SEL Validation Report 10MW
SEL Validation Report 10MW
SEL Validation Report 10MW
SEL MANUFACTURING
COMPANY LIMITED
VALIDATION OF THE
10 MW BIOMASS BASED POWER
PLANT IN PUNJAB, INDIA
REPORT NO. INDIA-VAL/295.49/2012
REVISION NO. 01
The validation scope is defined as an independent and objective review of the project design document, the
project’s baseline study, monitoring plan and other relevant documents, and consisted of the following three
phases: i) desk review of the project design and the baseline and monitoring plan; ii) follow-up interviews with
project stakeholders; iii) resolution of outstanding issues and the issuance of the final validation report and
opinion. The overall validation, from Contract Review to Validation Report & Opinion, was conducted using
Bureau Veritas Certification internal procedures.
The first output of the validation process is a list of Clarification and Corrective Actions Requests (CL and
CAR), presented in Appendix A. Taking into account this output, the project proponent revised its project
design document.
In summary, it is Bureau Veritas Certification’s opinion that the project correctly applies the baseline and
monitoring methodology AMS I C, Version 19 and meets the relevant UNFCCC requirements for the CDM and
the relevant host country criteria.
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1 INTRODUCTION .................................................................... 5
1.1 Objective 5
1.2 Scope 5
1.3 Validation team 5
2 METHODOLOGY .................................................................... 6
2.1 Review of Documents 6
2.2 Follow-up Interviews 7
2.3 Resolution of Clarif ication and Corrective Action Requests 7
2.4 Internal Technical Review 8
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6 REFERENCES ..................................................................... 84
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Abbreviations
CAR Corrective Action Request
CDM Clean Development Mechanism
CER Certified Emission Reductions
CL Clarification Request
CO 2 Carbon Dioxide
DOE Designated Operational Entity
GHG Green House Gas(es)
I Interview
IETA International Emissions Trading Association
NGO Non Government Organization
PDD Project Design Document
UNFCCC United Nations Framework Convention for Climate Change
DNA Designated National Authority
M & P Modalities and Procedure
VVM Validation and Verification Manual
MP Monitoring Plan
LCA Levelised Cost Analysis
NCV Net Calorific Value
PO Purchase Order
TFH Thermic Fluid Heater
MW h Mega W att Hour
SLM Straight Line Method
O & M Operation and Maintenance
SELML SEL Manufacturing Company Limited
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1 INTRODUCTION
SEL Manufacturing Company Limited has commissioned Bureau Veritas
Certification to validate its CDM project “10 MW Biomass based Power
plant in Punjab, India” (hereafter called “the project”) at village Shekhon
Mazara of Nawanshahar district in the state of Punjab, India.
1.1 Objective
The validation serves as project design verification and is a requirement
of all projects. The validation is an independent third party assessment of
the project design. In particular, the project's baseline, the monitoring
plan (MP), and the project’s compliance with relevant UNFCCC and host
country criteria are validated in order to confirm that the project design,
as documented, is sound and reasonable, and meet the stated
requirements and identified criteria. Validation is a requirement for all
CDM projects and is seen as necessary to provide assurance to
stakeholders of the quality of the project and its intended generation of
certified emission reductions (CERs).
UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM rules
and modalities and the subsequent decisions by the CDM Executive
Board, as well as the host country criteria.
1.2 Scope
The validation scope is defined as an independent and objective review of
the project design document, the project’s baseline study and monitoring
plan and other relevant documents. The information in these documents is
reviewed against Kyoto Protocol requirements, UNFCCC rules and
associated interpretations.
The validation is not meant to provide any consulting towards the Client.
However, stated requests for clarifications and/or corrective actions may
provide input for improvement of the project design.
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2 METHODOLOGY
The overall validation, from Contract Review to Validation Report &
Opinion, was conducted using Bureau Veritas Certification internal
procedures.
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(a) The project participants have made mistakes that will influence the
ability of the project activity to achieve real, measurable additional
emission reductions;
(b) The CDM requirements have not been met;
(c) There is a risk that emission reductions cannot be monitored or
calculated.
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The validation team may also use the term Clarification Request (CL), if
information is insufficient or not clear enough to determine whether the
applicable CDM requirements have been met.
The Lead Verifier provides a copy of the validation report to the reviewer,
including any necessary validation documentation. The reviewer reviews
the submitted documentation for conformance with the validation scheme.
This will be a comprehensive review of all documentation generated
during the validation process.
The reviewer compiles clarification questions for the Lead Verifier and
Validation Team and discusses these matters with Lead Verifier.
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3 VALIDATION CONCLUSIONS
In the following sections, the conclusions of the validation are stated.
The findings from the desk review of the original project design
documents and the findings from interviews during the follow up visit are
described in the Validation Protocol in Appendix A.
The CARs and CLs were closed based on adequate responses from the
Project Participant which meet the applicable requirements. They have
been reassessed before their formal acceptance and closure.
The validation team further confirms that letter of approval from the host
party (India) is unconditional with respect to party to the Kyoto Protocol,
voluntary participation and project’s contribution to the sustainable
development. The title of the project activity and the project participant
referred in the letter of approval is same as mentioned in the web-hosted
PDD and revised PDD, version 5 (Ref /2/) being submitted for registration.
Hence, the validation team confirms that letter of approval from the host
party is in accordance with paragraphs 49–50 of VVM version 1.2 (Ref
B/1/).
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1
http://maindb.unfccc.int/public/country.pl?country=IN
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In response to above CARs and CLs, the project participant revised the
PDD to correct the erroneous details. Having reviewed the revised PDD,
the validation team confirms that revised PDD, version 5 dated
09/01/2012 (Ref /2/) complies with the latest forms of the guidance
documents for completion of PDD and the information therein in
accordance with the applicable guidance document (Ref B/2/), and thus
complying with Para 57 of VVM, version 1.2.
