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PROJECT DESCRIPTION: VCS Version 3

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İNCİRLİ HYDRO POWER PLANT

Mrs. Gozde Ozveren

BorgaCarbon Consultancy Ltd.

Project Title İncirli Hydro Power Plant

Version 06

Date of Issue 01-02-2012

Prepared By Gozde Ozveren, BorgaCarbon Consultancy Ltd.

Contact Fulya Mah. Ortaklar Cad. Kemal Bey Apt. 24/4

Şişli / İstanbul

Turkey

Phone: +90 212 356 96 76

Fax: +90 212 356 96 36

E-mail: [email protected]

www.borgacarbon.com

mailto:[email protected]

http://www.borgacarbon.com/


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Table of Contents

Insert table of contents

1 – PROJECT DETAILS

2 – APPLICATION OF METHODOLOGY 3 – QUANTIFICATION OF GHG EMISSION REDUCTIONS AND REMOVALS 4 – MONITORING 5 – ENVIRONMENTAL IMPACT 6 – STAKEHOLDERS COMMENTS ANNEX 1: INFORMATION REGARDING PUBLIC FUNDING ANNEX 2: BASELINE INFORMATION ANNEX 3: MONITORING INFORMATION


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PROJECT DETAILS

1.1 Summary Description of the Project

İncirli Hydropower plant (hereafter referred to as the Project) developed by Laskar Enerji Üretim Pazarlama A.Ş (refered to as the Project Proponent) is a grid connected large-scale hydroelectric power plant which uses the water supply of İyidere river in Kalkandere district of Rize Province of Turkey (hereafter referred to as the Host Country). The Project Activity owner has obtained the initial electricity generation licence from the Electricity Market Regulatory Authority (EMRA) for 22.5 MW but amended the license for 25.20 MWe / 28.53 MWm installed capacity for 49 years

1. The designed annual operation time

is approximately 4417 hours. The total installed capacity of the project is 28.53 MWm / 25.20 MWe with three sets of turbine units (9.51 MWm x 3 = 28.53 MWm), with a predicted electricity supply to the grid of 126.02 GWh

2.

The aim of the Project is to utilise the hydro electrical resources in order to generate zero emission electricity and sell it to the Turkish National Grid via TEIAS (Türkiye Elektrik İletim A.Ş / Turkish Electricity Transmission Corporation) which is mainly dominated by fossil fuel-fired power plants. Thereby the project activity displaces electricity that is relatively carbon intensive (with a Combined Margin Emission Factor of 0.704 tCO2/MWh)

3 and reduces greenhouse gas emissions (GHG).

The initial project consists of İncirli I diversion weir on İyidere river, İncirli II diversion weir on Karadere river, sedimentation pools, water inlet structure, two conveyance tunnels, surge tank, penstock, power house, switchyard and the energy transmission line. One of the diversion weirs were planned on Karadere river, but soon after the start of the construction works, it was observed that the water flow of Karadere river was less than the value in the initial FSR, dated February 2006. Due to this observation the project owner requested water flow measurements by a stream gauging station and the water flow was measured 0.60 m

3/s instead of 3.55 m

3/s. Due to this great difference in water potential, the project

owner found it unnecessary to use the low water potential in Karadere river and dispensed the construction of İncirli II diversion weir and one of the conveyance tunnels

4.

Since the power plant is a run-of-river type, there shall be no dam construction resulting in any land to be covered with water

5.

The design flow rate for İncirli diversion weir is 30.00 m

3/s and the gross head is 60.00 meters. The

annual estimated electricity generation will be 126.02 GWh. The generated electricity shall be transferred to the İyidere Substation by a 34.5 kV and 2 km long transmission line. The net electricity generation of the project activity will be 123.46 GWh annually

6. The annual estimated emission reductions calculated

with the net electricity generation will be around 86,915 tCO2. Purpose of the Project:

a) The scenario existing prior to the start of the implementation of the Project is that the electricity requirement is satisfied by the National Grid of Turkey.

1 Amended electricity generation license for 25.20 MWe / 28.53 MWm.

2 Technical Feasibility Report of İncirli Hydroelectric Power Plant by Scopsu Proje, December 2008.

3 Please refer to section B.6 "Emission Reductions" section of this PDD. The emission reduction calculation Excel worksheet will

also be provided to DOE upon request.

4 The DSİ application letter for Project revision and the DSİ approval is available upon request.

5 Confirmation letter of the engineering company Scopsu Proje is available upon request.

6 Confirmation letter of the engineering company Scopsu Proje for the amount of net electricity generation is available upon request.


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b) The Project is a newly built hydropower plant with the installed capacity of 25.20 MWe /28.53 MWm (3 x 9.51 MWm). The Project will utilize the water resources of İyidere creek and its side branch Karadere creek to generate electricity which will be delivered to the National Grid of Turkey without CO2 emissions. The Project activity will achieve greenhouse gas (GHG) emission reductions by avoiding CO2 emissions from the business-as-usual scenario, electricity generated by those fossil fuel-fired power plants connected into the National Grid of Turkey.

c) The baseline scenario of the Project is the same as the scenario existing prior to the start of the

implementation of the Project. How does the Project reduces GHG emissions: The Project‟s estimated net electricity supply to the Grid will be 123.46 GWh annually. The Project activity will achieve greenhouse gas (GHG) emission reductions by avoiding CO2 emissions from the business-as-usual scenario, electricity generated by those fossil fuel-fired power plants connected into the National Grid of Turkey. The estimated emission reductions are 86,915 tCO2 per year. In addition to reduce GHG emissions by producing clean energy, the Project will also make contributions to the sustainable development of the local communities and the host country by means of:

Making better use of the renewable hydro power energy and play a positive role in the local renewable energy industry,

Contributing to local economy development by providing energy to meet the increasing local energy demand,

Reducing GHG emissions compared to the business-as-usual scenario, which is electricity generation by the country‟s generation mix mainly dominated by fossil fuel-fired power plants,

Reducing the emissions of other pollutants resulting from local coal-based power plants,

Creating new job opportunities: Around 300 job opportunities will be created during the construction phase and around 10 permanent jobs during the operation.

In addition to contribution to local economy, the Project will also contribute the use of local and renewable resources to meet the increasing energy demand of Turkey and reduce dependency on fossil fuels. In terms of fuel dependency, İncirli HPP is expected to contribute to the balance of payments by reducing that much imported energy, which will, in addition, increase air quality and access to affordable energy services in national level. İncirli HPP Project obtained the electricity generation license, in line with the Electricity Market Law #4628. As being a run-of-river type renewable energy source, it conforms to the definitions in Article 11 of the Law on Renewable Energy Sources. The Project is also within the scope of and in compliance with the Energy Efficiency Law. The Project, being an energy generation facility is also within the scope of and in compliance with the Forest Law, which states that the forest areas can be allocated to energy generation facilities by the Ministry of Environment and Forestry if the project implementation serves common good for the public. The Project also conforms to the principles of the Environmental Law as shown in the attached Environmental Impact Assessment Exemption Decision for the Project. In the content of the Feasibility Report which was submitted to Ministry of Environment and Forestry, an environmental impact matrix was also prepared. The parameters analyzed in the matrix are as follows;


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Table 1: Environmental Impact Matrix7

Impact Legal Standards Precautions

Dust occurrence during construction and excavations.

The precautions listed in the Regulation of the Air Quality Control (enactment date: 02.11.1986) will be taken.

