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

CDM – Executive Board page 1

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

CONTENTS

A. General description of project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / Crediting period

D. Environmental impacts

E. Stakeholders’ comments

Annexes

Annex 1: Contact information on participants in the project activity

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring plan

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SECTION A. General description of project activity

A.1. Title of the project activity:

Yunnan Mengjiahe Kachang Muwen Hydro Power Station Ver. 0.2 Apr. 03, 2007

A.2. Description of the project activity:

Summary: The proposed project activity is located in the middle and lower reaches of the Mengjia River, in Kachang Town, Yingjiang County, Dehong Dai-Jingpo Autonomous Prefecture, Yunnan Province, China. The project is a run-of-river diversion type hydropower station with a low dam. The installed capacity is 40MW. On the average, the project activity is expected to operate during 5,000hours per year, which corresponds to an average annual generation of 200,000MWh and a net electricity supply to the grid of 142,180MWh. The power generated in the station will be transmitted to the Mengjia transformer substation, and then to the Yunnan Grid and, finally, to the Southern Grid.

Contribution to sustainable development: The project activity contributes significantly to the region’s sustainable development in the following ways:

- In recent years, China has witnessed a huge increase in power consumption. Both public and private parties are struggling to meet the demand for electricity. The proposed hydropower project will contribute in a sustainable manner to bridging the gap between supply and demand of power on a regional and national level. - In China, more than 80% of total electricity production is derived from coal based power plants. Being so heavily dependant on coal for its energy requirements, this project carries environmental benefits for the country’s air, soil and water sources. The project activity will displace the generation of fossil fuel power plants, reducing CO2, SOx and NOx emissions significantly, thus mitigating the air pollution and its adverse impacts on human health. The project activity promotes the growth of sustainable and renewable capacity in China and makes it less dependent on exhaustible and polluting fossil fuels. - The project will definitely contribute to the province’s economic development by improving the local energy generation infra-structure and generating employment during both the construction and the operation of the power plant.

The proposed hydropower project is grid-connected electricity generation from renewable sources, which will be supplied to the Southern Grid and will replace electricity generated by thermal power plants, which are predominant in the Southern Grid. This will reduce anthropogenic emissions of greenhouse gases.

A.3. Project participants:

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Kindly indicate if the Party Name of Party involved (*) Private and/or public entity(ies) involved wishes to be ((host) indicates a host project participants (*) (as considered as Party) applicable) project participant ( Yes/No) People’s Republic of China Yingjiang Mingyu Electric -Power Development Co., Ltd. No (host) (as the project owner) ENEL Trade SpA Italy No (as the CER buyer)

A.4. Technical description of the project activity:

A.4.1. Location of the project activity:

A.4.1.1. Host Party(ies):

People’s Republic of China

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

Yunnan Province

A.4.1.3. City/Town/Community etc:

Kacha ng Town, Yingjiang County, Dehong Dai-Jingpo Autonomous Prefecture

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

The proposed project activity is located in the middle and lower reaches of the Mengjia River, in Kachang Town, which is located in the northwest of Yingjiang County, Dehong Dai-Jingpo Autonomous Prefecture, Yunnan Province, China. It is 109km from Yingjiang County, 264km from Luxi City, 791km from Kunming City, and 7.1km from the frontier line of China and Burma . The exact location of the station is at the longitude of 97°45' ~ 98°07'E, and latitude of 25°00'~ 25°15'N. To visualize the exact location of the project please refer to the map presented in Fig A.1:

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Yunnan

Yingjiang

Yunnan Mengjiahe Kachang Muwen Hydro Power Station

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Fig A.1 Location of Yunnan Mengjiahe Kachang Muwen Hydro Power Station A.4.2. Category(ies) of project activity:

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

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

The project is a run-of-river diversion type hydro power station with a low dam. The construction of the project power station mainly consists of barrage, diversion tunnel, powerhouse, pressure pipe and upper pool. The diversion tunnel is 2,421m and located in left bank. The turbines and generators are produced by Chongqing Turbine Co., Ltd. and the specific technical data is listed is Table A.1. Table A.1 Technical data of the turbine / generator units Maximum Water Turbine Amount Type Rated water head Rated output Head Unit 2 HLA543-LJ-160 239.2m 233m 20.620MW Generator Amount Type Rated voltage Rated rotate speed Rated Capacity Unit 2 SF20-10/3250 10.5kV 600?/min 20MW

The power generated by the station will be increased by 110kV and connected to 220kV the Mengjia transformer substation, and then to the Yunnan Province Grid and, finally, to the Southern Grid. There is no technology transfer due to all the te chnology employed is domestic.

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

The project activity uses the renewable crediting period, and the estimation of the emission reductions during the first crediting period (Jul. 2007 to Jun. 2014) are presented in Table A.2. Estimated Emission Reductions throughout the first crediting period are 774,662tCO2e. Table A.2 the Estimation of the Emission Reductions in the Crediting Period Annual estimation of emission reductions in Years tons of CO2e 2007( the last 6 months) 55,333 2008 110,666 2009 110,666 2010 110,666 2011 110,666 2012 110,666 2013 110,666 2014 (the first 6 months) 55,333

Total estimated reductions ( tons of CO2e) 774,662 Total number of crediting years 7

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Annual average over the crediting period of 110,666 estimated reductions(tons of CO2e)

A.4.5. Public funding of the project activity: There is no public funding from Annex I countries available to the project.

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SECTION B. Application of a baseline and monitoring methodology:

B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity:

Baseline methodology:

Approved consolidated baseline methodology ACM0002 (Version 6): “Consolidated baseline methodology for grid-connected electricity generation from renewable sources”.

The methodology draws upon Version 03 of the “Tool for the demonstration and assessment of additionality”.

Monitoring methodology:

Approved consolidated monitoring methodology ACM0002 (Version 6): “Consolidated monitoring methodology for zero-emissions grid-connected electricity generation from renewable sources”.

Reference: UNFCCC website: 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:

This project satisfies ACM0002 methodology applicable conditions, that is: 1 The project is a capacity addition from a renewable energy source, i.e. water resource. The electricity capacity addition is from a run-of-river hydropower station; 2 The proposed project activity does not involve renewable fuel switching from fossil fuels; 3 The geographic and system boundaries for the relevant electricity grid can be clearly identified (the Southern Grid) and information on the characteristics of the grid is available.

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

According to the definition of project boundary by ACM0002, the project boundary includes the project site (the physical site of the project plant) and the electricity system that the project is connected to. In this specific case, the station is connected to the Yunnan grid and, finally, to the Southern Grid. The Southern grid is a larger regional grid, which consists of four sub-grids: Guangdong, Guangxi, Yunnan and Guizhou. According to the guidance given above, and considering the substantial inter grid power exchange throughout the Southern Grid, it is justifiable to identify the Southern Grid as the correct project boundary for this specific project.

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Table B.1 Description of How the Sources and Gases Included in the Project Boundary Included Source Gas Justification / Explanation ? According to ACM0002methodology, it is only necessary account for CO2 emissions from CO2 Included electricity generation in fossil fuel fired power plants that is displaced due to the project activity are considered. Thermal According to ACM0002methodology, it is only necessary account for CO2 emissions from Baselin power plants in CH4 Excluded electricity generation in fossil fuel fired power plants e the Southern that is displaced due to the project activity are Grid considered. According to ACM0002methodology, it is only necessary account for CO2 emissions from N2O Excluded electricity generation in fossil fuel fired power plants that is displaced due to the project activity are considered. The project is grid-connected electricity generation CO Excluded from renewable sources, According to methodology Yunnan 2 ACM0002, without CO emission. Mengjiahe 2 Project Kachang The hydro power project is a run-of-river Activity Muwen CH4 Excluded hydropower station, According to methodology

hydropower ACM0002, without CH4 emission. station The project is grid-connected electricity generation N2O Excluded from renewable sources, According to methodology ACM0002, without N2O emission.

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

There are only a few scenarios that are prima facie realistic and credible in the context of the Southern Grid: 1. The proposed hydro power activity, without being registered as a CDM project activity; 2. Thermal power plant with equivalent annual power generation; 3. Other renewable energy power plant with equivalent annual power generation; 4. The equivalent electricity is supplied by the Southern Grid.

First scenario:

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The first scenario is in compliance with the Chinese relevant laws. According to the section B.5, The IRR 1 of the project is 8.08% without CDM revenue which is lower than the benchmark rate of 10% . So the project faces obvious financial barriers without CDM revenue. The first scenario is therefore not feasible nor is it a baseline scenario.

Second scenario: There is a widely discrepancy between thermal power and hydropower in annual operating hours and instability of water resource quality, if taking the capacity that can generate the same annual electricity generation the alternative scenario for the proposed project should be a grid-connected fossil fuel fired power plant with installed capacity less than 40MW. However, according to Chinese regulations, coal-fired power plants of less than 135MW are prohibited for construction in the areas covered by the large grids such as provincial grids2, at the same time, controlling the construction of thermal unit under 100MW3. Therefore, the second scenario doesn’t accord with Chinese relevant laws and regulations, it isn’t a feasible scenario.

