PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

CDM – Executive Board page 1

CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006

CONTENTS

A. General description of project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

D. Environmental impacts

E. Stakeholders’ comments

Annexes

Annex 1: Contact information on participants in the project activity

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring plan

Annex 5: Explanation of the coefficient of effective electricity

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SECTION A. General description of project activity

A.1 Title of the project activity:

Project Title: Tianlin Dongba Hydropower Station PDD Version: 2 Date: 07/11/2009

Revision History of the PDD Version Date Description and reason of revision 01 09/05/2008 Complete version of the PDD, prepared for validation. 02 26/11/2008 Revised PDD according to the requests by DOE.

A.2. Description of the project activity:

Summary: Guangxi Baise Tianlin Dongba Hydropower Station (hereafter referred to as the “Project”) developed by Guangxi Dongba Hydropower Co., Ltd. (hereafter referred to as the “Project Developer”) is a large-scale hydropower project with an accumulation reservoir in Guangxi Province, in the People’s Republic of (hereafter referred to as the “Host Country”). Total installed capacity of the Project will be 72 MW, consisting of three 24 MW turbines, with a predicted electricity supply to the grid of 275,940 MWh per annum.

The Project is located on the Xiyang River, which is approximately 500 meters upstream from the convergence of the Xiyang River and the Nala River, in Nabi Township, , Baise City, Guangxi Province. The main purpose of the project is to generate electricity and the electricity generated will be delivered to the Baise grid, and finally to the China Southern Power Grid (SCPG), displacing the electricity generation from fossil-fuel based power plants connected to the grid, thereby reducing the greenhouse gas (GHG) emissions.

Contribution to sustainable development: The project activity contributes significantly to the region’s sustainable development in the following ways: • Achieves GHG emission reductions by avoiding CO2 emission from the business-as-usual scenario electricity generation of those fossil fuel-fired power plants connected to China Southern Power Grid which dominated by fossil fuel fired electricity. • Increases employment opportunities in the area where the Project is located (631 people will be permanently employed for the Project operation and the construction of the Projects secures jobs in the construction sector) and thereby contributes to poverty alleviation. • Enhances the local investment environment and therefore improves the local economy. • Diversifies the sources of electricity generation, important for meeting growing energy demands and the transition away from diesel and coal-supplied electricity generation. • Makes greater use of renewable hydroelectric resources

The project activity promotes the growth of sustainable and renewable capacity in China and makes it less

1 Preliminary Design Report, p152 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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A.3. Project participants:

The project participants are listed in the following table:

Table A.1 Project participants

Kindly indicate if the Party Name of Party involved (*) Private and/or public entity(ies) involved wishes to be ((host) indicates a host project participants (*) (as considered as Party) applicable) project participant（Yes/No） Guangxi Dongba Hydropower Co., China (host） No Ltd. (project owner, private entity) South Pole Carbon Asset Switzerland Management Ltd. No (CER buyer, private entity)

A.4. Technical description of the project activity:

A.4.1. Location of the project activity:

A.4.1.1. Host Party(ies):

The People’s Republic of China

A.4.1.2. Region/State/Province etc.:

Guangxi Zhuang Autonomous Region

A.4.1.3. City/Town/Community etc:

Tianlin County, Baise City

A.4.1.4. Detail of physical location, including information allowing the unique identification of this project activity (maximum one page):

The proposed project activity is located on the Xiyang River, which is approximately 500 meters upstream of the convergence of the Xiyang River and the Nala River, in Nabi Township of Tianlin County of Baise City of Guangxi Zhuang Autonomous Region of the People’s Republic of China. The exact geographic location of the project site is 105°39’03’’E, 24°05’54’’N. It is 126 km away from the Tianlin county seat. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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The location of the station is shown in Fig.A.1.

Project Location

Figure A1. Geographical location of Tianlin County Dongba Hydropower Station

A.4.2. Category(ies) of project activity:

The project activity falls under the category described under CDM as “Sectoral Scope Number 1: Energy Industries – Renewable Sources”.

A.4.3. Technology to be employed by the project activity:

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The Project is located on the Xiyang River. It is a hydropower project with an accumulation reservoir. It mainly consists of water retaining dam, water diversion system, spillway tunnel, powerhouse, voltage booster station and other auxiliary facilities.

The water-retaining structure is a concrete gravity dam with a maximum dam height of 105.30 m, a maximum dam base width of 322.06 m, and a dam crest length of 464.92m. Water intake inlet is located on the right side of the river bank with 209.3 m water diversion tunnel. The water then goes to 254.7 m steel penstock and finally to the water turbine for electricity generation. The powerhouse is located near to the river bank and the booster station is located at right river bank. The main powerhouse is sized 56.9m!27.m!34.5m and the booster station occupies an area of 53m!46m.

A reservoir will be created in front of the dam after the project’s completion. The submerged area will include farmland, orchard and shrubs etc, with a total flooded area of 8.62995 million m2. The surface area of the reservoir at the normal pool level is 10.2269 million m2, based on which, the calculating result of the project activity’s power density is 7 W/m2.

Three Turbines and three generation sets are employed in the project. The single-unit installed capacity is 24MW, and the total installed capacity is 72MW. The project activity is expected to operate 4,180 hours per year. The electricity generated by the power generators in the proposed project station will be transferred though the 110 kV transmission lines to Baise grid, and finally to the China Southern Power Grid (SCPG). The power connection diagram is provided in Section B.7.2.

The specific technical parameters of the turbines and generators are listed in the following table:

Table A.2 Technical parameters of the turbine/generator units

The Main Technical Parameters Value Units 3 Designation HLA630-LJ-220 Rated Water Head 74m Turbines Rated output 24MW Rated rotate speed 300r/min Rated flow 35.91m3/s Type Francis turbine Units 3 Designation SF24-20/4250 Rated Power 24MW Generators Rated Voltage 10.5kV Rated rotate speed 300r/min Rated factor 0.85

Experienced experts monitor and coordinate project operations. Project operators will be trained by the turbine manufacturer on the proper use and maintenance of the turbines, as well as on the operation and management of the power plant by the Grid Company. Furthermore, the project owner will implement a series of internal safety measures to ensure operation in a safe and environmentally sound manner.

In terms of CDM monitoring, a monitoring officer will receive trainings on monitoring methodologies, PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

CDM – Executive Board page 7 procedures and archiving. Then, the monitoring officer will train the project staff in charge for CDM monitoring. A diagram of electricity export connection and metering is shown in B.7.2.

There is no direct technology transfer in the project activity since all the utilized technologies are from domestic manufactures.

A.4.4 Estimated amount of emission reductions over the chosen crediting period:

7 years crediting period is adopted. The estimation of the emission reductions in the first seven-year crediting period is presented in Table A.3. Estimated Emission Reductions throughout the first crediting period are 1,507,149 tCO2e. Table A.3 Estimation of emission reductions in first crediting period Annual estimation of emission Years reductions in tones of CO2e Year 1* 215,307 Year 2 215,307 Year 3 215,307 Year 4 215,307 Year 5 215,307 Year 6 215,307 Year 7 215,307 Total estimated reductions (tons of CO2e) 1,507,149 Total number of crediting years 7 Annual average over the crediting period of estimated reductions 215,307 (tons of CO2e) *Note: Year 1 starts with the crediting period of the project activity, which is defined under Section C.2.1.1 of the PDD.

A.4.5. Public funding of the project activity:

There is no public funding from Annex I countries involved in the project activity.

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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:

Baseline and monitoring methodology: Approved consolidated baseline methodology ACM0002 “Consolidated baseline methodology for grid- connected electricity generation from renewable sources”, Version 10

The methodology ACM0002/Version 10 is available at: http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html Grid Emission Factor Tool The “Tool to calculate the emission factor for an electricity system version 2.0 ” is used to calculate the baseline emission factor of China Southern Power Grid (hereafter referred to as “SCPG”).

Additionality Tool The “Tool for the Demonstration and Assessment of Additionality”, Version 05.2 is used to demonstrate the additionality of the project activity.

Information of the tools is available at: http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html

B.2 Justification of the choice of the methodology and why it is applicable to the project activity:

The project activity meets all conditions of the approved consolidated methodology ACM0002 as the following reasons:

1 The project activity results in new reservoirs and the power density is greater than 4 W/m2 as per definitions given in the Project Emissions section of the methodology, 2 The proposed project activity does not involve the switch from fossil fuels to renewable fuel; 3 The geographic and system boundaries for the relevant electricity grid can be clearly identified (SCPG) and the information on characteristics of the grid is available. Calculation of power density: As per ACM0002 Version 10, the power density of the project activity is calculated as follows:

Cap " Cap PD = PJ BL APJ " ABL

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 reservoir measured in the surface of the water, after the implementation of the project activity, when the reservoir is full (m2). PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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ABL =Area of the reservoir 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.

The installed capacity is 72 MW for proposed project and the area of the reservoir in the surface of the water after the implementation of the project activity when the reservoir is full is 10.2269 million m2. For new reservoir, area of the reservoir in the surface of the water before the implementation of the project activity when the reservoir is full is zero. Thus the power density therefore is 7.0 W/m2, which is higher than 4 W/m2.