Based on the CAR/CLs raised by the validation team during the course of
validation, the web hosted PDD (Ref /1/) did undergo changes and the
final PDD version 5 dated 15/06/2012 (Ref /2/) has the following changes
as compared to the web hosted PDD:
1. Information in section A.2 has been updated.
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The validation team noted that project participant has provided the
extraction steam temperature from the turbine as 190ºC in the web-hosted
PDD. Besides, the technical details of the project activity were not clear
from section A.4.2 of the web-hosted PDD. Hence, the validation team
raised a corrective action request CAR-3 on the same.
Based on the site visit carried out on 26 t h and 27 t h Aug. 2010, the
validation team confirms that project description presented in the revised
PDD version 5 represents the actual physical implementation of the
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project activity. The fixed crediting period of ten years has been chosen
by the project participant. The validation team further confirms that the
project activity equipments are new and the technical lifetime of the
project activity, as described by the manufacturer (Ref /9/ and Ref /10/) is
twenty years. Hence, the validation team also confirms that the project
lifetime is more than the applicable crediting period selected by the
project participant.
The steps taken to assess the relevant information contained in the PDD
against each applicability condition, as stated in AMS I C, version 19, are
described below.
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The validation team further confirms that the project participant has
taken latest default IPCC values based on 2006 IPCC Guidelines for
National Greenhouse Gas Inventories. The baseline and the
monitoring methodology have been applied in accordance with the
applicable methodology AMS-I.C. version 19. The project activity is
a Greenfield project and technical lifetime of the project has been
considered by the project participant in accordance with the
technology supplier’s specifications (Ref /9 and 10/). Hence, the
validation team confirms that the project activity complies with the
general guidance with the small-scale methodologies version 17.
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The proposed CDM project activity uses rice husk (loose renewable
biomass) as a fuel in the boiler of the cogeneration project activity.
Thus, the applicability condition is not relevant to the proposed CDM
project activity.
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does not specify any revenue realization from the sale of the power
to the grid or any other entity. Therefore, the validation team
confirms that both thermal and electrical energy are being
consumed by the manufacturing facility of the project participant in
the same premises and there is no risk of double counting of the
emission reductions. Hence, this condition is not applicable.
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The validation team observed during site visit that fossil fuels may be
used in the project activity boiler and hence raised corrective action
request CAR-20 as the web-hosted PDD was only specifying the project
boundary with respect to the renewable biomass fuel. Further the web-
hosted PDD also specify the baseline boundary which has been selected
as a coal based co-generation plant. However, since project participant
had not discussed pre-project scenario clearly in the web-hosted PDD, the
establishment of the baseline boundary in the web-hosted PDD was not
clear. Further, the project participant had not discussed the pre-project
scenario as one of the plausible alternative scenario in the web-hosted
PDD (please refer to section 3.7.2 report “Identification of alternatives” for
details). Therefore, the validation team raised corrective action request
CAR-21 with respect to identified baseline boundary in section B.3 of the
web-hosted PDD.
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Based on the above assessment, the DOE hereby confirms that the
identified boundary including the co-generation plant generating thermal
energy and electricity and industrial facility consuming energy generated
by the co-generation plant are justified for the project activity. The project
participant has established the baseline as coal-based co-generation
plant and hence, the baseline boundary presented in section B.3 of the
revised PDD is also appropriate and well justified with respect to the
green house gases included in the baseline and project scenario.
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http://www.energymanagertraining.com/announcements/issue25/winners_papers_Issue25/11_Suresh
Kolamala.pdf
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3
Th e l a t e s t p u b l i s h e d d a t a b a s e o f t h e C E A ( C e n t r a l E l e c t r i c i t y A u t h o r i t y , G o v e r n m e n t o f I n d i a )
s t a t e s t h a t t h e p o we r g e n e r a t i o n c a p a c i t y u s i n g c o a l i n t h e h o s t c o u n t r y i s 5 6 . 8 % a s o n
3 1 / 0 3 / 2 0 1 1 ( http://www.cea.nic.in/reports/planning/cdm_co2/user_guide_ver7.pdf) m a k i n g i t m o s t p r e f e r r e d
f o s s i l f u e l i n I n d i a . Th e g a s b a s e d p o we r g e n e r a t i o n c a p a c i t y r e m a i n s s e c o n d l a r g e s t a f t e r
c o a l a s 9 . 7 % o f t h e t o t a l g e n e r a t i o n c a p a c i t y a s o n 3 1 / 0 3 / 2 0 1 1 . H o we v e r , g a s p i p e l i n e i s
n o t a v a i l a b i l i t y i n t h e r e g i o n o f t h e p r o j e c t a c t i v i t y . Th u s , v a l i d a t i o n t e a m c o n f i r m s t h a t i n
s e l e c t i o n o f t h e f o s s i l fu e l s , m o s t p l a u s i b l e f ue l s o u r c e i s c o a l a n d t h e s a m e h a s b e e n
c o n s i d e r e d f o r t h e f o s s i l f u e l b a s e d c o - g e n e r a t i o n a s we l l a s t h e r m a l e n e r g y g e n e r a t i o n
alternatives.
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Electricity is produced in
renewable biomass (rice
husk) fired cogeneration
unit without possibility to
export the electricity and
thermal energy to any
external facility
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The project participant has carried out the levelised cost analysis to
determine the baseline scenario from the remaining alternatives under
consideration. The details of the validation of the appropriateness of the
alternative scenarios considered by the project participant have been
provided in section 3.7.2 of the validation report below. The alternatives
for which levelised cost analysis has been carried out and the cost of the
levelised cost of energy generation for the alternative scenarios are as
follows:
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It can be seen from above that the most plausible baseline option
identified after step 3 is Option (b) above viz; Electricity and thermal
energy (steam/heat) are produced in a cogeneration unit using fossil fuel.
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4
http://www.cea.nic.in/reports/planning/cdm_co2/user_guide_ver7.pdf
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energy requirements arising from the terry towel unit I (year 2008 onwards
until the co-generation plant was commissioned), the project participant
was meeting the thermal energy requirements of the project from fossil
fuel fired thermic fluid heater of (1.5 million kcal/hour) and a low
pressure boiler having capacity of 5TPH . However, the electrical
requirements until the commissioning of the project activity were met by
the grid electricity import and the captive DG sets (used as standby in
emergency situations).