Third scenario: There are no enough wind resources, solar sources, wave and tidal sources or geothermal sources in this area. The technology of biomass sources power is not mature and the cost is very high. Furthermore, no biomass sources power plant has previously been built in this area. The economic return of other renewable power plants with similar amount of capacity should be little attractiveness. The third scenario is therefore not feasible nor is it a baseline scenario.

Fourth scenario: The fourth scenario is in compliance with Chinese relevant laws and regulations, and without financial barriers. Conclusion: From above analysis we can conclude that the fourth scenario is the only plausible alternative to the project activity. Therefore, the baseline scenario of the project is:

Electricity delivered to the grid by the project would have otherwise been generated by the operation of grid -connected power plants and by the addition of new generation sources without the proposed project activity.

3 The hydropower NO.[1995]186 documents of Ministry of Water Resources of the People’s Republic of China which is The Revision of Economic Evaluation Code for Small Hydropower Project(SL16-95). The small hydropower project is: the station with installed capacity is lower than 25MW and the building, revising, expansion, rebuilding of corresponding Grid of it. The middle scale station is equal to and under 50MW in country can follow the regulations. 2 Notice on Strictly Prohibiting the Installation of Fuel fired Generators with the Capacity of 135MW or below issued by the General Office of the State Council, Decree No. [2002]6. 3 The Management Provisional Regulation on the Construction of Small Fuel fired Generators ( in Aug. 1997)

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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 additionality of the project activity is demonstrated using the steps described in the Tool for the Demonstration and Assessment of Additionality (version 3) as developed by the EB. We will argue and demonstrate that:

Step 1: Identification of Alternatives to the Project Activity Consistent with Current Laws and Regulations

Sub-Step1a. Define alternatives to the project activity

This methodological step requires a number of sub-steps, the first of which is the identification of realistic and credible alternatives to the project activity. There are only a few alternatives that are prima facie realistic and credible in the context of the Southern Grid:

1. The proposed hydro power activity, without being registered as a CDM project activity; 2. Thermal power plant with equivalent annual power generation; 3. Other renewable energy power plant with equivalent annual power generation; 4. The electricity is supplied by the Southern Grid.

The third alternative is not feasible since there is not enough other renewable energy, such as wind sources, biomass, solar sources, wave and tidal sources or geothermal sources, to provide equivalent annual power generation in local area.

Sub-Step1b. Consistency with mandatory laws and regulations

As discussed in section B.4, the first and fourth alternatives are in compliance with Chinese relevant laws and regulations. However, the second alternative is not in compliance with Chinese relevant laws and regulations, so it is not a feasible alternative.

Therefore, this specific project activity is not the only alternative consistent with Chinese current laws and regulations, and it is not the project that relevant mandatory laws and regulations force to construct. So it has additionality.

Step 2 Investment Analysis Sub-step 2a. Determine appropriate analysis method The additionality tool provides three investment analysis options which are: simple cost analysis (Option I), investment comparison analysis (Option II) and benchmark analysis (Option III). The project activit y will produce economic benefits (from electricity sales) other than CERs income and the fourth scenario is not a specific project. So, the project activity uses the benchmark analysis (Option III).

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

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The proposed project, with an installed capacity of 40MW, is located in the countryside. Based on the benchmark revenue rate in the financial evaluation of the Chinese Economic evaluation code for small hydropower projects, the IRR of electric power project total investment should not be lower than the threshold of 10%.

Sub-step 2c. Calculation and comparison of financial indicators (only applicable to options II and III): The basic parameters for calculation key financ ial indexes are provided in TableB.2:

Table B.2 the Basic Financ ial Parameter of the Project Annual Rate Estimated Operation Annual Installed Power Static Total Corporate Loan of Grid Price Period Operation Capacity supplied Investment VAT Income (€) the (€/kWh) (years) Cost (MW) to Grid (€) Tax Loan (with VAT) (€) (MWh) 40 142,180 15,000,000 7,040,000 6.84% 0. 017 6% 33% 25 628,660

The IRR of this project is only 8.08% without CDM revenue. Based on the regulation in Economic Evaluation Code for Small Hydropower Projects, the IRR for total investment of small hydropower projects should not be lower than the threshold of 10%. So the project faces obvious financial barriers without CDM revenue. Sub-step 2d. Sensitivity analysis (only applicable to options II and III): We choose the following parameters to conduct sensitivity analysis so that confirm whether the conclusion of low economic attractions is still exist when the key hypothesis has changed reasonably: 1. Static total investment 2. Annual operational cost 3. Grid price

Variations of ± 10% have been considered for the critical assumptions. Table B.3 summarizes the results of the sensitivity analysis, while Figure B.1 provides a graphic depiction.

Table B.3 Impact of Variations in Critical Assumptions on IRR -10% -5% 0% 5% 10% Grid Price 6.52% 7.35% 8.08% 8. 88% 9.58% Static total investment 9.45% 8.74% 8.08% 7. 47% 6.91% Annual operational cost 8.63% 8.36% 8.08% 7. 80% 7.51%

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IRR 10.00%

9.00%

8.00%

7.00%

6.00%

5.00% -10% -5% 0% 5% 10%

Grid Price Static Total Investment Annual Operation Cost

Fig B.1 the IRR Sensitivity Analysis when Static Total Investment, Annual Operation Cost or Grid Price changed

Fig.B.1 shows that none of variations can raise the IRR of the proposed project higher than the threshold of 10% and the sensitivity of the annual operational cost is very low. Wider variations in the remaining critical assumptions are impossible due to the following reasons: - The static investment can not be lowered because the price of equipment and material, etc., has been increasing,

Therefore, the results of the sensitivity analysis confirm that the project faces significant economic and financial barriers without CDM revenue, so the first alternative lacks economic attraction.

On the other hand, the whole investment IRR will increase greatly when the project receives the CERs revenues. If we take the CERs price as €8/tCO2e into account, the IRR of the project reaches 10.57%, thus the repayment of capital and interest will be raised and the financial situation will be improved. It is obvious that the benefits come from the CDM which helps release the financing pressure that would otherwise obstruct the project activity.

Step 3. Barrier Analysis Sub-step 3a. Identify barriers that would prevent the implementation of type of the proposed project activity Without CDM revenues, some barriers will interfere with the implantation of the project. They are:

Financial and Investment Environment

The installed capacity of the project is 40MW, which is less than 50MW and the project owner is a small enterprise in central and west of China. The national credit extension loan policy regulates that the bank should invest cautiously on small scale projects whose installed capacity is under 50MW, and insists on

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choosing the best among the excellent ones, especially being cautious with investment in central and western China due to the low risk tolerance of private companies. It is estimated that 70% of the total investment could be gotten from bank loan, but the actual loan account for only 55% due to the inferior level of local financial institutions and small purview for loan. Moreover, the repayment period is so short that the project owner should repay a great amount of loan and interest per year and the pressure of repayment will be great resulting in great difficulties and risks to the project’s operation. In addition, Yingjia ng County is located in a mountainous border area. The industrial base of it is weak and the income of the residents is very low, so the project can’t be financed by local residents. As a result, without CERs revenues, the project faces significant economic and financial barriers.

Uncertainty of electricity generation and sale price

The construction of the local province grid cannot meet the needs of generation output of the project and the hydropower could be affected by hydrological conditions to a large extent thus the generation is instable, which will make it difficult to achieve the estimated annual operating hours. In addition, power generation will be greater in flood season, so the electricity supply of the grid operating company will exceed demands and the station will adjust the power generated according to the arrangements taken with the grid operating company. Therefore, the station can not be operated under full burden. The uncertainty of electricity sale reduces the commercial attraction even more.

On the contrary, the income of CERs will improve the project ability to overcome risks, and reduce the financing difficulty. Al though the repayment period is so short and the pressure of repayment will be great, the CDM income will reduce the repayment pressure every year. It will also diminish the investment risk on the uncertainty of electricity sales and grid price, and improve the attraction of the project, thus, the project will be carried out and operated.

Sub-step 3b. Show that the identified barriers would not prevent the implementation of at least one of the alternatives (except the proposed project activity): From the above mentioned steps 1 and 2, the barriers stated cannot have an impact on the fourth alternative, so the fourth alterna tive is feasible.