B.3. Description of the sources and gases included in the project boundary

The spatial extent of the project boundary includes the project site and all power plants connected physically to SCPG. The system boundary of the proposed project is defined as SCPG due to following reasons:

1. In a country like China, with a layered dispatch system, grid boundary shall be defined based on regional grids. 2. The project power plant is connected to the Guangxi Grid via local grid network, and thus finally to SCPG. SCPG is a large regional grid, which consists four sub-grids: Guangdong, Guangxi, and . There are substantial inter-grid power exchanges among the sub-grids of SCPG mentioned above. 3. SCPG can be clearly identified as a regional grid and the information on the characteristics of this grid is publicly available. 4. There is a guidance from the Chinese CDM DNA (National Climate Change Coordination Office) on project boundaries identifying the applicable grid as the project boundary

According to the applied methodology, emissions related to the construction of power plants are neither considered in the baseline scenario nor in the project scenario. The emissions related to production, transportation and distribution of fuels used in the baseline scenario power plants are excluded from leakage emission calculations. Following sources and gases have been considered for calculation of baseline and project activity emissions:

Table B.1 Description of How the Sources and Gases Included in the Project Boundary Source GHG Included? Justification / Explanation

CO2 emissions CO Yes Main emission source from electricity 2 generation in Baseline fossil fuel fired power plants connected to CH4 No Minor emission source SCPG that are displaced due to the project N2O No Minor emission source PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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activity.

For hydro CO2 No Minor emission source Project power plants, The power density of the project is lower than 10 2 Activity emissions of CH4 Yes W/m , thus emissions of CH4 from the reservoir CH4 from the should be considered. reservoir. N2O No Minor emission source

The flow diagram below provides the physical delineating the project activity.

Project Boundary

Dongba power Emissions of CH4 from

Hydro plant the reservoir., PEy (ton)

Electricity supplied to the Grid by the project activity, EGy (MWh )

CO2 emissions from new and existing power Grid plants connected to the grid, as reflected in the combined margin

Figure B.1 Flow diagram of the project boundary

B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario:

As the project activity is the installation of a new grid-connected power plant, the baseline scenario for this new hydro power station 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 (CM) calculations described in the “Tool to calculate the emission factor for an electricity system”.

The baseline boundary of the proposed project is China Southern Power Grid, so the boundary when calculating the baseline Operating Margin emission factor and the Build Margin emission factor is set within China Southern Power Grid. In all, the GHG emission reductions of the proposed project are based on the emission factor and the electricity supplied to the power grid. The parameters to determine the baseline emissions are shown in the table below.

Table B.2 Key information and parameters used to determine the baseline emissions Parameter Value/Unit Source PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Operating Margin Emission 1.06080 tCO2/MWh Calculated from the Factor China Energy Statistical Yearbook 2005-2007 and the China Electric Power Yearbook 2005-2007 Build Margin Emission Factor 0.68155 tCO2/MWh Calculated from the China Energy Statistical Yearbook 2005-2007 and the China Electric Power Yearbook 2005-2007 Combined Margin Emission 0.87118 tCO2/MWh Calculated from the Factor China Energy Statistical Yearbook 2005-2007 and the China Electric Power Yearbook 2005-2007

In the absence of the project activity, electricity would continue to be generated by the mix of power plants connected to the SCPG.

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):

Step 1: Identification of Alternatives to the Project Activity Consistent with Current Laws and Regulations Sub-Step 1a. Define alternatives to the project activity This methodological step requires a number of sub-steps, the first one being the identification of realistic and credible alternatives to the project activity. There are only a few alternatives that are realistic and credible in the context of SCPG:

1. The proposed hydropower activity not undertaken as a CDM project activity; 2. New thermal fossil fuel fired power plant with equivalent annual power generation; 3. Other new renewable energy power plants with equivalent annual power generation; 4. The equivalent amount of electricity is supplied by SCPG.

Sub-Step 1b. Consistency with mandatory laws and regulations

Scenario 2: New thermal fossil fuel fired power plant with equivalent annual power generation There is a large difference between thermal power and hydropower in terms of annual operating hours and the stability of their operations. However, an alternative fossil fuel power plant that can provide the equivalent amount of electricity would have an annual utilization rate of 5,988 hours2, which were the average operating hours of thermal power plants in China in 2004. Thus, a comparable thermal power plant would be one with an installed capacity of less than 72 MW. However, according to relevant regulations in China, since 1997, the construction of fossil-fuel-fired thermal power plants with a single- unit installed capacity of less than 100MW (incl. enterprise-based captive power plants) has been strictly controlled by the authority. And since 2002, it has again been stipulated that the rule-breaking and wilful approval or construction of coal-fired thermal power plants in any region and by any entity is forbidden,

[2] China Electric Power Yearbook 2005. p.18 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

CDM – Executive Board page 12 and the thermal power plants of less than 135 MW are especially prohibited for construction.3 Therefore, this scenario does not comply with relevant Chinese laws and regulations and cannot be considered a feasible alternative.

Scenario 3: Other new renewable energy power plants with equivalent annual power generation In China, currently there are only high temperature geothermal plants for power generation in Tibet Autonomous Region and the cost of geothermal power plants is very high and the technology is not mature.4 Baise City belongs to inland China and is far away from the sea; therefore there are no wave and tidal sources to fuel a wave and tidal plant. No biomass-based power plant with a similar scale to the project has previously been built in the region. The solar power generation technology, infrastructure and equipment is still not employed in a large scale in China, therefore solar power is also not feasible.5 The region where the proposed project is located is poor in terms of wind resources with very low wind energy potential.6 Thus there are no favorable conditions for other renewable sources power plant construction and the economic return of other renewable power plants of similar size should are of very little attractiveness (without CDM). The third scenario is therefore not considered as the possible baseline scenario.

For alternative 1, there are no laws compelling the project developer to develop hydroelectric plants. Alternative 2 is the continuation of the current practice, thus alternative 1 and 2 are the possible scenarios.

Step 2 Investment Analysis Sub-step 2a. Determine appropriate analysis method According to the “Tool for the demonstration and assessment of additionality (version 05.2)”, three options can be applied to conduct the investment analysis. These are the simple cost analysis (Option I), the investment comparison analysis (Option II) and the benchmark analysis (Option III).

Since this project will generate financial/economic benefits other than CDM related income, through the sale of generated electricity, Option I (Simple Cost Analysis) is not applicable.

According to the Additionality Tool, if the alternative to the CDM project activity does not include investments of comparable scale to the project, then Option III must be used.

Given that the project developer does not have alternative and comparable investment choices, benchmark analysis (Option III) is more appropriate than investment comparison analysis (Option II) for assessing the financial attractiveness of the project activity.

Sub-step 2b. Option III. Apply benchmark analysis The likelihood of the development of this Project, as opposed to the continuation of import of grid electricity from the current electricity generation mix (i.e. the baseline), will be determined by comparing

3 Notice on Strictly Prohibiting the Rule-breaking Installation of Fuel-fired Generators with a Capacity of 135MW or below issued by the State Council Office, Guo Ban Fa Ming Dian [2002] No. 6. [4] Introduction to the Renewable Sources Power Generation, Hehai University, Huayong Lu, P3 http://eei.sjtu.edu.cn/news/CUS-EPSA/2006_10_12/pdf/01/A086.pdf [5] Introduction of the Renewable Sources Power Generation, Hehai University, Huayong Lu, P2 http://eei.sjtu.edu.cn/news/CUS-EPSA/2006_10_12/pdf/01/A086.pdf [6] http://www.newenergy.org.cn/html/2006-2/2006217_7650.html PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

CDM – Executive Board page 13 the Project IRR (without CDM financing) with benchmark rates applicable to a local investor, i.e. those provided by national authorities, local banks, or investment bonds in the Host Country.

Sub-step 2c. Calculation and comparison of financial indicators (only applicable to options II and III): According to several codes and rules published by the Chinese government and the State Power Corporation, the Project IRR after tax of large-scale hydro power projects in P. R. China should be higher than 8%7. Thus an 8% benchmark for the IRR of this Project is applicable and used to assess the Project. This benchmark is widely used for power project investments in P. R. China and serves as the sectoral benchmark rate on total investment for hydro projects.

Table B.3 below shows the financial analysis for the Project activity without CDM financing. As shown, the Project IRR without CDM 4.67% was lower than the 8% benchmark rate applicable to the Project. This therefore indicates that in comparison to other alternative investments, the project was not financially attractive in the absence of CDM financing.

