Project Idea Note Or PIN s1

Project Idea Note

PROJECT IDEA NOTE (PIN) 54098

Name of Project: Adoption of 3 phase DC/AC IGBT/GTO Technology for EMUs with Regenerative Braking for Mumbai Area.

Date submitted: December 19, 2006 Draft

Description of size and quality expected of a PIN

Basically a PIN will consist of approximately 5-10 pages providing indicative information on:  the type and size of the project  its location  the anticipated total amount of greenhouse gas (GHG) reduction compared to the “business-as-usual” scenario (which will be elaborated in the baseline later on at Project Design Document (PDD) level)  the suggested crediting life time  the suggested Certified Emission Reductions (CERs)/Emission Reduction Units (ERUs)/Verified Emission Reduction (VERs) price in US$ or € /ton CO2e reduced  the financial structuring (indicating which parties are expected to provide the project’s financing)  the project’s other socio-economic or environmental effects/benefits

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A. PROJECT DESCRIPTION, TYPE, LOCATION AND SCHEDULE

OBJECTIVE OF THE The objective of the project is to install advanced PROJECT regenerative braking technology in new three-phase Describe in not more Electric Multiple Units (EMUs), which are passenger than 5 lines trains whose carriages have the ability to draw electricity for captive uses directly from the overhead grid. Regenerative brakes essentially make use of the kinetic energy that is normally lost upon braking, which can be up to 30 % of an engine’s output, and converts it to reusable energy, thus saving on the energy input required to operate the EMU. PROJECT In India, the transport sector consumes a substantial DESCRIPTION AND portion of the national energy use. In the context of PROPOSED energy security and economic growth, energy efficiency ACTIVITIES measures are of crucial importance. Although rail About ½ page transport is already more energy efficient than road transport, Indian Railways, which has the second largest network (~ 63000 route-km) in the world under single management, has embarked on an energy efficiency program.

The project activity replaces the conventional electro- pneumatic braking technology with dynamic regenerative braking technology. The regenerative electrical energy is used by other powering rolling stock cars connected to same supply line. The regenerative electrical energy reduces the consumption of equivalent grid electrical energy required by the powering train, thereby conserving electrical energy and subsequently leading to GHG emission reduction. Indian Railways will replace the existing Electric Multiple Units (EMUs) with new ones fitted with regenerative brakes (three phase GTO/IGBT) and will manufacture new EMUs, which are capable of regenerating 25 to 30 % of the energy used, and can amount to 0.046 MW/unit/ day. The retrofittment / new production would be as per the following schedule:

Year Production Target Expected target (Nos. in terms of Range units*) (Nos. in terms of units*) 2007-08 120 ** 100-145 2008-09 180 ** 160-190 2009-10 180 ** 160-190 2010-11 45 ** 2011-12 Under 2012-13 Under Planning 2013-14 Planning stage 2014-15 stage 2015-16

In an initial phase, some 100 units have been manufactured so far.

 1 unit basically consists of 1 motor coach +1driving trailer coach +1 non-driving trailer coach ** This is a tentative figure, actual figure may increase.

TECHNOLOGY TO BE The technology to be used is advance regenerative EMPLOYED1 braking systems. It is DC/AC IGBT/GTO technology for Describe in not more EMUs. The regenerative braking system works on the than 5 lines principal of converting kinetic energy of the train while decelerating in to electrical energy by Variable voltage Variable Frequency Control by altering the frequency of current of traction motors in reverse direction. In this mode the traction motors work as generators and the inverter-converter converts the electrical energy direct current(DC) and subsequently converts to single phase line frequency alternate current(AC). The electrical energy is regenerated by the braking system and fed back to the supply line through overhead equipments(OHE). The regenerative electrical energy supplied back is used by other accelerating rolling stock of same service line. The regenerative electrical energy

1 Please note that support can only be provided to projects that employ commercially available technology. It would be useful to provide a few examples of where the proposed technology has been employed.

reduces the consumption of equivalent amount of grid electrical energy which would otherwise be consumed by the accelerating train, thereby conserving electrical energy and reducing GHG emission. In the project activities the electrical energy regenerated is consumed by other powering rolling stock cars of same service lines. TYPE OF PROJECT

Greenhouse gases CO2 targeted CO2/CH4/N2O/HFCs/PF Cs/SF6 (mention what is applicable) Type of activities Abatement Abatement/CO2 sequestration Field of activities 3E, Other Energy Efficiency (mention what is applicable) See annex 1 for examples LOCATION OF THE PROJECT Country INDIA City Several Brief description of the The location will be trains based in Mumbai. location of the project No more than 3-5 lines PROJECT PARTICIPANT Name of the Project Ministry of Railways, Government of India Participant Role of the Project Owner of the site or project Participant Organizational category Government agency Contact person Mr. R.K. Singh, Executive Director (Electrical Engineering), Railway Board Address Room No. 102A, Rail Bhawan , Raisina Road, New Delhi 110001 Telephone/Fax 011-23386991 (Tele/Fax)