Step 4 Common Practice Analysis

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

From 2000, the basic information about the existing or constructing hydropower plants similar (15-50MW) to the proposed activity are shown in Table B. 4. Table B.4 Hydropower plants of Yunnan similar to the proposed activity Installed Annual Name of Operation Capacity Location operation Investor hydropower plant date (MW) hours Wunihe Hydro Longling County, Supahe Hydroelectric 30 2005 5,714 Power Station Baoshan City Power Development

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Company Binlangjiang Tengchong Houqiao Hydro Hydroelectric Power 48 County, Baoshan 2005 5,600 Power Station Development City Company Supahe Hydroelectric Chaoyang Hydro Longling County, 40 2006 4,200 Power Development Power Station Baoshan City Company Maguan Daliangzi Maguan County, Maguan Daliangzi Hydro Power 32 Wenshan 2006 5,417 Power Company Ltd Station Prefecture Yunnan Heier Shizong Heier Hydro Longqing Town, 25MW Hydro 25 constructing 4,963 Power Development Shizong County Power Station Co.,Ltd. Yunnan Nandihe Yingjiang County, Hydro Power Yingjiang Nandihe 20 Dehong constructing —— Station Hydro Power Co.,Ltd. Prefecture

Expansion Project Yunnan Baoshan of Sabjiangkou Longling County, On the 32 5,984 Keyuan Lilicon Hydro Power Baoshan City constructing Electric Co.,ltd. Station Yunnan Yingjiang st Yunnan Yingjiang Mangya River 1 24.9 Yingjiang County constructing 5,837 Mangya River Hydro Power Hydropower Co.,ltd. Station Yingjiang Binlang Langwaihe Hydro Dehong 45 constructing 5,291 River Hydroelectric Power Station Prefecture Power Co.,ltd. Guquan River Nujiang Autonomy Fugong Hongyuan hydro Hydro Power 22 constructing 5,351 Prefecture power Co. Ltd. Station Kesikou Jinping Xingguang Honghe Hydropower 17 constructing 4,776 Electricity Generation Prefecture Sta tion Co. Ltd. Wakuhe Dehong Yingjiang Hongfu Hydropower 36 constructing 4,688 Prefecture Investment Co., Ltd. Station

Sub-step 4b. Discuss any similar options that are occurring The Wunihe hydropower station, Chaoyang hydropower station and the Houqiao hydropower station, they all belong to the “West-East Power Transmission Project”, those projects were supported by local government, loans were easy to acquire, and the power generated is easy to sell, the grid price is also higher.

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Therefore, these projects don’t have to face the barriers that the proposed project has, and have more commercial attraction. The proposed project lacks these advantages.

The Maguan Daliangzi hydro power station, the Yunnan Heier 25MW hydro power station, the Yunnan Nandihe hydro power station, the Expansion Project of Sabjiangkou hydro power station, the Mangya River 1st hydro power station, Guquan River hydro power station, Kesikou hydro power station , Wakuhe hydro power station and the Langwaihe hydro power station are also caught in the same difficulties with the proposed project, and they are applying for registration as CDM projects.

In general, the project faces several barriers whic h would prevent the implementation of the proposed project activity without CDM. CDM helps to overcome these barriers. If the project is not implemented, the power will be supplied by the Southern Grid. Hence, the proposed project activity isn’t baseline scenario, which is additional.

B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

The electricity generated by the project will be connected to the Yunnan Grid and then to the Southern Grid. The Southern Grid includes the Yunnan, Guangdong, Guangxi and Guizhou Grids. So this project selects the baseline emission factor for the Southern Grid. Baseline According to methodology ACM0002, Baseline emissions are equal to the power delivered to the grid, multiplied by the baseline emission factor EFy . The baseline emission factor is equal to the combined margins: the equally weighted average of the operating margin emission factor (EFOM , y ) and the build margin emission factor ( EFBM , y ). According to the Bulletin on Baseline Emission Factor of China Region Grid which was published by the Office of National Coordination Committee on Climate Change on Dec. 15, 20064, the operating margin emission factor ( EFOM , y ) and the build margin emission factor ( EFBM , y ) calculation for the Southern Grid is as follows:

STEP 1 Calculate the Operating Margin emission factor ( EFOM , y ) According to the ACM0002 (version 06), the Simple OM has been employe d to calculate the OM. The calculation equation is as follow s:

å Fi , j,y ´ COEFi, j,y i, j EFOM,simple,y = Equation (B.1) åGEN j ,y j Where

4 Bulletin on confirming of the baseline emission factor for China Grid is promulgated by Office of National Coordination Committee on Climate Change, Dec. 15. 2006.

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Fi, j,y is the amount of fuel i (in a mass or volume unit) consumed by power sources j in year(s) y;

COEFi,j,y is the CO2 emission coefficient of fuel i (tCO2e/mass or volume unit of the fuel), taking into account the carbon content of the fuels used by power sources j and the percent oxidation of the fuel(coal, oil and gas) in year(s) y; and

GENj,y is the electricity (MWh) delivered to the grid by power sources j.

The CO2 emission coefficient COEFi is obtained as

COEF = NCV ´ EF ´ OXID Equation (B.2) i i CO 2 ,i i Where:

NCVi is the net calorific value (energy content) per mass or volume unit of a fuel i , National fixed value;

OXIDi is the oxidation factor of the fuel ,1996 Revised IPCC Guidelines for default values; EF is the CO emission factor per unit of energy of the fueli ,1996 Revised IPCC Guidelines for default CO2 ,i 2 values. In addition, there is net imported power to the Southern Grid from the Central China Grid . Since it is not possible to identify the specific power plants exporting electricity from the Central China Grid to the Southern Grid, the average emission factor of the Central China Grid will be taken into account. The Operating Margin emission factors for 2002, 2003 and 2004 are calculated. The three-year average is calculated as a full-generation-weighted average of the emission factors. For details we can find in the bulletin mentioned above. The published Operation Margin Emission Factor as 0.9853tCO2e/MWh.

The operating margin emission factor of the baseline is calculated ex-ante and will not be renewed in the first crediting period of the project activity.

STEP 2 Calculate the Build Margin emission factor ( EFBM , y )

According to ACM0002, the Build Margin Emission Factor is calculated as the generation weighted average emission factor (measured in tCO2e/MWh) of a sample of m power plants. The calculation equation is as follows:

å Fi,m,y ´ COEFi,m,y i,m EFBM, y = Equation (B.3) åGEN m, y m

Where

Fi,m,y is the amount of fuel i (in a mass or volume unit) consumed by power plants m in year(s) y,

COEFi, j,m is the CO2 emission coefficient of fuel i (tCO2e/mass or volume unit of the fuel), taking into account the carbon content of the fuels used by power plants m and the percent oxidation of the fuel(coal, oil and gas) in year(s) y; and

GEN m,y is the electricity (MWh) delivered to the grid by power plants m.

The methodology supplied the following two options:

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Option 1: Calculate the Build Margin emission factor EFBM , y ex-ante based on the most recent information available on plants already built for sample group m at the time of PDD submission.

Option 2: For the first crediting period, the Build Margin emission factor EF BM , y must be updated annually ex-post for the year in which actual project generation and associated emissions reductions occur. For subsequent crediting periods, EFBM , y should be calculated ex-ante, as described in option 1 above.

Project participants have chosen Option 1. The sample group m consists of either the five power plants that have been built most recently or the power plant capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built recently. Project participants should use from these two options that sample group that comprises the larger annual generation.

However, in China it is very difficult to obtain the data of the five existing power plants built most recently or the power plants capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that were built most recently. Taking notice of this situation, EB accepts5 the following deviation in methodology application:

1) Capacity addition from one year to another is used as basis for determining the build margin, i.e. the capacity addition over 1 - 3 years, whichever results in a capacity addition that is closest to 20% of total installed capacity. 2) Use proportional weights that correlate to the distribution of installed capacity in place during the selected period above, using plant efficiencies and emission factors of commercially available best practice technology in terms of efficiency. It is suggested to use the efficiency level of the best technology commercially available in the provincial/regional or national grid of China, as a conservative proxy.

The build margin calc ulations featured below is derived from the "Bulletin on the baseline emission factor of the Chinese Electricity Grid”, which has been published by the Chinese DNA (Office of National Coordination Committee on Climate Change) on Dec. 15. 2006.

Since there is no way to separate the different generation technology capacities as coal, oil or gas fuel etc from thermal power based on the present statistical data, the following calculation measures will be taken: First, according to the energy balance sheet of the most recent year, we should calculate the ratio of different emissions of CO2 produced by solid, liquid, and gas fuels for power generation which is part of the total CO2 emissions; then take this ratio as the weight, take the emission factor based on the commercial optimal efficiency technology level as the base and calculate the emission factor of the thermal power for the grids; finally, multiply this emission factor for thermal power with the ratio of thermal power which is part of the 20% installed capacity addition for the grid, the result is the BM emission factor for the grid.

Sub-step 1

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

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Calculate the proportion of CO2 emissions of the solid, liquid and gas fuels used to generate power in the total CO2 emissions of three fuels.