Table B.3 Summary of project’s financial analysis without CDM financing IRR without 4.67% CDM

The key financial parameters for calculation of the project’s internal rate of return are provided in Table B.4:

Table B.4 Basic parameters for calculation of the Project’s IRR

Parameter Unit Value Source Installed capacity MW 72 PDR Net Generation of MWh/yr PDR electricity 275,940 Total investment 10000 RMB 76887 PDR

7 The three documents below mention a benchmark value relevant to the proposed Project. An 8% benchmark for the Project IRR is chosen in order to be conservative (see below for details on the value mentioned in each document). Interim Rules on financial assessment of hydropower projects (水电建设项目财务评价暂行规定,1994) substitute of financial assessment part of No. 3, published by The Ministry of Power of P.R.China and The Ministry of Water Resources of P.R.China - General Water Resources and Hydro Power Planning and Design Institute (电力部&水利部 水利水电规划设计总院), indicates that the benchmark (Project IRR after tax) for hydropower projects is 12%. Economic evaluation Implementation code for hydropower projects (水电建设项目经济评价实施细则 DL 5021- 93), published by The Ministry of Water Resources of the P.R.China - General Water Resources and Hydro Power Planning and Design Institute, uses a 10% benchmark for the Project IRR after tax. Interim Rules on Economic Assessment of Electrical Engineering Retrofit Projects (电力工程技术改造项目经济评 价暂行办法,国电发[2002]623号), published by The operation department of power generation and power transmission of the State Power Corporation of China (国家电力公司发输电运营部), specifies in section 1.11 that the benchmark (Project IRR after tax) for the power industry (not only for retrofit projects) is 8%. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Expected electricity Reply of Baise Grid tariff before 210 RMB/kwh during wet season, Company to the Request for 8 RMB/Mwh investment decision 310 RMB/kwh during dry season Dongba Hydro Tariff dated on 3rd June, 2004 Approved Electricity Tariff approval by Guangxi

tariff (VAT included) RMB/MWh 290 Provincial Price Bureau 9 dated on August 21, 2007 Equity/debt ratio - 20/80 PDR Loan rate % 5.76 PDR City maintenance & % PDR construction tax rate 3 Surtax for education % PDR expenses 5 VAT rate % 17 PDR Income tax 0% for the first two years then % PDR 7.5% until 2010; 33% from 2011. Depreciation rate % 3.1 PDR Depreciation period Yr 30 PDR Scrap value 10000 RMB 4375 PDR Project lifetime Yr 30 PDR Operation and 10000 1824 PDR maintenance cost RMB/yr

8 Before final decision was made, to assess if the project was financial attractive, the PO wrote to Baise Grid Company to inquire about Dongba hydro tariff. According to Reply of Baise Grid Company to the Request for Dongba Hydro Tariff dated on 3rd June, 2004, the tariff was 210 RMB/MWh during wet season, 310 RMB/MWh during dry season. With such tariff, project owner found the IRR of the project was not financially attractive and decided to seek carbon financing from CDM to go ahead. In accordance with the “Guidance on the Assessment of Investment Analysis” (Version 02, EB 41, Annex 45), all input values were known before the investment decision and can be considered realistic and appropriate values to be used in the financial calculation of the proposed project activity. Thus this tariff can be adopted for financial analysis. However, to be conservative, the approved actual tariff dated on Aug 21, 2007, which is higher than pre-decision tariff, is used and IRR of the project is 4.67%.

9 A mistake was made in the PDD for Global Stakeholder Consultation as to the calculation of the annual average tariff. According to the tariff approval by Guangxi Provincial Price Bureau dated on August 21, 2007, the tariff was 260 RMB/MWh during wet season, 320 RMB/MWh during dry season. Considering much more electricity was generated in wet season than in dry season, to calculate annual average tariff, a formula of “wet season tariff *70%+dry season tariff*30%” was adopted from advice of design institute and average tariff should be 278 RMB/MWh. However, an input mistake was made by the PDD writing consultant and the average tariff was calculated as “ dry season tariff *70%+wet season tariff*30%” actually, which gave 302 RMB/MWh as shown in the PDD for Global Stakeholder Consultation. Now the mistake has been corrected and to be conservative, the mean value of wet season tariff and dry season tariff is taken for financial analysis, which is 290 RMB/MWh. The tariff is VAT included according to the approval.

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Sub-step 2d: Sensitivity analysis

A sensitivity analysis was conducted by altering the following parameters: ! Electricity Tariff ! Investment Costs ! Operational Costs ! Operating Hours

Table B.5 summarizes the results of the sensitivity analysis, showing the variation of each parameter needed to reach the 8% benchmark. Table B.5 Results of the sensitivity analysis

Variation of the parameter needed to reach the 8% benchmark Operating Costs -150.5% Investment Costs -30.2% Electricity Tariff 39.64% Annual Operating Hours 52.80%

These variations do not reflect a realistic range of assumptions for the input parameters of the financial analysis.

- Operating costs: The results of the sensitivity analysis mean that even if the project incurred zero operating costs, which is unrealistic, the IRR of the project would remain below 8%.

- Investment costs: 30.2% of decrease in investment costs is very unlikely to happen, as it is much more likely that hydropower projects will experience cost increases rather than cost decreases during construction. This can be explained by the continuous increase in construction and installation costs of hydropower stations between 2004 to 200710. This shows that a 30.2 % decrease in investment costs is extremely unrealistic and that the IRR is not likely to reach the 8% benchmark.

- Electricity tariff: In China, the electricity tariff is strictly regulated by the central government. The electricity tariff will not be significantly changed without the permission of the central government. In order to ensure the stability of prices across the whole country (i.e. minimize inflation), the central government strictly controls basic prices such as electricity tariffs and commodity prices. For example, in 2002, the government issued the State Council Notification on the Power System Reform – GuoFa [2002} No.5 by which power plants are encouraged to lower the cost of electricity generation and feed-in tariffs. In May 2005, the National Development and Reform Commission, which regulates power production, also issued “Provisional Measures for the Administration of the Electricity On-Grid Tariffs”– NDRC [2005] NO.514, which aims at regulating the determination of the electricity tariff offered to power producers in order to stabilise tariffs and increase competitiveness in the electricity market.

Also, 290 RMB/MWh used in financial analysis is already higher than the actual tariff according to the tariff approval. Since more than half of the total electricity is produced in wet season, the

10 http://www.hydrocost.org.cn/price/priceIndex.jsp PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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actual annual average tariff should be lower than the arithmetic average value of 260 RMB/MWh and 320 RMB/MWh, which is adopted for IRR calculation. As a result, the financial analysis provided is already deemed to be conservative, and an additional increase of 39.64% is unlikely to occur.

- Operating hours: The expected operating hours of the proposed Project indicated in the preliminary design report were calculated based on historical hydrological data and electricity demand. As the operating hours were calculated based on historical data of years, assuming 52.80% of increase in annual operating hours is unrealistic, and the IRR is not likely to reach the benchmark from an increase in operating hours.

These results show that only with highly unrealistic very favourable circumstances would it be possible to reach the Project IRR benchmark. In reality, circumstances typically occur more unfavourably than projected and the IRR would be even further away from the benchmark. We can conclude that the IRR is lower than the benchmark for a realistic range of assumptions for the input parameters of the sensitivity analysis, and therefore, that the Project is not financially attractive. This demonstrates that the project activity would not be implemented without the CDM.

Justification of the net electricity generation delivered to grid as per PDR

According to PDR, which follows Interim Regulations on Economic Assessment of Hydro Projects (Large-Middle Size) published by The Ministry of Water Resources of the P.R.China - General Water Resources and Hydro Power Planning and Design Institute, the effective amount of electricity sold to the grid should be calculated as follows:

[Effective electricity sold to grid] = [hydrological electricity generation potential] x (1- [auxiliary power factor]) x (1- [line losses]) x [coefficient of effective electricity]

In the PDR, line losses have not been taken into account as a separate factor, hence the equation above was slightly simplified (resulting in the incorporation of eventual line losses within the “coefficient of effective electricity”):

[Effective electricity sold to grid] = [hydrological electricity generation potential] x (1- [auxiliary power factor]) x [coefficient of effective electricity] = 309,700 MWh/year×(1 – 1%)×90% = 275,940MWh/year

More information about the “coefficient of effective electricity” and the calculation/derivation processes is provided in Annex 5.

It should be noted that even if the coefficient of effective electricity is assumed to be 100% (instead of 90%), the IRR of the proposed project activity would be 5.63%, still far below the 8% benchmark.

Step 4 Common Practice Analysis Sub-step 4a. Analyze other activities similar to the proposed project activity

For the common practice, we have analyzed all hydropower projects in Guangxi Province with installed capacities between 50 and 300MW that have started operations or are still under construction. According to the tool for the demonstration and assessment of additionally, projects are considered “similar” in case PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

CDM – Executive Board page 17 they are located in the “same county/region”, are of “similar scale”, and “take place in a comparable environment with respect to regulatory framework, investment climate, access to technology, access to financing, etc”. We have selected hydropower stations with a similar installed capacity and have taken a wide range of installed capacities (50-300MW), because Chinese government classifies hydropower stations between 50MW and 300MW as medium scale projects11. The selected geographical area, i.e. Guangxi Province divided by Chinese Government, is relatively large and includes a significant number of similar projects. Basic information about these projects is given in Table B.5. Table B.6 Common Practice in Guangxi

Applying Name of Capacity Location Operation year for CDM or Ownership hydropower plant (MW) not

63 1994 No State owned Zhaoping Station Jingnan Station 69 1998 No State owned Meiya Electric Co., 72 1999 No Zuojiang Station Ltd.

