PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

CDM – Executive Board

page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03.1 - in effect as of: 28 July 2006

CONTENTS

A. General description of project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

D. Environmental impacts

E. Stakeholders’ comments

Annexes

Annex 1: Contact information on participants in the project activity

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring plan

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SECTION A. General description of project activity

A.1 Title of the project activity :

Huadian Laizhou Wind Farm Project Version 01 Date: March 11, 2008

A.2. Description of the project activity :

Huadian Laizhou Wind Farm Project (hereinafter referred to as the proposed project) is located in the southwest of Hutouya Town, Laizhou City, Province, P.R.. It is a grid-connected renewable energy project to generate zero-emission electricity by using advanced wind power generation technology to avoid CO 2 emissions from the business-as-usual scenario of electricity generation. The construction and operation of the proposed project will be implemented by Huadian Power International CO., LTD.

The proposed project is to install 27 sets of wind turbine with a unit capacity of 1500kW, providing a total installed capacity of 40.5MW. The proposed project is expected to deliver 77,320 MWh electricity annually to the North China Grid (NCG), transmitted through the Shandong Grid, with an annual average available operating hour estimated as 1909.2h. By providing electricity equivalent to the net generation of the project activity that would be sold to the North China Grid which is currently dominated by fossil fuel , an annual CO 2 emission reduction of approximately 83,160 tCO 2e is expected to be achieved.

The proposed project will not only provide renewable electricity to grid but also contribute to sustainable development of the host country by means of:  Providing reliable, zero-emitting renewable energy to the North China Grid  Contributing to local economic development through employment creation  Decrease the GHG emission by reducing the electricity generation from the fossil-fuel fired power plants, particularly the emission of SO x, NO x and dust.

A.3. Project participants : >> The parties involved in the project are shown in Table A-1:

Table A-1 Project participants Name of Party involved Private and/or public entity(ies) Kindly indicate if the Party (*)((host) indicates a host project participants (*) (as involved wishes to be considered Party) applicable) as project participant (Yes/No) P. R. China (host) Huadian Power International No CO., LTD Germany KfW No

See Annex 1 for details

A.4. Technical description of the project activity: PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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A.4.1. Location of the project activity :

A.4.1.1. Host Party (ies): >>

P. R. China

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

Shandong Province

A.4.1.3. City/Town/Community etc: >>

Hutouya Town, Laizhou 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 is located in the southwest of Hutouya Town, Laizhou City, Shandong Province, P.R.China. Laizhou City is located in the northwest of Jiaodong peninsula. The exact location is at the north latitude of 37°10′24-37°11 ′31N and the east longitude of 119°48′20-119°50 ′06E. Figure A.1 illustrates the location of the project.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 4 Huadian Laizhou Wind Farm Project Site

Figure A.1 The location of Huadian Laizhou Wind Farm Project

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

The proposed project falls into: Sectoral Scope 1: energy industries (renewable - / non-renewable sources) Project Activity: Electricity generation from wind power

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page 5 A.4.3. Technology to be employed by the project activity :

The proposed project is to install 27 sets of wind turbine with a capacity of 1500kW per unit, adding up to a total installed capacity of 40.5MW. Theses turbines are domestically manufactured by Sinovel Wind Co.Ltd, which will be arranged according to the wind resource conditions as well as the geographical characteristics of the site.

Table A-2 Turbine specifications Specification of Wind Turbine Rotor Diameter 77.4 m Area swept 4657 m 2 Number of blades 3 Rotor Speed 9.7-19 rpm Operational data Cut-in wind speed 3.0 m/s Nominal wind speed 11 m/s Cut-out wind speed 20 m/s Generator Nominal output 1500 kW Rated voltage 690 V

The average wind speed in the height of 70m is 6.6m/s and the intensity of wind power is 342.6W/m 2. The wind direction is relatively stable in the whole year, guaranteeing high turbine operation efficiency.

The proposed project will adopt ‘Unit Connection’ method. Each wind turbine is connected with one 0.69/35kV transformer by a 35kV cable line, then linked through 35kV cable lines into one 110/35kV boosting transformer substation, The generated electricity will be transmitted through local Lu Su 220kV transformer substation to the Shandong Grid and finally to the North China Grid.

The proposed project activity will provide training to the construction team. The staff of the project entity will receive training in the operation of the wind farm.

All technologies utilized in the project activity are domestic technologies and no technology will be transferred to China through this project activity.

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

7×3 year renewable crediting period is chosen for the proposed project. Annual emission reduction of the proposed project is estimated to be 83,160 tCO 2e and the total reduction will be 582,120 tCO 2e during the first crediting period (from January 1 st , 2009 to December 31 st , 2015).

The estimation of the emission reductions in the crediting period is presented in Table A-3.

Table A-3 Estimation of emission reduction over the first crediting period Annual estimation of emission Years reductions in tones of CO 2 e 2009 83,160 2010 83,160 2011 83,160 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 6 2012 83,160 2013 83,160 2014 83,160 2015 83,160 Total estimated reductions 582,120 (tones of CO 2 e) Total number of crediting years in 1 st crediting 7 period Annual average over the crediting period of 83,160 estimated reductions (tones of CO 2e)

A.4.5. Public funding of the project activity : >> No public funding from Annex I Parties is involved in this project activity.

SECTION B. Application of a baseline and monitoring methodology

B.1. Title and reference of the approved baseline methodology applied to the project activity : >> 1. ACM0002: “Consolidated baseline methodology for grid-connected electricity generation from renewable sources”, version 07, EB36; 2. “Tool to calculate the emission factor for an electricity system ”, version 01, EB35; 3. “Tool for the demonstration and assessment of additionality ”, version 04, EB36;

For more information regarding the methodology, please refer to the link: 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: >> As a grid-connected wind farm project, the proposed project meets all the applicability criteria of ACM0002 as following:  The project is a new wind power plant with the electricity capacity additions in Grid;  The project does not involve switching from fossil fuels to a renewable energy source at the proposed site;  The geographic and system boundaries for the electricity grid (NCG) to which the proposed project will be connected can be clearly identified and information on the characteristics of the grid is available.

Therefore, ACM0002 is applicable to the proposed project.

B.3. Description of how 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 the North China Grid.

The electricity system of the proposed project is the North China Grid which covers two cities, three PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 7 provinces and one autonomous region ( Municipality, Municipality, Hebei Province, Shanxi Province, Shandong Province and Inner Mongolia Autonomous Region)1.

According to the methodology ACM0002, the emission source and the category of GHG are described as in table B-1:

Table B-1 The emission source and the category of GHG Source Gas Included? Justification / Explanation CO 2 emissions CO 2 Yes Main emission source from the North Minor emission source. Excluded for CH No China Grid’s 4 simplification. This is conservative . electricity generation in Baseline fossil fuel fired power plants Minor emission source. Excluded for N O No that are 2 simplification. This is conservative . displaced due to the project activity. Excluded by the methodology for wind farm CO No 2 projects. Project The proposed Excluded by the methodology for wind farm Activity CH No project 4 projects .

Excluded by the methodology for wind farm N O No 2 projects .

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

1. Identification of alternatives to the project activity consistent with current laws and regulations

Under the current circumstances of the Chinese power sector there are four plausible alternatives to the project activity. These four plausible alternatives are:

Scenario a: The proposed project itself, but undertaken without being registered as a CDM project activity; Scenario b: Construction of a fuel-fired power plant with equivalent amount of annual electricity generation; Scenario c: Construction of a power plant using other renewable sources with equivalent electricity generation, such as hydropower projects or solar power plants; Scenario d: Equivalent electricity service provided by the North China Grid.

2. Justification of the selection of the baseline scenario

Scenario a: According to the investment analysis presented in B.5, the project IRR is 5.47% which is lower than the financial benchmark of Chinese Power Industries (8%)2. It is obvious that the project is not

1 http://cdm.ccchina.gov.cn/WebSite/CDM/UpFile/File1364.pdf 2 State Power Corporation of China. Interim Rules on Economic Assessment of Electrical Engineering Retrofit Projects. Beijing: China Electric Power Press, 2003 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 8 an attractive investment without the CDM revenues. The proposed project will not be constructed without the consideration of CERs sales revenues. Therefore, the Scenario a is not a realistic and credible alternative.