å Fi, j, y ´COEFi, j iÎCOAL, j lCoal = Equation (B.4) å Fi, j,y ´ COEFi, j i, j F COEF å i, j,y ´ i, j iÎOIL, j lOil = Equation (B.5) å Fi, j, y ´ COEFi, j i, j

å Fi, j,y ´COEFi, j iÎGAS, j lGas = Equation (B.6) å Fi, j,y ´ COEFi, j i, j Where,

Fi,m,y , is the amount of fuel i (in a mass or volume unit) consumed by power sources j in year(s) y,

COEFi, j,m is the CO2 emission coefficient of fuel i (tCO2e/mass or volume unit of the fuel), taking into account the carbon content of the fuels used by power plants m and the oxidation percentage of the fuel in year(s) y, Coal, Oil and Gas is solid, liquid and gas fuels respectively.

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

EFThermal = lCoal ´ EFCoal ,Adv + lOil ´ EFOil ,Adv + lGas ´ EFGas ,Adv Equation (B.7)

Where,

EFCoal ,Adv , EFOil ,Adv , EFGas ,Adv are the operating margin emission factors respectively consumed by coal- fired, oil-fired and gas-fired generation technology in the commercial optimization efficiency.

A coal-fired power plant with a total installed capacity of 600MW is assumed to be the commercially ava ilable best practice technology in terms of efficiency, the estimated coal consumption of such a National Sub-critical Power Station with a capacity of 600MW is 336.66gce/kWh, which corresponds to an efficiency of 36.53% for electricity generation.

For ga s and oil power plants a 200MW power plant with a specific fuel consumption of 268.13gce/kWh, which corresponds to an efficiency of 45.87% for electricity generation, is selected as commercially available best practice technology in terms of efficiency.

The main parameters used for calculation of the thermal power plant emission factors EFCoal ,Adv , EFOil ,Adv ,

EFGas,Adv are provided in Annex3.

Sub-step 3: Calculate the Build Margin emission factor

CAPThermal EFBM,y = ´ EFThermal Equation (B.8) CAPTotal

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Where,

CAPTotal is the total capacity addition, CAPThermal is the total thermal power capacity addition. For details we can find in the bulletin mentioned above. The published Build Margin emission factor is 0.5714tCO2e/MWh.

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

The data resources for calculating OM and BM are: 1. Installed capacity, power generation and the rate of internal electricity consumption of thermal power plants Source: China Electric Power Yearbook (2003-2005) 2. Fuel consumption and the net caloric value of thermal power plants Source: China Energy Statistical Yearbook (figures are for 2000-2005) 3. Carbon emission factor and carbon oxidation factor of each fuel Source: Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Workbook, Table 1-2 of Page 1.6 and Table 1-4 of Page 1.8 in Chapter one.

STEP 3 Calculate the Electricity Baseline Emission Factor ( EFy ) The Baseline Emission Factor is calculated as a Combined Margin, using the weighted average of the Operating Margin and Build Margin.

EFy = wOM ´ EFOM ,y + wBM ´ EFBM ,y Equation (B.9)

According to the Bulletin on Baseline Emission Factor of China Region Grid which was published by the Office of National Coordination Committee on Climate Change on Dec. 15, 2006, the operating margin emission factor ( EFOM ) of Southern Grid is 0.9853tCO2e/MWh and the build margin emission factor

( EFBM ) is 0.5714tCO2e/MWh,. The defaults weights for hydroelectric power projects are used as specified in the ACM0002 (version 06).

wOM = 0.5 ; wBM = 0.5

We calculate a Baseline Emission Factor of 0.77835tCO2e/MWh.

Emission Reductions ( ERy )

The project activity mainly reduces carbon dioxide through substitution of grid electricity generation with fossil fuel fired power plants by renewable electricity. The emission reduction ERy by the project activity during a given year y is the difference between baseline emissions (BEy ), project emissions (PEy) and emissions due to leakage ( Ly ), as follows: ER = BE - PE - L y y y y Equation (B.10) where the baseline emissions (BEy in tCO2) are the product of the baseline emissions factor (EFy in tCO2/MWh) calculated in Step 3, times the electricity supplied by the project activity to the grid (EG y in

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MWh) minus the baseline electricity supplied to the grid in the case of modified or retrofit facilities

( EGbaseline in MWh), as follows:

BE y =( EGy -EGbaseline )´EFy Equation (B.11)

There is no modified or retrofit facilities for the proposed project, therefore EGbaseline = 0 . The project activity is a run-of-river hydropower project, According to the ACM0002, greenhouse gas emissions from the project activity are zero. Hence PEy = 0 .

According to the ACM0002, there is no leakage calculation is required. Hence Ly = 0 . Therefore, the emission reductions are equal to the baseline emissions, namely,

ER y = BE y = EG y ´ EFy Equation (B.12)

B.6.2. Data and parameters that are available at validation: Data / Parameter: EGPy, j Data unit: MWh The Generation of Power Sources j in (years) y Description: (2002-2004, including Guangdong, Guangxi, Yunnan and Guizhou) Source of data used: China Electric Power Yearbook 2003-2005 Value applied: Provided in Annex 3 Justification of the choice of data or description of measurement methods and Official Statistical Data procedures actually applied : Any comment: To calculate the power delivered to the grid

Data / Parameter: GENimport,y Data unit: MWh The Power Transmitted from the Central China Grid to the Southern Grid in (years) y Description: (2002-2004,) Source of data used: China Electric Power Yearbook 2003-2005 Value applied: Provided in Annex 3 Justification of the choice of data or description of measurement methods and Official Statistical Data procedures actually applied : Any comment: To calculate the OM

Data / Parameter: PRm, y Data unit: % Description: The rate of electricity consumption of thermal power plants of Province m in year (s) y

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(2002-2004 including Guangdong, Guangxi, Yunnan and Guizhou) Source of data used: China Electric Power Yearbook 2003-2005 Value applied: Provided in Annex 3 Justification of the choice of data or description of measurement methods and Official Statistical Data procedures actually applied : Any comment: To calculate the power delivered to the grid

Data / Parameter: Fi,, j,y Data unit: 104t/108m3 The Fuel Consumption of Power Sources j in (years) y Description: (2002-2004, including Guangdong, Guangxi, Yunnan and Guizhou) Source of data used: China Energy Statistical Yearbook 2000-2005 Value applied: Provided in Annex 3 Justification of the choice of data or description of measurement methods and Official Statistical Data procedures actually applied : Any comment: To calculate OM and BM

Data / Parameter: NCVi Data unit: TJ/ fu el in a mass or volume unit

Description: The NCVi of Fuel i in a mass or volume unit Source of data used: China Energy Statistical Yearbook 2005 Value applied: Provided in Annex 3 Justification of the choice of data or description of measurement methods and Official Statistical Data procedures actually applied : Any comment: To calculate OM and BM

EF Data / Parameter: CO 2 ,i Data unit: tC/TJ Description: The Emission Factor of Fuel i in a mass or volume unit Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, Source of data used: Workbook Value applied: Provided in Annex 3

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Justification of the choice of data or description of measurement methods and IPCC Default Value procedures actually applied : Any comment: To calculate OM and BM

Data / Parameter: OXIDi Data unit: % Description: The Oxidation Rate of Fuel i Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, Source of data used: Workbook Value applied: Provided in Annex 3 Justification of the choice of data or description of measurement methods and IPCC Default Value procedures actually applied : Any comment: To calculate OM and BM

Data / Parameter: GENEbest,coal Data unit: % Description: The optimum commercial, coal-fired power supply efficiency China DNA: Bulletin on Baseline Emission Factor of China Region Grid-the Source of data used: calculation of baseline Build M argin emission factor for China Grid Value applied: 36.53% Justification of the choice of data or description of National Fixed Value measurement methods and procedures actually applied : Any comment: To calculate OM

Data / Parameter: GENEbest,oil/ gas Data unit: % Description: The optimum commercial, oil and gas power supply efficiency China DNA: Bulletin on Baseline Emission Factor of China Region Grid-the Source of data used: calculation of baseline Build Margin emission factor for China Grid Value applied: 45.87% Justification of the choice of data or description of National Fixed Value measurement methods and procedures actually applied : Any comment: To calculate OM

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Data / Parameter: CAPy,i Data unit: MW The Install Capacity of Power Sources j in (years) y Description: (2000-2004, including Guangdong, Guangxi, Yunnan and Guizhou) Source of data used: China Electric Power Yearbook 2003-2005 Value applied: Provided in A nnex 3 Justification of the choice of data or description of Official Statistical Data measurement methods and procedures actually applied : Any comment: To calculate BM

B.6.3. Ex-ante calculation of emission reductions:

According to section B6.1 and further details in Annex 3, the combined baseline emission factor of the project is 0.77835tCO2e/MWh in first crediting period. And the annual electric power supplied to the grid by the project is 142,180MWh.

Therefore, BE y in the first crediting period is to be calculated as follows:

BEy = EGy × EFy =110,666tCO2e

Therefore, in the first crediting period, the annual emission reductions are 110,666tCO2e.