No Station 120 Guigang 1999 State owned

Meiya Electric Co., 54 2000 No Fushi Station Ltd. Dapu Station 2004 China Meiyan Group 90 Liuzhou No

Guangxi Longjiang Xiaqiao 50 Power Development Hydropower Plant Huanjiang 2005 Yes Co., Ltd. Guangxi Pingle Guijiang Bajiangkou 90 City 2006 Yes Electric Power Co.,Ltd Hydropower Project Guangxi Xiafu Zhaoping Guihai 49.5 Zhaoping 2006 Yes Hydropower Project Electric Power Co.,Ltd Guangxi Long’an Guangxi Long’an Jinjitan Hydro 72 2007 Yes Guangneng power Power Project Company Ltd Guangxi Guijiang Zhaoping Guangneng Jinniuping 60 Hezhou 2007 Yes Electric Power Co., Hydorpower Ltd. Project12 Fusui Guangneng Shanxiu 78 Chongzou 2007 Yes Electric Power Co., Hydropower Station Ltd. Guangxi Rong Guangxi Rongjiang Rongshui River Guding 80 2007 Yes River Guding Hydro Miao Hydropower Project Power Co., Ltd.

11 Yearbook of China Power (2005), page 141 12Guangxi Guijiang Jinniuping Hydorpower Project PDD, retrieved on March 26th, 2008 from http://www.dnv.com/focus/climate_change/Upload/Jinniuping%20PDD_V02_DOE_20070409%20_2_.pdf PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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in China

Guangxi Youjiang Guangxi Xijiang Naji Hydro Power 66 Tianyang 2008 Yes Shipping Construction Generation Project Development Co.,Ltd Guangxi Zhuang Autonomous Wuzhou JiuRMB Region Wuzhou 60 Wuzhou 2009 Yes Electricity Investment Wangcun Development Co., Ltd. Hydropower Station

Source: http://www.ghcb.com.cn/gcyj_content.asp?sub_newid=55&id=505 http://www.sxth.gov.cn/gg/detail.asp?id=180 http://www.meiyagx.com/shownews1.asp?id=200 http://www.gl.gxnews.com.cn/news/20050330/05agjywz/165401.htm http://www.meiyapower.com/mpcweb/gb/files/20010628-S.pdf http://www.chinameiyan.com/myaboutKGGS.php?GS=Dabu http://cdm.unfccc.int/index.html

The power industry in P. R. China underwent a significant suite of reforms in 200213. First of all, under the reforms, the China State Power Corporation was diversified into five separate regional grids in 200214, consequently changing the tariffs and allowable amounts of electricity supplied to the grid15. Secondly, under the reform, there were changes to the existing electricity tariff mechanisms16. As a result, the investment environment of power production projects in P. R. China changed significantly in 2002. For Zhaoping Station, Jingnan Station, Zuojiang Station, Guigang Station and Fushi station, they were put into operation before 2002 therefore excluded from common practice analysis. Other hydro plants, which applied for CDM financing support, are also excluded. Sub-step 4b. Discuss any similar options that are occurring: Only Dabu station is considered similar to the project activity. However, Dapu station had obtained foreign preferential loan from Austria government17, which makes it face less financing barrier as the project activity does.

13 See “Electric Power Reform”, 2003 Yearbook of China Electric Power, Page 10-14. 14 The first reform consisted of the reorganisation of the power companies in order to break the monopoly of the China State Power Corporation and ensure fair competition, and to separate generation from transmission. The second one consisted in the bureaucratic centralisation of the power sector through the inclusion of the State Economic and Trade Commission in the National Development and Reform Commission (NDRC), which then opened a renewable energy department under the Energy Bureau, thereby enabling the creation of coherent policies in the power sector. Source: Lemaa, A and Rubyb K. (2007) Between fragmented authoritarianism and policy coordination: Creating a Chinese market for wind energy, Energy Policy, 35, 3879-3890. Also see: http://english.people.com.cn/200204/12/eng20020412_93913.shtml 15 Sections 5-7, 2003 Yearbook of China Electric Power, Page 14. 16 Electricity tariff was made up according to local demands and grid structure and is divided into tariff of electricity to grid, transmission tariff, distribution tariff and sales tariff. Sections 17-22, 2003 Yearbook of China Electric Power, Page 11-12. 17 http://www.chinameiyan.com/myaboutKGGS.php?GS=Dabu PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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It can therefore be concluded that hydropower projects implemented previously or currently underway in Guangxi Province did not face the same barriers as the proposed Project, and therefore the Project can not be considered common practice.

In conclusion the proposed Project is deemed to be additional according to ACM0002 and the tool for the demonstration and assessment of additionality.

CDM consideration

The project developer only decided to invest and go ahead with the project after additional CDM revenue was considered. Also CDM revenues helped the project to reduce its financial risk and obtain loan from the bank. The table below provides actions taken to secure CDM status for the project in parallel with its implementation:

Table B.7 Overview of key events in the development of the project

Project activity Date CDM activity Preliminary Design Report by Guangxi 05/2004 Design Institute of Electric Power Industry. The PO received “Reply of Baise Grid Company to the Request for Dongba Hydro With this tariff, the project was Tariff”. The tariff set by the Grid Company 03/06/2004 not financially attractive. was 210 RMB/MWh during wet season, 310 RMB/MWh during dry season. Project owner participated in 12/07/2005 CDM training course Board meeting. Project owner 10/08/2005 decided to seek financial support from CDM based on analysis from PDR and Baise Grid Company’s reply regarding tariff. Bank agreed to provide loan to the proposed project based on the fact that the proposed 08/2005 project can obtain CDM income to overcome its financial barrier. Equipment Contract signed with Sichuan 02/09/2005 Dongfeng Electricity Equipment

Manufacture Co. Ltd. Construction permit 07/09/2005 EcoChain Science and Technology Co., Ltd. signed 07/2006 formal broker service contract with project owner Signature of CDM collaboration agreement between South Pole 10/02/2007 Carbon Asset Management Ltd. (South Pole) and EcoChain PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Southpole Carbon Asset Management Ltd. signed term 26/04/2007 sheet with PO and started due diligence check. With this tariff, the project was The tariff was approved by Guangxi not finally attractive. Provincial Price Bureau. The actual tariff 21/08/2007 was 260 RMB/MWh during wet season,

320 RMB/MWh during dry season.

After completing due diligence check and obtaining necessary 11/2007 materials, Southpole Carbon Asset Management Ltd. signed ERPA with the project owner. Project started operation 1/2008 NDCR CDM evaluation 04/2008 meeting notification received

by PO 05/2008 China LOA obtained

According to the cash flow sheet of the PDR written in June 2004, based on an optimistic assumption of the electricity tariff of 0.31 CNY/kWh, the financial IRR was 7.02%, which is lower than the 8% benchmark for hydropower projects in China, thus making the project not financially attractive.

Only weeks later, in June 2006, the project owner, during negotiations with the grid company, was informed by the grid company that the electricity tariff could only reach 0.21 RMB/kWh during wet season and 0.31 RMB/kWh during dry season. This increased the risk profile of the project and made it even less attractive as investment without consideration of any additional revenues, which triggered the project owner’s decision to apply for CDM. Therefore, on 10th August 2005, the project owner made a board decision of applying the project as a CDM project to overcome the financial barrier and improve the financial situation. Ecochain, CDM consulting company, at the end of 2006, signed broker service contract with project owner. From this time on, all steps of the CDM cycle were undertaken as fast as possible, subject to delays and capacity restraints within the CDM market. Corresponding evidence has been shown to DOE.

The documents and information mentioned in Table B.3 provided above are in line with paragraphs 5 (a) and (b) of the latest “Guidance on the demonstration and assessment of prior consideration of the CDM (version 03)” from EB49, Annex 22. The documents mentioned above are applicable evidences to prove that (a) the project participants were aware of the CDM prior to the project activity start date, and that the benefits of the CDM were a decisive factor in the decision to proceed with the project; and (b) that continuing and real actions were taken to secure CDM status for the project in parallel with its implementation.

It should be noted that the requirements for “demonstration of continuing and real actions to secure CDM status”, as per guidance mentioned above, determine a gap of up to two years between documented evidence provided to the DOE as sufficient to meet the requirements for validation of prior consideration of CDM. The documented evidence listed in the Table B.3 indicate all the gaps are less than 1 year.

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B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

As described under Section B.3, the CO2 emissions from power plants connected to SCPG represent the baseline emissions to the project activity. The baseline emissions are calculated as follows: Baseline emissions According to methodology ACM0002 (Version 10), baseline emissions are equal to the power delivered to the grid, multiplied by the baseline emission factor EFy . The baseline emission factor is defined as the Combined Margin (CM): the equally weighted average of the Operating Margin (OM) emission factor (

EFOM , y ) and the Build Margin (BM) emission factor (EFBM , y ).Combined, Operating and Build Margin emission factors are calculated according to the procedures prescribed in the “Tool to calculate the emission factor for an electricity system” (Version 2). The detailed calculation approach and the applied formulae are provided in this section, whereas all calculation tables and parameters are listed in Annex 3.

The data used to calculate the grid emissions factor comes from reliable and publicly accessible statistics e.g. China Energy Statistic Yearbook and China Electric Power Yearbook, as well as Chinese DNA.

Step 1. Identify the relevant electric power system As per delineation of Chinese national electric system published by National Development and Reform Commission, which is also Chinese DNA, the relevant electric power system is SCPG. The Project’s electricity generation unit is connected to the Guangxi Grid via local grid network, and thus finally to SCPG. SCPG is a large regional grid, which consists of four sub-grids: Guangdong, Guangxi, Yunnan and Guizhou. There is substantial inter-grid power exchange among the above mentioned sub-grids of SCPG. SCPG can be clearly identified as regional grid and information on the characteristics of this grid is publicly available. 18

For the purpose of determining the operating margin emission factor, use the simple operating margin emission rate of the exporting grid, determined as described in step 3 (a) to determine the CO2 emission factor(s) for net electricity imports (EFgrid,import,y) from a connected electricity system within the same host country(ies).

