 69,309
2018 0 69,309 0 69,309
Total
(tonnes of CO2e)0 485,163 0 485,163
B.7. Application of the monitoring methodology and description of the monitoring plan:
B.7.1 Data and parameters monitored:
The power densities of the proposed project are larger than 10 W/m2so it is no need to monitor the TEGy
of this proposed project.
Data / Parameter: EGy,export
Data unit: MWh/yrDescription: Electricity supplied by the proposed hydropower plant to the national grid
Source of data to be
used:
Direct measurement at the project connection point
Value of data appliedfor the purpose of
calculating expected
emission reductions in
section B.6.3.
120,246
Description of
measurement methods
and procedures to be
applied:
Two-way power meters will be installed at the grid-connected point to measure
the amount of electricity supplied by the proposed hydropower plant to the grid
in the positive direction. The electricity will be continuously measured by the
power meters and monthly recorded. Double checking by the invoice issued by
project owner to ensure the consistency. Electronic data will be archived within
the crediting period and 2 years after the end of the crediting period.
Monitoring frequency Continuous measurement and at least monthly recording
QA/QC procedures tobe applied:
The uncertainty level of this data is low. The measurement/ monitoringequipment should adopt the colligated automation system complying with
national standard and technology. These equipment and systems should be
calibrated and checked every 2 year.
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Any comment: Use for calculatingEG acility,y, = EGy, export- EGy, import
Data / Parameter: EGy, importData unit: MWh/yrDescription: Electricity imported from the grid to the proposed hydropower plant
Source of data to be
used:Direct measurement at the project site
Value of data applied
for the purpose of
calculating expected
emission reductions in
section B.6.3.
0
Description of
measurement methods
and procedures to be
applied:
The power meters will be installed at the grid-connected point to measure the
amount of electricity supplied by the 110 kV grid to the proposed hydropower
plant. The readings of electricity meter will be monthly recorded. Double
checking by the invoice issued by EVN to ensure the consistency. Hardcopy of
invoice from EVN will be archived within the crediting period and 2 years after
the end of the crediting period.
Monitoring frequency Continuous measurement and at least monthly recording
QA/QC procedures to
be applied:
The uncertainty level of this data is low. The measurement/ monitoring
equipment should adopt the colligated automation system complying with
national standard and technology. These equipment and systems should be
calibrated and checked every 2 year.
Any comment: Use for calculatingEGfacility,y, = EGy, export- EGy, import
Data / Parameter: APJData unit: m
2
Description: Area of the single or multiple reservoirs measured in the surface of the water,
after the implementation of the project activity, when the reservoir is full.
Source of data to be
used:
Project site.
Value of data applied
for the purpose of
calculating expected
emission reductions in
section B.6.3.
Reservoir area: 229,900
Description of
measurement methodsand procedures to be
applied:
Measured by the observation equipment
Monitoring frequency Yearly
QA/QC procedures to
be applied:
The uncertainty level of this data is low.
Any comment: Use for calculating the power density
Data / Parameter: CapPJ
Data unit: W
Description: Installed capacity of the hydro power plant after the implementation of theproject activity.
Source of data to be
used:
Project site
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Value of data applied
for the purpose of
calculating expectedemission reductions in
section B.6.3.
30,000,000
Description of
measurement methods
and procedures to be
applied:
Manufactures nameplate
Monitoring frequency Yearly
QA/QC procedures to
be applied:
Any comment: Use for calculating the power density
Data / Parameter: EGfacility,y
Data unit: MWh/yrDescription: Net electricity supplied by the proposed hydropower plant in year y
Source of data to be
used:Calculating from EGy, importand EGy, export
Value of data applied
for the purpose of
calculating expected
emission reductions in
section B.6
120,246
Description of
measurement methodsand procedures to be
applied:
Calculating by subtracting EGy, importfrom EGy,export. Double checking by the joint
balance sheet issued by EVN and project owner to ensure the consistency. Datawill be archived within the crediting period and 2 years after the end of the
crediting period.
Monitoring frequency Continuous measurement and at least monthly recording
QA/QC procedures to
be applied:
The data will be crosschecked with records for sold electricity.These equipment
and systems should be calibrated and checked every 2 year.
Any comment: For CERs calculation
B.7.2. Description of the monitoring plan:
According to Version 12.2.0 of ACM0002, there is no need to monitor project emissions and leakage
under this project activity.
The baseline emission factor of Vietnam National Grid (EFgrid,CM,y) is fixed ex-ante (detail in Section B.6),
the main data to be monitored isEGfacility,y. EGfacility,ywill be calculated according to this formula below:
EGfacility,y