Aquarius Hydroelectric Project ( A small-scale CDM project )

1. Aquarius Hydroelectric Project (A small-scale CDM project) Project Design Document

2. Host country requirements: • Brazil is a non-Annex 1 country • Brazil has ratified the Kyoto Protocol last August 28, 2002 • Establishment of Designated National Authority

3. A.1. Title of the project activity: • Aquarius hydroelectric project

4. A.2 Description of the project activity: • The objective of the project activity is to generate clean electricity using hydroelectric resources and sell it to the regional power grid. • The project is expected to have an installed capacity of 4.2 MW, and will utilize the water of the Correntes river. It will be a run-of-river project with no dam or flooding. • The Aquarius project started in the 1980s with some structures already in place, like, water intake channel, partial excavation of the conduction channel, bases for blocks of anchorage of the penstock and ramp.

5. A.2 Description of the project activity (cont.): • The project was reactivated in 1999 and was linked to the 180 MW Ponte de Pedra hydropower plant. • The total height difference (head) between the headpond and the turbine/generator is approximately 60 meters. The dam takes advantage of the existing natural fall and the inlet water is at 254.3 m above sea level. • The project will require 350 m conduction channel and a 160 m long penstock, and two turbines will be installed.

7. A.2 Description of the project activity (cont.): • The project will deliver about 25,750 MWh/year to the Brazilian power system. • Since the power plant is located at the end of the CEMAT (Centralis Eletricas Matogrossenses) distribution system, another important function of the Aquarius project is to improve the quality of power supply in the region.

8. A.3 Project Participants: Host Party: Brazil Project Developers: Companhia Agricola Sonora Estancia – CASE PDD Consultants: MGM International, Inc. and NEGAWATT – Projtos, Engenhariae Comercio Ltda. Annex 1 country participant: Electric Power Dev. Co. Ltd

9. A.4.1 Technical Description of the project activity: A.4.1 Location of the project activity: A.4.1.1. Host country: Brazil A.4.1.2. Region: Latin America A.4.1.3. City/Town: Itiquira Municipality (right margin of the Correntes river) in the Mato Grosso State and Sonora Municipality (left margin of the Correntes river), Mato Grosso do Sul State A.4.1.4 The project will be located in the central-western region of Brazil (latitude: 17°37‘S and longtitude 54°55’W), on the Correntes river.

10. Map of Brazil

11. A.4.2. Type and category(ies) and technology of project activity: Type : 1 – Renewable Energy Projects Category: D – Renewable Electricity Generation for a Grid

12. A.4.3 Brief Statement on how anthropogenic emissions of greenhouse gas (GHGs) by sources are to be reduced by the proposed CDM project activity: It is expected that the project activity will serve to displace fossil-fired plants with clean technology provided by hydroelectricity. The baseline analysis (Section B) estimates that the Project would displace: 7 -year (2005-2012) 104,594 tonnes of CO2 21-year 313,782 tonnes of CO2 30-year life span 448,260 tonnes of CO2

13. A.4.4 Public funding of the project activity: No public funding, including official development assistance is involved in financing the project.

14. A.4.5 Confirmation that the small-scale project activity is not a debundled component of a larger project activity: Aquarius is not part of a larger debundled CDM activity.

15. B.1 Title and reference for the project category applicable to the project activity: Type 1 – Renewable Energy Projects Category 1.D – Renewable Electricity Generation for a Grid

16. B.2 Project category applicable to the project activity: The baseline is the kWh produced by the renewable generating unit multiplied by an emission coefficient (measured in kgCO2/kWh) calculated in a transparent and conservative manner as: The average of the “approximate operating margin” and the “build margin”, where: The “approximate operating margin” is the weighted average emissions (in kgCO2/kWh) of all generating sources serving the system, excluding hydro, geothermal, wind, low-cost biomass, nuclear and solar generation; • The “build margin” is the weighted average emissions (in kgCO2/kWh) of recent capacity additions to the system, defined as the lower of most recent 20% of plants built or the 5 most recent plants

17. B.3. Description of how the anthropogenic GHG emissions by sources are reduced below those that would have occurred in the absence of the registered CDM project activity • Until mid 1990’s the electricity market was focused on large hydroelectric power plants operated by the state; • 1990s consumption increased by 49% while installed capacity increased only by 35% requiring the use of stored energy in the form of water in the reservoirs. • In 1995 onwards, international interest rate increased and investment capacity of the state decreased; • The solution was privatization and liberalization of the market;