Step 2. Select an operating margin (OM) method “Tool to calculate the emission factor for an electricity system” outlines four options for the calculation of the Operating Margin emission factor(s) ( EFOM , y ):

(a) Simple OM, or (b) Simple adjusted OM, or (c) Dispatch Data Analysis OM, or (d) Average OM.

As per “Tool to calculate the emission factor for an electricity system” (Version 02), any of the four methods can be used. “Dispatch Data Analysis” method is not selected herein, because dispatch data, let

18 National Development and Reform Commission of China published delineation of the electricity grid of China. Please visit http://cdm.ccchina.gov.cn/web/index.asp for more details. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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alone detailed dispatch data, are not available to the public or to the project participants. For the same reason, the simple adjusted OM methodology cannot be used.

The Simple OM method has been chosen instead. This is possible because low cost/ must run resources account for less than 50% of the power generation in the grid in most recent years. From 2002 to 2006, according to gross annual power generation statistics for SCPG, the ratio of power generated by hydro- power and other low cost/compulsory resources was: 32.97% in 2002, 31.06% in 2003, 29.95% in 2004, 30.42% in 2005 and 28.73% in 2006 respectively, significantly lower than 50%.19

The simple OM of the grid for the proposed project is calculated using the Ex ante option: A 3-year generation-weighted average, based on the most recent data available at the time of submission of the CDM-PDD to the DOE for validation, without requirement to monitor and recalculate the emissions factor during the crediting period.

Step 3. Calculate the operating margin emission factor according to the selected method

The simple Operating Margin (OM) emission factor ( EFgrid ,OMsimple,y ) is calculated as the generation- weighted average emissions per electricity unit (tCO2/MWh) of all generating sources serving the system, not including low-operating cost and must-run power plants. As per “Tool to calculate the emission factor for an electricity system” (Version 2), it may be calculated: ! • Based on data on fuel consumption and net electricity generation of each power plant / unit (Option A), or • Based on data on net electricity generation, the average efficiency of each power unit and the fuel type(s) used in each power unit (Option B), or • Based on data on the total net electricity generation of all power plants serving the system and the fuel types and total fuel consumption of the project electricity system (option C)

Since neither the data of fuel consumption nor the net electricity generation for every single electricity generation plant/unit is publicly available for SCPG, the proposed project uses Option C for simple OM calculation. The calculation is based on the total net electricity generation and the fuel types and total fuel consumption of each provincial sub-grid of SCPG. Electricity importation from Southern China Power Grid (SCPG) is also counted. A three-year average, based on the most recent fuel consumption statistics available at the time of PDD submission, is used (“ex-ante” approach).

The calculation equation of the Simple OM is as follows:

"FCi,y # NCVi,y # EFCO2,i,y i EFgrid ,OMsimple,y = Equation (B. 1) EGy

Where: EFgrid,OMsimple,y Simple operating margin CO2 emission factor in year y (tCO2/MWh) ! FCi,y Amount of fossil fuel type i consumed in the project electricity system in year y (mass or volume unit) NCVi,y Net calorific value (energy content) of fossil fuel type i in year y (GJ / mass or volume unit)

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EFCO2,i,y CO2 emission factor of fossil fuel type i in year y (tCO2/GJ) EGy 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 year y (MWh) i All fossil fuel types combusted in power sources in the project electrcitiy system in year y y Either the three most recent years for which data is available at the time of submission of the CDM-PDD to the DOE for validation (ex ante option) or the applicable year during monitoring (ex post option), following the guidance on data vintage in step 2

The Operating Margin emission factors for 2004, 2005 and 2006 are calculated separately and then the three-year average is calculated as a full-generation-weighted average of the emission factors. For details please refer to Annex 3. The result of the Operation Margin Emission Factor calculation is 1.06080 tCO2e/MWh. The operating margin emission factor of the baseline is calculated as a fixed ex-ante value and will not be renewed within the first crediting period of the project activity. Step 4. Identify the cohort of power units to be included in the build margin As per the emission factor tool, the sample group of power units m used to calculate the build margin consists of either: (a) The set of five power units that have been built most recently, or (b) The set of power capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently.

However, in China it is very difficult to obtain the data of the five existing power plants built most recently or the power plants capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that were built most recently. Taking notice of this situation, EB accepts20 the following deviation in methodology application:

1) Capacity addition from one year to another is used as basis for determining the build margin, i.e. the capacity addition over 1 - 3 years, whichever results in a capacity addition that is closest to 20% of total installed capacity. 2) Proportional weights that correlate to the distribution of installed capacity in place during the selected period above are applied, using plant efficiencies and emission factors of commercially available best practice technology in terms of efficiency. It is suggested to use the efficiency levels of the best technology commercially available in the provincial/regional or national grid of China, as a conservative proxy. In terms of vintage of data, project participants can choose between one of the following two options: Option 1. For the first crediting period, calculate the build margin emission factor ex-ante based on the most 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

20 This is in accordance with the „Request for guidance: Application of AM0005 and AMS-I.D in China”, a letter from DNV to the Executive Board, dated 07/10/2005, available online at: http://cdm.unfccc.int/UserManagement/FileStorage/6POIAMGYOEDOTKW25TA20EHEKPR4DM. This approach has been applied by several registered CDM projects using methodology ACM0002 so far. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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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. 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 margin emission factor calculated for the second crediting period should be used. Project participants have chosen Option 1 for BM calculation. Step 5. Calculate the build margin emission factor As per the method of Chinese National Development and Reform Commission (NDRC) accepted by EB, since there is no way to separate the different generation technology capacities based on coal, oil or gas fuel etc from the generic term “thermal power” in the present energy statistics, the following calculation measures will be taken:

First, according to the energy statistics of the selected period in which approximately 20% capacity has been added to the grid, determine the ratio of CO2 emissions produced by solid, liquid, and gas fuel consumption for power generation; than multiply this ratio by the respective emission factors based on commercially available best practice technology in terms of efficiency. Finally, this emission factor for thermal power is multiplied with the ratio of thermal power identified within the approximation for the latest 20% installed capacity addition to the grid. The result is the BM emission factor of the grid.

Sub-step 1 Calculate the proportion of CO2 emissions related to consumption of coal, oil and gas fuel used for power generation as compared to total CO2 emissions from the total fossil fuelled electricity generation (sum of CO2 emissions from coal, oil and gas).

%Fi, j,y # NCVi,y # EFCO2,i, j,y i$COAL, j Equation (2) "Coal,y = %Fi, j,y # NCVi,y # EFCO2,i, j,y i, j

%Fi, j,y # NCVi,y # EFCO2,i, j,y i$OIL, j Equation (3) "Oil,y = F # NCV # EF ! % i, j,y i,y CO2,i, j,y i, j

%Fi, j,y # NCVi,y # EFCO2,i, j,y i$GAS, j Equation (4) "Gas,y = F # NCV # EF ! % i, j,y i,y CO2,i, j,y i, j

Where, F ! i, j, y , is the amount of fuel i (in a mass or volume unit) consumed by power sources j in year(s) y, Fi, j,y , is the amount of fuel i (in a mass or volume unit) consumed by power sources j in year(s) y, 3 NCVi,y is the net calorific value of fuel i in year y (GJ/t for solid and liquid fuels, GJ/m for gas fuels)

! ! PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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EFCO2,i, j,y is the CO2 emission coefficient of fuel i (tCO2/GJ)

Coal, Oil and Gas stands for solid, liquid and gas fuels respectively.

! Sub-step 2: Calculate the operating margin emission factor of fuel-based generation.

EFThermal = "Coal ! EFCoal, Adv + "Oil ! EFOil, Adv + "Gas ! EFGas, Adv Equation (5)

Where,

EFThermal is the weighted emissions factor of thermal power generation with the efficiency level of the best commercially available technology in China in the previous three years.

EFCoal,Adv , EFOil,Adv , EFGas,Adv are the emission factors of coal, oil and gas-fired power generation with efficiency levels of the best commercially available technology in China in the previous three years.

A coal-fired power plant with a total installed capacity of 600 MW is assumed to be the best commercially available technology in terms of efficiency, the estimated coal consumption of such a National Sub-critical Power Station with a capacity of 600MW is 329.94gce/kWh, which corresponds to an efficiency of 37.28% for electricity generation. For gas and oil power plants a 200MW power plant with a specific fuel consumption of 252gce/kWh, which corresponds to an efficiency of 47.67% for electricity generation, is selected as the best commercially available technology in terms of efficiency.

The main parameters used for calculation of the thermal power plant emission factorsEFCoal,Adv,y ,

EFOil,Adv,y , EFGas,Adv,y are provided in Annex3. Sub-step 3: Calculate the Build Margin emission factor CAP ! Thermal,y Equation (6) ! !EF grid ,BM ,y = " EFThermal,y CAPTotal,y Where,

CAPTotal,y is the total capacity addition of the selected period in which approximately 20% capacity has ! been added to the grid,

CAPThermal,y is the total thermal power capacity addition of the selected period in which approximately ! 20% capacity has been added to the grid. Detailed calculations are provided in Annex 3.