The desk review of the web-hosted PDD does not provide information on
the pre-project scenario and the capacity expansion programme of the
project participant which has resulted into additional requirement of the
thermal as well as electrical energy. Hence, the validation team raised
corrective action request CAR-22. In response to CAR-22, the project
participant described the phase-wise commissioning of the manufacturing
facility (spinning and terry towel units) in the revised PDD. The project
participant also included continuation of the current practice as one of the
alternative in section B.4 of the PDD (i.e. electricity requirements met
from the grid and additional low pressure boiler installation for the
increased thermal energy requirements due to commissioning of the terry
towel units). The project participant also provided the commissioning
certificates for the justification of the phase-wise commissioning of the
manufacturing facility (Ref /15, 16, 17/). The phase-wise commissioning of
the manufacturing facility was established by the project participant in the
section A.2 of the revised PDD. In addition, the validation team confirms
that due to the fact that energy requirements of the manufacturing facility
(which was under continuous expansion during the entire project
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The validation team also noticed that in section B.4 of the web-hosted
PDD, the project participant provided the levelised cost of the various
alternatives in INR million/year and not in terms of the cost of energy
production/unit of the output. Besides, the levelised cost was not
computed for the entire technical lifetime of the project activity. Hence,
the validation team raised corrective action request CAR-23. In response
to the CAR-23, the project participant revised the description in section
B.4 of the PDD and also submitted the revised Levelised Cost Analysis
(hereafter referred as LCA) spreadsheets where the levelised cost energy
has been reported in Million INR/Terra Joule of the energy production for
the alternatives considered. Further, the revised LCA spreadsheet
submitted by the project participant considers the entire technical lifetime
of the project which is 20 years (as per the manufacturer’s specification of
the boiler and turbine). Hence, the validation team closed CAR-23.
The project participant also considered petcoke as a fuel under the fossil
fuel based alternatives in web-hosted PDD and eliminated this option (use
of petcoke as a fuel) in the we-hosted PDD itself due to higher energy
cost of petcoke as compared to other fossil fuel based alternative (i.e.
sub-bituminous coal). However, the validation team observed that that
input assumptions considered for the cost and NCV of petcoke and coal
were not specified under section B.4 of the web-hosted PDD. Hence, the
validation team raised corrective action request CAR-4 with respect to the
same. In response to CAR-4, the project participant provided the sources
of input assumptions for the cost and NCV of the coal and petcoke in the
revised PDD being submitted for the registration. The validation team
confirms that the calorific value of the petcoke was considered is based
on the IPCC default value. The calorific value of the coal has been
considered from third party lab test report (Ref /30/) available at the time
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The project activity was web-hosted on UNFCCC web site for global
stakeholders’ comments with version no. 17 of the applied methodology
AMS-I.C. The version 17 of the applied methodology AMS-I.C. (Ref B/5/)
in Para 13 specify that “for calculating the emission factor, reliable local
or national data shall be used. IPCC default values shall be used only
when country or project specific data are not available or demonstrably
difficult to obtain”. The validation team observed that project participant
has considered IPCC 2006 default emission factor of the coal for the
emission reduction calculations. Hence, based on the description
contained in Para 13 of the AMS-I.C. version 17, the validation team
raised clarification request CL-6.
The methodology AMS-I.C. was revised two times during the course of the
validation and version 17 of the methodology expired. The project
participant applied the latest available approved version 19 of the
methodology AMS-I.C. and responded to CL-6 that the methodology
revision has taken place and in the revised methodology, IPCC default
emission factors have been specified as an alternative approach. The
validation team also reviewed the revised the methodology and confirms
that Para 16 of AMS I C, version 19 (which was Para 13 in version 17)
has been revised and the statement “for calculating the emission factor,
reliable local or national data shall be used. IPCC default values shall be
used only when country or project specific data are not available or
demonstrably difficult to obtain” has been deleted. Further, the equations
for the baseline emission calculations specif y using IPCC default emission
factors as an alternative option. Therefore, the validation team accepted
the response of the project participant and closed CL-6.
The validation team further confirms that the project participant has also
included the description on national policies and circumstances relevant
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(d) The project participant has taken into account prevailing national
and/or sectoral policies relevant to the baseline.
Baseline emissions:
In accordance with the requirement of applied methodology AMS I C,
Version 19, project participant has calculated the baseline emissions by
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Project emissions:
The project activity is a renewable biomass (rice husk) based co-
generation project activity. The project participant has provided ex ante
determination in the latest version of the PDD 5 that 100% renewable
biomass will be used in the project activity.
However, it has also been specified in the PDD that in case, during
exigency, the project activity may use the coal. It was also observed by
the validation team during site visit that the project activity boiler is a
multi-fuel fired boiler. Hence, for the purpose of the estimation of project
emissions and emission reduction, the consumption of fossil fuel (coal) is
considered to be zero.
The project participant has provided the provisions to calculate the project
emissions from fossil fuel consumption in accordance with the tool to
calculate project or leakage CO2 emissions from fossil fuel combustion
(Ref B/10/). Similarly, provisions for the computation of project emissions
from the electricity consumption have been considered in accordance with
the tool to calculate baseline, project and/or leakage emissions from
electricity consumption (Ref B/9/). The optional choices provided in the
tools have been detailed by the project participant in section B.6.1 of the
PDD version 5.
Leakage emissions
In accordance with the applied baseline and monitoring methodology
AMS-I.C., version 19, the leakage needs to be considered in accordance
with Paragraph 47 and 48. The validation team has reviewed and
analyzed the applicability of leakage to the project activity as follows:
Conditions in the Validation team’s observation and
methodology for leakage justification
consideration (AMS-I.C. Ver.