Scenario b: Considering the same annual electricity generation, the alternative baseline scenario for the proposed project should be a fuel-fired power plant with installed capacity equivalent to or less than 40.5MW. Furthermore, as the proposed project is a grid-connected project, the alternative baseline scenario must be a grid-connected fuel-fired power project. According to Chinese power regulations, fuel- fired power plants of less than 135MW are prohibited to construct in the areas covered by large grids 3. Therefore, the Scenario b is not a realistic and credible alternative.

Scenario c: According to the water resources investigation 4, there are not enough water resources able to install a hydropower plant with equivalent electricity generation in Shandong Province. Currently the installed capacity which is commercially exploitable is very little in Shandong Province, and most of which have been developed. It is impossible to construct a hydropower plant as an alternative to the proposed project. And due to technical limit and high investment & low incoming 5, it is impossible to use solar energy to generate equivalent electricity within the project area. Therefore, the Scenario c is not feasible.

Scenario d: The North China Grid as the provider for the same electricity output as the proposed project is in accordance with the regulations and policies and economically feasible. Therefore, the Scenario d is the only feasible baseline scenario.

In conclusion, the Scenario d - Equivalent electricity service provided by the North China Grid is the only realistic and credible baseline scenario.

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) : >> The following steps are used to demonstrate the additionality of the proposed project according to the “Tool for the demonstration and assessment of additionality” (Version 04):

Step 1. Identification of alternatives to the project activity consistent with current laws and regulations

Sub-step 1a. Define alternatives to the project activity:

Realistic and credible alternatives available to the proposed project that provide outputs or services comparable to the proposed project activity include: Alternative a: The proposed project itself, but undertaken without being registered as a CDM project activity; Alternative b: Construction of a fuel-fired power plant with equivalent amount of annual electricity generation; Alternative c: Construction of a power plant using other renewable sources with equivalent electricity

3 Notice on Strictly Prohibiting the Installation of Fuel-fired Generators with Capacity of 135 MW or below issued by the General Office of the State Council, decree no. 2002-6. 4 http://www.checc.cn/shuigis/province/provincedetail.jsp?provinceID=12 5 http://www.newenergy.org.cn/html/2006-7/2006710_10767.html PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 9 generation, such as hydropower projects or solar power plants; Alternative d: Equivalent electricity service provided by the North China Grid.

According to the water resources investigation, there are not enough water resources able to install a hydropower plant with equivalent electricity generation in Shandong Province. Currently the installed capacity which is commercially exploitable is very little in Shandong Province, and most of which have been developed. It is impossible to construct a hydropower plant as an alternative to the proposed project. And due to technical limit and high investment & low incoming, it is impossible to use solar energy to generate equivalent electricity within the project area. Therefore, the Scenario c is not feasible.

Sub-step 1b. Consistency with mandatory laws and regulations:

Considering the same annual electricity generation, the alternative baseline scenario for the proposed project should be a fuel-fired power plant with installed capacity equivalent to or less than 40.5MW. Furthermore, as the proposed project is a grid-connected project, the alternative baseline scenario must be a grid-connected fuel-fired power project. According to Chinese power regulations, fuel-fired power plants of less than 135MW are prohibited to construct in the areas covered by large grids. Therefore, the Scenario b is not a realistic and credible alternative.

For alternative a, the proposed project undertaken without being registered as a CDM project activity satisfies China’s regulations.

For alternative d, equivalent electricity service provided by NCG satisfies China’s regulations.

Therefore, alternative a and alternative d satisfy China’s regulations and will be analyzed in Step 2 as potential baseline alternatives.

Step 2. Investment Analysis

Sub-step 2a. Determine appropriate analysis method

The “Tool for the Demonstration and Assessment of Additionality” recommends three analysis methods: simple cost analysis, investment comparison analysis and benchmark analysis.

The proposed project produces economic benefits through the sales of electricity other than CDM related income; therefore, the simple cost analysis cannot be taken. The investment comparison analysis is not applicable to the proposed project because the alternative of the proposed project is “Equivalent electricity service provided by the North China Grid”, not a single project. Hence, the benchmark analysis is chosen and the Internal Return Rate (IRR) is used to assess the financial viability of the project activity.

Sub-step 2b. Option III. Apply benchmark Analysis

The financial benchmark rate of return (after tax) of Chinese Power Industries is 8% for the IRR of total investment(see footnote 2).

Sub-step 2c. Calculation and comparison of financial indicators

1) Parameters needed for calculation of IRR According to the Feasibility Study Report of the proposed project, parameters needed for calculation of IRR are as follows: PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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Table B-2 Parameters for calculation of IRR Installed capacity 40.5 MW Electricity delivered to grid 77,320 MWh Static total investment RMB 425,560,000 Expected tariff(Including VAT) RMB 0.60 /KWh Tax VAT 8.5% Income tax 33% Extra tax 10% of turnover tax Operation life 22 years Annual O&M cost RMB 4.59 million Expected CERs price EUR 10/tCO 2e

2) Comparison of the project IRR and the financial benchmark

In accordance with benchmark analysis, if the financial indicators of the proposed project, such as the project IRR, are lower than the benchmark, the proposed project is not considered to be financially attractive.

Table B-3 shows the project IRR with and without the income from CERs sale. Without the sales of CERs, the project IRR is 5.47% which is lower than the financial benchmark. Thus the proposed project is not financially acceptable. Taking into account the CDM revenues, the project IRR is 8.13% and higher than the financial benchmark. Therefore, the CDM revenues enable the project to overcome the investment barrier.

Table B-3 Comparison of IRR with and without the income from CERs sale Item Without CDM Benchmark With CDM IRR 5.47% 8% 8.13%

Sub-step 2d. Sensitivity analysis

For the proposed project, three parameters were selected as sensitive factors to check out the financial attractiveness:

1) Static total Investment 2) Expected tariff(Including VAT) 3) Annual O&M Cost

Assuming the above three factors vary in the range of -10% to 10%, the project IRR ( without the income from CERs sales) varies to different extents as shown in Table B-4 and Figure B.1 below.

Table B-4 Sensibility analysis of the proposed project -10% -7.5% -5% -2.5% 0 2.5% 5% 7.5% 10% Static total Investment 6.81% 6.45% 6.11% 5.79% 5.47% 5.17% 4.88% 4.60% 4.33% Expected 3.86% 4.27% 4.68% 5.08% 5.47% 5.86% 6.24% 6.62% 6.99% tariff(Including VAT) Annual O&M Cost 5.63% 5.59% 5.55% 5.51% 5.47% 5.44% 5.40% 5.36% 5.32%

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8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00% -10.00% -7.50% -5.00% -2.50% 0.00% 2.50% 5.00% 7.50% 10.00% Static total Investment Expected tariff(Including VAT) Annual O&M Cost

Figure B.1 Sensibility analysis of the proposed project

Within the reasonable changing range of Static total Investment, Expected tariff (Including VAT) and Annual O&M Cost, the IRR of the proposed project is always lower than the investment benchmark, then lacks financial attractiveness.

Based on the Investment Analysis above, the proposed project is not financially attractive without consideration of CERs sales revenues. Alternative a of the proposed project undertaken without being registered as a CDM project activity is not feasible thus not baseline scenario.

Step 4 Common practice analyses

Sub-step 4a. Analyze other activities similar to the proposed project activity

The proposed project is a new 40.5MW wind farm in Shandong Province. Activities similar to the proposed activity should be wind farms located in Shandong Province with the installed capacity between 15MW to 60MW and the operation date later than January 1 st , 2000. Those similar activities are listed in Table B-5 below.

Table B-5 Similar scale (15WM to 60WM) Wind farm Projects in Shandong Province PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 12 Capacity Name of wind farm 6 Operation year Remark (MW) Jimo Huawei 16.4 MW 2003 Invested by foreign company Shandong Changdao (Huaneng) 27.2 MW 2005 Registered CDM Project 7 Shandong Laizhou Diaolongzhui 48.75MW underway Registered CDM Project Shandong Lubei 48MW underway Applying for CDM Project 8 Shandong 48MW underway Applying for CDM Project Shandong Huaneng 49.5MW underway Applying for CDM Project

Sub-step 4b. Discuss any similar options that are occurring:

In 2006, the installed capacity of wind farms is up to 324.2MW, accounting for lower than 0.279% of the total installed capacity of the North China Grid 9. Therefore, it is clear that wind power is not common in Shandong Province.

Jimo Qingdao Huawei wind farm project got foreign company's support to overcome its investment barrier which is unavailable to the proposed project. And the above table demonstrates that other similar wind farm projects are all seeking support from applying as CDM projects for financial competition, Shandong Changdao (Huaneng) wind farm project and Shandong Laizhou Diaolongzhui wind farm project have successfully registered in EB.