The transporters will be covered.

Loading and off-loading will be done carefully.

The circulation roads will be watered when necessary.

Noise pollution due to construction works.

Regulation of Noise Control (enactment date: 11.12.1986)

Equipment maintenance.

All the precautions will be taken for the workers in accordance with the Labor Law#1475 and the Regulation of Workers Health and Labor Security.

Equipment and machinery operating during activities.

132. and 134. Clauses of the Regulation of the Highway Transportation will be enabled.

Oil changes for the vehicles will be made by taking necessary precautions and in accordance with the clauses in the Regulation of Oil Wastes#18 (enactment date 12.08.1996).

In the site area, a canal will be provided for oil changing.

Waste oils will never be released in garbage, earth or waste water.

The oil will be collected in metal containers and will be utilized by private entities buying the waste oils.

In case these precautions will not be enough Turkish Waste Control Regulations (enactment date: 27.08.1995) will be applied.

Solid waste ocurrance during the construction and operation.

The construction and operation phases will be fully in line with the relevant clauses of the Regulation of Solid Wastes Control.

Recyclable wastes will be decomposed in accordance with the 8. Clause of the Regulation of Solid Wastes Control and in accordance with the same regulation the rest of the wastes will be transported to the Bagtasi

7 İncirli Diversion Weir and HEPP Project FSR December 2008.


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Municipality waste collecting area.

Surplus excavation materials will be stocked.

Final stocking will be done in accordance with the 23. Clause of the Regulation of Solid Wastes Control.

Surplus excavation materials will be used for land levelling and landscaping.

Flora will be impacted. Due to the activities, there will be a little harm on the flora.

The plant taxons are common and spread around the country. Though, these plant species are very populated, they don‟t have the risk of extinction due to the project implementation.

During the construction phase, there will be some waste water formation due to domestic purposes.

The activities will be fully in line with the Regulation of Opening Cesspools In Places Where It Is Impossible to Build Sewage System.

Waste water disposal will be done in accordance with the cesspool project approved by the provincial bank.

The dimensions of the cesspools will be determined to be enough at least for three days.

The cesspools will be located next to the road.

Fauna will be impacted. Due to the activities, there will be little harm on the fauna.

As the necessary amount of water will be released for the aquatic life, these areas will not be impacted.

In terms of fish ovulation and reproduction areas, river vegetation and deep structure will be protected with care.

Close attention will be given to working hours with the construction equipment.

The construction phase will be started after the spring which is the reproduction period of most of the fauna elements.

The social life will be affected. In terms of project implementation, there will be great contribution to local and national economy. Especially during the construction phase, new job opportunities will be provided to local people. The employees for the operation phase will also be provided from the region.

We can conclude that the Project is in line with the identified legislations.


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1.2 Sectoral Scope and Project Type

According to UNFCCC definitions, the Project activity falls into; Sectoral Scope 01: Energy Industry (renewable/non-renewable sources). Grid-connected renewable power generation from run-of-river hydropower project.

1.3 Project Proponent

Laskar Elektrik Üretim Pazarlama A.Ş is the project proponent. The contact details are as follows;

Phone: +90 312 286 60 71

Fax: +90 312 286 51 70

E-mail: [email protected]

1.4 Other Entities Involved in the Project

Borga Carbon Ltd. is the developer of this project under VER scheme. Contact details are as follows:

Phone: +90 212 356 96 76 Fax: +90 212 356 96 36 E-mail: [email protected]

1.5 Project Start Date

The start date of İncirli run-of-river hydro power project is the plant acceptance date by the government authorities and the energy generation start date which is 24-05-2011

8.

1.6 Project Crediting Period

Two times renewable crediting period of 10 years. Length of the first crediting period: 10 years and 0 months. Start Date: 24-05-2011 End Date: 23-05-2021

1.7 Project Scale and Estimated GHG Emission Reductions or Removals

Project X

Mega-project

Years Estimated GHG emission

reductions or removals

(tCO2e)

24-05-2011 – 23-05-2012 86,915

8 Plant acceptance and energy generation start date.

mailto:[email protected]


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24-05-2012 – 23-05-2013 86,915

24-05-2013 – 23-05-2014 86,915

24-05-2014 – 23-05-2015 86,915

24-05-2015 – 23-05-2016 86,915

24-05-2016 – 23-05-2017 86,915

24-05-2017 – 23-05-2018 86,915

24-05-2018 – 23-05-2019 86,915

24-05-2019 – 23-05-2020 86,915

24-05-2020 – 23-05-2021 86,915

Total estimated VERs 869,150

Total number of crediting years 10

Average annual VERs 86,915

1.8 Description of the Project Activity

In hydro power technology the electricity is generated utilizing the energy of flowing water. The turbine generators in Hydro power technology are used to convert the potential of water into mechanical energy and then to electrical energy. Unlike the hydro power plants with dam or reservoir facilities, the electricity generation of run-of-river type hydro power plants depend on the water flow regime in the river. Whenever the water is available in the river, the hydro power plant generates electricity but when there is no water no electricity is generated. These types of power plants produce the electricity as long as the water flow is available in the river. Technology of the project Activity. The Project Activity is a new hydro power plant and the main construction consists of a diversion weir, sedimentation pool, a tunnel, a surge tank, a penstock and a power plant structure with 3 turbines each having 8.4 MWe / 9.51 MWm installed capacities and 3 generator units. The turbines and other main equipments are manufactured by Zhejiang Jinlung Electromechanic Co. Ltd of China. The project makes use of water resources to generate electricity by leading the water through a tunnel to the water intake (surge tank) and directing it through the turbines to drive the generators via penstock. The electric power will be produced in 3 units of alternators with plant load factor of 50% and will be delivered to İyidere Substation through a 34.5 kV transmission line of 2 km. The main technical parameters of the main equipment are described in Table 1 below. The designed flow rate of İncirli hydro power plant is 30.00 m

3/s. The Project is expected to have 36.000

kWh internal consumption and 2% (2.52 Gwh) line losses9. After deducting the inner consumption and the

line losses, from the estimated electricity generation of 126.020 GWh, the net electricity generation will be 123.46 GWh. The annual estimated emission reductions calculated with the net electricity generation will be around 86,915 tCO2.

9 Declaration from the engineering company Scopru Proje Ltd.


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Environmentally Safe Technology: As confirmed and approved by the EIA Exemption Decision

10, the project does not lead to pollution and

has little impact on the environment limited to the construction phase only. So the project is safe to the environment. The project will use hydro power technology which is very well known and recognized technology in electricity generation. The turbines and control equipments are imported

11 but all the other equipments

are from domestic market. Table 2 – Main Technical Parameters of the Project Activity

İncirli Diversion Weir Hydrology

Drainage Area (km2) 895.00

Annual Average Precipitation (mm) 900.00 – 1000.00

Annual Average Flow (m3/s) 30.00

İncirli Diversion Weir

Body Type Concrete Weight

Max. Operation Level (m) 102.00

Crest Elevation (m) 102.00

Thalweg Elevation (m) 97.00

Height From Thalweg (m) 5.30

Crest Lenght (m) 110.00

Gravel Pass Unit 2

Gravel Pass Capacity (m3/s) 60

Gravel Pass Dimensions (m x m) 4.5 x 4.5

Gravel Pass Crest Elevation (m) 97.00

İncirli Water Intake Structure

Type Side intake, rectangular profile.