E-mail and web www.indianrail.gov.in ; [email protected] address, if any Main activities Indian Railways provide efficient and safe movement of Describe in not more bulk cargo and passengers through the length and than 5 lines breadth of the country. They are by far India’s single largest employer organization with staff strength of over 1.5 million persons. Summary of the As a government entity, IR does not operate on a financials PROFIT model, but key figures are: Summarize the Capital at Charge INR 593469.3 million financials (total assets, Revenues INR 473702.1 million revenues, profit, etc.) in Expenses INR 427588.8 million not more than 5 lines Summary of the Since 2005, Indian Railways has implemented relevant experience of regenerative braking technology in a limited number of the Project Participant electric locomotives and EMUs, and has gained initial Describe in not more experience in operational and maintenance issues. than 5 lines EXPECTED SCHEDULE Earliest project start 2007 date Year in which the plant/project activity will be operational Estimate of time Time required for financial commitments: 6 months required before Time required for legal matters: 3 months becoming operational Time required for construction: 3 months after approval of the PIN Expected first year of 2008 CER/ERU/VERs delivery Project lifetime 25 years Number of years For CDM projects: 10 years Expected Crediting Period 7 years twice renewable or 10 years

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For JI projects: Period within which ERUs are to be earned (up to and including 2012) Current status or phase Pilot projects have been undertaken for the installation of the project and use of regenerative braking technology for EMUs. Identification and pre- selection phase/opportunity study finished/pre- feasibility study finished/feasibility study finished/negotiations phase/contracting phase etc. (mention what is applicable and indicate the documentation) Current status of Process for Letter of No Objection will commence after acceptance of the Host the PIN is approved. However, this would not be a major Country bottleneck in processing the project. Letter of No Objection/Endorsement is available; Letter of No Objection/Endorsement is under discussion or available; Letter of Approval is under discussion or available (mention what is applicable) The position of the Host Has the Host Country ratified/acceded to the Kyoto Country with regard to Protocol? ______YES , in 2002______the Kyoto Protocol Has the Host Country established a CDM Designated National Authority / JI Designated Focal Point? ______YES , in 2002

B. METHODOLOGY AND ADDITIONALITY

ESTIMATE OF Annual (if varies annually, provide schedule): in tCO2- GREENHOUSE equivalent GASES ABATED/ Year Holding Yearly Cumulative CO2 SEQUESTERED CERs CERs In metric tons of CO2- 2008 120 30905 30905 equivalent, please 2009 180 77262 108167 attach calculations 2010 180 123619 231786 2011 45 135208 366994 2012 Under 135208 502202 2013 planning 135208 637410 2014 stage 135208 772618 2015 135208 907826 2016 135208 1043034 BASELINE SCENARIO There are several viable options to the project: CDM/JI projects must result in GHG a. Construction of conventional EMUs without any emissions being lower regenerative braking system – which essentially is than “business-as- happening currently and represents the likely baseline usual” in the Host scenario Country. At the PIN b. Construction of EMUs with regenerative braking using stage questions to be the three phase regenerative technology (essentially answered are at least: the project)  Which emissions c. Construction of EMUs with other regenerative braking are being reduced technology. by the proposed CDM/JI project? The additionally analysis will show that in the absence of  What would the the CDM project, EMUs would be constructed without future look like any regenerative braking systems, given that without the regenerative braking is not a financially viable proposed CDM/JI technology. The additional energy used for locomotives project? with conventional braking is 568.8 tCO2e/locomotive About ¼ - ½ page /annum, and for EMUs with conventional braking, 257.54 tCO2e/EMU/annum. ADDITIONALITY In 2005 and 2006, the Railway Board has piloted the Please explain which installation and use of regenerative brakes in electric

of 15 Project Idea Note additionality arguments trains and EMUs. The installation and use of apply to the project: regenerative brakes is considered additional based on (i) there is no regulation the following analysis: or incentive scheme in place covering the Financial Barrier: The budget of the Railway Board is project approved on an annual basis by the Indian Parliament, (ii) the project is and given the mandate to generate a sufficient surplus financially weak or not by financing economically viable projects as well as to the least cost option provide social services, the budget process in (iii) country risk, new unpredictable. Honourable Minister of Railways at para technology for country, 40 of his speech while introducing the Railway Budget other barriers 2007-2008 on 26th February 2007 has stressed for (iv) other development of World Class passenger systems with a special note that Global Warming and changing climate conditions are a World Wide concern today. These energy efficient and environment friendly systems would go a long way in alleviating these concerns. At time of writing, the Parliament had not approved the financing of the installation and use of regenerative brakes for fiscal years beyond 2007-08 onwards. Any carbon finance revenue would serve to reduce the funds required from Parliament to use the more efficient braking technology.