Through the analysis and discussion above, there are essential distinction between the proposed project and the above projects in terms of the installed capacity and sources of investment and operation environment. Therefore, there is no similar project as the proposed project in Shandong Province. The proposed project is not a common practice.

In conclusion, the proposed project activity is additional.

B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

ACM0002, th e Baseline Emission Factor of Chinese Power Grids in 2007 10 are applied as the following steps, and the data are from China Electric Power Yearbook and China Energy Statistical Yearbook

The key methodological steps are:

I. Calculating the Baseline Emission （BE y）;

II. Calculating the Project Emission （PE y）;

III. Calculating the Leakage Emission （ LE y）;

6 The list of wind farm projects with size from 15MW to 60MW in Shandong Province is provided by Shandong Electrical Engineer Consult. 7 http://cdm.unfccc.int/Projects/projsearch.html 8 http://cdm.ccchina.gov.cn/WebSite/CDM/UpFile/File1698.pdf 9 China Electric Power Yearbook 2007, on the 637th page 10 http://cdm.ccchina.gov.cn/web/NewsInfo.asp?NewsId=1889 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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IV. Calculating the Emission Reduction （ER y）

I. Calculating the Baseline Emission

According to ACM0002, the baseline emission ( BE y) is the product of the baseline emission factor (EF grid,CM,y ) times the electricity supplied by the project activity to the grid ( EG y). First, the baseline emission factor is calculated as the Combined Margin emission factor.

I.1 Calculation of the baseline emission factor ( EF grid,CM,y )

According to ACM0002, the baseline emission factor ( EF grid,CM,y ) is calculated by “Tool to calculate the emission factor for an electricity system”.

The baseline emission factor ( EF grid,CM,y ) is the Combined Margin emission factor, which consists of the weighted average of Operating Margin emission factor and Build Margin emission factor by utilizing the latest data vintage (ex-ante) for the North China Grid

Six steps are utilized to calculate the baseline emission:

Step 1 – Identify the relevant electric power system. Step 2 – Select an operating margin (OM) method. Step 3 – Calculate the operating margin emission factor (EF grid,OM,y )according to the selected method. Step 4 – Identify the cohort of power units to be included in the build margin. Step 5 – Calculate the build margin emission factor (EF grid,BM,y ). Step 6 – Calculate the combined margin emissions factor (EF grid,CM,y ).

Step 1 – Identify the relevant electric power system

According to ‘the Baseline Emission Factor of Chinese Power Grids in 2007’ published by Chinese DNA, the relevant electric power system of the project is North China Grid, and the data of calculation are from China Electric Power Yearbook and China Energy Statistical Yearbook.

Step 2 –Select an operating margin (OM) method

The calculation of (EF grid,OM,y ) is based on one of the four following methods:

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

According to the total electricity generation in 2001-2005 of the North China Grid, the low-cost/must run resources constitute less than 50% of total amount grid generating output (see Annex 3 for details). Therefore, Method (a) simple OM is used to calculate the simple OM emission factor utilize the data of 2003-2005 in ex-ante option.

Step 3 – Select an operating margin (EF grid,OM,,y ) method according to the selected method

According to “Tool to calculate the emission factor for an electricity system ”, the simple OM emission PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 14 factor in y year ( EFgrid,OM,simple,y ) is calculated as the generation-weighted average CO 2 emissions per unit net electricity generation (tCO2/MWh) of all generating power plants serving the system, not including low-cost / must-run power plants / units. It may be calculated:

Option A: Based on data on fuel consumption and net electricity generation of each power plant / unit4, or Option B: Based on data on net electricity generation, the average efficiency of each power unit and the fuel type(s) used in each power unit, or

Option C: 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.

Because the fuel consumption and net electricity generation data of each power plant / unit in the North China Grid is unavailable, but the total net electricity generation, the fuel types and total fuel consumption of all power plants in the North China Grid is available, so option C is the only option.

The formula of EF grid,OM,simple,y in option C is: × × ∑ FC i,y NCV i,y EF CO i,,2 y = i EF grid ,OMsimple ,y (1) EG gen , y

Where:

EF grid,OMsimple,y = Simple operating margin CO 2 emission factor in year y (tCO 2/MWh); FC i,y =Amount of fossil fuel type i consumed in the project electricity system in year y (mass or volume unit); NCV i,y = Net calorific value (energy content) of fossil fuel type i in year y (GJ / mass or volume unit);

EF CO2,i,y = CO 2 emission factor of fossil fuel type i in year y (tCO 2/GJ); EG gen,y = Net electricity generated and delivered to the grid by all power sources serving the system, not including low-cost / must-run power plants / units, in year y (MWh); i = All fossil fuel types combusted in power sources in the project electricity system in year y; y = the three most recent years for which data is available at the time of submission of the CDM-PDD to the DOE for validation.

The data in the computation is from China Electric Power Yearbook 2004-2006.

Step 4 – Identify the cohort of power units to be included in the build margin

According to “Tool to calculate the emission factor for an electricity system ”, the sample group m consists of either 1) the five power plants that have been built most recently; Or 2) the power plant capacity additions in the electricity system that comprise 20% of the system generation and that built most recently. The one with larger annual generation should be used.

However, the information on the five power plants built most recently in the North China Grid is not publicly available. EB guidance on the application of approved methodology AM0005 now consolidated into ACM0002 can be applied for the purposed of estimating the build margin emission factor for each PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 15 fuel type 11 . The proposed deviations accepted and the alternative solutions in absence of data were as follows:

1) It is agreed to use the new capacity additions during the past 1-3 years to calculate the Build Margin emission factor;

2) It is agreed that the use of the installed capacity to replace the annual electricity generation to calculate the Build Margin emission factor;

3) As a similar conservative estimation, to calculate the total fuel consumption of different fuel-fired power plants by utilization of the most advanced commercialized technologies.

Using the average fuel efficiency of existing power plants as the baseline will bring about higher baseline emission and result in higher emission reductions, as the average fuel efficiency of old power plants is lower than the new power plants, which is not a conservative method.

Step 5. Calculation of the Build Margin Emission Factor ( EF grid,BM,y )

Due to the difficulty of separating the coal-fired, gas-fired or oil-fired installed capacity from the total fuel-fired installed capacity, according to the suggestion on the alternative solutions in absence of data by CDM EB, the Build Margin emission factor (EF BM,y ) will be calculated as :

1) Based on the most recent year’s energy balance of the North China Grid, calculating the percentages of CO 2 emissions from the coal-fired, oil-fired and gas-fired power plants in total fuel-fired CO 2 emissions;

2) Based on the most advanced commercialized technologies which applied by the coal-fired, oil-fired and gas-fired power plants, calculating the fuel-fired emission factor of the North China Grid;

3) Calculating the Build Margin emission factor (EF BM,y ) through fuel-fired emission factor times the weighted-average of fuel-fired installed capacity which is more close to 20% in the new capacity additions. The detailed calculation as follows:

Sub-Step 5a. Calculating the percentages of CO 2 emissions from the coal-fired, oil-fired and gas-fired power plants in total fuel-fired CO 2 emissions .

× ∑ Fi, j,y COEF i, j, y ∈ λ = i Coal , j (2) Coal × ∑ Fi, j,y COEF i, j,y i, j × ∑ Fi, j,y COEF i, j,y ∈ λ = i Oil , j (3) Oil × ∑ Fi, j, y COEF i, j,y i, j

11 http://cdm.unfccc.int/UserManagement/FileStorage/6POIAMGYOEDOTKW25TA20EHEKPR4DM PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 16 × ∑ Fi, j,y COEF i, j,y ∈ λ = i Gas , j (4) Gas × ∑ Fi, j,y COEF i, j, y i, j

Where: Fi ,j, y is the amount of fuel i (in a mass or volume unit) consumed by relevant power sources j in year(s) y COEF i,j,y is the CO 2 emission coefficient of fuel i (tCO 2e/ mass or volume unit of the fuel), taking into account the carbon content of the fuels used by relevant power sources j and the percent oxidation of the fuel in year(s) y λCoal is the percentage of CO 2 emissions from the coal-fired power plants in total fuel-fired CO 2 emissions; λOil is the percentage of CO 2 emissions from the oil-fired power plants in total fuel-fired CO 2 emissions; λGas is the percentage of CO 2 emissions from the gas-fired power plants in total fuel-fired CO 2 emissions;

Sub-Step 5b. Calculating the fuel-fired emission factor

= λ × + λ × + λ × EF Thermal Coal EF Coal , Adv Oil EF Oil , Adv Gas EF Gas , Adv (5)

Where: EF Thermal is the fuel-fired emission factor; EF Coal,Adv ，EF Oil,Adv and EF Gas ，Adv are corresponding to the emission factors of coal, oil and gas fired power plants which are applied by the most advanced commercialized technologies.