Location Right bank

Sill elevation (m) 96.00

Grate units 3

Grate width (m) 5.00

Grate height (m) 5.00

İncirli Sedimentation Pool

Type Rectangular profile, flushing gate, concrete pool

Location Right bank

Number of Units 1

Pool Width (m) 18.00

Pool Height (m) 5.00

Pool Length (m) 120.00

İncirli Conveyance Tunnel

Type Modified horseshoe profile

Number of Units 1

Location Right Bank

Dimension (m) 4.5

Capacity (m3/s) 60.00

Tunnel Length (m) 5860.00

Tunnel Slope (%) 0.0015

Penstock

10

EIA Exemption Decision is available upon request.

11 The turbine purchase agreement will be provided upon request.


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Location Over the ground

Penstock type Steel

Number of Units 1

Penstock diameter (m) 4.50

Penstock length (m) 78.00

Penstock max. discharge (m3/sec) 60.00

Turbine12

Type Vertical Shaft Francis

Number of Units 3 sets.

Unit power (MW) 8.40

Design head (m) 46.3

Design discharge 20.65 m3/s each.

Unit output at design head 8400 kWe

Rated speed 375 rpm

Manufacturer Zhejiang Jinlung Electromechanic Co. Ltd.

Alternators13

Type 3-Phase A.C synchronous generator, Vertica shaft, enclosed hood, air cooled type.

Number of units 3 sets

Capacity 8.4 MW / 9.33 MVA

Voltage 10.6 kV

Power Factor 0.9 (lagging)

Frequency 50 Hz

Rated speed 375 rpm

Transformers

Internal transformer

Type Oil isolated

Number of units 2

Unit output (kVA) 400

Frequency (Hz) 50

Voltage (kV) 6.3 / 0.4

External transformer

Type Oil isolated, forced oil and air cooling

Number of units 2

Unit output (kVA) 9400

Frequency (Hz) 50

Voltage (kV) 6.3 / 34.5

Power Plant

Installed power (MW) 25.20 MWe / 28.53 MWm

Firm power (GWh) 6.83

Annual firm energy generation (GWh) 59.81

Annual secondary energy generation (GWh) 66.21

Annual average total energy generation (GWh) 126.02

Energy Transmission Line

Type 34.5 kV

Characteristic 2 x 477 MCM

Length (km) 2

Figure 1 : Project layout of İncirli Hydro Power Plant

12

Specifications in the turbine and generator units purchase agreement with Zhejiang Jinlung Electromechanic Co. Ltd.

13 Specifications in the turbine and generator units purchase agreement with Zhejiang Jinlung Electromechanic Co. Ltd.


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As mentioned in the above section, one of the tunnels shown in the project layout is cancelled by the DSİ approval.

1.9 Project Location

The project will be implemented in Rize province, Kalkandere district on İyidere stream. The project area is located in between 40.900 N – 40.950 N latitudes and 40.400 E – 40.438 E longitudes and the power house is located at 40.9772 N latitude and 40.40 E longitude. The climatic characteristics reflect the Black Sea climate where, the winters are rainy, the temperature is cool and the flora is mainly composed of green trees. In accordance with the assessments of flora and fauna in the Project Introductory File five of the plant species were determined endemic, but the ratio of these endemic species are below the country average and are in low risk profile

14.

Figure 2. Location of the Project Activity

14

Project Introductory File of İncirli HEPP by Scopsu Proje Ltd.


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Figure 3. Project Layout of İncirli HPP


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1.10 Conditions Prior to Project Initiation

For a developing country like Turkey, obviously energy generation has a critical role on providing

economical growth and its sustainability. Turkey‟s energy demand and GHG emissions are increasing


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exponentially since the last decade. Major portion of the GHG emissions are caused by the energy

generation profile of the country which relies greatly on thermal facilities. In order to fulfil the energy

demand by causing minimum damage on the environment, Turkey encourages the investments on

renewable electricity generation and develops energy efficiency incentives for the consumers. İncirli

HEPP has been implemented as a hydraulic power plant in order to provide electricity to the Turkish

National Grid. Due to its technology, it uses water as fuel and provides energy without any GHG

emission. Therefore the project has not been implemented to generate GHG emissions for the purpose of

their subsequent reduction, removal or destruction.

1.11 Compliance with Laws, Statutes and Other Regulatory Frameworks

Through the cabinet decree #93/4789 ratified in 12.08.1993, the state-owned enterprise TEK (Turkish Electricity Administration) was recognized in two separate enterprises as TEİAŞ (Turkish Electricity Generation, Transmission Co.) and TEDAŞ (Turkish Electricity Distribution Co.). By the Law # 4501, ratified in 21.01.2000; an international arbitration committee was settled in the sector. The main duty of this committee was to prepare eligibility regulations on the current electricity legislations through the UN legal acquisitions and in accordance with this to start the restructuring surveys in the sector. As the result of this restructuring programme, Electricity Market Law # 4628, date 20.02.2001 was ratified. The aim of this law is; to create an electricity market that can activate in a competitive environment with special legal system legislations, which is financially strong, consistent and transparent to provide the consumers the most efficient, qualified, constant, low cost and environment friendly electricity. With the contribution of the private sector companies, the privatisation of this competitive market aimed to identify, regulate and control the legal, technical and financial criteria of the electricity companies. In 2001, Enerji Piyasası Düzenleme Kurumu (EPDK) /Electricity Market Regulatory Committee (EMRA)

15

was set up to oversee the generation of the new power market. EPDK has the leading role for the implementation of the overall power reform and completed an initial draft of regional market rules. As the initial step of opening electricity market, the Turkish government achieved separating the power generation from the electricity grid at the national level and began to encourage the private sector companies to invest in power generation projects. But, on the other hand, the tariff determination and approval of power project investments are still centrally controlled and manipulated by EMRA. As being indicated above, Turkish electricity market is at the beginning stage shifting from government-oriented system to market-oriented system. All the instabilities and uncertainties accompanied with the reforms could lead to critical and risky business conditions for the power producers to invest in Turkey. Hence, at present, investors prefer the coal-fired power plants associated with mature domestic technology, abundant fuel source with preponderant site location, shorter construction period, and low unit capacity construction cost. Regarding the above information on the current electricity market situation, the above alternatives for the project implementation are realistic and credible. The following applicable mandatory laws and regulations have been identified concerning renewable energy investments in Turkey:

1. Electricity Market Law16

2. Law on Utilisation of Renewable Energy Resources for the Purpose of Generating Electrical

Energy17

15

http://www.epdk.gov.tr/web/guest/epdk_hakkinda

16 Law Number 4628, enactment date 03/03/2001, http://www.epdk.gov.tr/english/regulations/electricity.htm

17 Law Number 5346, enactment date 18/05/2005, http://www.eie.gov.tr/duyurular/YEK/LawonRenewableEnergySources.pdf

http://www.epdk.gov.tr/english/regulations/electricity.htm

http://www.eie.gov.tr/duyurular/YEK/LawonRenewableEnergySources.pdf


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3. Energy Efficiency Law18

, 4. Forest Law

19,

5. Environment Law

20

6. Regulation on procedures and principles of signing the agreement of utilisation of water

resources for the purpose of electricity production in the electricity market21

7. Regulation on Environmental Impact Assessment22

The resultant alternatives to the project as outlined in Step 1a are in compliance with all these applicable laws.