19)
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5
BOP; Balance of Plant
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(a) All assumptions and data used by the project participants are listed in
the PDD, including their references and sources are correct;
(b) All documentation used by project participants as the basis for
assumptions and source of data is correctly quoted and interpreted in
the PDD;
(c) All values used in the PDD are considered reasonable in the context
of the proposed CDM project activity;
(d) The baseline methodology has been applied correctly to calculate
project emissions, baseline emissions, leakage emissions and
emission reductions;
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(e) All estimates of the baseline emissions can be replicated using the
data and parameter values provided in the PDD.
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Chronology of events:
Date Events Evidence verified EB 62, Annex 13
requirements
04/01/2008 Feasibility The validation team Para 6 (a)
report of has reviewed the The project feasibility
the project feasibility study report also refers to
activity report of the project the eligibility of the
prepared activity dated project activity under
by the ACE 04/01/2008 (Ref CDM mechanism. This
Engineers /18/) report was available to
and the Board at the time
Consultants of investment decision
thus making an
awareness of CDM to
the project participant
and consideration of
CDM as a decisive
factor for the
implementation of
proposed CDM project
activity.
01/02/2008 Decision to The project Para 6 (a)
approve the participant has Extracts of the board
10 MW provided the resolution clearly
Biomass Certified true copy specif y that decision to
based co- of the extracts of undertake the project
generation the minutes of the activity has been
project board meeting (Ref carried out considering
activity by /13/). The extracts the CDM benefits to
the Board of the board the project activity.
of Directors meeting provided by The validation team
of the the project has cross-checked the
company. participant were evidence from the
cross-verified by the original Board Meeting
validation team register of the project
during the site visit participant at their
with the Original registered office in
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the project
participant.
29/10/2009 Meeting with Email correspondence Para 6 (b)
national from National CDM In accordance with
CDM Authority of India Para 6 (b) this can
Authority of regarding the be considered
India intimation of the another real action
regarding meeting and towards securing
host country considering the the CDM benefits
approval of project activity for parallel to its
the project host country approval implementation by
activity (Ref /23/). the project
participant.
16/02/2010 Appointment The contractual Para 6 (b)
of DOE for agreement signed In accordance with
validation of between the project Para 6 (b) this can
the CDM participant and be considered
project Bureau Veritas for another real action
activity CDM validation towards securing
services (Ref /24/) the CDM benefits
parallel to its
implementation by
the project
participant.
10/01/2010 Commissioni Minutes of meeting Para 6 (b)
ng of the took place between The evidence
project representatives of the towards
activity project participant and implementation of
Siemens (Ref /16/), the project activity.
which includes the
commissioning details
and confirmation of
the successful
commissioning of the
project.
19/06/2010 Host Country Letter of approval Para 6 (b)
Approval for issued by the In accordance with
the project Government of India; Para 6 (b) this can
activity Ministry of be considered
Environment and another real action
Forest (Ref /3/) towards
securing the CDM
benefits parallel to
its implementation
by the project
participant.
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Based on the above time lines and its validation, the validation team
confirms that the project activity meets the requirements of Para 6 (a)
and 6 (b) of the Annex 13 of EB 62. Moreover, assessment of the real
and continuing action validated by the validation team (as reported
above) confirms that in accordance with Para 8 (a) of the Annex 13, EB
62, there is a less than two years gap between the documented
evidences since the start date of the proposed CDM project activity till
the start of the validation. Hence, the validation team concludes that
the project activity meets the requirements of prior consideration of the
CDM. The above-specified assessment of the validation team confirms
that CDM benefits were seriously considered by the project participant
at the time of investment decision and during the implementation phase
of the project activity.
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The project participant provided the response that the project activity has
been envisaged due to the capacity expansion of the manufacturing
facility which leaves the project participant no other choice than to make
an investment to supply the same (or substitute) products or services. In
order to verify the capacity expansion of the manufacturing capacity of the
project participant, the validation team interviewed the plant personnel
during the site visit and also reviewed the commissioning certificates
provided by the project participant for the added capacity of the terry
towel units and the spinning units (Ref /14, 15, and 17/). Moreover, the
project participant provided description on the capacity addition of the
manufacturing facility in the PDD version 3 including the justification for
selection of the levelised cost analysis. Based on the review of the
commissioning certificates of the terry towel and spinning units and the
site visit conducted, the validation team confirms that the electrical and
thermal energy requirements of the manufacturing facility of the project
participant were increased significantly due to the capacity expansion
which compels the project participant to invest in the project activity (as
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considered for the levelised cost analysis) to meet the total electrical and
thermal energy requirements of the manufacturing facility.
Hence, the validation team concluded that the levelised cost analysis
selected by the project participant is the most appropriate and well
justified method of demonstrating the additionality of the proposed CDM
project activity and is also in conformity with Para 19 of the latest
available guidance on investment analysis approved in of CDM Executive
Board Meeting report 62 (Ref B/12/) and Para 109 of VVM, Version 1.2
(Ref B/1/).
The validation team also observed that the levelised cost analysis results
reported in the web-hosted PDD were not computed in the terms of unit
cost of energy generation and hence raised corrective action request
CAR-33 on the same. CAR-33 was closed after the project participant
submitted the revised PDD and revised levelised cost analysis sheet in
terms of unit cost of generation of the energy (Million INR/TJ). In addition,
the validation team also observed that the project participant has
considered the period of assessment for the levelised cost analysis as 10
years which does not cover the complete technical lifetime of the project
activity. Hence, corrective action request CAR-37 was raised with respect
to the same. The project participant resubmitted the levelised cost
analysis spreadsheet considering the entire technical lifetime of the
project activity of twenty years as certified by the technology supplier (Ref
/9 and 10/). Hence, CAR-37 was closed by the validation team.
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for details)
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Regulatory Commission
renewable energy tariff order
published on 15/01/2008 (Ref
/19/), The Gujarat Electricity
Regulatory Commission
renewable energy tariff order
published on 17/08/2007 (Ref
/19/) and Madhya Pradesh
Electricity Regulatory
Commission tariff order dated
07/08/2007 (Ref /19/) refer
the capital cost of the
biomass power project as Rs
40 million/MW , Rs. 35
million/MW and Rs. 42.5
million/MW respectively and
the average of the same work
out as 39.1 Million/MW . The
project participant has
considered the project cost
for the co-generation plant as
Rs. 405 million for 10 MW
(i.e. Rs. 40.5 million/MW )
and subjected the value to
+/- 10% sensitivity.