6.3 × EF ×44 EF = CO i,,2 y ()i∈Coal (6) Coal ,Adv × × FCR Coal ,Adv 1000 12 6.3 × EF × 44 EF = CO i,,2 y ()i∈Oil (7) Oil ,Adv × × FCR Oil ,Adv 1000 12 6.3 × EF ×44 EF = CO i,,2 y ()i∈Gas (8) Gas ,Adv × × FCR Gas ,Adv 1000 12

Sub-Step 5c. Calculating the Build Margin Emission Factor.

CAP = Thermal × EF BM , y EF Thermal (9) CAP Total Where: EF BM,y is the Build Margin emission factor with advanced commercialized technologies for year y; CAP Total is the new capacity additions; CAP Thermal is the new fuel-fired capacity additions.

Step 6. Calculation of the Baseline Emission Factor (EF gid,CM,y )

= × + × EF grid ,CM ,y EF grid ,OM ,y wOM EF grid ,BM ,y wBM (10)

Where: ω ω The default weights of wind farm project are OM =0.75 and BM = 0.25.

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page 17 I.2. Calculation of the Baseline Emission ( BE y)

= ( − )× BE y EG y EG baseline EF grid ,CM , y (11)

Where: BE y is baseline emissions in year y (tCO2/yr). = − EG y is electricity supplied by the project activity to the grid (MWh), EG y EG PJ to grid, y EG grid to PJ, y .

EG baseline is baseline electricity supplied to the grid in the case of modified or retrofit facilities (MWh). For new power plants this value is taken as zero. EF grid,CM,y is combined margin CO2 emission factor for grid connected power generation in year y calculated using the latest version of the “Tool to calculate the emission factor for an electricity system”.

II. Project Emission

According to the methodology, there are no expected project emissions for a wind farm project.

Therefore, PE y=0

III. Leakage Emission

According to the methodology, the leakage of the project need not be considered. LE y=0.

IV. Emission Reduction

Emission reductions will be estimated based on the baseline emission, the project emission and the leakage emission. The emission reduction ER y due to the proposed project activity during a given year y is calculated as follows:

= − − ER y BE y PE y LE y (12)

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

Data / Parameter: Fi ,p, y Data unit: 10 4t, 10 7m3 Description: the amount of fuel i (in a mass or volume unit) consumed by the relevant power sources in p province in year(s) y Source of data used: China Energy Statistical Yearbook 2004-2006 Value applied: See Annex 3 for details Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually applied : Any comment:

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page 18 Description: the amount of fuel i (in a mass or volume unit) consumed by North China Grid in year(s) y Source of data used: China Energy Statistical Yearbook 2004-2006 Value applied: See Annex 3 for details Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually applied : Any comment:

Data / Parameter: EF CO 2 ,i Data unit: tC/TJ Description: the CO 2 emission factor per unit of energy of the fuel i Source of data used: Table 1.4 of Chapter 1 of Vol.2 of the 2006 IPCC Guidelines Value applied: See Annex 3 for details Justification of the Data that is collected from the IPCC because the local data is not available. choice of data or description of measurement methods and procedures actually applied : Any comment:

Data / Parameter: NCV i Data unit: TJ/ mass or volume unit of a fuel Description: the net calorific value (energy content) per mass or volume unit of a fuel i Source of data used: China Energy Statistical Yearbook 2006 Value applied: See Annex 3 for details Justification of the Local values choice of data or description of measurement methods and procedures actually applied : Any comment:

Data / Parameter: Installed Capacity Data unit: MW Description: Installed capacities of the North China Grid 2001-2005 Source of data used: China Electric Power Yearbook 2002-2006 Value applied: See Annex 3 for details Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 19 applied : Any comment:

Data / Parameter: Electricity Generation Data unit: MWh Description: The electricity generated by source j Source of data used: China Electric Power Yearbook 2002-2006 Value applied: See Annex 3 for details Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually applied : Any comment:

Data / Parameter: EG gen,y Data unit: MWh Description: 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. Source of data used: China Electric Power Yearbook 2004-2006 Value applied: See Annex 3 for details Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually applied : Any comment:

Data / Parameter: FCR Coal ，Adv Data unit: % Description: The fuel consumption rate of coal-fired power plants which employed the most advanced commercialized technologies. Source of data used: From China’s DNA Value applied: 35.82% Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually applied : Any comment:

Data / Parameter: FCR Oil ，Adv Data unit: % Description: The fuel consumption rate of Oil-fired power plants which employed the most advanced commercialized technologies. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 20 Source of data used: From China’s DNA Value applied: 47.67% Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually applied : Any comment:

Data / Parameter: FCR Gas, ，Adv Data unit: % Description: The fuel consumption rate of Gas-fired power plants which employed the most advanced commercialized technologies. Source of data used: From China’s DNA Value applied: 47.67% Justification of the Data that is collected from the official statistics. choice of data or description of measurement methods and procedures actually applied : Any comment:

B.6.3 Ex-ante calculation of emission reductions:

I. Baseline Emission

I.1 Calculation of the baseline emission factor ( EF grid,CM,y )

Therefore, the North China Grid’s Operating Margin emission factor (EF Grid,OM,simple ) is the weighted emission factors of 2003-2005:

EF grid ,OMsimple , y =1.1208 tCO 2e/MWh

The Build Margin emission factor can be calculated by formulae (2)-(9): EF grid,BM,y =0.9397 tCO 2e/MWh

The baseline emission factor EF y is calculated as formula (10). Thus, EF grid,CM,y = 1.07553 tCO 2e/MWh

I.2. Calculation of the Baseline Emission ( BE y)

The baseline emission BE y is calculated as formulae (11): BE y= (EG y － EG baseline )×EF grid,CM,y = (EG PJ to grid,y － EG grid to PJ,y － EG baseline )×EF grid, CM,y = (77,320-0-0) × 1.07553=83,160 t CO2e /year

See annex 3 for details.

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page 21 II. Project Emission

PE y = 0.

III. Leakage Emission

LE y=0.

IV. Emission Reduction

The Emission Reductions ( ER y) for the proposed project activity could be calculated as the formula (12): ER y =83,160-0-0 = 83,160 tCO 2e /year

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

Table B-6 Estimation of emission reductions due to the project Estimation of Estimation of Estimation of Estimation of overall project activity baseline leakage emission Year emissions emissions (tonnes of reductions (tonnes of CO 2e) (tonnes of CO 2e) CO 2e) (tonnes of CO 2e) 2009 0 83,160 0 83,160 2010 0 83,160 0 83,160 2011 0 83,160 0 83,160 2012 0 83,160 0 83,160 2013 0 83,160 0 83,160 2014 0 83,160 0 83,160 2015 0 83,160 0 83,160 Total 0 582,120 0 582,120 (tonnes of CO 2e) Note: The starting date of the first crediting period is January 1 st , 2009, and the deadline is December 31 st , 2015.

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

B.7.1 Data and parameters monitored: Data / Parameter: EG PJ to grid,y Data unit: MWh Description: Net Electric power supplied to the grid Source of data to be Measured by meters used: Value of data applied 77,320 MWh for the purpose of calculating expected emission reductions in section B.5 Description of Hourly measurement and monthly recording; 100% of data will be monitored PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 22 measurement methods and electronic archived. and procedures to be applied: QA/QC procedures to The measurement will in compliance with the National Guidelines and be applied: requirements of the grid company for accuracy and reliability. The calibration will be carried out according to relevant national standards and regulations by authorized organisation. Any comment: Double check by receipt of sales

B.7.2 Description of the monitoring plan:

1. Key data to be monitored The data required to be monitoring during the implementation of the proposed project include:  Net electricity supplied to the grid by the project

2. The Operational and Management Structure for Monitoring

To monitor the project emission reductions and any leakage effects, the project owner will set up a CDM Monitoring Office and designate a qualified staff responsible for all relevant matters, including monitoring of emission reductions, data collection and archiving, QC/QA, and verification. The structure of the CDM Monitoring Office is outlined in Figure B.2.