1.12 Ownership and Other Programs

1.12.1 Proof of Title

Laskar Elektrik Üretim Pazarlama A.Ş. has the electricity generation license approved by Electricity

Market Regulatory Committee (EPDK)23

for İNCİRLİ HEPP for 49 years as of 22-11-200724

, Water Use

Agreement signed between the project owner company and The General Directorate of State Hydraulic

Works on 07 November 2007and will claim for VER credits.

1.12.2 Emissions Trading Programs and Other Binding Limits

The proposed project‟s net GHG emission reductions or removals will not be used for compliance with an

emissions trading program or to meet binding limits on GHG emissions since Turkey do not have a

national emission target for the near future. The standpoint of Turkey on this issue has been stressed in

the IEA Report on 2009 Turkey Review as: “Turkey is a party to the UNFCCC and became a party to

Kyoto Protocol in 2009. However as a rapidly developing economy with low emissions per capita, Turkey

has preferred not to set a quantitative overall target to limit emissions. This exemption is based on the

decision 26/CP.7 of 2001 by the Parties to the UNFCCC. Turkey is the only Annex-I country that has not

(by May 2010) set mitigation targets for the post-2012 period or proposed mitigation actions to support

them, as required under the Copenhagen Accord. It is also the only OECD country that does not have a

national emission target for 2020.”25

1.12.3 Participation under Other GHG Programs

The project has not been registered, or is not seeking registration under any other GHG programs other

than VCS under VER scheme or any other scheme.

18

Law Number 5627, enactment date 02/05/2007, http://www.eie.gov.tr/english/announcements/EV_kanunu/EnVer_kanunu_tercüme_revize2707.doc

19 Law Number 2872. Published in Official Gazette No:18132 on 11/08/1983. It will be available upon request.

20 Law Number 2872. Published in Official Gazette No:18132 on 11/08/1983. It will be available upon request.

21 National Gazette Number 25150, 06/06/2003

22 National Gazette Number 26939, 17/07/2008

23 http://www2.epdk.org.tr/lisans/elektrik/lisansdatabase/verilenuretim.asp

24 The electronic copy can be found in Annex 1.

25 IEA/OECD 2010, Energy Policies of IEA Countries – Turkey 2009 Review :

http://www.iea.org/textbase/nppdf/free/2009/turkey2009.pdf

http://www.eie.gov.tr/english/announcements/EV_kanunu/EnVer_kanunu_tercüme_revize2707.doc

http://www2.epdk.org.tr/lisans/elektrik/lisansdatabase/verilenuretim.asp

http://www.iea.org/textbase/nppdf/free/2009/turkey2009.pdf


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1.12.4 Other Forms of Environmental Credit

Turkish government promotes its energy policy by encouraging the competition and private enterprises on national energy sector. The ministry of Energy and Natural Resources and the Treasury is leading the way to eradicate mainstream strategies for the future of the country‟s energy politics. “Currently, the Turkey energy program is being supported by a number of International Bank for Reconstruction and Development(IBRD) investment loans, policy loans and policy advisory work including the National Transmission Grid Project, Turkey Energy Community of South East Europe (Adjustable Program Loan #2 and #3), investment loan for renewable energy and energy efficiency, as well as Programmatic Energy Sector Advisory Work (energy policy notes, Turkey energy strategy and others).”

26

However the renewable energy generation investors in private sector are not subject to any particular environmental crediting in the country. The only incentive available for the energy generation project from the renewable resources is the government guarantee of purchase of the electricity via the feed-in-tariff of $7.3cent/kWh

27. It is concluded that the proposed project neither has nor intends to generate any other

form of GHG-related environmental credit for GHG emission reductions or removals claimed under the VCS Program, or that any such credit has been or will be cancelled from the relevant program.

1.12.5 Projects Rejected by Other GHG Programs

The proposed project has not previously applied nor been rejected by any other GHG programs.

1.13 Additional Information Relevant to the Project

Eligibility Criteria

N/A

Leakage Management

Project emissions from fossil fuel consumption in year y (tCO2/yr) is calculated according to the UNFCCC tool “Tool to calculate project or leakage CO

2 emissions from fossil fuel combustion”

(Version 02)” and concluded that the project activity does not involve any geothermal components hence; there is no leakage emissions of the project

28.

Commercially Sensitive Information

In 2.5 Additionality Section, a detailed financial analysis of the project investment and the values

has been explained which are considered as commercially sensitive information. In addition, the

variables and their explanations that are used for the benchmark calculations and the data used

for calculating build margin that are subject to extensive research and effort which are classified

26

http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,print:Y~isCURL:Y~contentMDK:22489887~menuPK:141311~pagePK:34370~piPK:34424~theSitePK:4607,00.html

27 http://www.mevzuat.adalet.gov.tr/html/1477.html

28 Please refer to Part 3.3 for further information.

http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK=228424&Projectid=P048852






http://www.mevzuat.adalet.gov.tr/html/1477.html


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as commercially sensitive information for the project developer Borga Carbon. The information

suggested above has been excluded from the public version of the project description.

Further Information

Not applicable.

2 APPLICATION OF METHODOLOGY

2.1 Title and Reference of Methodology

Title of the baseline and monitoring methodology: ACM0002 "Consolidated baseline methodology for grid-connected electricity generation from renewable sources" (ver.12.2.0 EB 65), valid from 17 September 2010. Title of the Tool to Calculate the Emission Factor for an Electricity System: "Tool to calculate the emission factor for an electricity system

29" (ver.02.2.1 EB 63), valid from 29 September 2011..

As required in the CDM Methodologies, project additionality should be demonstrated via the "Tool for the demonstration and assessment of additionality

30" (ver.05.2EB 39), valid from 26 August 2008.

For more information on methodology, please refer to the following website;

http://cdm.unfccc.int/methodologies/PAmethodologies/approved

2.2 Applicability of Methodology

İncirli run-of-river HEPP Project is a grid-connected renewable power generation project activity which meets all the applicability criteria stated in the methodology ACM0002, such as; Applicability Conditions:

No Methodology Condition Applicability

1 The methodology ACM0002 is applicable to grid-connected renewable power generation project activities that (a) install a new power plant at a site where no renewable power plant was operated prior to the implementation of the project activity (Greenfield plant); (b) involve a capacity addition; (c) involve a retrofit of an existing plant; (d) involve a replacement of an existing plant.

The Project Activity is the installation of a new power plant at a site where no renewable power plant was operated prior to the implementation of the project activity (Greenfield plant).

Methodology is applicable.

2

The project activity is the installation, capacity addition, retrofit or replacement of a power plant/unit of one of the following types: hydro power plant/unit (either with a run-off-river reservoir or an accumulation reservoir), wind power plant/unit, geothermal power plant/unit, solar power plant/unit, wave power plant/unit or tidal

The Project Activity is the installation of a run-of-river hydro power plant.


29

http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v2.pdf

30 http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v5.2.pdf

http://cdm.unfccc.int/methodologies/PAmethodologies/approved

http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v2.pdf

http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v5.2.pdf


v3.0 18

power plant/unit.

3

In case of hydro power plants with reservoirs, the power density of the power plant should be greater than 4 W/m

2.

İncirli hydro power plant does not consists of a reservoir or is not implemented in an existing reservoir, so the project emissions are accounted as zero.


4

The methodology is not applicable to project activities that involve switching from fossil fuels to renewable energy sources at the site of the project activity.

İncirli hydro power plant does not involve switching from fossil fuels to renewable energy sources.


5

The geographic and system boundaries for the relevant electricity grid can be clearly identified and information on the characteristics of the grid is available.