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validation team.
Price of rice Rs. 2800 Quotations The price of the rice husk
husk /MT provided has been considered by the
by the rice project participant based on
husk the quotation from Rice husk
suppliers Supplier dated 15/12/2007
(Ref /26/) (Ref /26/). The feasibility
study report (Ref /18/) of the
project activity also
corroborates with the price of
rice husk specified in the
quotation dated 15/12/2007.
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6
http://www.indiasolar.com/cal-value.htm
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http://www.productivity.in/knowledgebase/Energy%20Management/c.%20Thermal%20Energy%20systems/4.1%20Fuels%2
0and%20Combustion/4.1.3%20Properties%20of%20Coals.pdf
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5%.
In 2009, Central Electricity
Regulatory Commission
(CERC) published detailed
tariff order (Ref /20/) for the
co-generation plants. The
capital cost of the biomass
based co-generation project
in accordance with the tariff
order of CERC published in
year 2009 in Annexure 4 E
(published on 03-12-2009),
the year on year escalation
on the biomass has been
considered as 5%. Hence,
year on year escalation of 5%
was accepted by the
validation team.
Annual 5.35% W hole sale The PP has conservatively
escalation on price index applied the escalation of
coal for coal 5.35% on the coal cost based
published on the one year data (Jan
by Office 2007 to Dec 2007).
of the
Economic The same can be attributed
Advisor to the fact that the escalation
(Govt. of for the year 2006 stood as
India) (Ref 0.17%, whereas the same for
/31/) year 2005 stood as 0% as
evident from the W holesale
price index for Coal. Hence,
validation team accepted the
annual escalation on coal as
5.35% as a conservative
estimate.
Rate of 7.84% As per As per companies Act
depreciation companies applicable to the project
for building Act activity
applicable (http://taxclubindia.com/simpl
to the e/depreciation%20rates%202
project 009-10.pdf).
activity.
Rate of 7.84% As per As per companies Act
depreciation companies applicable to the project
for plant and Act activity
machinery applicable (http://taxclubindia.com/simpl
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to the e/depreciation%20rates%202
project 009-10.pdf).
activity.
Rate of 7.69% As per As per companies Act
depreciation companies applicable to the project
for spare parts Act activity
applicable (http://taxclubindia.com/simpl
to the e/depreciation%20rates%202
project 009-10.pdf).
activity.
Discount rate 13.00% Reserve The discount rate used for
Bank of
the calculation of levelised
India (RBI)
cost of energy over lifetime
prime of the energy generating
lending equipments has been
rate (Ref
sourced from Reserve Bank
/35/) of India (RBI) prime lending
rate published by RBI on 1 s t
Feb. 2008. The validation
team has accepted the
discount rate and confirms
that it is correct and
appropriate to the type of
project activity as it is
provided by RBI, which as a
Monetary Authority, which
formulates, implements and
monitors the monetary policy
of the host country India. The
RBI specifies the prime
lending rates of the five
major banks of India from
28 t h Dec. 2007 to 18 t h Jan
2008 between the range of
12.75% to 13.25%. Thus, the
average value of 13% applied
by the project participant has
been accepted by the
validation team.
Operation and Rs. 7.78 Feasibility The operation and
maintenance million study maintenance expenses
expenses /year report (Ref considered by the project
(including the /18/) participant as per the
manpower feasibility study report are
cost) Rs. 7.78 Million/ year.
including the manpower cost
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The financial expert in the validation team has verified the calculations of
levelised cost of energy presented by the project participant and observed
them to be in order. The calculation includes the values of depreciation as
per company’s act of host country India. The validation team confirms that
the project participant has applied all the statutory levies as per then valid
applicable rules of the host country.
The financial expert has also verified the arithmetic accuracy of the
calculations of levelised cost of energy and found the same to be correct.
The calculations of levelised cost have been provided in an MS-Excel
transparent spreadsheet. The formulae used in the spreadsheet are
readable. All the cells of the spreadsheet can be accessed and the data in
the cells can be viewed, as the cells are unprotected. The levelised cost
in baseline and project scenario has been computed over an entire
technical lifetime of the project activity, which is in accordance with
applied methodology (Ref B/5/) and General Guidelines for SSC CDM
methodologies (Ref B/7/). The calculations of levelised cost of energy are
thus based on the most appropriate and well justified input values in
accordance with Guidelines on the assessment of investment analysis
(Annex 5, EB-62) (Ref B/12/).
The validation team hereby confirms that the approach adopted in making
assumptions, projections and the computations for levelised cost of
energy in the investment comparison analysis, conforms to the accepted
and standard accounting principles of the host country and is also in line
with the Guidelines on the assessment of Investment analysis (Annex 5 of
EB-62). The financial expert has verified the calculations of levelised cost
of energy in alternatives to the project scenario and project scenario itself
and observed them to be in order and are hence certified by the financial
expert.
The validation team thus concludes that the underlying assumptions in the
investment analysis are appropriate. Accounting principles adopted in the
calculations and the calculations per se are also correct.
The levelised costs of energy are worked out are as per the following
details:
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The validation team hereby confirms that the levelised cost of coal based
co-generation captive plant is the least cost alternative for the project
participant and allowed to implement as per the local regulations of the
host country. On the other hand, the rice husk based captive co-
generation project, which in turn, implemented by the project participant,
is the second most plausible scenario for the project participant. Other
two scenarios are not discussed further as they are more costly to
implement and operate as compared to the rice husk based and coal
based co-generation captive plant.
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Hence, the validation team concludes that it is essential for the project
activity to get the CDM revenue in order to make the project economically
comparable to the least cost alternative available to the project
participant i.e. coal based co-generation project.