CDM Monitoring Office

Office Manager

Monitoring Section Audit Section

Figure B.2 Organization chart of CDM project management office

The responsibilities of the sections are briefly described as following:  Office Manager: Manage the work of CDM Monitoring Office; Charge of all relevant matters with the monitoring activity.  Monitoring Section: Monitor, collect and archive the data according to the Monitoring Plan.  Audit Section: Audit the work of Monitoring Section and execute the QC/QA procedures according to the Monitoring Plan.

3. Metering Systems The net electricity supply will be metered. The main meter should be installed at the position both agreed by the project owner and Shandong Province Grid Company to measure the net electricity supplied to the grid by the project, which is treated as the main recording system. The backup meter at the project site is employed to measure the output electricity given the main metering system fails, which is treated as the backup recording system. The accuracy degree of the both electric meters is 0.2S.

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page 23 4. Calibration

The calibration of the electric meters will be periodically carried out according to relevant national standards and regulations. The electric meters for the electricity delivered to the grid by the project should be tested by a qualified metrical organization co-authorized by the owner and Shandong Province Grid Company. After the calibration, the electric meters should be jointly inspected and sealed on the behalf of the parties concerned and shall not be accessible by either party except in the presence of the other party or its accredited representatives.

If following works for the main metering system of the electricity delivered to the grid by the project happen: remove, replacement, disassembling, sealing, seal-breaking, accident treatment and etc, the Shandong Province Grid Company is the responsible operator, and the representative of the project owner should attend.

If the parties have dissidence on the operation of the main metering system, the main metering system will be calibrated by the qualified metrical organization co-authorized by both parties. Both parties will decide the amount of electricity depending on the results of the calibration and relevant regulations. If the parties have dissidence on the calibration results, a high qualification metrical organization will be authorized to re-calibrate the meters.

If the main metering system of the electricity delivered to the grid by the project has failure, damage or missing, the amount of the electricity delivered to the grid by the project will be determined by the records of the backup metering system, the records of other relevant metering system, or other measurements agreed by both parties.

5. Data Collection and Management

Two methods will be used to measure and record the data: monthly hand-log, and automatic log by the metering government system. The data collected by the metering government system will be the main reference for electricity sales. If the data difference between the data from monthly hand-log and automatic log by the metering government system is larger than the permit, the data from monthly hand- log will be the reference after the validation of the grid company.

Under the monitoring system, a data management system will be set up for keeping data and information, and tracking information from the primary source to data calculation, in paper format. It is the responsibility of the owner to provide additional necessary data, information and document for validation and verification requirements of respective DOE.

Paper documentation such as maps, diagrams and environmental assessment will be collected in a central place, together with this monitoring plan. In order to facilitate auditor’s reference, monitoring results should be indexed. All paper-based information will be stored by the owner and kept at least one copy.

The data monitored and required for verification and issuance will be kept for two years after the end of the crediting period or the last issuance of CERs for this proposed project activity, whichever occurs later.

6. Verification

A qualified DOE will be selected and engaged in the verification. The owner will make the arrangements for the verification and prepare for the audit and verification process to the best of its abilities. The owner PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 24 will facilitate the verification by providing the DOE all required necessary information, before, during and, in the event of queries, after the verification.

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: 11/03/ 2008

Name of persons determining the baseline study and monitoring methodology: 1) Miss. Fu Shujie, CDM Project Development Center of CPCEC, E-mail: [email protected] , Tel: +86 10 85285120-809. 2) Mr. Han Shudong, CDM Project Development Center of CPCEC, E-mail: [email protected], Tel: +86 10 85285120-812. 3) Miss. Meng Jing, CDM Project Development Center of CPCEC, E-mail: [email protected], Tel: +86 10 85285120-806. 4) Miss. Li [email protected], CDM Project Development Center of CPCEC, E-mail: [email protected], Tel: +86 10 85285120-830.

Neither CPCEC nor its employees are project participants.

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 : >> 29/11/2007

C.1.2. Expected operational lifetime of the project activity: >> 22 years 0 month

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

C.2.1. Renewable crediting period

C.2.1.1. Starting date of the first crediting period : >> 01/01 /2009

C.2.1.2. Length of the first crediting period : >> 7 years 0 month

C.2.2. Fixed crediting period :

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page 25

C.2.2.1. Starting date: >> Not applicable

C.2.2.2. Length: >> Not applicable

D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: >> The Environmental Impact Assessment (EIA) for the proposed project was carried out by Shandong University in March, 2007. The EIA has been approved by Shandong Environmental Protection Administration.

Atmosphere Waste gases and suspended dusts are mainly caused in the construction period. The following countermeasures are applied: 1) Use cofferdam to curtain the construction area 2) Prohibit operation under strong wind and spray in windy weather

Water Waste water mainly comes from construction slurry and domestic sewage. The following countermeasures are applied: 1) Construct a sedimentation basin to dispose waste water 2) Build an environmental friendly toilet to treat sanitary sewage

Noise A. Construction period It mainly comes from the operations of construction machineries. The following countermeasures are applied: 1) Decentralize those noise resources 2) Choose low noise machineries and arrange an appropriate operation schedule 3) Take noise-attenuation measures or install some temporary noise baffles at night

B. Operation period It mainly comes from the operations of wind turbines. The following countermeasures are applied: 1) Chooses low-noise wind turbines 2) Install damping devices

Solid Waste Solid waste mainly comes from construction trash and domestic solid waste. The following countermeasures are applied: 1) Pileup solid waste centrally, carry out to dispose regularly in designated place 2) Use environmental friendly toilet to dispose degradable garbage

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page 26 The proposed project site is away from the main flight route of migratory birds. There will be little influence on birds.

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 : >> According to the EIA, no significant environmental impacts are discovered by the project participants or the host party. Shandong Environmental Protection Administration has approved the EIA.

SECTION E. Stakeholders’ comments >> E.1. Brief description how comments by local stakeholders have been invited and compiled: >> To get public attitude towards the proposed project, the project owner distributed questionnaires soliciting public input. The investigation lasted for one month.

30 questionnaires were distributed and all of the distributed questionnaires had been returned with 100% respond rate.

The questions in the questionnaires including: Do you think the construction of wind farm will impose noise pollution on residential milieu? Do you think the construction of wind farm will destroy local environment? Do you think the construction of wind farm will bring positive influence to residential milieu? Do you agree with the construction of the proposed project? Do you support the application of CDM for the proposed project?

The investigated stakeholders include residents, technicians and related governmental officials. The outcome of the consultation is described in section E.2.

E.2. Summary of the comments received: >> Comments from the questionnaires  100% of respondents think the construction of the proposed project will not impose any noise pollution on residential milieu;  100% of respondents think the construction of the proposed project will not destroy local environment;  76.7% of respondents think the construction of the proposed project will bring benefits to residential milieu, mainly mitigate the burden of electricity cost;  100% of respondents agree with the construction of the proposed project and 100% support the proposed project with CDM application.

E.3. Report on how due account was taken of any comments received: >> The survey shows that the proposed project receives very strong support from local residents. Little negative comments have been received on the project. Moreover, the local community possesses strong positive comments on the effects that the proposed project will benefit the local economy and infrastructure. There has therefore been no reason to modify the plans due to comments received. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 27 Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

The Project Entity

Organization: Huadian Power International CO., LTD Street/P.O.Box: No. 278 east Road, Laizhou City, Shandong Province. Building: / City: Laizhou City State/Region: Shandong Province Postfix/ZIP: 261400 Country: P.R. China Telephone: 0535-2808612 FAX: 0535-2808600 E-Mail: [email protected] URL: / Represented by: Jin Chunguang Title: / Salutation: / Last Name: Chunguang Middle Name: / First Name: Jin Department: / Mobile: Direct FAX: / Direct tel: / Personal E-Mail: [email protected]

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page 28 The Purchasing Party

Organization: KfW Street/P.O.Box: Palmengartenstr. 5-9. Building: City: Frankfurt State/Region: Postfix/ZIP: 60325 Country: Germany Telephone: +49 69 7431 4032 FAX: +49 69 7431 4775 E-Mail: URL: www.kfw.de/carbonfund Represented by: Florian Sekinger Title: Senior Project Manager Salutation: Mr. Last Name: Sekinger Middle Name: First Name: Florian Department: KfW Carbon Fund Mobile: Direct FAX: +49 69 7431 4775 Direct tel: +49 69 7431 4032 Personal E-Mail: [email protected]

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page 29 Annex 2

INFORMATION REGARDING PUBLIC FUNDING

No public funding from Annex I parties is involved in this project activity. PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 30 Annex 3

BASELINE INFORMATION

I Calculation of the baseline emission factor ( EF grid,CM,y )

Step 1 – Identify the relevant electric power system

According to ‘the Baseline Emission Factor of Chinese Power Grids in 2007’ published by Chinese DNA, the relevant electric power system of the project is North China Grid, and the data of calculation are from China Electric Power Yearbook and China Energy Statistical Yearbook.