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

The emission reductions of the project are 774,662tCO2e during the first crediting period. Table B.5 Estimate of Emission Reductions Due to the Project Estimation of Estimation of Estimation of Estimation of project activity overall emission Year baseline emissions leakage emissions reductions (tonnes of CO2e) (tonnes of CO2e) (tonnes of CO2e) (tonnes of CO2e) 2007(the last 6 0 55,333 0 55,333 months) 2008 0 110,666 0 110,666 2009 0 110,666 0 110,666 2010 0 110,666 0 110,666 2011 0 110,666 0 110,666 2012 0 110,666 0 110,666 2013 0 110,666 0 110,666 2014(the first 6 0 55,333 0 55,333 months) Total(tonnes of 0 774,662 0 774,662 CO2e)

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

B.7.1. Data and parameters monitored:

We need to monitor the power supplied to the grid ( EG s,y ) and the electricity use of power plant supplied by the grid PEg, y , and according to the two data, the net power supplied to the grid ( EGy ) will be calculated( EG y = EG s,y - PE g,y ).

Table B.6 Data and parameters monitored ( EGs,y )

EG Data / Parameter: s,y Data unit: MWh Description: Power supplied to the grid in year y Source of data to be used: Measured by meter Value of data: The electricity supplied to the grid by the project is 142,280MWh Description of measurement methods and procedures to be Measured continuously and recorded on a monthly basis applied: The meters will be periodically checked according to the relevant national QA/QC procedures to be electric industry standards and regulations; Power supplied to the grid and applied: double checked according to electricity sales receipt. Any comment: Refer to B.7.2. Description of the monitoring plan

Table B.7 Data and parameters monitored ( PE g ,y )

PE Data / Parameter: g,y Data unit: MWh Description: The electricity use of power plant supplied by the grid in year y Source of data to be used: Measured by meter The electricity use of power plant supplied by the grid is estimated to be Value of data: 100MWh Description of measurement methods and procedures to be Measured continuously and recorded on a monthly basis applied: The meters will be periodically checked according to the relevant national QA/QC procedures to be electric industry standards and regulations; Power supplied to the grid and applied: double checked according to electricity sales receipt. Any comment: Refer to B.7.2. Description of the monitoring plan

B.7.2. Description of the mo nitoring plan:

The objective of the monitoring plan is to insure the complete, consistent, clear, and accurate monitoring and calculation of the emissions reductions during the whole crediting period. The project owner will be responsible for the implementation of the monitoring plan, and the Grid Company will cooperate with the project entity.

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1. Monitoring Objective The main monitoring data are power generation supplied to the grid and the electricity use of power plant supplied by the grid thus gets the net electricity supplied to the grid because the baseline emission factor is fixed by Ex-ante calculation. 2. Monitoring Organization A chief monitoring officer will be appointed by the project owner who supervises and verifies metering and recording, collects data (meter’s data reading, sales/billing receipts), calculates emission reductions and prepares a monitoring report. The monitoring officer will receive support from Beijing Tianqing Power International CDM Consulting Co., Ltd. 3. Monitoring Equipment and program According to the Technical Administrative Code of Electric Energy Metering (DL/T448 - 2000), the electric energy metering equipment will be properly configured and the metering equipment will be checked by both the project owner and the grid company before the project is in operation.

Two meters (bio-direction) are required, of which, the first meter (backup meter) at the exit of the proposed project station is employed to measure output electricity and power supplied to the specific project from the grid company(with the transmission line loss) , and the second meter (main meter) measures the power supplied to the grid and power supplied to the specific project from the grid company(except the transmission line loss) at the input of the Mengjia transformer substation of the Grid Company. When the main meter is in troubles, the project owner should employ the data monitored by the backup meter. 4. Data Collection: The project owner and the Grid Company are responsible for operation monitoring of the backup meter and the main meter respectively and guarantee the measuring equipments are in good operation and completely sealed. The electricity recorded by the main meter alone will suffice for the purpose of billing and emission reduction verification as long as the main meter fault is within the permissible tolerance. The main monitoring process is as follows: i The project owner and Grid Company read and check the backup meter and the main meter and record the data at 24:00 on the last day of every month; ii The grid company sells the electricity to the project owner; iii The project owner provides an electricity sales invoice to the Grid Company. A copy of the invoice is stored by the project owner, together with a record of the payment by the grid company. iv The Grid Company provides an electricity sales invoice to the project owner and the invoice is stored by the project owner. v The project owner records the net electricity supplied to the grid; vi The project owner keeps and safe keeps the records of the main meter’s data readings for verification by the DOE.

If inaccuracy of the reading data from the main meter exceeds the allowable tolerance or the meter operate abnormally during a month, or any other unexpected problems, the grid-connected electricity generated by the proposed project shall be followed by:

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i Reading the backup meter (after taking the line losses into consideration) to ensure electricity is supplied to the grid, unless a test by either party reveals it is inaccurate; ii If the backup system is not within acceptable limits of accuracy or performed improperly, the proposed project owner and the Grid Company shall jointly prepare an new agreement of the correct readings; and iii If the proposed project owner and the Grid Company fail to reach an agreement concerning the correct reading, then the matter will be submitted for arbitration according to agreed procedures.

The meter reading will be readily accessible for the DOE. Calibration test records will be maintained for verification. 5. Calibration The verification of electric energy meter should be periodically carried out according to relevant National electric industry standards or regulations. After verification, meters should be sealed. Both meters shall be jointly inspected and sealed on behalf of the project owner and Grid Company and shall not be accessible by either party except in the presence of the other party or its accredited representatives. All the meters installed shall be tested by the qualified metrical organization co-authorized by the project owner and the Grid Company within 10 days after: i The detection of a difference larger than the allowable tolerance in the readings of the main meter and the backup meter; ii Repair to the faulty meter caused by improper operation. 6. Data Management Data will be archived at the end of each month using electronic spreadsheets. The electronic files will be stored on hard disk and cd-rom. In addition, a hard copy printout will be archived. In addition, the project owner will collect sales receipts for the power delivered to the grid as a cross-check. At the end of each crediting year, a monitoring report will be compiled detailing the metering results and evidence (i.e. sales receipts). Physical documentation such as, paper-based maps, diagrams and environmental assessment, will be collected in a central place, together with the monitoring plan. In order to facilitate the auditor’s reference, monitoring results will be indexed. All paper-based information will be stored by the project owner. All data records will be kept for a period of 2 years following the end of the crediting period.

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

Date of completion: 03/04/2007 Name of persons determining the baseline:

Alex Yang, General Manager, Beijing Tianqing Power International CDM Consulting, Co., Ltd. Tel: +86-10-68298491/68298496 Fax: +86-10-68173622/68221621 Email: [email protected] (Not Project Participant) Jane Yang, Beijing Tianqing Power International CDM Consulting, Co., Ltd. Tel: +86-10-68298491/ 68298496

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Fax: +86-10-68173622/68221621 Email: [email protected] (Not Project Participant)

Daniel Jiang, Beijing Tianqing Power International CDM Consulting, Co., Ltd. Tel: +86-10-68298491/68298496 Fax: +86-10-68173622/68221621 Email: [email protected]

Jasmine Tang, Beijing Tianqing Power International CDM Consulting, Co., Ltd. Tel: +86-10-68298491/68298496 Fax: +86-10-68173622/68221621 Email: [email protected] (Not Project Participant)

Tracy Yuan, Beijing Tianqing Power International CDM Consulting, Co., Ltd. Tel: +86-10-68298491/68298496 Fax: +86-10-68173622/68221621 Email: [email protected] (Not Project Participant)

Helen Mu, Beijing Tianqing Power International CDM Consulting, Co., Ltd. Tel: +86-10-68298491/68298496 Fax: +86-10-68173622/68221621 Email: mu [email protected] (Not Project Participant)

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:

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30/03/2005

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

The expected operational lifetime of the project activity 25 years

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:

01/07/2007

C.2.1.2. Length of the first crediting period:

7 years

C.2.2. Fixed crediting period:

Not applicable

C.2.2.1. Starting date:

C.2.2.2. Length:

SECTION D. Environmental impacts

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

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According to the relevant environmental laws and regulations, an environmental impact assessment had been carried out, and had been approved by Environment Protection Bureau of Yunnan Province on May 20, 2005. The main assessment conclusions are provided below:

1. Impact on Land Utilization and Immigration The total occupied land amount is 31.666hm2, of which farmland is 0.8hm2; permanent occupied land is 16.633hm2; and temporary occupied land is 14.233hm2. The project uses a diversion tunnel and reduces the occupied land correspondingly. The proportion of requisitioned land and farmland is small; the impact on soil utilization structure and soil resource can be neglected. The proposed project doesn’t involve any immigration.

2. Impact on Soil and Water Loss The project employs engineering measures, vegetation measures and management measures to control and prevent new and former soil and water loss caused by construction. Based on those measures, the former water and soil loss will be regulated to protect and improve the ecological environment.