18. B.3. Description of how the anthropogenic… (cont.) • In year 2000, the power demand was 305.6 TWh with a generation capacity of 67.7 GW; with a gross generation of 322.5 TWH; • The only alternatives were improved energy efficiency or a more intensive use of existing plants; • Improved energy efficiency generated limited result; • Intensive use of existing plants was exploited; • The reservoirs were not able to meet the demand resulting to power shortage in 2001; • In 2001 onwards, rationing was imposed to reduce consumption by 20%

19. B.3. Description of how the anthropogenic… (cont.) • In 2000 the government launched the Thermal Electric Priority Plan (PPT) to increase the share of thermal electricity; The government promoted the building of thermal power plants based on imported natural gas; • This was a significant shift from basically hydroelectric system to thermal power plants; • The Wind Energy Incentive and Alternative Energy Sources Incentive Program foresee increase generation capacity by 3300 MW with other renewable energy other than hydro, offering long-term contracts with special conditions, lower transmission costs, lower interest rates from banks. • There are still uncertainties on the benefits of these programs.

20. B.4 Description of the project boundary for the project activity: Dashed line indicates project boundary Construction of Equipment Auxiliary energy Materials transportation Power Plant (prod. Of energy) Injection of elec. to the grid Grid (trans and dist.) End users Construction of the plant Correntes river (water supply)

21. B.5 Details of the baseline and its development: B.5.1 The methodology used is option (a) of Appendix B of the Simplified Methodology developed based on the following steps: • Determination of expected annual electricity production, found by multiplying the installed capacity (4.2 MW) by the plant capacity factor (70%) by 8,760 (number of hours in one year) = 25,755 MWh per year. Capacity factor: average of natural gas and hydro plants in 2001 Equation 1: Annual Plant Capacity = Plant Capacity x Plant Capacity x Annual Hours Output (MWh/yr) (MW) Factor 8,760 hours

22. B.5 Details of the baseline and its development (cont.): 2.Determine power plants serving the national and regional system (excluding hydro, geothermal, wind, nuclear, low-cost biomass, and solar generation). The Sistema de Informacoes Empresariais do Setor de Energia Electrica, Boletim Semestral Sintese 2001, MME-ANEEL-ELETROBRAS provides data on the electricty generation of its power plants. For the study, power plants located in the Center-West region of Brazil,comprising the states of Goias, Mato Grosso and Mato Grosso do Sul were considered.

23. B.5 details of the baseline and its development (cont.): • Emission factors (kg CO2 per kWh electricity) for thermal power plants are obtained from natural gas and diesel consumption, and corresponding power generation of power plants in the West Central (WC) region during 2001, as reported in SIESEE. Additional data were taken from Revised 1996 (IPCC Guidelines for National Greenhouse Gas Inventories, Volume 3: GHG Inventory Reference Manual

24. B.5 details of the baseline and its development (cont.): • Plant conversion efficiencies (conversion of thermal energy into electricity), obtained from the official data, were checked with estimates of the World Bank Greenhouse Gas Assessment Handbook, 1998. 5. Annual emissions of carbon dioxide are calculated by multiplying electricity generation by the corresponding emission factors (by fuel and technology) B.5.2. Date of completing the final draft of this baseline: 28/02/2003

25. B.5 details of the baseline and its development (cont.): B.5.3 Name of person/entity determining the baseline: Dr. Gautam S. Duff and Ing. Ivana Cepon, MGM International, Inc. Ayabucho 1435, 9B C1111AAM Buenos Aires Argentina

26. C.1 Duration of the project activity: C.1.1 Starting date of the project activity: Construction is expected to begin in mid 2003. Duration of the construction is 17 months. Generation is expected for early 2005. C.1.2 Expected operational lifetime of the project activity 30 years

27. C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period (at most seven (7) years per period) C.2.1.1 Starting date of the first crediting period is (dd/mm/yyyy) : 01/07/02005 C.2.1.2 Length of the first crediting period 7 years C.2.2 Fixed crediting period (at most ten (10) years: Not selected.