Step 2 –Select an operating margin (OM) method

According to the electricity generation in 2001-2005 of the North China Grid, the low-cost/must run resources constitute less than 50% of total amount grid generating output (see Table 2). Method (a) simple OM is used to calculate the simple OM emission factor utilize the data of 2005-2007 in ex-ante option for the proposed project.

Step 3 – Calculation of the Operating Margin Emission Factor ( EF OM,y ) The Emission Factor, Average Low Caloric Value applied in the calculation of the Operating Margin and Build Margin emission factor are listed in table 1 .

Table 1 Related Parameters Fuel Emission Factor 1 （tc/TJ ） Average Low Caloric Value 2 H I Raw Coal 25.8 20908 MJ/t Cleaned Coal 25.8 26344 MJ/t Other Washed Coal 25.8 8363 MJ/t Coke 29.2 28435 MJ/t Coke Oven Gas 12.1 16726 MJ/km 3 Other Gas 12.1 5227 MJ/km 3 Crude Oil 20 41816 MJ/t Gasoline 18.9 43070 MJ/t Kerosene 19.6 43070 MJ/t Diesel Oil 20.2 42652 MJ/t Fuel Oil 21.1 41816 MJ/t PLG 17.2 50179 MJ/t Refinery Gas 15.7 46055 MJ/t Natural Gas 15.3 38931 MJ/km 3 Other Petroleum Products 20 38369 MJ/t Other Coking Products 25.8 28435 MJ/t Other Energy 0 0 Source ：1 “2006 IPCC Guidelines for National Greenhouse Gas Inventories ：Volume 2 Energy”, Table 1.3&1.4, Chapter 1. 2 “China Energy Statistical Yearbook 2006”, p287.

Table 2 Electricity Generation of North China Grid (2001-2005) Electricity Generation (MWh) Year Split of Thermal Hydro Thermal Total 2001 2927000 358066000 360993000 99.19%

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page 31 2003 3798000 457675000 461654000 99.14%

2004 3758000 526772000 530804000 99.24%

2005 4093000 603231000 607782000 99.25% Sources: China Electric Power Yearbook 2002-2006

The calculation of the Operating Margin emission factor of North China Grid for the year 2003-2005 is listed in the following table:

Table 3 Calculating the simple OM for the year 2003 Inner Shan CO Emission Fuel Unit Beijing Tianjin Hebei Shanxi Total 2 Mongolia dong （tCO 2e） K=G*H*I* 44/12/10000 (mass) A B C D E F G=A+B+C+D+E+F K=G*H*I*J* 44/12/1000 (volume) Raw Coal 10 4t 714.73 1052.74 5482.64 4528.51 3949.32 6808 22535.94 445737636.11 Cleaned coal 10 4t 0 0 0 0 0 9.41 9.41 234510.60 Other Washed 10 4t 6.31 0 67.28 208.21 0 450.9 732.7 5796681.31 Coal Coke 10 4t 0 0 0 0 2.8 0 2.8 85244.34 Coke Oven 10 8m3 0.24 1.71 0 0.9 0.21 0.02 3.08 228559.67 Gas Other Gas 10 8m3 16.92 0 10.63 0 10.32 1.56 39.43 914399.71 Crude Oil 10 4t 0 0 0 0 0 29.68 29.68 910139.18 Gasoline 10 4t 0 0 0 0 0 0.01 0.01 298.48 Diesel Oil 10 4t 0.29 1.35 4 0 2.91 5.4 13.95 440693.26 Fuel Oil 10 4t 13.95 0.02 1.11 0 0.65 10.07 25.8 834672.45 PLG 10 4t 0 0 0 0 0 0 0 0 Refinery 10 4t 0 0 0.27 0 0 0.83 1.1 29163.56 Gas Natural Gas 10 8m3 0 0.5 0 0 0 1.08 1.58 345076.60 Other Petroleum 10 4t 0 0 0 0 0 0 0 0 Products Other Coking 10 4t 0 0 0 0 0 0 0 0 Products Other 10 4t 9.83 0 0 0 0 39.21 49.04 0 Energy tce Total 455557075.27 Sources ：China Energy Statistical Yearbook 2004

Table 4 Electricity Generation of Fuel-fired power plants of NCG in 2003 Electricity generation （MWh ） Auxiliary power ratio （%） Total (MWh ） Beijing 18608000 7.52 17208678.4 Tianjin 32191000 6.79 30005231.1 Hebei 108261000 6.5 101224035 Shanxi 93962000 7.69 86736322.2 Inner Mongolia 65106000 7.66 60118880.4 Shandong 139547000 6.79 130071758.7 Total 425364905.8 Sources: China Electric Power Yearbook 2004

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page 32 Table 5 Calculating CO 2 Emission of Northeast China Grid in 2003 Fuel Unit Liaoning Jilin Heilongjiang Total CO 2 Emission （tCO 2e） K=G*H*I*J* 44/12/10000 (mass) A B C G=A+B+C K=G*H*I*J* 44/12/1000 (volume) Raw Coal 10 4t 3556.51 2006.66 2763.62 8326.79 164695313 Cleaned coal 10 4t 70.83 0 3 73.83 1839948.734 Other Washed Coal 10 4t 617.04 15.9 53.41 686.35 5429988.017 Coke 10 4t 0 0 0 0 0 Coke Oven Gas 10 8m3 1.66 0 0 1.66 123184.7599 Other Gas 10 8m3 5.31 0 0 5.31 123141.3249 Crude Oil 10 4t 3.39 0 0 3.39 103954.576 Gasoline 10 4t 0 0 0 0 0 Diesel Oil 10 4t 0.32 0.34 0 0.66 20850.00368 Fuel Oil 10 4t 14.87 0.7 4.32 19.89 643474.2257 PLG 10 4t 1.55 0 0 1.55 49051.64513 Refinery Gas 10 4t 4.03 0 0.46 4.49 119040.35 Natural Gas 10 8m3 0 0.04 4.47 4.51 984997.1241 Other Petroleum Products 10 4t 0 0 0 0 0 Other Coking Products 10 4t 0 0 0 0 0 10 4t Other Energy 29.38 0 0 29.38 0 tce Total 174132943.7 Net Electricity imports to NCG 4244380MWh Sources: China Energy Statistical Yearbook 2004 China Electric Power Yearbook 2004

Table 6 Electricity Generation of Northeast China Grid in 2003 Electricity Electricity generation （MWh ） Auxiliary power ratio （%） supply （MWh ） Liaoning 82336000 7.17 76432509 Jilin 33883000 7.32 31402764 Heilongjiang 49598000 8.48 45392090 Total 153227363 Sources: China Electric Power Yearbook 2004

Therefore, the average emission factor of Northeast China Grid in 2003 is 1.13656 tCO 2/MWh, the OM emission factor of NCG is

EF Grid,OM,simple,2003 =（1.13656×4244380+455551793.43 ）/（4244380+425364905.8 ）=1.071615 tCO 2/MWh

Table 7 Calculating the simple OM for the year 2004 Inner Shan CO Emission Fuel Unit Beijing Tianjin Hebei Shanxi Total 2 Mongolia dong （tCO 2e） K=G*H*I*J* 44/12/10000 (mass) A B C D E F G=A+B+C+D+E+F K=G*H*I*J* 44/12/1000 (volume) Raw Coal 10 4t 823.09 1410 6299.8 5213.2 4932.2 8550 27228.29 538547476.6 Cleaned coal 10 4t 0 0 0 0 0 40 40 996856.96 Other 10 4t 6.48 0 101.04 354.17 0 284.22 745.91 5901190.882 Washed Coal 6697.769467 Coke 10 4t 0 0 0 0 0.22 0 0.22