3. Impact on Acoustic Environment The impact on the acoustic environment of the project mainly happens in the construction period. There is no village located around the construction area thus the susceptibility is comparatively low. The project only brings impact on workers and wildlife. However the impact is temporary and will disappear when the construction has been completed.

4. Impact of Solid Waste on Environment The waste slag, construction garbage and domestic garbage during construction period will be disposed into 5 waste slag fields. So it will have little impact on environment.

5. Impact on Ambient Air

The main air pollution during the construction period will be dust, SO2 and NOx. There is no village located around construction area, and the insensitivity is low. After adopting water sprinkler and covered measures etc, little influence will be caused by construction of the project on the quality of ambient air in the local area.

6. Impact on Aquatic Environment The wastewater will be discharged when it has reached the discharging standard. The project adopts land toilets and the dejection will be used by local farmers. Other domestic wastewater will be used to irrigate the woodland; the domestic wastewater during operation period will be treated by septic tanks and then be used to irrigate the forest.

7. Impact on ecosystem

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During construction period, the project will have some impact on terrestrial animals as well as fish. The similar territories in nearby districts are big and the living territory for animals is scattered widely. The construction of the station will not cause the depopulation of species and have little impact on animals.

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:

All of the project participants and the host party involved think there is little negative environmental impact of this specific project.

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SECTION E. Stakeholders’ comments

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

The project owner had distributed questionnaires to local residents who may be impacted by the project to collect advice for the project and come back 20 investigation questionnaires.

Furthermore, a special stakeholder consultation meeting of the project was organized on May 14, 2006 at Zhongyu hotel, Mang City, Yunnan Province to collect opinions from all the potential stakeholders, such as local residents etc, aiming at collecting advices on the influence imposed on the local society, economy, daily life etc for the project broadly.

In order to make the potential stakeholders to receive information regarding the meeting, the project owner published a bulletin for the meeting of stakeholders on the newspaper of Dehong Comity Paper, and also published the meeting bulletin via the website of www.tqcdmchina.com. In the bulletin, the company noticed that all the potential stakeholders to know detailed information about the project of Mengjiahe Kachang Muwen Hydropower Station. At the meeting, the project owner and the consultant invited the participants to express their comments and concerns about the project and the CDM. The main questions are as following:

1. Is the benefit or the loss more important as a result of the construction of the power station? 2. Are there any situations where there is a lack of electricity? What type of resource is used for daily life? How will the building of the station have an influence? 3. What type of negative influence will the station bring to the local residents? 4. Will the construction of a hydro power station influence noise and drinking water pollution? 5. Will the construction of a hydro power station influence the living environment of animals, fish and plant? If yes, how much? 6. Will there be migration as a result of this project? 7. What is the source of income of local residents? Will the project have an impact on local residents’ income? 8. What impact will the project have on the ecosystem? 9. Do you understand CDM? And what is your attitude toward the development of CDM? Do you oppose it or support it? 10. Do you agree with the construction of this power station?

E.2. Summary of the comments received:

We have reclaimed 20 questionnaires, the investigated people are all local villagers, in which, 30% are women, 100% graduated from junior high school or lower and the investigation results are following:

Ø 100% of the investigated residents use firewood for warming and cooking. Ø 100% of the investigated residents think the hydropower station will bring benefit to their lives and will not cause negative impact on to their lives. Ø 100% of the investigated residents think the construction of the project will not bring negative impact on local environment.

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Ø 100% of the investigated residents agree with the construction of the project.

From the questionnaires and stakeholders’ meeting, we know that all, the local government and residents alike, agree with the construction of the project. All stakeholders agree that although it will flood a few river bottomlands, it has little impact on agriculture resources. The project involves no migrants. Furthermore, there is not serious influence on the ecosystem after implementing the measures mentioned above. The project solves the traffic problem both for the station and the ocall village; and builds transforming and CATV lines for local communication. The project is located in subtropic zone monsoon humid climate, so different kinds of infections are spread seriously, while local medical conditions are very poor. The project will set up a medical sanitary room for local residents and improve the medical conditions. After the construction, it will supply 60-70MWh for local residents for free. The project will provide electricity power for life and manufacture and improve the lif e quality of local residents, such as increasing incomes of the local residents. The impact brought by the project is generally positive, so all of them support the construction of this project.

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

Given the generally positive (or neutral) nature of the comments received, no action has been taken to address the comments received.

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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

The Project Entity:

Organization: Yingjiang Mingyu Electric -Power Development Co., Ltd The Third Floor, Flood Prevention Deploy Building, The Department of Water Street/P.O.Box: Resources, Pingyuan Town,Yingjiang County Building: /

City: Dehong Dai-Jingpo Autonomous Prefecture

State/Region: Yunan Province

Postfix/ZIP: 679300

Country: China

Telephone: +86-692-8115166

FAX: +86-692-8115166

E-Mail: [email protected]

URL: /

Represented by: Li Zhao

Title: Accountant

Salutation: Mr.

Last Name: Zhao

Middle Name: /

First Name: Li

Department: Office

Mobile: +86-13988289611

Direct FAX: +86-692-8114986

Direct tel: +86-692-8114986 Personal E-Mail: [email protected]

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The Buyer

Organization: ENEL Trade SpA

Street/P.O.Box: Viale Regina Margherita, 125

Building: /

City: Rome

State/Region: /

Postfix/ZIP: 00198

Country: Italy

Telephone: +44-20-79848709

FAX: +44-20-79848661

E-Mail: /

URL: http://www.enel.it

Represented by: Eliano Russo

Title: /

Salutation: Mr.

Last Name: Russo

Middle Name: /

First Name: Eliano

Department: /

Mobile: /

Direct FAX: +39-06-83054394

Direct tel: +39-06-83058506

Personal E-Mail: [email protected]

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Annex 2

INFORMATION REGARDING PUBLIC FUNDING

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

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Annex 3

BASELINE INFORMATION

Table 1 –Power Supply data for the Southern Grid, 2002 (not including low operating cost and must-run power plants) Guangdong Guangxi Guizhou Yunnan Thermal Power Generation (MWh) 123,081,000 13,069,000 33,231,000 15,787,000 Rate of Electricity Consumption of the Power Plant (%) 5.58 8.31 7.90 8.21 Power Supplied to the Grid(MWh) 116,213,080.20 11,982,966.10 30,605,751.00 14,490,887.30 Total Supplied to Grid of the Thermal Power (MWh) 173,292,684.60 Net import Power from the Central China Power (MWh) 0.00 The total Power for the Southern Grid (MWh) 173,292,684.60 Data Source: China Electric Power Yearbook 2003.

Table 2 –Power Supply data for the Southern Grid, 2003 (not including low operating cost and must-run power plants) Guangdong Guangxi Guizhou Yunnan Thermal Power Generation (MWh) 143,351,000 17,079,000 43,295,000 19,055,000 Rate of Electricity Consumption of the Power Plant (%) 4.99 4.09 6.57 3.77 Power Supplied to the Grid(MWh) 136,197,785.10 16,380,468.90 40,450,518.50 18,336,626.50 Total Supplied to Grid of the Thermal Power (MWh) 211,365,399.00 Net import Power from the Central China Power (MWh) 11,100.00 The total Power for the Southern Grid (MWh) 211,376,499.00 Data Source: China Electric Power Yearbook 2004.

Table 3 –Power Supply data for the Southern Grid, 2004 (not including low operating cost and must-run power plants) Guangdong Guangxi Guizhou Yunnan Thermal Power Generation (MWh) 169,389,000 20,143,000 49,720,000 24,322,000 Rate of Electricity Consumption of the Power Plant (%) 5.42 8.33 7.06 7.56 Power Supplied to the Grid(MWh) 160,208,116.20 18,465,088.10 46,209,768.00 22,483,256.80 Total Supplied to Grid of the Thermal Power (MWh) 247,366,229.10 Net import Power from the Central China Power (MWh) 10,951,240.00 The total Power for the Southern Grid (MWh) 258,317,469.10 Data Source: China Electric Power Yearbook 2005. Table 4. Calculation of average emission factor for Central China Grid in 2003 and 2004 2003 2004

Total CO2 emission of the Central China Grid (tCO2e) 270,902,649.98 339,209,149.89 The total power supplied to the Central China Grid (MWh) 352,435,719.20 418,261,666.30

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Average emission factor (tCO2e/ MWh) 0.76866 0.81100

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Table 5–2002 data for primary fuel input for thermal power supply to the Southern Grid

Guangdong Guangxi Guizhou Yunnan Subtotal Fuel Unit A B C D =A+B+C+D

Raw coal Ten thousand Tons 4,121.06 711.35 1,430.68 1,144.39 7,407.48 Clean coal Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Other washed coal Ten thousand Tons 0.00 0.00 35.26 13.58 48.84 Coke Ten thousand Tons 0.00 0.00 0.00 6.44 6.44 Coke oven gas Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Other gas 108 Cubic meter 0.63 0.00 0.00 0.00 0.63 Crude oil 108 Cubic meter 5.80 0.00 0.00 0.00 5.80 Gasoline Ten thousand Tons 0.01 0.00 0.00 0.00 0.01 Diesel oil Ten thousand Tons 73.07 0.67 0.00 0.50 74.24 Fuel oil Ten thousand Tons 701.41 0.20 0.00 0.00 701.61 LPG Ten thousand Tons 0.09 0.00 0.00 0.00 0.09 Refinery gas 108Cubic meter 1.42 0.00 0.00 0.00 1.42 Natural gas 108Cubic meter 0.00 0.00 0.00 0.00 0.00 Other petroleum products 108Cubic meter 7.91 0.00 0.00 0.00 7.91 Other coking products Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Other E (standard coal) Ten thousand Tons 79.28 0.00 0.00 0.00 79.28 Data Source: China Energy Statistical Yearbook 2000-2002.