The project participant carried out the sensitivity analysis for ±10% range
of the sensitivity. The same is in accordance with the guidance provided
for the sensitivity analysis in Annex 5 of EB-62. The results of the
sensitivity analysis carried tabulated below:
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Rice husk based captive cogeneration 2.6657 2.7971 2.9285 3.0600 3.1914
Alternative Scenario Parameter -Calorific Value of Coal
Coal based captive cogeneration 2.8554 2.7208 2.5996 2.4900 2.3903
Electricity from grid and steam from
3.8003 3.7583 3.7205 3.6863 3.6552
coal based low pressure boiler
Electricity from grid and steam from
3.8251 3.8251 3.8251 3.8251 3.8251
rice husk low pressure boiler
Rice husk based captive cogeneration 2.9285 2.9285 2.9285 2.9285 2.9285
Alternative Scenario Parameter - Calorific Value of Rice Husk
Coal based captive cogeneration 2.5996 2.5996 2.5996 2.5996 2.5996
Electricity from grid and steam from
3.7205 3.7205 3.7205 3.7205 3.7205
coal based low pressure boiler
Electricity from grid and steam from
3.9162 3.8682 3.8251 3.7860 3.7505
rice husk low pressure boiler
Rice husk based captive cogeneration 3.2206 3.0669 2.9285 2.8034 2.6896
Alternative Scenario Parameter - Project Cost (Cogeneration)
Coal based captive cogeneration 2.5801 2.5899 2.5996 2.6094 2.6191
Electricity from grid and steam from
3.7205 3.7205 3.7205 3.7205 3.7205
coal based low pressure boiler
Electricity from grid and steam from
3.8251 3.8251 3.8251 3.8251 3.8251
rice husk low pressure boiler
Rice husk based captive cogeneration 2.9090 2.9188 2.9285 2.9383 2.9480
Alternative Scenario Parameter - Project Cost (Grid + L P boiler)
Coal based captive cogeneration 2.5996 2.5996 2.5996 2.5996 2.5996
Electricity from grid and steam from
3.7126 3.7165 3.7205 3.7244 3.7284
coal based low pressure boiler
Electricity from grid and steam from
3.8172 3.8211 3.8251 3.8290 3.8330
rice husk low pressure boiler
Rice husk based captive cogeneration 2.9285 2.9285 2.9285 2.9285 2.9285
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small-scale CDM project activities. Barrier analysis was not applied for
the demonstration of additionality of proposed CDM project activity.
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Project participant has provided for archiving in electronic and paper form
of all the monitored data. This is stated transparently in section B.7 of the
revised PDD (Ref /2/). Project participant has provided for keeping the
data for 2 years after the end of the last crediting period.
W hile reviewing the web hosted PDD validation team observed that
“source of data” and “description of measurement methods” were not
explained explicitly in the monitoring plan. The validation team raised
corrective action request CAR-12 and CAR-13. The project participant
revised the monitoring plan in response to CAR-12 and 13 and included
additional description on source of data and description of measurement
methods. The validation team reviewed the revised monitoring plan
submitted by the project participant and found the corrections appropriate
and thus, closed CAR-12 and CAR-13.
The validation team also observed that the monitoring plan of the web
hosted PDD was not detailed with respect to the QA/QC procedures,
calibration frequency, data uncertainty and cross checking mechanisms
for the applicable monitoring parameters. The validation team raised
clarification request CL-18 with respect to the same. The project
participant detailed the data uncertainty procedures, data cross checking
mechanism, and calibration frequency of energy meters, transmitters etc.
in the revised PDD. The validation team noted that QA/QC procedures
mentioned above have been sufficiently addressed in accordance with the
applicable monitoring methodology AMS-I.C. version 19. Thus, CL-18 was
closed by the validation team.
The validation team further noted from the review of the web-hosted PDD
that monitoring plan was clear with respect to the monitoring of the
moisture content of the biomass and temperature of the feed water. In
addition, the monitoring plan presented in the web-hosted PDD was silent
on the monitoring of the fossil fuel consumption (during exigencies) in the
project activity. Thus, the validation team raised clarification request CL-
15 with respect to the same. The project participant revised the
monitoring plan and included the procedures for the monitoring of feed
water temperature, moisture content of the biomass, fossil fuel
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Hence, the DOE hereby confirms that the project participant is able to
implement the monitoring plan in accordance with the applied monitoring
methodology and the monitoring plan is feasible within the project design
as it relies on metered data from widely accepted monitoring instruments.
The validation team also confirms that the operating staff of project
participant are experienced in the operation the thermal energy
generating equipments. The validation team therefore is of the opinion
that the project participant is capable of implementing the monitoring plan
in the specific context of the project activity.
It was observed by the validation team that under section E.2 of the web-
hosted PDD, the local stakeholders who have made comments were not
identified. Thus, the validation team raised corrective action request CAR-
14. The validation team closed CAR-14 after the project participant
provided the revised PDD with the identified local stakeholders who have
made the comments. The validation team cross-checked the information
provided in the PDD by means of the interviewing the local stakeholders
during the site visit and there were no negative comments regarding the
project activity from any of the local stakeholders. The stakeholders also
confirmed the process of invitation as described in the PDD. The
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5 VALIDATION OPINION
Bureau Veritas Certification has performed a validation of the “10 MW
Biomass based Power plant in Punjab, India”. The validation was
performed on the basis of UNFCCC criteria and host country criteria and
also on the criteria given to provide for consistent project operations,
monitoring and reporting.
Project participant/s used the latest guidance and tools published by the
CDM Executive Board for demonstration of the additionality. In line with
this tool, the PDD provides analysis of investment barrier to determine
that the project activity itself is not the baseline scenario. Project
participant used Attachment A to Appendix B of simplified modalities and
procedures for small scale CDM project activities for demonstration of the
additionality. The PDD provides investment barrier to demonstrate
additionality. The levelised cost of energy from rice husk (even with
sensitivity on cost of fuel and calorific value of fuel) is higher than the
levelised cost of output energy in the baseline scenario i.e. using fossil
fuel (coal) and hence it is demonstrated that the project is additional.