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page 33 Coke Oven 10 8m3 0.55 0 0.54 5.32 0.4 8.73 15.54 1153187.451 Gas Other Gas 10 8m3 17.74 0 24.25 8.2 16.47 1.41 68.07 1578574.385 Crude Oil 10 4t 0 0 0 0 0 0 0 0 Gasoline 10 4t 0 0 0 0 0 0 0 0 Diesel Oil 10 4t 0.39 0.84 4.66 0 0 0 5.89 186070.4874 Fuel Oil 10 4t 14.66 0 0.16 0 0 0 14.82 479451.3838 PLG 10 4t 0 0 0 0 0 0 0 0 Refinery Gas 10 4t 0 0.55 1.42 0 0 0 1.97 52229.28682 Natural Gas 10 8m3 0 0.37 0 0.19 0 0 0.56 122305.6296 Other Petroleum 10 4t 0 0 0 0 0 0 0 0 Products Other Coking 10 4t 0 0 0 0 0 0 0 0 Products 10 4t Other Energy 9.41 0 34.64 109.73 4.48 0 158.26 0 tce Total 549024040.8 Sources ：China Energy Statistical Yearbook 2005

Table 8 Electricity Generation of Fuel-fired power plants of NCG in 2004 Total Electricity generation （MWh ） Auxiliary power ratio （%） （MWh ） Beijing 18579000 7.94 17103827.4 Tianjin 33952000 6.35 31796048 Hebei 124970000 6.50 116846950 Shanxi 104926000 7.70 96846698 Inner Mongolia 80427000 7.17 74660384.1 Shandong 163918000 7.32 151919202.4 Total 489173109.9 Sources: China Electric Power Yearbook 2005

Table 9 Calculating CO 2 Emission of Northeast China Grid in 2004 Fuel Unit Liaoning Jilin Heilongjiang Total CO 2 Emission （tCO 2e） K=G*H*I*J* 44/12/10000 (mass) A B C G=A+B+C K=G*H*I*J* 44/12/1000 (volume) Raw Coal 10 4t 4144.2 2310.9 3084.8 9539.9 188689376.8 Cleaned coal 10 4t 84.75 1.09 4.88 90.72 2260871.585 Other Washed Coal 10 4t 577.67 14.26 61 652.93 5165589.096 Coke 10 4t 0 0 0 0 0 Coke Oven Gas 10 8m3 4.83 2.91 0 7.74 574367.4948 Other Gas 10 8m3 57.33 4.19 0 61.52 1426676.894 Crude Oil 10 4t 0 0 0 0 0 Gasoline 10 4t 0 0 0 0 0 Diesel Oil 10 4t 2.04 1.16 0.24 3.44 108672.7465 Fuel Oil 10 4t 12.81 1.78 2.86 17.45 564536.2111 PLG 10 4t 2.19 0 0 2.19 69305.22764 Refinery Gas 10 4t 9.79 0 1.14 10.93 289779.7487 Natural Gas 10 8m3 0 0.03 2.53 2.56 559111.4496 Other Petroleum Products 10 4t 0 0 0 0 0 Other Coking Products 10 4t 0 0 0 0 0 10 4t Other Energy 26.97 5.07 0 32.04 0 tce Total 199708287.3 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 34 Net Electricity imports to NCG 4514550MWh Sources: China Energy Statistical Yearbook 2005 China Electric Power Yearbook 2005

Table 10 Electricity Generation of Northeast China Grid in 2004 Electricity generation Auxiliary Electricity generation Auxiliary Other Total of fuel-fired power power ratio of hydropower plants power ratio (MWh) （MWh ） plants （MWh ） （%） （MWh ） （%） Liaoning 84543000 7.21 3947000 1.33 264000 82605954.6 Jilin 33242000 7.68 6147000 0.75 81000 36870911.9 Heilongjiang 53482000 7.84 1338000 1.27 46000 50656018.6 Total 170132885.1 Sources: China Electric Power Yearbook 2005

Therefore, the average emission factor of Northeast China Grid in 2004 is 1.17411 tCO 2/MWh, the OM emission factor of NCG is

EF Grid,OM,simple,2004 =（1.17411×4514550+549031577.7 ）/（4514550+489173109.9 ）=1.122840 tCO 2/MWh

Table 11 Calculating the simple OM for the year 2005 Inner Shan CO Emission Fuel Unit Beijing Tianjin Hebei Shanxi Total 2 Mongolia dong （tCO 2e） K=G*H*I*J* 44/12/10000 (mass) A B C D E F G=A+B+C+D+E+F K=G*H*I*J* 44/12/1000 (volume) Raw Coal 10 4t 897.75 1675.2 6726.5 6176.5 6277.2 10405.4 32158.53 636062535.8 Cleaned coal 10 4t 0 0 0 0 0 42.18 42.18 1051185.664 Other 10 4t 6.57 0 167.45 373.65 0 108.69 656.36 5192725.191 Washed Coal Coke 10 4t 0 0 0 0 0.21 0.11 0.32 9742.210133 Coke Oven 10 8m3 0.64 0.75 0.62 21.08 0.39 0 23.48 1742396.483 Gas Other Gas 10 8m3 16.09 7.86 38.83 9.88 18.37 0 91.03 2111027.27 Crude Oil 10 4t 0 0 0 0 0.73 0 0.73 22385.49867 Gasoline 10 4t 0 0 0.01 0 0 0 0.01 298.4751 Diesel Oil 10 4t 0.48 0 3.54 0 0.12 0 4.14 130786.3867 Fuel Oil 10 4t 12.25 0 0.23 0 0.06 0 12.54 405689.6325 PLG 10 4t 0 0 0 0 0 0 0 0 Refinery Gas 10 4t 0 0 9.02 0 0 0 9.02 239141.2016 Natural Gas 10 8m3 0.28 0.08 0 2.76 0 0 3.12 681417.0792 Other Petroleum 10 4t 0 0 0 0 0 0 0 0 Products Other Coking 10 4t 0 0 0 0 0 0 0 0 Products 10 4t Other Energy 8.58 0 32.35 69.31 7.27 118.9 236.41 0 tce Total 647649330.9 Sources ：China Energy Statistical Yearbook 2006

Table 12 Electricity Generation of Fuel-fired power plants of NCG in 2005 Total Electricity generation （MWh ） Auxiliary power ratio （%）* （MWh ） Beijing 20880000 7.73 19265976 Tianjin 36993000 6.63 34540364 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 35 Hebei 134348000 6.57 125521336 Shanxi 128785000 7.42 119229153 Inner Mongolia 92345000 7.01 85871616 Shandong 189880000 7.14 176322568 Total 560751013 Sources: China Electric Power Yearbook 2006

Table 13 Calculating CO 2 Emission of Northeast China Grid in 2005 Fuel Unit Liaoning Jilin Heilongjiang Total CO 2 Emission （tCO 2e） K=G*H*I*J* 44/12/10000 (mass) A B C G=A+B+C K=G*H*I*J* 44/12/1000 (volume) Raw Coal 10 4t 4305.41 2446.13 3383.21 10134.75 200454895.9 Cleaned coal 10 4t 0 0 0 0 0 Other Washed Coal 10 4t 524.74 19.26 24.16 568.16 4494939.888 Coke 10 4t 0 0 0 0 0

Coke Oven Gas 10 8m3 1.03 3.57 0.68 5.28 391816.5856

Other Gas 10 8m3 12.62 8.37 0 20.99 486767.6854

Crude Oil 10 4t 1.16 0 0 1.16 35571.47733 4 Gasoline 10 t 0 0 0 0 0 Diesel Oil 10 4t 1.18 1.48 0.57 3.23 102038.6544 4 Fuel Oil 10 t 9.32 2.46 1.55 13.33 431247.4323 4 PLG 10 t 0.12 0 0 0.12 3797.54672 4 Refinery Gas 10 t 5.48 0 1.32 6.8 180283.8327 Natural Gas 10 8m3 0 0.84 2.24 3.08 672680.9628 Other Petroleum Products 10 4t 0 0 0 0 0 Other Coking Products 10 4t 0 0 0 0 0 10 4t Other Energy 16.18 0 0 16.18 0 tce Total 207254040 Net Electricity imports to NCG 23423000MWh

Sources: China Energy Statistical Yearbook 2006 China Electric Power Yearbook 2006

Table 14 Electricity Generation of Northeast China Grid in 2005 Electricity Electricity generation （MWh ） Auxiliary power ratio （%）* Supply （MWh ）* Liaoning 89668000 7.03 83364340 Jilin 43395000 6.59 40535270 Heilongjiang 59900000 7.96 55131960 Total 179031569 Sources: China Electric Power Yearbook 2006