28. D.1. Name and reference of approved methodology applied to the project activity: According to option (a) of Type 1, Category D of CDM small-scale project activity categories contained in Appendix B of the simplified M & P for CDM small-scale project activities, monitoring shall consist of metering the electricity generated by the renewable technology (hydroelectricity).

29. D.2 Justification of the choice of the methodology and why it is applicable to the project activity: Monitoring has been chosen as it is suggested in the last proposal on “Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories”. Data collection is compatible with the baseline methodology described in Section B.5

30. D.3 Data to be monitored: • ID Number • Data type • Data variable • Data Unit • Measured; Calculated; Estimated • Recoding Frequency • Proportion of data to be monitored • How will the data be archived? (electronic or paper) • For how long is archived date to be kept? • Comments: Source of data

31. D.4 Name of person/entity determining the monitoring methodology: Dr. Gautam S. Duff and Ing. Ivana Cepon, MGM International, Inc. Ayabucho 1435, 9B C1111AAM Buenos Aires Argentina

32. E.1 Formulae used: E.1.1Selected formulae as provided in appendix B: Not applicable E.1.2 Description of formulae when not provided in appendix B: E.1.2.1 Describe the formulae used to estimate anthropogenic emissions by sources of greenhouse gases due to the project activity within the project boundary: Zero since hydroelectric power is clean technology.

33. E.1 Formulae used (cont.): E.1.2.2 Describe the formulae used to estimate leakage due to the project activity,where required for the applicable project category in appendix B to the simplified modalities and procedures for small-scale CDM project activities. Not applicable. E.1.2.3 The sum of E.1.2.1 and E.1.2.2 represents the project activity emissions: No emissions at all.

34. E. 1 Formulae used cont.: E.2.4 Describe the formulae used to estimate anthropogenic emissions by sources of greenhouse gases in the baseline using the baseline methodology for the applicable project category in appendix B to the simplified modalities and procedures for small-scale CDM project activities. Baseline emissions, E baseline are given by: E baseline (tonneCO2/yr) = [E] baseline (kgCO2/kWh) x CG(kWh/yr) ------------------------------------------------ 1000kg / tonne Where CG stands for Aquarius electricity generation(Equation 1).

35. E. 1 Formulae used cont.: E.1.2.5 Difference between E.1.2.4 and E.1.2.3 represents the emission reductions due to the project activity during the given period. Total baseline emission = 14,942 tonnesCO2/year – Hydro power emission = 0 Emission Reductions = 14,942 tonnesCO2/year

36. E.2 Table providing values obtained when applying formulae above: Build margin estimation: [E] build margin = 0.310 kg CO2/kWh Operating margin estimation: [E] operating margin = 0.851d kg CO2/kWh Baseline estimation: [E] baseline = ([E] build margin + [E] operating margin)/2 = 0.580 kg CO2/kWh

37. E.2 Table providing values obtained when applying formulae above (cont.): E baseline = 0.580 kgCO2/kWh x 25,755 MWh/yr -------------------------------------------------------------------------- 1000 kg/tonne E baseline = 14,942 tonnes CO2/year Total emissions reductions: 1 year 14,942 tonnes CO2 7 years 104,594 tonnes CO2 21 years 313,782 tonnes CO2 30 years 448,260 tonnes CO2

38. F.1 If required by the host party, documentation on analysis of the environmental impacts of the project activity: The proposed project is a run-of-river hydropower plant, which involves no dam construction and no flooding, and thus no deforestation. Therefore, the environmental impact is very small compared to other types of power generation alternatives.

39. G.1 Stakeholders comments The municipality of Sonora, where the project would be located, is a major stakeholder in the project. They were asked to give an opinion on the project. A letter of support was attached to the PDD. Another stakeholder is the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA). IBAMA issued an environmental license. PDD was also posted on the website for comments of other stakeholders and the public in general. Deadline for comments is May 23, 2003.

40. Related links: • http://www.dnv.com/certification/ClimateChange/ • http://unfccc.int/cdm • http://prototypecarbonfund.org

41. Thank you Marina T. Mallare Climate Change Information Center Manila Observatory Ateneo de Manila University Tel No. 426-59-21 Fax No. 426-08-47 E-mail: marina@observatory.ph