! The result of the Build Margin emission factor calculation is 0.68155 tCO2e/MWh.

As mentioned above, the build margin emission factor of the baseline is calculated as a fixed ex-ante value and will not be renewed within the first crediting period.

The data sources for calculating OM and BM are: 1. Installed capacity, power generation and the rate of internal electricity consumption of thermal power plants for the years 2004 to 2006, Source: China Electric Power Yearbook (2000-2007) PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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2. Fuel consumption and the net caloric value of thermal power plants the years 2004 to 2006, Source: China Energy Statistics Yearbook (figures are for 2005-2007) 3. Carbon emission factor and carbon oxidation factor of each fuel, Source: Revised 2006 IPCC Guidelines for National Greenhouse Gas Inventories: Workbook, P1.23 and P1.24 in Chapter one.

Step 6. Calculate the combined margin emissions factor

The Baseline Emission Factor is calculated as a Combined Margin, using the weighted average of the Operating Margin and Build Margin.

EFgrid ,CM ,y = wOM " EFgrid ,OM ,y + wBM " EFgrid ,BM ,y Equation (7)

The operating margin emission factor ( EFgrid ,OM ,y ) of SCPG is 1.06080 tCO2e/MWh and the build margin

emission factor ( EF ) is 0.68155 tCO2e/MWh. The defaults weights are used as specified in the ! grid ,BM ,y wBM = 0.5 emission factor tool: wOM = 0.5 ! The result! of the Baseline Emission Factor ( EFy ) calculation is 0.87118 tCO2e/MWh.

The project activity reduces carbon dioxide emissions through displacement of grid electricity generation

based on fossil-fuel-fired power plants by renewable electricity. The emission reduction ERy achieved by

the project activity during a given year y is the difference between baseline emissions ( BE y ), project

emissions ( PE y ) and emissions due to leakage ( Ly ):

ER = BE ! PE ! L y y y y Equation (B.8)

Baseline Emission (BEy)

EF The baseline emissions (BE y in tCO2) are the product of the baseline emissions factor ( y in

tCO2/MWh), calculated under Step 3 above, times the electricity exported to the grid by the project activity ( EG y in MWh):

BE y = EGy ! EFy Equation (B.9)

Project Emission (PEy)

Fossil Fuel Combustion (PEFF,y).

No fossil fuel is consumed on site thus PEFF,y is zero.

Emissions from water reservoirs of hydro power plants (PEHP,y)

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The project activity result in new reservior with power density of 7 W/m2. According to Annex 5 of EB 23 report: Threshholds and Criteria for Elegibility of Hydroelectric Power Plants with Reservoir as CDM Project Activities, hydroelectric power plants with power densities greater than 4 W/m2 but less than or equal to 10 W/m2 can use the currently approved methodologies, with an emission factor of 90 gCO2eq/kWh for project reservoir emissions.

EF " TEG PE = Re s y Equation (10) HP,y 1000 Where,

PE is emission from reservoir expressed as tCO2e/year, ! HP,y

EFRe s is the default emission factor for emissions from reservoirs, and the default value as perEB23 is 90 gCO2eq/kWh, ! TEGy is total electricity produced by the project activity, including the electricity supplied to the grid and the electricity supplied to internal loads, in year y (MWh). Leakage No leakage is considered according to the methodology.

Hence: Leakagey = 0 Equation (11)

Therefore, the emission reductions related to electricity generation:

ER BE - PE ! y = y y

B.6.2. Data and parameters that are available at validation:

Data / Parameter: F i,j,y Data unit: t, m3 The amount of fuel i consumed by relevant power source j in years Description: y. Source of data used: China Energy Statistics Yearbooks (2005-2007) Value applied: See Annex 3 Justification of the choice of data or description of Official released statistics; publicly accessible and reliable data measurement methods source and procedures actually applied : Any comment: PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Data / Parameter: FCi,y Data unit: t, m3 Amount of fossil fuel type i consumed in the project electricity Description: system in year y (mass or volume unit) Source of data used: China Energy Statistics Yearbooks (2005-2007) Value applied: See Annex 3 Justification of the choice of data or description of Official released statistics; publicly accessible and reliable data measurement methods source and procedures actually applied : Any comment:

Data / Parameter: NCV i,,y Data unit: MJ/t, kJ/m3 Description: Net calorific value (energy content) of fossil fuel type i in year y Source of data used: China Energy Statistics Yearbook 2007 Value applied: See Annex 3 Justification of the choice of data or description of Official released statistics; publicly accessible and reliable data measurement methods source and procedures actually applied : Any comment:

Data / Parameter: EFCO2,i,y

Data unit: tCO2/TJ

Description: CO2 emission factor of fossil fuel type i in year y Source of data used: 2006 IPCC Guidelines for National Greenhouse Gas Inventories Value applied: See Annex 3 Justification of the choice of data or description of IPCC default value measurement methods and procedures actually applied : Any comment:

Data / Parameter: GENj,y Data unit: MWh The electricity generation by source j in year y of each province Description: connected to the SCPG (this includes electricity imports to the SCPG) Source of data used: China Electric Power Yearbooks (2003-2007) PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Value applied: See Annex 3 Justification of the choice of data or description of Official released statistics; publicly accessible and reliable data measurement methods source and procedures actually applied : Any comment:

Data / Parameter: Rate of internal use by the power station Data unit: % The rate of internal use of power source j in each province Description: connected to the SCPG. Source of data used: China Electric Power Yearbooks (2005-2007) Value applied: See Annex 3 Justification of the choice of data or description of Official released statistics; publicly accessible and reliable data measurement methods source and procedures actually applied : Any comment:

Data / Parameter: CAPj,y Data unit: MW The aggregate incrementally installed power capacity of all kinds of Description: power generation sources j (MW) in the SCPG in year y Source of data used: China Electric Power Yearbooks (2005-2007) Value applied: See Annex 3 Justification of the choice of data or description of Official released statistics; publicly accessible and reliable data measurement methods source and procedures actually applied : Any comment:

Data / Parameter: CAPthermal,y-n,y Data unit: MW The aggregate incrementally installed power capacity of thermal Description: power generation sources (MW) in the SCPG in year y compared to that of year y-n Source of data used: China Electric Power Yearbooks (2005-2007) Value applied: See Annex 3 Justification of the choice of data or Official released statistics; publicly accessible and reliable data description of source measurement methods PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Data / Parameter: EFRes Data unit: gCO2eq/kWh Description: Default emission factor for emissions from reservoirs Source of data used: Decision by EB23 Value applied: 90 Any comment:

Data / Parameter: CapBL Data unit: W Description: Installed capacity of the hydro power plant after the implementation of the project activity. For new hydro power plants, this value is ! zero. Source of data: Project site. Value applied 0 Measurement procedures (if any): Any comment: -

Data / Parameter: ABL Data unit: m2 Description: Area of the reservoir 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: Project site. Value applied 0 Measurement procedures (if any): Any comment: -

B.6.3 Ex-ante calculation of emission reductions:

According to section B.6.1 and further details in Annex 3, the emission factor is 0.87118 tCO2e/MWh throughout the first crediting period of the project. The total electricity produced by the proposed project activity is 278,730 per year, and the expected net amount of electricity generation by the project to be exported to SCPG is 275,940 MWh per year. The default emission factor for emission from reservoirs is 90 gCO2eq/kWh.

Therefore, the average annual emission reductions to be achieved by the project activity throughout the first crediting period are 204,855 tCO2e/yr.

ERy= EFy×EGy-PEy = 0.87118 ×275,940-278,730×0.09 =240,393.4-250,85.7=215,307 tCO2e/yr

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Please refer to Section B.6.1 for details on the equations and assumptions leading to the result above.

B.6.4 Summary of the ex-ante estimation of emission reductions:

st The total emission reductions of the project are 1,507,149 tCO2e during the 1 7 years crediting period. Table B.4 Estimate of Emission Reductions Due to the Project Estimation of Estimation of Estimation of Estimation of overall baseline Years project activity leakage emission Emissions emissions (tCO2e) (tCO2e) reductions (tCO2e) (tCO2e) Year 1 25,085 240,393 0 215,307 Year 2 25,085 240,393 0 215,307 Year 3 25,085 240,393 0 215,307 Year 4 25,085 240,393 0 215,307 Year 5 25,085 240,393 0 215,307 Year 6 25,085 240,393 0 215,307 Year 7 25,085 240,393 0 215,307

Total (tCO2e) 175,595 1,682,751 0 1,507,149

B.7 Application of the monitoring methodology and description of the monitoring plan:

B.7.1 Data and parameters monitored:

Data / Parameter: EG y Data unit: MWh Description: Net amount of electricity exported to the grid in the year y Source of data to be Measured by meters (M1 and M2) used: Value of data 275,940 MWh/year Description of Electricity will be measured with electricity meters and data will be recorded measurement methods monthly. and procedures to be applied: QA/QC procedures to According to the Technical Administrative Code of Electric Energy Metering be applied: (DL/T448-2000), meters will be calibrated periodically. Data measured by meters will be cross-checked by electricity sales receipts.