İncirli hydro power plant supplies electricity to the Turkish National Grid whose geographic and system boundaries can clearly be identified.


As required by the EB 48, Annex 11: Guidelines for the reporting and validation of Plant Load Factors (ver.01), the plant load factor (hereafter referred to as the PLF) shall be defined ex-ante in the PDD for some project activities applying ACM0002 methodology. This parameter is a vital component of ensuring the environmental integrity of the VER Project Activity. The Plant Load Factor shall be defined ex-ante in the PDD according to the one of the following options;

The plant load factor provided to banks and/or equity financiers while applying the project activity for project financing, or the government while applying the project activity for implementation approval;

The plant load factor determined by a third party contracted by the project participants (e.g. an engineering company).

The FSR of İncirli Hydroelectrical Power Plant is completed by Scopsu Proje Ltd. which is a private engineering company and this FSR is presented to banks for project financing and to the government for licensing procedures. And as stated in the "Guidelines for Reporting and Validation of Plant Load Factors" the PLF is calculated in accordance with the information in the FSR. The PLF is calculated as; Annual operating hours = Annual electricity generation / installed capacity Annual operating hours of İncirli HEPP = 126.020 MWh / 28.53 MWm = 4417h PLF = Annual operating hours / 8760h = 0.50 PLF = 50%

2.3 Project Boundary

According to the methodology ACM0002, the spatial extent of the project boundary includes the project power plant and all power plants connected physically to the electricity system that the project power plant is connected to.


v3.0 19

In Turkish electricity system, like İncirli HEPP, the generated electricity of all power plants will be delivered to the national grid by TEİAS (Turkish Electricity Transmission Company) and will be distributed nationwide by TEDAS (Turkish Electricity Distribution Company), whose geographical extent includes the whole country. So the project boundary can be identified as the geographic scope of the national grid. The greenhouse gases and emission sources included in or excluded from the project boundary are shown in Table 3 below;

Table 3 – Emission sources included in or excluded from the project boundary.

Source Gas Included? Justification / Explanation

Baseline Fossil Fuel-fired

Power Plants

CO2 Yes

According to ACM0002, version 12.2.0, only CO2 emissions from

electricity generation should be accounted for

as the main source of emission

with emission factor of 0.704

tCO2/MWh.

CH4 No

Minor emission source and

excluded by the methodology

N2O No



Project Activity İncirli Run-of-river Hydro Power Plant

CO2 No



CH4 No



N2O No



The project geographic boundary is illustrated in Figure 4: Figure 4 - Project Boundary


v3.0 20

2.4 Baseline Scenario

In accordance with the Baseline Methodology Procedure of the methodology ACM0002, if the project activity is the installation of a new grid-connected renewable power plant/unit, the baseline scenario is the following; Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the "Tool to calculate the emission factor for an electricity system". Identified alternative scenarios that are available to the project participants and that provide outputs or services with comparable quality, properties and application areas as the proposed Project Activity, in accordance with the "Tool for the Demonstration and Assessment of Additionality" (ver. 05.2) are;

I. The proposed project activity undertaken without being registered as a VER project activity,

II. Providing the same amount of electricity by the National Turkish Grid,

III. Building a thermal power plant with the same capacity and annual output,

IV. Building a power plant using another renewable source with the same capacity and annual output.

Alternative I : Implementing the Project Activity without being registered as a VER project activity: Based on the investment analysis in Step 3 of Section 2.5, the IRR of the Project Activity without the carbon revenues is 10.42%, which is much lower than the benchmark of 13.79%. The proposed project activity is only credible with the help of VER revenues with an IRR of 11.25%. Thus, Alternative I cannot be considered as a credible alternative baseline scenario, but still will be compared to the Project Activity in this PDD. Alternative II: Providing the same amount of electricity by the existing power plants connected to Turkish National Grid This scenario presents the default option of the current practice. Hence it is a credible alternative scenario. The current electricity system of Turkey is dominated by fossil fuel-fired (natural gas, coal, lignite) power plants with high GHG emissions with an emission factor of 0.704 tCO2 as highlighted in Section 3.


v3.0 21

Alternative III: Building a new thermal power plant with the same installed capacity or equivalent electricity output Turkish electricity generation is mainly composed of thermal power plants and the share of renewable resources; especially hydroelectric power plants have decreased significantly in recent years. (Please refer to Energy generation mix under Figure 5.) Since Turkey is classified as a developing country, obviously there is an increasing demand for electricity which is fully being expected to continue in the near future. The current trend in Turkey -considering historical data on slow development of alternative energy resources -is to build increasing numbers of thermal power plants in the future to satisfy the annual growing demand in energy. Based on the statistics of Electricity Market Regulatory Authority, there are 129 operative thermal power plant licenses in Turkey

31. In order to make an effective comparison, out of these 129 thermal power plants,

the ones with capacities over 50 MW have been eliminated. The rest with 50 MW and less capacities are as follows; Privately Owned Power Plants:

34 MW Aksa Thermal Power Plant – Mardin

50 MW Goren Thermal Power Plant – Gaziantep

26 MW Akım Energy Generation Power Plant – Başpınar

9 MW Uşak Thermal Power Plant – Uşak

50 MW Gaziantep Energy Generation Power Plant – Gaziantep

30 MW Tekirdağ Energy Generation Power Plant – Tekirdağ

36 MW Pancar OSB – İzmir

7 MW Çorum Energy Generation Power Plant – Çorum

36.5 MW Bilenergy Power Plant – Ankara

13.49 MW Ege Energy Power Plant – İzmir

26.52 MW Çorlu Cogeneration Power Plant – Tekirdağ

25 MW Gül Energy Power Plant – Gaziantep

10 MW Pınarbaşı Cogeneration Power Plant – Pınarbaşı

7.78 MW İnönü Cogeneration Power Plant – Eskişehir

12 MW Falez Electricity Generation Power Plant – Antalya

18.9 MW Habaş Electricity Generation Power Plant – Bilecik

37.8 MW Habaş Electricity Generation Power Plant – İzmir

15 MW Zorlu Electricity Generation Power Plant – Van

43 MW Ken Kipaş Electricity Generation Power Plant – Kahramanmaraş

46.5 MW Batıçim Electricity Generation Power Plant – İzmir

26 MW Aksa Electricity Generation Power Plant – Hakkari EÜAŞ Owned Power Plants:

457 MW Kangal Thermal Power Plant – Sivas

210 MW Orhaneli Thermal Power Plant – Bursa

1355 MW Afşin-Elbistan A Thermal Power Plant – Kahramanmaraş

300 MW Çatalağzı Thermal Power Plant – Zonguldak

365 MW Tunçbilek Thermal Power Plant – Kütahya

180 MW Aliağa Thermal Power Plant – İzmir

50 MW Hopa Thermal Power Plant – Artvin

1205 MW Ambarlı Thermal Power Plant – İstanbul

1440 MW Afşin-Elbistan B Thermal Power Plant – Kahramanmaraş

31



v3.0 22

320 MW Çan Thermal Power Plant – Çanakkale

600 MW Seyitömer Thermal Power Plant – Kütahya From the list of privately owned thermal power plants, 9 MW Uşak Thermal Power Plant, 7 MW Çorum Thermal Power Plant, 13.49 MW Ege Energy Power Plant, 10 MW Pınarbaşı Thermal Power Plant, 7.78 MW İnönü Cogeneration Power Plant, 12 MW Falez Electricity Generation Power Plant, and 15 MW Zorlu Electricity Generation Power Plant are eliminated due to their small capacities compared to 28.53 MW İncirli HEPP. The rest 14 thermal power plants can be considered as alternatives to İncirli HEPP, but there is no publicly available data to compare their financial structures with it. Apart from those there are also 11 thermal power plants in Turkey operated by government entity EÜAŞ. Considering their large capacities only one of them, 50 MW Hopa Thermal Power Plant could be considered as an alternative to the project, but it is still eliminated since it is operated by the government. In conclusion it is correct to state that in the absence of the proposed project activity, the same amount of electricity is required to be supplied via either the current power plants or by increasing the number of thermal power plants thus increasing GHG emissions. Thus, the alternative is realistic and credible as well. However due to the competitive nature of the market there is no publicly available data to compare the project activity to this Alternative and besides the above mentioned differences between the thermal power plants and İncirli HEPP regarding their capacities, ownerships and lack of publicly available data to compare their financial structures, one other reason why they are excluded from the alternatives is there is no government purchase guarantee for the electricity produced by thermal and natural gas power plants

32. therefore this Alternative is excluded.

Figure 5 - Turkish Energy Generation Mix

33

32

Electricity Market Law #4628 http://www.mevzuat.adalet.gov.tr/html/1130.html 33

http://www.enerji.gov.tr/index.php?dil=tr&sf=webpages&b=elektrik&bn=219&hn=219&nm=384&id=386

http://www.enerji.gov.tr/index.php?dil=tr&sf=webpages&b=elektrik&bn=219&hn=219&nm=384&id=386


v3.0 23

As indicated in the 2009-2018 electricity generation capacity projection that has been published by TEIAS, it has been envisaged that starting from 2012, the annual electricity consumption demand will be increased maximum by 7.5% and minimum by 6.7%. Considering the total installed capacity of Turkey was 41,821.2 MW back in 2008

34,

If no new power plants step in and the demand would be met by the presently operating facilities,

by 2011,the national electricity supply shortage grow to be -4.1% and thrive permanently.

If all the process-under-construction power plants get activated and start to generate electricity,

by 2011, the national electricity supply shortage still grow to be -3% and thrive permanently.

If all the process-under-construction projects, presently operating power plants and the license

holding projects in the planning phase start electricity generation simultaneously, the supply

shortage scenario mentioned above will be delayed to 2015 by -3.5%.

In order not to encounter any electricity supply shortage by 2020, 56,000 MW extra installed

capacity shall be erected.

There are two possible scenarios that have been projected on the potential power plant installed capacities of thermal, hydraulic, wind and other renewable resources. Table 4 - Scenario 1:

THERMAL HYDRAULIC WIND + RENEWABLE TOTAL

34

http://www.teias.gov.tr/projeksiyon/KAPASITEPROJEKSIYONU2009.pdf

http://www.teias.gov.tr/projeksiyon/KAPASITEPROJEKSIYONU2009.pdf


v3.0 24

MW % MW % MW % MW

2009 27905 64 14736 34 655 2 43295

2010 27683 62 16100 36 857 2 44640

2011 28966 61 17726 37 1067 2 47760

2012 29574 59 19320 39 1067 2 49962

2013 32653 62 19320 36 1067 2 53040

2014 32653 62 19320 36 1067 2 53040

2015 32653 62 19320 36 1067 2 53040

2016 32653 60 20520 38 1067 2 54240

2017 32653 60 20520 38 1067 2 54240

2018 32653 60 20520 38 1067 2 54240

Table 5 - Scenario 2:

THERMAL HYDRAULIC WIND + RENEWABLE TOTAL

MW % MW % MW % MW

2009 27905 64 14886 34 695 2 43485

2010 27750 62 16381 36 880 2 45011

2011 28966 60 18058 37 1157 2 48182

2012 32094 60 19877 37 1157 2 53128

2013 34142 62 19877 36 1157 2 55182

2014 34142 62 19877 36 1157 2 55182

2015 34142 62 19877 36 1157 2 55182

2016 34142 61 21077 37 1157 2 56382

2017 34142 61 21077 37 1157 2 56382

2018 34142 61 21077 37 1157 2 56382

As being supported and highlighted by the numbers above, thermal power plants in Turkey are and will be the leading actor among the electricity generation supply system. Therefore it can be determined that the electricity generated by the project activity that is supplied to the grid is or would have been supplied by at least one fossil fuel fired generating unit. Figure 6: Peak Load and consumption projection for Turkish electricity system between 2005-2020


v3.0 25

35

Alternative IV: Building a power plant using other renewable sources with the same installed capacity or equivalent electricity output. In Rize, the electricity system consists of hydropower plants and fossil fuel-fired power plants. The projections on electricity generation capacity show that, the share of hydropower in electricity generation mix decreases in recent years and since most of the wind energy generation facilities are located on the west of Turkey

36, there are no other renewable (wind, geothermal, biomass) electricity generation in the

project area37

. The researches of EİE (General Directorate of Electrical Power Resources Survey and Development Administration) show that Bandırma, Antakya, Kumköy, Mardin, Sinop, Gökçeada, Çorlu and Çanakkale provinces of Turkey have the most efficient wind potentials but Rize province and the rest of the Blacksea Region excluding Sinop do not have enough wind potentials for such investments. Regarding the climatic conditions, researches and surveys on solar power potential of Turkey show that all Blacksea Region including Rize province are very poor in solar power and thus, no such investment is expected in the future. Biomass or geothermal projects seem much easier to invest in the project area but, there is no research showing the necessary time for the development of such alternative renewable sources in the region. Thus, alternative IV cannot be considered as a credible and realistic alternative baseline scenario.

35

http://www.teias.gov.tr/apkuretimplani/veriler.htm

36

http://www.google.co.uk/imgres?imgurl=http://www.dmi.gov.tr/FILES/arastirma/ruzgaratlasi/107_tra9mart.jpg&imgrefurl=http://www.dmi.gov.tr/arastirma/yenilenebilir-enerji.aspx%3Fs%3Druzgaratlasi&usg=__YII8grqzgIizaymrxc--J_GVtY0=&h=509&w=700&sz=71&hl=en&start=3&zoom=1&um=1&itbs=1&tbnid=amZeZxEBVbNxsM:&tbnh=102&tbnw=140&prev=/images%3Fq%3Dturkiye%2Bruzgar%2Bharitasi%26um%3D1%26hl%3Den%26sa%3DX%26rlz%3D1T4ACGW_en___TR400%26tbs%3Disch:1

37 http://epdk.gov.tr/lisans/elektrik/lisansdatabase/uygunuretim.asp

http://www.teias.gov.tr/apkuretimplani/veriler.htm






http://epdk.gov.tr/lisans/elektrik/lisansdatabase/uygunuretim.asp


v3.0 26

Figure 7: Wind and Solar Potential Of Turkey

38

39

38

http://www.dmi.gov.tr/2006/arastirma/files/TurkishWindAtlas.pdf

39

http://www.google.com.tr/imgres?q=turkey%27s+solar+potential&hl=tr&sa=X&rlz=1R2GGLR_trTR432&tbm=isch&prmd=ivns&tbnid=BC-rC-eVsiH7kM:&imgrefurl=http://turkgeonews.wordpress.com/2010/10/07/solar-energy-for-sustainable-future-of-


v3.0 27

In accordance with the alternatives above, only Alternative I and Alternative II can be considered as credible and realistic alternatives to the project activity.