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Table 6- Calculation of the OM Emission Factor for the Southern Grid in 2002

Oxidation CO2Emission Fuel Consumption Emission Factor Average NCV Rate 3 (tCO2e) Fuel Unit in the SCPG ( tC/TJ) (MJ/t,km ) (%) I=G*H*F*E*44/12/10000( in mass) (E) (F) H G I=G*H*F*E*44/12/1000 (in volume) Raw coal Ten thousand Tons 7,407.48 25.80 98.0 20,908 143,582,063.68 Clean coal Ten thousand Tons 0.00 25.80 98.0 26,344 0.00 Other washed coal Ten thousand Tons 48.84 25.80 98.0 8,363 378,664.82 Coke Ten thousand Tons 6.44 29.50 98.0 28,435 194,114.79 Coke oven gas 108 Cubic meter 0.00 13.00 99.5 16,726 0.00 Other gas 108 Cubic meter 0.63 13.00 99.5 5,227 15,618.20 Crude oil Ten thousand Tons 5.80 20.00 99.0 41,816 176,078.81 Gasoline Ten thousand Tons 0.01 18.90 99.0 43,070 295.49 Diesel oil Ten thousand Tons 74.24 20.20 99.0 42,652 2,321,856.41 Fuel oil Ten thousand Tons 701.61 21.10 99.0 41,816 22,471,255.50 LPG 108Cubic meter 0.09 17.20 99.5 50,179 2,833.92 Refinery gas 108Cubic meter 1.42 18.20 99.5 46,055 43,424.12 Natural gas 108Cubic meter 0.00 15.30 99.5 38,931 0.00 Other petroleum products Ten thousand Tons 7.91 20.00 99.0 38,369 220,340.12 Other coking products Ten thousand Tons 0.00 25.80 98.0 28,435 0.00 Other E (standard coal) Ten thousand Tce 79.28 0.00 0.00 0.00 0.00

Total emission Q 169,406,545.87 tCO2e Total supply to the Southern Grid P 173,292,684.60 MWh

OM Emission Factor (=Q/P) 0.9776 tCO 2e/MWh Data sources: China Energy Statistical Yearbook 2000-2002; Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, Workbook, p. 1.8; p. 1.6.

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Table 7–2003 data for primary fuel input for thermal power supply to the Southern Grid

Guangdong Guangxi Guizhou Yunnan Subtotal Fuel Unit A B C D =A+B+C+D

Raw coal Ten thousand Tons 4,491.79 831.84 2,169.11 1,405.27 8,898.01 Clean coal Ten thousand Tons 0.05 0.00 0.00 0.00 0.05 Other washed coal Ten thousand Tons 0.00 0.00 36.38 20.37 56.75 Coke Ten thousand Tons 0.00 0.00 0.00 0.50 0.50 Coke oven gas Ten thousand Tons 0.00 0.00 0.00 0.04 0.04 Other gas 108 Cubic meter 3.21 0.00 0.00 11.27 14.48 Crude oil 108 Cubic meter 6.85 0.00 0.00 0.00 6.85 Gasoline Ten thousand Tons 0.02 0.00 0.00 0.00 0.02 Diesel oil Ten thousand Tons 31.90 0.00 0.00 0.76 32.66 Fuel oil Ten thousand Tons 627.22 0.30 0.00 0.00 627.52 LPG Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Refinery gas 108Cubic meter 2.85 0.00 0.00 0.00 2.85 Natural gas 108Cubic meter 0.00 0.00 0.00 0.00 0.00 Other petroleum products 108Cubic meter 11.35 0.00 0.00 0.00 11.35 Other coking products Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Other E (standard coal) Ten thousand Tons 93.21 0.00 0.00 22.35 115.56 Data Source: China Energy Statistical Yearbook 2004.

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Table 8- Calculation of the OM Emission Factor for the Southern Grid in 2003

Oxidation CO 2Emission Fuel Consumption Emission Factor Average NCV Rate 3 (tCO2e) Fuel Unit in the SCPG ( tC/TJ) (MJ/t,km ) (%) I=G*H*F*E*44/12/10000( in mass) (E) (F) H G I=G*H*F*E*44/12/1000 (in volume) Raw coal Ten thousand Tons 8,898.01 25.80 98.0 20,908 172,473,585.95 Clean coal Ten thousand Tons 0.05 25.80 98.0 26,344 1,221.15 Other washed coal Ten thousand Tons 56.75 25.80 98.0 8,363 439,992.40 Coke Ten thousand Tons 0.50 29.50 98.0 28,435 15,071.02 Coke oven gas 108 Cubic meter 0.04 13.00 99.5 16,726 3,173.15 Other gas 108 Cubic meter 14.48 13.00 99.5 5,227 358,970.64 Crude oil Ten thousand Tons 6.85 20.00 99.0 41,816 207,955.15 Gasoline Ten thousand Tons 0.02 18.90 99.0 43,070 590.98 Diesel oil Ten thousand Tons 32.66 20.20 99.0 42,652 1,021,441.68 Fuel oil Ten thousand Tons 627.52 21.10 99.0 41,816 20,098,291.43 LPG 108Cubic meter 0.00 17.20 99.5 50,179 0.00 Refinery gas 108Cubic meter 2.85 18.20 99.5 46,055 87,154.04 Natural gas 108Cubic meter 0.00 15.30 99.5 38,931 0.00 Other petroleum products Ten thousand Tons 11.35 20.00 99.0 38,369 316,164.40 Other coking products Ten thousand Tons 0.00 25.80 98.0 28,435 0.00 Other E (standard coal) Ten thousand Tce 115.56 0.00 0.00 0.00 0.00 × CO 2 emission of power import from the Central China Grid 0.76866 11,100= 8,532.11tCO2e

Total emission (Q) 195,032,144.10tCO2e Supply to the Southern Grid(P) 211,376,499.00MWh

OM Emission Factor (=Q/P) 0.92268 tCO 2e/MWh Data sources: China Energy Statistical Yearbook 2004; Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, Workbook, p. 1.8; p. 1.6.

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Table 9–2004 data for primary fuel input for thermal power supply to the Southern Grid

Guangdong Guangxi Guizhou Yunnan Subtotal Fuel Unit A B C D =A+B+C+D

Raw coal Ten thousand Tons 6,017.70 1,305.00 2,643.90 1,751.28 11,717.88 Clean coal Ten thousand Tons 0.21 0.00 0.00 0.00 0.21 Other washed coal Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Coke Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Coke oven gas Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Other gas 108 Cubic meter 2.58 0.00 0.00 0.00 2.58 Crude oil 108 Cubic meter 16.89 0.00 0.00 0.00 16.89 Gasoline Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Diesel oil Ten thousand Tons 48.88 0.00 0.00 1.83 50.71 Fuel oil Ten thousand Tons 957.71 0.00 0.00 0.00 957.71 LPG Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Refinery gas 108Cubic meter 2.86 0.00 0.00 0.00 2.86 Natural gas 108Cubic meter 0.48 0.00 0.00 0.00 0.48 Other petroleum products 108Cubic meter 1.66 0.00 0.00 0.00 1.66 Other coking products Ten thousand Tons 0.00 0.00 0.00 0.00 0.00 Other E (standard coal) Ten thousand Tons 79.42 0.00 0.00 0.00 79.42 Data Source: China Energy Statistical Yearbook 2005.