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6 REFERENCES
Categor y 1 Documents:
Documents provided by Type the name of the company that relate directly
to the GHG components of the project.
/1/ W eb-hosted PDD titled 10 MW biomass based power plant in
Punjab, India, version 01, dated 11/06/2010
/2/ Revised PDD version 5, dated 15/06/2012
/3/ Host Country Approval letter, reference no. 4/19/2009-CCC, issued
by Government of India, Ministry of Environment and Forest, dated
19/06/2010
/4/ Purchase order for the boiler issued by M/s SEL Manufacturing
Company Limited to M/s Cethar Vessels Limited; reference no.
SELML 001AFBC; dated 01/03/2008
/5/ Purchase order for the STG set and auxiliaries issued by M/s SEL
Manufacturing Company Limited to M/s Siemens Limited; reference
no. SELML 002STG; dated 07/03/2008
/6/ Techno-Commercial offer for the supply of the boiler to M/s SEL
Manufacturing Company Limited from M/s Cethar Vessels Limited
dated 08/11/2007
/7/ Techno-Commercial offer for the supply of the Turbo-generator set
to M/s SEL Manufacturing Company Limited from M/s Siemens
Limited dated 11/09/2007
/8/ Annual report of the company SEL Manufacturing Company Limited
for financial year 2010-11 dated 19/05/2011
/9/ Certificate of the technical lifetime of the project activity boiler
from the manufacturer M/s Cethar Vessels Limited; reference no.
CVL/RD/2533/10 dated 29/10/2010
/10/ Certificate of the technical lifetime of the project activity Turbo-
Generator Set from the manufacturer M/s Siemens Limited; dated
02/11/2010
/11/ Undertaking from M/s SEL Manufacturing Company dated
07/09/2011 stating that company will not sell power from it’s 10
MW project activity to any external party and the same would be
exclusively used for the internal power requirements of SEL
manufacturing Company
/12/ Biomass Assessment Report of SEL Manufacturing Company
Limited, A Feasibility Report for SEL Manufacturing Company
Limited prepared by Ace Engineers and Consultants and approved
by the Punjab Energy Development Agency (PEDA) on 26/03/2010.
/13/ The certified true extracts of the resolution passed by the Board of
Directors of SEL Manufacturing Company Limited in the Meetin g
Held on 1 s t Feb. 2008 at their registered office Ludhiana, Punjab,
India
/14/ Growth journey milestones of the M/s SEL Manufacturing Company
Limited available on the official website http://www.selindia.in/growth.html
of the company.
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Company Limited
/30/ Third party lab test report by M/s Lab Equipments Calibration
Centre dated 24/12/2007 for the determination of the calorific
value of the coal contracted by M/s SEL Manufacturing Company
Limited
/31/ W holesale Price Index for the “coal” commodity published by the
Office of the Economic Advisor (Government of India) for Jan.
2007 to Dec. 2007 available at the website http://eaindustry.nic.in/
/32/ Punjab State Electricity Board (state government utility company)
electricity bill dated 12/01/2008 for the month of Dec. 2007
/33/ Punjab State Electricity Board (state government utility company)
electricity bill dated 12/01/2006 for the month of Dec. 2005
/34/ Punjab State Electricity Board (state government utility company)
electricity bill dated 12/01/2007 for the month of Dec. 2006
/35/ W eekly Statistical Supplement published by Reserve Bank of India
dated 01/02/2008 specif ying the prime lending rates of the five
major banks of India from 28 t h Dec. 2007 to 18 t h Jan 2008 between
the range of 12.75% to 13.25%
/36/ Annual Report of the Reserve Bank of India for the financial year
2006-07 published on 30/08/2007
/37/ Rajasthan Electricity Regulatory Commission Tariff order for wind
and biomass projects published on 15/03/2007
/38/ Techno-commercial proposal of 20TPH low pressure boiler from
M/s Cethar Vessels Limited to the project participant dated
10/11/2007 bearing reference no. CVL/RD/RSS/07
/39/ Techno-commercial proposal for the balance of the plant for
20TPH low pressure boiler from M/s Cethar Vessels Limited to the
project participant dated 10/11/2007 bearing reference no.
CVL/RD/2533/07
/40/ Petcoke supply quotation provided to M/s SEL Manufacturing
Company Limited by M/s Ek Onkar Trading Company, dated
13/12/2007; reference no. EOTC-QUT/10/0113
Categor y 2 Documents:
Background documents related to the design and/or methodologies
employed in the design or other reference documents.
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Persons interviewed:
List persons interviewed during the validation or persons that contributed
with other information that are not included in the documents listed above.
/1/ Mr. K.S. Bedi (General Manager, Power Plant) – SEL
Manufacturing Company Limited
/2/ Mr. Joginder Singh, Farmer, Shekhon Mazara
/3/ Mr. Pratik Sharma, Consultant, E&Y India
/4/ Mr. Atin Prakash, Sr. Consultant E&Y India
1. o0o -
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2. o0o -
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Draft Final
CHECKLIST QUESTION Ref. § COMMENTS
Concl Concl
1. Approval COUNTRY A COUNTRY B
(India) (Not applicable)
a. Have all Parties involved approved the project VVM 44 Yes, the project activity Not applicable OK OK
activity? has been approved by
the national CDM
authority of India
(designated national
authority of India)
b. Has the DNA of each Party indicated as being VVM 45 Yes, the NCDMA has Not applicable OK OK
involved in the proposed CDM project activity in provided written letter of
section A.3 of the PDD provided a writTen letter approval (through letter
of approval? (If yes, provide the reference of the reference no 4/19/2009-
letter of approval, any supporting documentation, CCC; dated 19th June
and specify if the letter was received from the 2010). The letter has
project participatn or directly from the DNA) been provided to DOE.
c. Does the letter of approval from DNA of each VVM 45 -
Party involved:
i. confirm that the Party is a Party of the Kyoto VVM 45.a Yes, the NCDMA has Not applicable OK OK
Protocol? provided written letter of
approval (through letter
reference no 4/19/2009-
CCC; dated 19th June
2010). The National
CDM Authority of India
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i. If yes, are the estimates provided in the PDD for VVM 90 Refer to the section (7) of this protocol for details on OK OK
these data and parameters reasonable? the data and parameters to be monitored after project
implementation.