Technological Barrier: Regenerative brakes are a novel technology, which cannot be wholly manufactured in India. In order to implement such a technology change, Indian Railways will rely on several highly specialized technology providers from other countries, and must build capacity to convert the necessary number of units in a short time frame.

Financial Analysis:

The most attractive economic alternative option to the project activity is to continue the present style of operation, without regenerative brakes.

With regard to the current/existing EMUs, there is no economic incentive to replace these with ones that have regenerative brakes, as the current braking systems

could be in use for an additional ten years. The investment required is in the order of 4 crore per EMU unit, with a payback period of more than 20-30 years, on a technology that has a lifetime of approximately 25 years.

There is no regulation or incentive scheme that requires the Indian Railways to switch to regenerative braking technology for electric locomotives and EMUs. Though there has been a sustained effort to improve energy efficiency measures, these efforts have been slowed down by insufficient funds for investment for such high capital investments, or insufficient projected revenue.

One of the motivations for the adoption of regenerative braking system is to modernize the railway infrastructure, as well as to promote security and reduce energy intensity. It should be noted that the use of regenerative brakes is not common practice in developing countries (China is the only other non-Annex I country besides India that has begun its deployment), and only a handful of Annex I countries currently use such technologies including Japan, Germany, Canada, Switzerland and France. SECTOR The Indian Railways are the only entity whose entire BACKGROUND budget is voted on by the Indian Parliament unlike others Please describe the who are allocated monies under the Union Budget (also laws, regulations, voted on by Parliament), thus providing an additional policies and strategies public accountability. Historically, the outlay for Railways of the Host Country that reduced from about 53% (up to 4th Plan) of outlay for are of central relevance Transport Sector to about 37% for the 9th Plan period. to the proposed project, Currently, the share of all major commodities transported as well as any other by IR in bulk has been dropping except for Coal and Iron major trends in the ore. relevant sector. In 2005-2006, Indian Railways operated on a budget Please in particular surplus for the first time in five years, given the high explain if the project is wage and pension liability. On the one hand, Indian running under a public Railways is expected to earn to meet their working incentive scheme (e.g. expenses and also generate sufficient surplus for

of 15 Project Idea Note preferential tariffs, development, and on the other hand, it is to discharge grants, Official social services without compensation from the General Development Exchequer. Such social services include: essential Assistance) or is commodities to be transported below cost, some required by law. If the passenger and other coaching services are to be project is already in maintained, the operation of uneconomic branch lines operation, please are to be maintained, and new lines should be describe if CDM/JI completed with negatives rates of return. Moreover, revenues were issues related to cross-subsidization of passenger traffic considered in project from revenues out of goods transport and the extent to planning. which socially desirable projects should carry explicit subsidies are also being discussed.

Honourable Minister of Railways at para 40 of his speech while introducing the Railway Budget 2007-2008 on 26th February 2007 has stressed for development of World Class passenger systems with a special note that Global Warming and changing climate conditions are a World Wide concern today. These energy efficient and environment friendly systems would go a long way in alleviating these concerns. The project will help in reducing the CHG emission through more energy efficient equipment and is therefore taken up as a priority over competing conventional way of manufacturing locomotives. Although the price of conventional locomotive is 1/3 of the proposed state of art locomotive. METHODOLOGY The project proposes to use the small scale Please choose from the Methodology III. C—that covers emission reductions following options: from low greenhouse gas emitting vehicles. The Delhi Metro Corporation (DMRC) has already submitted a For CDM projects: PDD that is at the validation stage using this (i) project is covered by methodology. Bundling will be used to meet the an existing Approved applicable thresholds. CDM Methodology or Approved CDM Small- Scale Methodology (ii) project needs a new methodology (iii) projects needs

of 15 Project Idea Note modification of existing Approved CDM Methodology

For JI projects: (iv) project will use a baseline and monitoring plan in accordance with Appendix B of the JI Guidelines and further JISC guidance (V) project will use Approved CDM or CDM Small-Scale Methodology

C. FINANCE

TOTAL CAPITAL COST ESTIMATE (PRE-OPERATIONAL) Development costs (Feasibility studies, resource studies, etc.) Installed costs (Property plant, equipment, etc.) Land ___ Other costs (please (Legal, consulting, etc.) specify) Total project costs SOURCES OF FINANCE TO BE SOUGHT OR ALREADY IDENTIFIED Equity Ministry of Railways, Government of India Name of the organizations, status of financing agreements and finance (in US$ million) Debt – Long-term - Name of the organizations, status of financing agreements and finance (in US$ million)

