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SS CDM Cogeneration in Egypt - Additionality

SS CDM Cogeneration in Egypt - Additionality. Ihab Elmassry , M. Sc. CEM, CDGP Cummins Power Generation, UK Email imassry@link.net. Tunis – August 27-28, 04. Cogeneration.

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SS CDM Cogeneration in Egypt - Additionality

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  1. SS CDM Cogeneration in Egypt -Additionality Ihab Elmassry, M. Sc. CEM, CDGP Cummins Power Generation, UK Emailimassry@link.net Tunis – August 27-28, 04

  2. Cogeneration Cogeneration is the simultaneous generation of usable heat and power, usually electricity, in a single process from the same fuel.

  3. kWh from utility No kWh exported Plant Self Generation Concept Base electrical kWh supplied Gas Gen-set

  4. Additionality test (Proposal on CDM Additionality Tests, Lex de Jonge & Sandra Grener) Project is not additional Has construction of the project started? Was the project construction started before 1 Jan, 2000? Was CDM taken into consideration since the early stages of project development Was the project construction starting date before both date of registration & 31 Dec. 2005? Is there documentation to this effect? Is execution of the project based on a direct or indirect legal obligation?

  5. Check one of the options 3a or 3b for barrier testing? Project is not additional • 3b: do one or more of the following barriers exists: • Investment • Technological • Practice • others 3a: determine financial or economical barrier (IRR, .. Etc) Project is less eco attractive Are many projects recently implemented without CDM? Project is additional • Have one or more of the following barriers recently changed fundamentally • Investment • Technological • Practice • others

  6. Cogeneration Whey the non project is more likely?

  7. I. Investment/financial barrier • A cogeneration project is relatively a capital intensive project. The cost of a cogeneration project may be varied from fraction of millions up to tenth of millions depends on the size and the type of the cogeneration unit. • There is no clear financing mechanism for environmental and/or energy efficiency and/or demand side management projects. • Banks and leasing companies’ interest rates are high.

  8. I. Investment/financial barrier (cont.) • Subsidy that imposed on electricity and energy prices which resulted in low return on investment for cogeneration projects. • Relatively high simple payback periods, in best cases it is not less than 6 years.

  9. Base Case +20% Example: Debt/Equity 100%/0%

  10. +20% Example: Debt/Equity 50%/50% Base Case

  11. +20% Example: Debt/Equity 0%/100% Base Case

  12. II. Practice • Lack of knowledge about the conducting techno-economic feasibility studies and risk assessment for cogeneration projects. • Lack of knowledge on energy efficiency equipment

  13. III. Institutional • Absence of governmental incentives such as low bank interest rate and advantageous customs, taxes and customs duties. • The reluctance of the utility to purchase the excess of electricity produced by the small producers. It offers a very low selling back price. • The lack of awareness of cogeneration technology and its benefits to Egypt,

  14. III. Institutional (cont.) • The lack of long-term plans supported by the government for cogeneration promotion. • No cogeneration power purchase agreement • Cogen-End user contractual issues • Low selling back tariff • No official written procedure for interconnection requirements

  15. IV. Technological: • Few number of small scale cogeneration projects are already installed, this leads to operation & performance risk

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