6. Additionality of a project activity
a. Does the PDD describe how a proposed CDM VVM 93 Yes, as per Attachment A to Appendix B, the project OK OK
projet activity is additional? participant has demonstrated the additionality of the
project.
b. Does the CDM-PDD state the latest version of VVM 94 Any additionality tool has not been referred in the web OK OK
the additionality tool being used? hosted PDD. The project activity is a small scale
project and methodology AMS I C, Version 17 also
does not refer to any additionality tool except
attachment A of appendix B.
c. Were the following steps of the tool to assess EB Ann
additionality used: 39 10
i. Identification of alternatives to the project EB Ann The alternatives are identified only in baseline OK OK
activity? 39 10 development and not applicable for additionality, as it
does not use the tool to assess additionality.
ii. Investment analysis to determine that the EB Ann Yes, the project participant has demonstrated OK OK
proposed project activity is either: 1) not the 39 10 investment barrier based on Attachment A to
most economically or financially attractive, or 2) Appendix B of simplified modalities and procedures.
not economically or financially feasible?
iii. Barriers analysis? EB Ann Not applicable for additionality, as project activity does OK OK
39 10 not use the tool to assess additionality.
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CAR-7 Table 1 In section B.4 of the revised PDD, The project participant has specified
In section B.4, the project participant has provided the NCV and cost/price of Coal and the data sources of NCV and cost of
NCV and cost of pet coke and coal. However, the (3.n.iii)
Pet Coke has been taken from the the pet coke and coal. Thus, CAR-7
data sources have not been specified. following sources: has been closed.
• Price of Coal – 3.575 INR/kg
(Quotation from Coal
Supplier dated 21 December
2007)
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CAR-33 Table 1 The project proponent has now Section B.4 and B.5 of the PDD has
The project participant has carried out levelised carried out the Levelized Cost been revised by the project
cost analysis. The PP has compared the cost of (6.l.v),
Analysis of the energy production, participant. Levelised cost of energy
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CAR-37 Table 1 The period of assessment taken for The period of assessment has been
The period of assessment taken for levelized cost (6.c.d), levelized cost analysis is now taken by the project participant as
analysis is only 10 years. Project participant to take (6.c.g) revised to 20 years (technical 20 years which is in accordance
the entire technical lifetime of the project activity as lifetime of the project activity). The with the general guidance for
a period of assessment or provide justification why revised levelized cost analysis investment analysis. Hence CAR-37
10 year assessment period will not lead to spreadsheet is being provided as has been closed by the validation
under/overestimation of the computation results. Annexure 7. team.
CAR-38 Table 1 The sensitivity analysis has been The project participant has revised
The sensitivity analysis has been carried out by the carried out for the following the description on the sensitivity
project participant on parameters price of baseline (6.c.ll)
parameters of the project activity: analysis in section B.5 of the PDD.
and project activity fuel, calorific value of basline The project participant has carried
fuel and project activity fuel. However, project out the sensitivity analysis for the
participant has not demonstrated clearly as how • Cost of Coal. parameters which contribute more
variables selected constitue more than 20% of the than 20% to the project cost and
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CAR-39 Table 1 The version 17 of the applied In accordance with the applied
The monitoring plan descriptions in case of co- methodology (AMS – I C) has methodology AMS-I.C. version 19,
firing by the project activity has not been included (7.r)
expired and the PDD has been the project participant has specified
the web hosted PDD in accordance with Para 33 of updated with the current version 19 ex ante in the revised PDD that
the applied methodology AMS I C, Version 17. of the methodology (AMS – I C). PP project activity will utilise 100% rice
would like to submit that the husk. Since the project activity is
paragraph 33 & 34 of version 17 of based in an area where rice husk is
AMS – I C has now been deleted in sufficiently available (also evident
version 19 of the methodology from the govt. approved biomass
(AMS – I C). assessment report). However, in
case of exigency, the project
participant has included the
The PP would also like to clarify that provisions for the monitoring of the
the following parameters required fossil fuel consumption and
as per paragraph 44 of the applied calculation of project emissions
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CL-7 Table 1 PP would like to clarify that the The project participant has provided
Though the steam was produced using fossil fuels equipment being used before the the details of the phase wise
and electricity was imported from PSEB grid in pre (5.d.b.xiv),
implementation of the project commissioning of the manufacturing
project scenario, the baseline emissions are not (5.d.b.xvi)
activity could not ‘provide output or facility of the project participant.
calculated in accordance with Paragraph 18 of the services comparable with the Hence, the electrical and thermal
applied methodology AMS IC, Version 17. proposed CDM project activity’. It requirements in the pre-project and
can be seen that the combined project scenario are not comparable
thermal output of the boiler (5 TPH) as the thermal and electrical
and thermopac (15 lac K Cal/hr) requirements in the project scenario
was only 138.37 TJ/annum have been significantly increased.
whereas; the thermal output Besides, there was no simultaneous
required post expansion was 349.23 heat and power generation in the
TJ/annum. pre-project scenario as compared to
the project activity. Hence, the
validation team accepted the
Thus, the pre project scenario with response of the project participant.
an addition of a fossil fuel fired As the revised baseline emissions
boiler has now been described as are in accordance with the baseline
one of the alternatives to the project identified by the project participant
activity in section B.4 of the revised based on the most economical
PDD. The same alternative has also scenario of levelized cost analysis,
been eliminated from further CL-7 has been closed.
consideration as the single
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Now, the monitoring plan in the (iii) The project participant has also
revised PDD does include explicit provided details of the recording
QA/QC procedures, calibration frequency, measurement accuracy,
procedures, cross checking etc. for net electricity supplied to the
mechanism, data uncertainty, data manufacturing plant
archiving etc.
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