CDM Opportunities in Indian Finance Sector 0206

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Nishant Bhardwaj IT Power India 24 Feburary, 2006 N.Delhi Mainstreaming CDM Opportunities in the Indian Finance Sector

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IT Power Group Renewable Energy and Environment Management Consulting Origin: Small is Beautiful Operations in Australia, China, India, Kenya, Mongolia, Morocco, South Africa and US. 900 projects in over 91 countries since 1978

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IT Power India Initiated operations in the year 1997 Completed 90 projects in 21 countries for institutional and private sector clients Focus on RE and Environment Management

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Expertise Renewable Energy Advisory Services Solar Photovoltaics Micro-Hydro Solar Thermal Wind Energy Bio-energy Climate Change - CDM Information Management; Training & Capacity Building.

IT Power Carbon: 

IT Power Carbon Securing CDM Finance Business plan, baseline study & PDD for 25.8MW wind power project, China Baseline study & PDD for China Coal Mine Methane Power Generation Project 15CDM projects in pipeline Capacity Building Analysis and evaluation CBM Projects in India China capacity building programme Bundling small scale CDM projects in India Advisory Services Main Streaming CDM opportunities in Biomethanation Master Plan of India Review of NATCOM report of India

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Widely recognised that small scale project contribute more towards sustainable development than large scale projects Consistent with Spirit of Kyoto Protocol that CDM project to contribute in sustainable development of Host Countries

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Energy efficiency: ≤15 GWh / a Renewable energy: ≤ 15 MW other project activities: ≤ 15 kt CO2 emissions / a Small Scale Projects (6 (c) of 17/CP.7)

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Simplified M&P for SSC Simplified Methodologies; No change modifications in project cycle – ‘Fast track’; Single OE for validation and verification; Simplified PDD; Administrative levy halved. All these only influences limited share of transaction cost

Transaction Cost : 

Transaction Cost Baseline Study- 18k; Validation - 28k; Registration- 5k; Negotiation- 18k; Verification- 20k; Certification -1k Total ~ 90k All Figure in USD (Source : UNFCCC Sec)

Bundling - Unexplored: 

Bundling - Unexplored One option under simplified small scale modalities and procedures which remained unexplored was “Bundling Small Scale CDM projects”

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What is Bundling? Combining several SS CDM projects into a portfolio: PDD Validation and Registration; Verification and Certification Limits of 6(c) of 17/CP7; Overall Monitoring plan with samples; Verification & Certification to cover all

Projects that can be bundled : 

Projects that can be bundled In principle any project can be bundled with other project Renewable energy -(Wind, Hydro, Biomass, Solar) Energy Efficiency Bundling make sense only if this lowers the transaction cost Technology specific Baseline specific

Impact on Transaction cost: 

Impact on Transaction cost Large difference in metered and non-metered projects because of monitoring costs Transaction costs metered small project: 21% of CER revenues Bundling of metered projects could decrease share of transaction costs to CER revenues : 10% If the project is not metered projects, increases transaction costs

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Bundling Organisation

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What is Required to Bundle?

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What kind of organisations can bundle? Financial institution or Strategic Business Unit (private company)? - profit motivated Governmental (e.g. nodal agencies) or Non-governmental organisation - e.g.rural development aims Trade Association - increase technology sales for members/improve efficiency Others - manufacturers, ESCO’s, O&M companies

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Profitability of Bundling Organisation Ownership of CERs Risks of non-delivery Sharing of benefits Full scale demonstration Replicability Issues in Bundling

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Business Plan for Bundling organisation

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Legal Agreements for CDM Projects

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Enabling Small Scale CDM Projects- CDMpool Establishing Institutional Capacity Providing Guidelines on Bundling To raise awareness for Investment in Small Scale energy Projects www.cdmpool.com Supported By Synergy Programme of European Commission

CDMpool : Project Highlights : 

CDMpool : Project Highlights IREDA selected as Bundling Organisation Business Plan Developed for Bundling Organisation Capacity building of IREDA and PFC PIN for four bundled project developed (Solar, Hydro, Biomass Gasifier and Energy Efficiency) PIN circulated to various buyers Handbook on bundling (www.cdmpool.com )

Case Study 1 Biomass Bundled Project : 

Case Study 1 Biomass Bundled Project Project bundled : 5 Biomass Gasifiers Capacity : 1 MW each State : Tamil Nadu Baseline : Regional Grid mix CERs expected : Approx. 25, 000 tCO2eq/ Year Crediting Period : 2006-2015, 10 years Project Developer : Southern Green Power Pvt. Ltd Internal rate of return : With CDM Project : 15.6 % Without CDM project: 13%

Case Study 2 Solar Bundled project : 

Case Study 2 Solar Bundled project Project bundled : Solar Home System and Solar Lantern Capacity : 15000 SHS And 5000 Solar lanterns State : West Bengal Baseline : Kerosene lamps CERs expected : Approx 2100 tCO2eqtCO2eq/ Year Crediting Period : 2001 to 2010 (10 years) Project Developer : Market Dynamics Pvt. Ltd. Internal rate of return : With CDM Project : 30.27% Without CDM project: 29.35 %

Contacts: 

Contacts Nishant Bhardwaj IT Power India nb@itpi.co.in

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Thank you for Your Attention Contact : IT Power India C-50, Shivalik N. Delhi-110017 www.itpi.co.in