Debt – Short term - Name of the organizations, status of financing agreements and finance (in US$ million) Carbon finance - advance payments2 sought from the World Bank carbon funds. (US$ million and a brief clarification, not more than 5 lines) SOURCES OF Indian Railways intends to sell 80 % of the emission CARBON FINANCE reductions generated by 2012 to the World Bank. Name of carbon financiers other than any of the World Bank carbon funds that your are contacting (if any) INDICATIVE $9 /ton for CERs as a floor price CER/ERU/VER PRICE 3 PER tCO2e Price is subject to negotiation. Please indicate VER or CER preference if known.4 TOTAL EMISSION REDUCTION PURCHASE AGREEMENT (ERPA) VALUE A period until 2012 (end 9,639,000 US$ of the first commitment

2 Advance payment subject to appropriate guarantees may be considered. 3 Please also use this figure as the carbon price in the PIN Financial Analysis Model (cell C94). 4 The World Bank Carbon Finance Unit encourages the seller to make an informed decision based on sufficient understanding of the relative risks and price trade-offs of selling VERs vs. CERs. In VER contracts, buyers assume all carbon-specific risks described above, and payment is made once the ERs are verified by the UN- accredited verifier. In CER/ERU contracts, the seller usually assumes a larger component - if not all – of the carbon risks. In such contracts, payment is typically being made upon delivery of the CER/ERU. For more information about Pricing and Risk, see “Risk and Pricing in CDM/JI Market, and Implications on Bank Pricing Guidelines for Emission Reductions”.

of 15 Project Idea Note period) A period of 10 years ___ US$ / € A period of 7 years ___ US$ / € Please provide a financial analysis for the proposed CDM/JI activity, including the forecast financial internal rate of return for the project with and without the Emission Reduction revenues. Provide the financial rate of return at the Emission Reduction price indicated in section “Indicative CER/ERU/VER Price”. DO NOT assume any up-front payment from the Carbon Finance Unit at the World Bank in the financial analysis that includes World Bank carbon revenue stream. Provide a spreadsheet to support these calculations. The PIN Financial Analysis Model available at www.carbonfinance.org is recommended.

D. EXPECTED ENVIRONMENTAL AND SOCIAL BENEFITS

LOCAL BENEFITS  Less local emissions to air – SPM, SOx E.g. impacts on local  Less noise and more comfort for travelers air, water and other pollution. GLOBAL BENEFITS - Describe if other global benefits than greenhouse gas emission reductions can be attributed to the project. SOCIO-ECONOMIC ASPECTS What social and Overall improvement in efficiency of the transport of bulk economic effects can goods/passengers could reduce their landed costs to be attributed to the consumers – individual as well as industrial leading to all project and which would round economic development, with lower environmental not have occurred in a damages. comparable situation without that project? Indicate the communities and the number of people that will benefit from this project. About ¼ page

What are the possible - direct effects (e.g. employment creation, provision of capital required, foreign exchange effects)? About ¼ page What are the possible - other effects (e.g. training/education associated with the introduction of new processes, technologies and products and/or the effects of a project on other industries)? About ¼ page ENVIRONMENTAL Higher economic well-being is a key criterion in India’s STRATEGY/ strategy for CDM. This project can directly contribute to PRIORITIES OF THE lower costs of a more efficient technology and HOST COUNTRY consequent higher economic well-being for people using A brief description of rail transport. the project’s Environmental well being would be enhanced at the local consistency with the level due to reduced emissions of pollutants like SPM environmental strategy and SOx. and priorities of the Thus the project is in line with India’s environmental Host Country strategy and priorities. About ¼ page

ANNEX I - Technologies

1. Renewables 1a Biomass 1b. Biogas 1c. Bagasse 1d. Wind 1e. Hydro 1f. Geothermal 1g. Photovoltaic 1h. Solar Thermal 2. Fossil Fuel Switch 3. Energy Efficiency 3a. Cement Efficiency Improvement 3b. Construction material 3c. District heating 3d. Steel Gas Recovery 3e. Other Energy Efficiency 4. Waste Management 4a. Landfill Gas recovery/utilization 4b. Composting 4c. Recycling 4d. Biodigestor 4e. Wastewater Management 5. Coalmine/Coalbed Methane 6. Oil and Gas Sector 6a. Flared Gas Reduction 6b. Reduction of technical losses in distribution system

7. N2O removal 8. HFC23 Destruction 9. SF6 Recovery 10. Transportation 9a. Fuel switch 9b. Modal switch 11. Others