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Table 10- Calculation of the OM Emission Factor for the Southern Grid in 2004

Oxidation CO 2Emission Fuel Consumption Emission Factor Average NCV Rate 3 (tCO2e) Fuel Unit in the SCPG ( tC/TJ) (MJ/t,km ) (%) I=G*H*F*E*44/12/10000( in mass) (E) (F) H G I=G*H*F*E*44/12/1000 (in volume) Raw coal Ten thousand Tons 11,717.88 25.80 98.0 20,908 227,132,222.08 Clean coal Ten thousand Tons 0.21 25.80 98.0 26,344 5,128.83 Other washed coal Ten thousand Tons 0.00 25.80 98.0 8,363 0.00 Coke Ten thousand Tons 0.00 29.50 98.0 28,435 0.00 Coke oven gas 108 Cubic meter 0.00 13.00 99.5 16,726 0.00 Other gas 108 Cubic meter 2.58 13.00 99.5 5,227 63,960.24 Crude oil Ten thousand Tons 16.89 20.00 99.0 41,816 512,753.65 Gasoline Ten thousand Tons 0.00 18.90 99.0 43,070 0.00 Diesel oil Ten thousand Tons 50.71 20.20 99.0 42,652 1,585,955.53 Fuel oil Ten thousand Tons 957.71 21.10 99.0 41,816 30,673,659.31 LPG 108Cubic meter 0.00 17.20 99.5 50,179 0.00 Refinery gas 108Cubic meter 2.86 18.20 99.5 46,055 87,459.85 Natural gas 108Cubic meter 0.48 15.30 99.5 38,931 104,309.23 Other petroleum products Ten thousand Tons 1.66 20.00 99.0 38,369 46,240.78 Other coking products Ten thousand Tons 0.00 25.80 98.0 28,435 0.00 Other E (standard coal) Ten thousand Tce 79.42 0.00 0.00 0.00 0.00

CO 2 emission of power import from the Central China Grid 0.81100×10,951,240=8,881,427.85tCO2e

Total emission (Q) 269,093,117.34tCO2e Supply to the Southern Grid (P) 258,317,469.10MWh

OM Emission Factor (=Q/P) 1.04171tCO 2e/MWh Data sources: China Energy Statistical Yearbook 2005; Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, Workbook, p. 1.8; p. 1.6.

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Table 11-Full-wighted Ave. OM 3 years of the Southern Grid years 2002 2003 2004

Total CO 2 Emission

(tCO2e) 169,406,545.87 195,032,144.10 269,093,117.34 Total supply ( MWh) 173,292,684.60 211,376,499.00 258,317,469.10 = (169,406,545.87 +195,032,144.10 +269,093,117.34) / (173,292,684.60 Full-weighted average OM +211,376,499.00 +258,317,469.10)

= 0.9853 tCO 2e/MWh

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Table12. Calculation of Ratio of Solid, Liquid and Gas fuel in total CO 2 Emission in 2004 Average Emission Oxidation CO Emission Fuel Unit Guangdong Guangxi Guizhou Yunnan Subtotal NCV Factor Rate 2 Ratio (tCO e) (MJ/t,km 3) ( tC/TJ) (%) 2 Raw coal 104tons 6,017.70 1,305.00 2,643.9 1,751.28 11,717.88 20,908 25.80 98.0 227,132,222 - Clean coal 104tons 0.21 0.00 0.00 0.00 0.21 26,344 25.80 98.0 5,129 -

Other washed 4 Coal 10 tons 0.00 0.00 0.00 0.00 0.00 8,363 25.80 98.0 0 - coal Coke 104tons 0.00 0.00 0.00 0.00 0.00 28,435 29.50 98.0 0 - Total ------227,137,351 87.29% Crude oil 104tons 16.89 0.00 0.00 0.00 16.89 41,816 20.00 99.0 512,754 - Gasoline 104tons 0.00 0.00 0.00 0.00 0.00 43,070 18.90 99.0 0 - Diesel oil 104tons 0.00 0.00 0.00 0.00 0.00 43,070 19.60 99.0 0 - Fuel oil 104tons 48.88 0.00 0.00 1.83 50.71 42,652 20.20 99.0 1,585,956 - Oil LPG 104tons 957.71 0.00 0.00 0.00 957.71 41,816 21.10 99.0 30,673,659 - Other petroleum 104tons 1.66 0.00 0.00 0.00 1.66 38,369 20.00 99.0 46,241 - products Total ------32,818,610 12.61% Natural gas 10 7m3 4.80 0.00 0.00 0.00 4.8 38,931 15.30 0.995 104,309 - Coke oven gas 10 7m3 0.00 0.00 0.00 0.00 0.00 16,726 13.00 0.995 0 - Other gas 10 7m3 25.80 0.00 0.00 0.00 25.8 5,227 13.00 0.995 63,960 - Gas LPG 104tons 0.00 0.00 0.00 0.00 0.00 50,179 17.20 0.995 0 - Refinery gas 104tons 2.86 0.00 0.00 0.00 2.86 46,055 18.20 0.995 87,460 - Total ------255,729 0.10% Total ------260,211,690 100%

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Table13. Calculation of the Emission Factor for Coal-fired, oil-fired and Gas -fired Power

Emission Factor of Oxidation Supply fuel Rate Emission Factor (tCO 2e/MWh) Variable Efficiency F G =3.6/J/1000*F*G*44/12 J (tc/TJ) ( %)

Coal-fired EFCoal,Adv 36.53% 25.8 98.0 0.9136

Gas-fired EFGas,Adv 45.87% 15.3 99.5 0.4381

Oil-fired EFOil,Adv 45.87% 21.1 99.0 0.6011

The emission factor of thermal power is:

EFThermal = lCoal ´ EFCoal ,Adv + lOil ´ EFOil ,Adv + lGas ´ EFGas, Adv = 0.8737tCO2e/MWh.

Table14. The Installed Capacity of the Southern Grid 2002 Installed Capacity Guangdong Guangxi Guizhou Yunnan Tianshengqiao Subtotal Thermal 25,237.8 3,156.2 2,932.7 4,642.5 0.0 35,969.2 power(MW) Hydro power(MW) 7,775.3 4,363.3 5,836.3 2,426.1 2,520.0 22,921.0 Nuclear power(MW) 2,790.0 0.0 0.0 0.0 0.0 2,790.0 Wind power and 76.8 0.0 0.0 0.0 0.0 76.8 other(MW) Total (MW) 35,879.9 7,519.5 8,769.1 7,068.6 2,520.0 61,757.1 Data Source: China Energy Statistical Yearbook 2003.

Table15. The Installed Capacity of the Southern Grid 2003 Installed Capacity Guangdong Guangxi Guizhou Yunnan Tianshengqiao Subtotal Thermal 27,231.4 3,190.1 3,556.8 6,465.8 0.0 40,444.1 power(MW) Hydro power(MW) 8,107.2 4,525.2 6,543.2 3,713.7 2,520.0 25,409.3 Nuclear power(MW) 3,780.0 0.0 0.0 0.0 0.0 3,780.0 Wind power and 83.4 0.0 0.0 0.0 0.0 83.4 other(MW) Total (MW) 39,202.0 7,715.3 10,100.0 10,179.5 2,520.0 69,716.8 Data Source: China Energy Statistical Yearbook 2004.

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Table16. The Installed Capacity of the Southern Grid 2004 Installed Capacity Guangdong Guangxi Guizhou Yunnan Subtotal Thermal power(MW) 30,172.9 4,378.1 4,306.9 7,801.8 46,659.7 Hydro power(MW) 8,584.6 5,040.4 7,058.6 6,896.5 27,580.1 Nuclear power(MW) 3,780.0 0.0 0.0 0.0 3,780.0 Wind power and 83.4 0.0 0.0 0.0 83.4 other(MW) Total (MW) 42,620.9 9,418.5 11,365.5 14,698.3 78,103.3 Data Source: China Energy Statistical Yearbook 2005, Tianshenqiao power station is included in Guizhou.

Table17. The Calculation of BM Emission Factor for the Southern Grid New addition The Ratio in 2002 2003 2004 2002-2004 new addition Thermal power(MW) 35,969.2 40,444.1 46,659.7 10,690.5 65.40% Hydro power(MW) 22,921.0 25,409.3 27,580.1 4,659.1 28.50% Nuclear power(MW) 2,790.0 3,780.0 3,780.0 990.0 6.06% Wind power (MW) 76.8 83.4 83.4 6.6 0.04% Total(MW) 61,757.0 69,716.8 78,103.2 16,346.2 100.00% Ratio of installed capacity 79.07% 89.26% 100% in 2004 Data Source: China Energy Statistical Yearbook

EFBM,y = 0.8737×65.40% = 0.5714 tCO2e/MWh.

The OM is calculated as 0.9853tCO2e/MWh, the BM is calculated as 0.5714tCO2e/MWh. And the baseline emission factor equal to the combined margin with equally weighted average of the operating margin emission factor and the build margin emission factor.

According to ACM0002 (version 6), the default weight of hydropower is:

wOM = 0.5 wBM = 0.5

So the Baseline Emissions Factor ( EFy in tCO2e/MWh) is 0.77835tCO2e/MWh.

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Annex 4

MONITORING INFORMATION

The monitoring plan will monitor are power generation supplied to the grid and the electricity use of power plant supplied by the grid, provided the relative information in section B7.2.

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