Therefore, the average emission factor of Northeast China Grid in 2005 is 1.1578 tCO 2/MWh, the OM emission factor of NCG is EF Grid,OM,simple,2005 =(1.1578×23423000+647686276.3 ）/（560751013+23423000 ）=1.155145 tCO 2/MWh

Therefore, EF Grid,OM,simple = （1.1578×23423000+647686276.3+1.13656×4244380+455551793.43+1.117411×4514550+549031577.7 ）/

（647686276.3+23423000+4244380+425364905.8+4514550+489173109.9 ）=1.1208 tCO 2/MWh

Step 4 – Identify the cohort of power units to be included in the build margin

The proposed project used the deviations agreed by EB guidance on the application of approved methodology AM0005 now consolidated into ACM0002 can be applied for the purposed of estimating the build margin emission factor for each fuel type. The proposed deviations accepted and the alternative solutions in absence of data were as follows: 1) It is agreed to use the new PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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page 36 capacity additions during the past 1-3 years to calculate the Build Margin emission factor; 2) It is agreed that the use of the installed capacity to replace the annual electricity generation to calculate the Build Margin emission factor; 3) As a similar conservative estimation, to calculate the total fuel consumption of different fuel-fired power plants by utilization of the most advanced commercialized technologies. Using the average fuel efficiency of existing power plants as the baseline will bring about higher baseline emission and result in higher emission reductions, as the average fuel efficiency of old power plants is lower than the new power plants, which is not a conservative method.

Step 5. Calculation of the Build Margin Emission Factor ( EF grid,BM,y )

Sub-Step 5a. Calculating the percentages of CO 2 emissions from the coal-fired, oil-fired and gas-fired power plants in total fuel-fired CO 2 emissions .

Table 15 the percentages of CO 2 emissions from the coal-fired, oil-fired and gas-fired power plants in total fuel-fired CO 2 emissions of NCG for the year 2005 Inner Beijin Tianji Shan CO Fuel Unit Hebei Shanxi Mongoli Total 2 g n dong Emission （tCO e） a 2 G=A+B+C+D+E+ K=G*H*I*J*44/12/10 A B C D E F F 0 Raw 6726. 6176.4 10405. 10 4 t 897.75 1675.2 6277.23 32158.53 636062536 Coal 5 5 4 Cleaned 10 4 t 0 0 0 0 0 42.18 42.18 1051186 coal Other 167.4 Washed 10 4 t 6.57 0 373.65 0 108.69 656.36 5192725 5 Coal Coke 10 4 t 0 0 0 0 0.21 0.11 0.32 9742 Subtotal 642316189 Crude 10 4 t 0 0 0 0 0.73 0 0.73 22385 Oil Gasoline 10 4 t 0 0 0.01 0 0 0 0.01 298 Kerosene 10 4 t 0 0 0 0 0 0 0 0 Diesel 10 4 t 0..48 0 3.54 0 0.12 0 4.14 130786 Oil Fuel Oil 10 4 t 12.25 0 0.23 0 0.06 0 12.54 405690 Other Petroleu 10 4 t 0 0 0 0 0 0 0 0 m Products Subtotal 559160 Natural 10 7m 2.8 0.8 0 27.6 0 0 31.2 681417 Gas 3 Coke 10 7m Oven 6.4 7.5 6.2 210.8 3.9 0 234.8 1742396 3 Gas Other 10 7m 160.9 78.6 388.3 98.8 183.7 0 910.3 2111027 Gas 3 PLG 10 4 t 0 0 0 0 0 0 0 0 Refinery 10 4 t 0 0 9.02 0 0 0 9.02 239141 Gas Subtotal 4773982 Total 647649331 Sources: China Energy Statistical Yearbook 2006

The result from the above table: λCoal =99.17%, λOil =0.08%, λGas =0.74%

Sub-Step 5b. Calculating the fuel-fired emission factor

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page 37 = λ × + λ × + λ × EF Thermal Coal EF Coal , Adv Oil EF Oil , Adv Gas EF Gas , Adv

Where: EF Thermal is the fuel-fired emission factor; EF Coal,Adv ，EF Oil,Adv and EF Gas ，Adv are corresponding to the emission factors of coal, oil and gas fired power plants which are applied by the most advanced commercialized technologies.

Table 16 Emission factors of Coal, Oil and Gas with the most advanced commercialized technologies applied by the fuel- fired power plants Fuel consumption Fuel Emission Factor Emission Factor Parameters Oxidation rate （tc/TJ ） （tCO 2/MWh ） A B C D=3.6/A/1000*B*C*44/12 Coal-fired EF 35.82% 25.8 1 0.9508 plant Coal,Adv Oil-fired EF 47.67% 21.1 1 0.5843 plant Oil,Adv Gas-fired EF 47.67% 15.3 1 0.4237 plant Gas,Adv Sources: The Baseline Emission Factors of Chinese Power Grids in 2007, NRDC.

Then, calculating =λ × +λ × +λ × EF Thermal Coal EF Coal,Adv Oil EF Oil ,Adv Gas EF Gas ,Adv =0.9465 tCO 2/MWh

Sub-Step 5c. Calculating the Build Margin Emission Factor CAP = Thermal × EF Grid ,BM , y EF Thermal CAP Total

Where: EF Grid,BM,y is the Build Margin emission factor with advanced commercialized technologies for year y; CAP Total is the new capacity additions; CAP Thermal is the new fuel-fired capacity additions.

Table 17 Installed Capacities of the North China Grid 2005 Installed Capacity Unit Beijing Tianjin Hebei Shanxi Inner Mongolia Shandong Total Fuel-fired MW 3833.5 6149.9 22333.2 22246.8 19173.3 37332 111068.7 Hydro MW 1025 5 784.5 783 567.9 50.8 3216.2 Nuclear MW 0 0 0 0 0 0 0 Wind & Others MW 24 24 48 0 208.9 30.6 335.5 Total MW 4882.5 6178.9 23165.7 23029.8 19950.2 37413.4 114620.5 Sources ：China Electric Power Yearbook 2006

Table 18 Installed Capacities of the North China Grid 2004 Installed Capacity Unit Beijing Tianjin Hebei Shanxi Inner Mongolia Shandong Total Fuel-fired MW 3458.5 6008.5 19932.7 17693.3 13641.5 32860.4 93594.9 Hydro MW 1055.9 5 783.8 787.3 567.9 50.8 3250.7 Nuclear MW 0 0 0 0 0 0 0 Wind & Others MW 0 0 13.5 0 111.7 12.3 137.5 Total MW 4514.4 6013.5 20730 18480.6 14321.2 32923.5 96983.2 Installed Capacity Unit Beijing Tianjin Hebei Shanxi Inner Mongolia Shandong Total Fuel-fired MW 3347.5 6008.5 17698.7 15035.8 11421.7 30494.4 84006.6 Hydro MW 1058.1 5 764.3 795.7 592.1 50.8 3266 Nuclear MW 0 0 0 0 0 0 0 Wind & Others MW 0 0 13.5 0 76.6 0 90.1 Total MW 4405.6 6013.5 18476.5 15831.5 12090.4 30545.2 87362.7 Sources ：China Electric Power Yearbook 2005

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page 38 Table 19 Installed Capacities of the North China Grid 2003 Sources ：China Electric Power Yearbook 2004

Table20 Change Installed Capacity from 2003-2005 2003-2005 Year 2003 Year 2004 Year 2005 Percentage of New Capacity Additions New Capacity A B C D=C-A Fuel-fired (MW) 84006.6 93594.9 111068.7 27062.1 99.28% Hydro (MW) 3266.0 3250.7 3216.2 -49.8 -0.18% Nuclear (MW) 0 0 0 0 0 Wind(MW) 90.1 137.5 335.5 245.4 0.9% Total 87362.7 96983.1 114620.4 27257.7 100% Percentage of Year 2005 76.22% 84.61% 100%

Then ，the result is ： EF Grid,BM,y =0.9465×99.28%=0.9397 tCO 2/MWh

Step 6. Calculation of the Baseline Emission Factor ( EF gid,CM,y ) EF Grid,CM,y =0.75× EF Grid,OM ，y+0.25× EF Grid,BM ，y=0.75×1.1208 +0.25×0.9397=1.07553 tCO 2/MWh

II Calculation of the Baseline Emission ( BE y) BE y=EF Grid,CM,y ×EG y=1.07553×77320=83160 tCO 2/year

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page 39

Annex 4

MONITORING PLAN

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