Any comment:

Data / Parameter: TEGy Data unit: MWh Description: Total electricity produced by the project activity PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Source of data to be Measured by meters (M1 and M2) used: Value of data 278,730 MWh/year Description of Electricity will be measured with electricity meters and data will be recorded measurement methods monthly. and procedures to be applied: QA/QC procedures to According to the Technical Administrative Code of Electric Energy Metering be applied: (DL/T448-2000), the meters will be calibrated periodically. Any comment:

Data / Parameter: CapPJ Data unit: W Description: Installed capacity of the hydro power plant after the implementation of the project activity. Source of data!: PDR Value of data 72 MW Measurement Onsite check of generators, nameplates and technical materials procedures (if any): Any comment: -

Data / Parameter: APJ Data unit: m2 Description: Area of the reservoir measured in the surface of the water after the implementation of the project activity Source of data!: PDR Value applied 10.2269 million m2 Measurement The area of the reservoir has been determined on the basis of the measurement of procedures (if any): the crest level of the dam and the topography of the area. The Project routinely measures water levels and water levels would be used as area indicator. Any comment:

B.7.2 Description of the monitoring plan:

The objective of the monitoring plan is to ensure the complete, consistent, clear, and accurate monitoring and calculation of the emissions reductions during the entire crediting period of the project activity. The project owner will be responsible for the implementation of the monitoring plan, and the Grid Company will cooperate with the project entity. 1. Monitoring Objective The main monitoring data consists of two parameters. One is the net electricity supplied to the grid. Another is total electricity produced by the project activity in year y.

Also the highest water level and install capacity will be recorded for each verification period and checked by DOE onsite. 2. Monitoring Organization PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Onsite staff will be responsible for meter recording and a monitoring officer will be appointed for data checking and collection. Onsite staffs and the monitoring officer will receive training from EcoChain (Beijing) Science and Technology Co., Ltd.

3. Monitoring Equipment and Program

The electricity meters measuring power output to the grid and total electricity output will be calibrated in line with the relevant standard. This will assure that the equipment operates at the stated level of accuracy.

The bidirectional meters M1 and M2 are used for measuring net electricity supplied to the grid. Three unidirectional electric meters (M3, M4 and M5) are used to measure the electricity generated by three power generators in the proposed project station. The accuracy of meters M1 and M2 will be no less than 0.5 and accuracy of meters M3, M4 and M5 no less than 1.0. The indicative grid connection diagram is illustrated as below:

Table B.6 Parameters and basic information of Monitoring meters

4. Data Collection: The project owner is responsible for the operation of the electric energy meter, and guarantees that the measuring equipments are in good conditions and completely sealed.

The measurement recorded by the electric energy meter will suffice for the purpose of billing and emission reduction verification. The monitoring process is as follows:

(i) The project owner reads and checks the electric energy meter and records the data periodically as the firsthand record the amount of the electricity supplied to the grid; PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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(ii) The project owner compiles the data recorded for the amount of electricity supplied to the grid monthly and provides the monthly balance sheet of electricity sales to the grid company; (iii) The grid company confirms the amount of electricity exported to the power grid after the verification, confirmation and acceptance of the electricity data offered by the project owner; (iv) The project owner provides an electricity sales invoice to the grid company according to the actual amount of electricity delivery reflected in the grid company’s confirmation. A copy of the invoice is kept by the project owner; (v) The project owner will keep the balance sheet of electricity sales to the grid company appropriately. The periodical records of the electricity meter’s measurements are archived on paper.

If either the project owner or the grid company detects any distortion or mal-function of the electric energy meter, which causes inaccuracy of the measured data, it will promptly inform the other party as well as a qualified metrical institute co-authorized by the project owner and the grid company to jointly investigate and solve the problems.

Under the uncommon circumstances mentioned above, based on mutual agreement, the parties will jointly determine the amount of electricity supplied to the grid during the period of electric energy meter is in distortion or mal-function by referring to the voltage and current meters’ measurements in accordance with certain relevant rules.

The meter reading will be readily accessible for the verification entity. The project owner will keep the calibration test records for verification.

5. Calibration A metrical institute authorized by the Administration of Standard Measurement will periodically carry out the verification of the electric energy metering equipment according to relevant national electric industry standards and regulations. After the verification of every meter, the electricity metering equipment is sealed, stamped or by other means closed. Either party shall not unseal, change the structure, layout or any connection wire of the electric metering equipment nor manipulate the equipment.

6. Procedures in Case of Damaged Metering Equipment and Emergencies

- Damages to metering equipments In case metering equipment is damaged and no reliable readings can be recorded the project entity will estimate net supply by the proposed project activity according to the following procedure:

1. In case metering equipment operated by project entity is damaged only: The metering data logged by the grid company, evidenced by sales receipts will be used as record of net power supplied to the grid for the days for which no record could be recorded. 2. In case both metering equipment operated by project entity and grid company are damaged: The project entity and the grid company will jointly calculate a conservative estimate of power supplied to the grid. A statement will be prepared indicating " the background to the damage to metering equipment " the assumptions used to estimate net supply to the grid for the days for which no record could be recorded " the estimation of power supplied to the grid The statement will be signed by both a representative of the project entity as well as a representative of the grid company.

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The project entity will furthermore document all efforts taken to restore normal monitoring procedures.

- Emergencies In case of emergencies, the project entity will not claim emission reductions due to the project activity for the duration of the emergency. The project entity will follow the below procedure for declaring the emergency period to be over: 1. The project entity will ensure that all requirements for monitoring of emission reductions have been re- established. 2. The monitoring officer and the head of operations of the hydropower station will both sign a statement declaring the emergency situation to have ended and normal operations to have resumed.

7. Data Management The project owner will keep the printout of the monthly records for the amount of supplied electricity to the grid in an appropriate way, as well as the firsthand records. At the end of each crediting year, a monitoring report will be compiled by the project owner. Hard copied documentation of relevant information of the monitoring process, such as paper-based maps and diagrams, are kept together with the monitoring plan. In order to facilitate the auditing, the monitoring results are indexed. All hard-copied information is stored by the project owner.

All data records will be kept for an additional period of 2 years following the end of the crediting period.

B.8 Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies)

Date of completion: 05/11/2009

Name of persons determining the baseline and monitoring methodology:

Yi Lin South Pole Carbon Asset Management Ltd. Technoparkstrasse 1 8005 Zurich Switzerland E-mail: [email protected] Tel.: +41 44 633 78 90

Zhijie Duan South Pole Carbon Asset Management Ltd. Technoparkstrasse 1 8005 Zurich Switzerland E-mail: [email protected] Tel.: +41 44 633 78 90

Marco Hirsbrunner South Pole Carbon Asset Management Ltd. Technoparkstrasse 1 8005 Zurich Switzerland PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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E-mail: [email protected] Tel.: +41 44 633 78 91

South Pole Carbon Asset Management Ltd. is a participant of the project listed in Annex I of the PDD.

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SECTION C. Duration of the project activity / crediting period

C.1 Duration of the project activity:

C.1.1. Starting date of the project activity:

02/09/2005 (the date when the equipment contract was signed)

C.1.2. Expected operational lifetime of the project activity:

The expected operational lifetime of the project activity is 30 years.

C.2 Choice of the crediting period and related information:

The project activity uses a renewable crediting period as described in C.2.1.

C.2.1. Renewable crediting period

C.2.1.1. Starting date of the first crediting period:

01/06/2010 or the date of registration, whichever comes later.

C.2.1.2. Length of the first crediting period:

7 years

C.2.2. Fixed crediting period:

Not applicable

C.2.2.1. Starting date:

Not applicable

C.2.2.2. Length:

Not applicable

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SECTION D. Environmental impacts

D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts:

According to the clauses 13 and 19 of the Environmental Protection Law of the P. R. China, the Project entity must analyse the environmental impacts of project activities in P. R. China before utilising natural resources and beginning project construction. The Project Developer therefore commissioned a third party, Guangxi Electric Power Industry Investigation Design and Research Institute, to conduct the required environmental impact assessment (EIA) in 2002, and the EIA report was approved by the Guangxi Environmental Protection Bureau in May 2002.

The environmental impacts of Dongba are not considered significant. The construction of the Project will help to meet the growing electricity demand in the local area. In addition, the Project implementation includes soil and water conservation measures and the three main pollutants (namely waste water, exhaust fumes, and solid waste) due to the construction of the Project are treated during the construction of the Project. The environment management and monitoring plan are properly arranged. There is no transboundary impact related to the Project. The EIA comes to the conclusion that from the perspective of environmental protection, the Project can be built at the selected site.

Where impacts of the Project were identified, mitigation measures were suggested and defined. The EIA highlights the following with regards to the Project, as shown in the table below.

Identified environmental impacts Measures taken Make the drain connected to the sedimentation tank. Waste oil collected and reused. Oil residual combusted. Wastewater collect from the staff and treated in dry Water pollution latrine and septic tank Household rubbish collected and sent to local waste treatment station Reservoir bottom cleaned Buffer blast A showering system is to be installed to dampen and Air pollution control dust Optimized construction technology Workers Equipped with anti-dust mask and cap Choose equipment with low noise, arrange construction time Noise pollution Limit transportation speed, restrict ringing in the evenings and improve road conditions. Workers Equipped with earplug and ear cover Provide Sanitation education Health Protection measures Implement epidemic prevention measures Implement environmental sanitation measures PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1.