Step 1: Identification of alternatives to the project activity consistent with current laws and regulations Sub-step 1a: Define alternatives to the project activity: The possible alternatives to the project activity are as follows; 1) Implementing the project but not as a VER project, 2) Providing the same amount of electricity by the National Grid, 3) Building a new thermal power plant with the same installed capacity or equivalent electricity output. 4) Building a new power plant using renewable sources with the same installed capacity or equivalent electricity output. Outcome of Step 1a: Based on the baseline scenario discussion in the parts above, alternative scenario number 4 is not applicable for the project activity due to lack of resources for other renewable energy

40. Alternative

scenario number 1 and 2 are applicable to compare to the project activity and alternative scenario number 2 is chosen as the baseline. Alternative scenario number 3 is also not applicable due to the lack of publicly available information and particular data. Sub-Step 1 b. Consistency with mandatory laws and regulations: To conclude the above discussions in Sub-steps 1a and 1b, alternative scenarios that are discussed above are technically feasible and also comply with current consent conditions in Turkey. They are the possible alternatives to the proposed project in terms of legal compliance as explained in PDD Section 1.11. Outcome of Step 1 b: The resultant alternatives to the project as outlined in Step 1a are in compliance with all these mandatory legislation and regulations taking into account the enforcement in the country and EB decisions.

2.5 Additionality

Table 6. Key milestones of the project activity

Date Event

01-07-2004 Establishment of Laskar Enerji Üretim Pazarlama Ltd. Şti.

February 2006 Initial Feasibility Report completion date for İncirli Diversion Weir and Pınaraltı HEPP

30-03-2007 Laskar Enerji Üretim Pazarlama Ltd. Şti was taken over by Adali Holding.

turkey/&docid=dfLALIqO_BDCQM&w=751&h=301&ei=bRtqTsT2JKL54QTprrX5BA&zoom=1&iact=hc&vpx=964&vpy=280&dur=572&hovh=142&hovw=355&tx=276&ty=78&page=1&tbnh=86&tbnw=214&start=0&ndsp=16&ved=1t:429,r:9,s:0&biw=1366&bih=620

40








v3.0 28

08-05-2007 The company‟s name was changed to Laskar Enerji Üretim Pazarlama A.Ş

06-18-2007 BOD minutes for early VER consideration for İncirli HEPP41

07-11-2007 Water Use Agreement with State Hydraulic Works (DSİ)

22-11-2007 Electricity generation licence obtained from EMRA (Electricity Market Regulatory Authority)

06-05-2008 BOD minutes for investment decision for İncirli HEPP (investment decision date)42

17-07-2008 EIA Exemption Decision obtained from the MoEF.

23-07-2008 Construction contract signing date.

December 2008 FSR completion date.

28-05-2009 Bank Loan Agreement with IBRD and Turkish Development Bank.

07-07-2009 Project Introductory File completed, which is required by the Ministry of Environment and Forestry in order to evaluate the potential environmental impacts of the project.

17-07-2009 Turbine and generator units purchase contract signing date with Zheijang Jinlun Electromechanic Co. Ltd.

19-02-2010 DSİ application for the changes in the project. (Laskar Enerji Üretim A.S requested to cancel İncirli II Diversion weir and one of the conveyance canals due to the miscalculations of water potential in the FSR)

31-05-2010 Contract signed with BorgaCarbon Danışmanlık Ltd. for carbon crediting application.

14-07-2010 DSI approval of project change.

As required by the methodology ACM0002, the following steps are cited to demonstrate the additionality for this project via "Tool for the demonstration and assessment of additionality"(ver.05.2). As described in the tool, the steps for demonstrating additionality are as flows;

Identification of alternatives to the project activity,

Investment analysis to determine whether the project activity is not the most economically or financially attractive or not the most economically or financially feasible.

Barrier analysis to determine whether the project activity faces barriers that prevent the implementation of this type of project activity and do not prevent the implementation of at least one of the alternatives.

Common practice analysis to determine whether the project activity has already diffused in the relevant sector and region.

Step 2: Investment Analysis: The purpose of the investment analysis is to determine whether the project activity is the most economically or financially attractive or less than the other alternatives without the revenue from the sale of VERs. To conduct the investment analysis, the following sub-steps are used: Sub-step 2a. Determine appropriate analysis method Three methods of analysis are suggested in the "Tool for the Demonstration and Assessment of Additionality" (ver.05.2). These are:

Option I: Simple cost analysis,

Option II: Investment comparison analysis, and

Option III: Benchmark analysis.

41

BOD minutes of Adalı Holding A.Ş. which is the parent company to Laskar Enerji A.Ş. that indicates the status that the project developer would consider VER revenues in order to implement the project.

42 BOD minutes of Adalı Holding A.Ş. which is the parent company to Laskar Enerji A.Ş. that indicates the investment decision to

İncirli HEPP project.


v3.0 29

Option I, the simple cost analysis is not appropriate since the project activity has additional revenues from the sale of the generated electricity. Option II, the investment comparison analysis has been excluded. The reason is given by the defined alternatives above that the only realistic and credible alternative, i.e. the baseline scenario, is the continuation of electricity supply from the existing power grid to meet the electricity demand other than a new power investment project. Option III, after determining the financial/economic indicator, such as IRR, as it has been permitted by the additionality tool, the value shall be assessed considering the parameters that are standard in the market by also regarding the specific characteristics of the project type. However this financial analysis shall not be linked to the subjective profitability expectation or risk profile of a particular project developer. The benchmark analysis method is adopted based on the consideration of the WACC of the proposed project. Sub-step 2b. Option III. Apply benchmark analysis: As being stated above, the benchmark is the WACC of the project which is referred as the weighted average cost of capital which has been permitted in the “Tool for the demonstration and assessment of additionality” under sub-step 2b, article 6, paragraph (c): A company internal benchmark (weighted average capital cost of the company), only in the particular case referred to above paragraph 5 (economic analysis shall be based on standard parameters of the market but not linked to subjective profitability expectation or risk profile of a particular project developer) supported by Annex: Guidance on the Assessment of Investment Analysis (Ver. 03), Article 14. Since İncirli HEPP project activity is the first energy investment of the project owner company, the WACC of similar companies have been used. WACC formula

43:

Where, E/V= Rate of the equity in the investment which is 27.2% in this case

44.

Re= Cost of Equity D/V= Rate of the debt in the investment which is 72.80% in this case

45.

Rd= Cost of debt (USD denominated Government Bond rate assumed to be the cost debt 7.11%46

) (1-Tc)=This part is excluded due to the intent of application of a pre-tax benchmark. In the project IRR calculations the tax payments are not included as a source of cash out-flow. The reason for that is since the terms of the financial loan agreement is not set as of the investment decision date. Therefore the tax payments would not be able to be calculated considering the debt and financial expenses of the project investment prior to the loan agreement

47.