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To rubbish dustbin and waste transferring station; Solid waste To local waste treatment station. Additional land erosion will be prevented through installation of effective monitoring and site reclamation,. Biodiversity and ecosystems Grow water plants and constrain fish industry in the reservoir; control powerboat and monitor water quality The dam built as part of the Dongba project is expected to inundate farmland and inhabited land belonging to Nabi, Gaolong, Nazuo and Funing Villages. 2292.55 mu farmland, which is 1.526 km2 in total ( mu is Chinese area unit, 1 mu= 666 m2) are expected to be inundated by the project and 932 people are expected to be affected directly due to resettlement. All of them are farmers. No one will lose income due to the resettlement. No one will Resettlement be affected indirectly due to loss of work places. The resettlement plan is in line with the “Regulations on Land Requisition Compensation and Resettlement for Construction of Large and Medium-sized Water Conservancy and Hydropower Projects” and “P.R.China Law on Land Management”. The local government is responsible to carry out all resettlement compensation measures.

Generally, besides the irreversible environmental impact caused by the new reservoir, other environmental impacts of the project can be prevented or mitigated through adopting relevant measures. Therefore, from the perspective of environmental protection, the project construction and operation are feasible.

D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party:

The project participants and the host party involved both consider the negative environmental impacts of the project as marginal. Comparing the environmental impacts after the mitigation measures mentioned above to the contribution of the project to the sustainable development on a regional, national and global level, the project will have an overall positive impact. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1.

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SECTION E. Stakeholders’ comments

E.1. Brief description how comments by local stakeholders have been invited and compiled:

From October 2001 to December 2001, Guangxi Electric Power Industry Investigation Design and Research Institute conducted the stakeholder consultation and incorporated the consultation results into the EIA report of the project.

Residents from villages of Nabi, Gaolong, Nazuo and Funing and the dam region are stakeholders. An on- the-spot questionnaire survey was conducted, which followed the principle of publicity, justice, and comprehensiveness. The information includes:

1. General introduction of the construction project; 2. Possible environmental impacts; 3. Planned prevention or alleviation measures against possible negative environmental impacts.

Considering the education levels of the surveyed stakeholders, and in order to facilitate filling-out and statistic process, in the questionnaire forms, checkboxes were widely used and the questions were designed in line with the principle of simplicity, popularity, explicity and understandability. The survey invited public comments on the following contents:

1. Opinions to the construction project 2. Impacts on local conditions for living, study, work and entertainment 3. The construction project’s impacts on local community and environment 4. Attitude and idea to the construction and operation of the project 5. Concern to the environmental problems and inclined solutions

Local stakeholders including local residents living nearby the construction site, i.e. the places being identified as the project influenced areas, were involved. Questionnaires were distributed in the form of random lot drawing. In total 90 questionnaires were returned.

The first-hand materials collected in the survey were analyzed and kept by the designated EIA report development entity. The stakeholders’ opinions were summarized and incorporated into the EIA report with corresponding measures to address concerns if any. Then relevant environmental administrative authority organize ad hoc expert panel to discuss and evaluate the stakeholders’ opinions summarized in the EIA report. In the approval and acceptance process, the authority seriously considered the suggestions of the ad hoc expert panel. In case any stakeholder holds that her or his opinion was not adopted, she or he can report to the authority in written.

To track the opinions of stakeholder during construction process, a second stakeholder consultation meeting was held from March to April 2008. In order to ensure that the potential stakeholders get to know the project and receive information concerning the meeting, Ecochain (Beijing) Science and Technology Co., Ltd. sent out reference materials for the potential stakeholders to get to know detailed information about the hydropower station.

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The project owner and the consultant invited the participants to express their comments and concerns about the project and CDM. In total 63 investigational questionnaires have been returned. The main questions investigated were:

1. Do the local residents know about the construction of this hydropower station? 2. Will the project bring negative impacts on the living and working of the stakeholders? 3. Will the construction of the project bring benefits to the local residents? In which aspects? 4. What kind of environmental impacts will the project bring to the locals? 5. Will the project bring any negative impacts on local ecological environment such as local land animals, fish, vegetation and so on? 6. What measures can be taken to reduce the impacts on the environment caused by the project?

E.2. Summary of the comments received:

For the first survey in 2002, 90 questionnaires were collected. Among the surveyed stakeholders, there were 56 officials, accounting for 62.2% of the total; 11 workers, accounting for 12.2% of the total; 20 farmers, accounting for 22.2% of the total; and 4 with other occupation, accounting for 4.4%.

The survey results are:

94.4% stakeholders are in favor of the project construction, while 2.2% stakeholders do not support the project construction and 3.3% were undecided;

The positive impacts caused by the project according to stakeholders are (order by importance): 1. promotion of the local economy; 2. improvement of the electricity supply; 3. provision of employment opportunities.

The environmental impacts caused by the project according to stakeholders are (order by importance): 1. residential relocation; 2. ecological environmental alteration; 3. farmland flooded by the reservoir; 4. water and soil loss; 5. negative impacts brought by people from outside the region.

The environmental measurement which shall be adopted by the project according to stakeholders are (order by importance): 1.resettlement arrangement; 2.construction site management; 3. animal and plant protection in the reservoir area; 4. water and soil loss prevention; 5. prevention of river pollution.

It can be seen from the stakeholder survey that resettlement issues were considered as the most important aspect and concern, therefore special attention was paid on compensations to local farmers.

For the second survey in 2008, there were 63 investigation questionnaires returned to the project owner. The interviewed people were plant staff and local residents near plant site. 22.2% are women, 68.2% are minorities, 58.7% with junior or senior high school or technical secondary school degree and 22.2% with junior college or university degree. All are elder than twenty years old. The investigation results are the following:

• 92.1% of the investigated stakeholders have already known about the construction of this hydropower station. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1.

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• 93.7% of the investigated stakeholders think that the hydropower project will not bring negative impacts on the ecological environment. • 73.0% of the investigated stakeholders think that the hydropower station will bring benefits to the local economic development. • 30.2% of the investigated stakeholders think that the project will bring benefits to their lives. • Others held neutral points

The conclusions of the meeting are as follows:

• Most of the stakeholders think that the hydropower project will cause little negative impacts on the environment. • The project will be in favor of regional economy development.

In a word, there was no objection received from local residents who live nearby the construction site.

E.3. Report on how due account was taken of any comments received:

The result of the first survey shows that since the project is expected to have considerable positive effects on the local socio-economic development, the surveyed local stakeholders show great enthusiasm and expectations on the project and most of them are in favour of an immediate start of the construction. Meanwhile, they also had some special concerns about: 1. resettlement planning and the investment related fund raising; 2. local ecological environment protection.

In order to reduce possible negative impacts on local environment and people’s daily lives brought by the project, in the project EIA report approval document, Environmental Protection Bureau of Guangxi Zhuang Autonomous Region requires the project owner: 1) to make use of the excavated soil and rocks from constructing the tunnel and flood spillway for the flood sluice dam and rockfill dike constructions and thus to reduce the net amount of solid waste; solid waste shall not be dumped into farmland or river; all the temporary excavated sites and dumping sites shall be timely refilled, replanted or reclaimed; 2) to maintain the connecting roads and avoid constructing quarry along the roads; 3) the water and soil conservation plan approved by relevant water resource management authority shall be integrated into the project’s environmental protection plan. In the resettlement and farmland reclamation processes, the water and soil conservation plan shall be strictly followed to reduce soil loss; 4) after the completion of the construction, the project entity must apply for the environmental approval and acceptance procedure managed by relevant environmental protection authority.

During the second survey, it was confirmed the stakeholders are supportive on the project. No negative comments have been collected. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1.

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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

The Project Owner

Organization: Guangxi Dongba Hydropower Co., Ltd.

Street/P.O.Box: No. 42, Chengbei 2nd Road , Youjiang

Building:

City: Baise City

State/Region: Guangxi Zhuang Autonomous Region

Postfix/ZIP: 533000

Country: P. R. China

Telephone: 0086-776-2853222

FAX: 0086-776-2824848

E-Mail:

URL:

Represented by: Zhiyong Wei

Title:

Salutation: Mr.

Last Name: Wei

Middle Name:

First Name: Zhiyong

Department:

Mobile:

Direct FAX:

Direct tel:

Personal E-Mail:

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The CER Buyer:

Organization: South Pole Carbon Asset Management Ltd.

Street/P.O.Box: Technoparkstr. 1

Building: /

City: Zurich

State/Region: Zurich

Postfix/ZIP: 8005

Country: Switzerland

Telephone: +41 44 633 78 70

FAX: +41 44 633 14 23

E-Mail: [email protected]

URL: www.southpolecarbon.com

Represented by: Renat Heuberger

Title /

Salutation: Mr.

Last Name: Heuberger

Middle Name: /

First Name: Renat

Department: /

Mobile: /

Direct FAX: +41 44 633 14 23

Direct tel: +41 44 633 78 70

Personal E-Mail: [email protected]

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Annex 2

INFORMATION REGARDING PUBLIC FUNDING

There is no public funding from Annex I countries used in the project activity.