43

http://www.mtholyoke.edu/~aahirsch/howwacc.html

44 BOD minutes for Investment Decision as of 06/05/2008 and FSR Amendment.

45 BOD minutes for Investment Decision as of 06/05/2008 and FSR Amendment.

46 http://www.ziraat.com.tr/tr/bankamiz/faiz-ve-ucretler/aspx/eurobond.aspx. The Bond Rates are observed as of the investment

decision date 06/05/2008. Bond, yield rate of US900123BA75 is chosen to be the cost of debt due to its date of maturity being 04/03/2018 which is the closest to 10 years as from the investment decision date of the project activity. 47

Guidance on the Assessment of Investment Analysis (Ver. 03), Article 11)

http://www.mtholyoke.edu/~aahirsch/howwacc.html

http://www.ziraat.com.tr/tr/bankamiz/faiz-ve-ucretler/aspx/eurobond.aspx


v3.0 30

Cost of Equity Formula:

Where;

A: Global risk free rate: Long-term Composite US T-bond 06/05/2008, 4.65%48

Sovereign spread: The sovereign spread represents the difference between bond yields issued by Turkish and US Governments on international markets by the country those are indicated by Moody‟s ratings.

49

Market risk premium: (sovereign spread50

*volatility constant)+(generally accepted equity risk*Levered Beta)

51

Volatility constant: Standard deviation of daily per cent changes in the equity market divided by the standard deviation of daily per cent changes in bond market: 2.77 is volatility constant

52 for

Turkish Market and 5.00% is generally accepted equity risk53

. Beta: Average Beta estimates of 4 only members of the Electricity Members of Istanbul Stock

Exchange in Turkish Energy Generation Market those adjusted according to the “Pure Play Technique”, where they have the only publicly available Beta information available, on the investment period of the project

54:

Table 8. Bloomberg Screenshots and Q1 2008 Debt to Equity Ratios Used in Financial Analysis

48

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=longtermrateYear&year=2008

49 www.stern.nyu.edu/.../pc/.../ctryprem08.xls file.

50 www.stern.nyu.edu/.../pc/.../ctryprem08.xls, please refer to cell D122 for sovereign spread of 525.

51 www.stern.nyu.edu/.../pc/.../ctryprem08.xls Please refer to cell E9 for equity market risk premium of 5%.

52 Please refer to the Formula and Explanations from “http://www.stern.nyu.edu/fin/workpapers/papers99/wpa99021.pdf”

(page:16)file. Also, all the input parameters for Volatility Constant Calculation are taken from the Bloomberg Database.

53 www.stern.nyu.edu/.../pc/.../ctryprem08.xls file.

Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. He is best known as author of several widely used academic and practitioner texts on Valuation, Corporate Finance, and Investment Management.

54 Bloomberg Database.



http://www.stern.nyu.edu/.../pc/.../ctryprem08.xls




http://en.wikipedia.org/wiki/Professor

http://en.wikipedia.org/wiki/Finance

http://en.wikipedia.org/wiki/Stern_School_of_Business

http://en.wikipedia.org/wiki/New_York_University

http://en.wikipedia.org/wiki/Corporate_finance

http://en.wikipedia.org/wiki/Corporate_finance

http://en.wikipedia.org/wiki/Equity_valuation

http://en.wikipedia.org/wiki/Valuation_(finance)

http://en.wikipedia.org/wiki/Corporate_Finance

http://en.wikipedia.org/wiki/Investment_Management


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Levering Beta Formula55

: Adjusted and Levered Beta = Unlevered Beta x [1 + ((1 – Tax Rate) x (Debt / Equity))] = 2.4885 Sub-step 2c. Calculation and comparison of financial indicators The Project is implemented with a total installed capacity of 25.20MWe / 28.53 MWm with three turbines of 8.4MWe / 9.51MWm capacity. Hence the project can be operated in three options; If only one turbine works at a given time the project would work in the 8.4MWe option. If two turbines work simultaneously the 16.8MWe option will be used. In the case where all three turbines are simultaneously operational the 28.53MWm option would be used. These three options give the project the ability to produce effective electricity in different seasons of flow rate of the river. Basic data and assumptions for the calculation of the financial indicators of the 28.53MWm Project are summarized in the Table 8 below; Table 8. Data and parameters used in Financial Analysis

Parameter Unit Value Data Source

Installed Capacity MWm 28.53 FSR & Electricity Generation Licence

Plant Load Factor % 50 FSR

Annual Gross Electricity Supply

MWh/y 126,020 FSR

Annual Net Electricity Supply MWh/y 123,460 FSR

Total grid connection losses % 2.5

Electricity Loss Declaration

Electricity sales tariff EUR cent / kWh 5.5

Renewable Energy Law

56

Total Investment USD 54,941,699

FSR – Due to BOD minutes for Investment

Decision

Loan USD 40,000,000

Bank Loan Agreement – Due to BOD minutes for

Investment Decision

Annual O&M Costs

USD 981,000

FSR – Due to the BOD minutes for Investment decision. (FSR Pages

293 & 300)

Operation period (Economical Lifetime)

Year 10 FSR – Excel Worksheet.

Crediting period Year 10

Voluntary Carbon Standard.

At the time the third party was working on the feasibility report, the project owner company was about to receive the bank loan. Just after the bank loan amount and the payback periods were agreed on, the project owner company evaluated the financial outcomes of the project in the FSR including the bank loan and decided that the project was not financially attractive enough, but could only be invested including the VER revenues. Since the project is a retroactive project, the rate of equity, bank loan amount and paybacks were already determined in foreign currency. In order to be able to see how much interest the company has to pay for the money it financed, the WACC has been selected as the benchmark value which is the overall required

55

Please refer to http://www.ibankingfaq.com/interviewing-technical-questions/discounted-cash-flow-analysis/what -are-the-formulas-for-ulevering-and-levering-beta/ which contains the Hamada formula used in beta levering and unlevering.

56 Renewable Energy Law #5346.

http://www.ibankingfaq.com/interviewing-technical-questions/discounted-cash-flow-analysis/what%20-are-the-formulas-for-ulevering-and-levering-beta/

http://www.ibankingfaq.com/interviewing-technical-questions/discounted-cash-flow-analysis/what%20-are-the-formulas-for-ulevering-and-levering-beta/


v3.0 36

return on the company as a whole. As directed by the WACC calculation, the project IRR has been selected instead of Equity IRR because the paybacks in foreign currency have a significant impact on the project‟s cash flow and the feasibility. According to the IRR calculation

57, the project IRR with and without

the VER revenues for the 28.53 MWm option is summarized in Table 9 below; Table 9. IRR of the Project Activity

Parameter IRR Without VER Revenues

IRR With VER Revenues

Benchmark

Project IRR 10.42% 11.25% 13.79%

Benchmark Analysis: Since there is no objective, official and publicly available pre-determined value for IRR or any other financial indicator for hydro power plants in Turkey and according to the "Tool for the demonstration and assessment of additionality" sub-step 2b, article 6 (c), a relevant benchmark for a Project‟s IRR can be derived from the weighted average capital cost of the company. The calculation methods for the benchmark value below have been based on finance professionals‟ advice and accepted accounting and mathematical methods. According to US Department of Treasury, US Long-term T-bond rate, the risk free rate which is 4.65% as of the investment decision date of the project. This rate represents an after tax return over all components of the country‟s major index. This is the amount obtained from investing in securities considered free from the market risk, such as government bonds from developed countries. The interest rate of U.S. Treasury bills or the long-term bond rate is frequently used as a proxy for the risk-free rate. Beta measures how much a company's share price moves against the market as a whole. A beta of one, for instance, indicates that the company moves in line with the market. If the beta is in excess of one, the share is exaggerating the market's movements; less than one means the share is more stable. Since the project owner does not exist in equity market, the only Electricity Members‟ of Istanbul Stock Exchange Betas in energy industries in Turkey have been considered and averaged as 0.87

58. For the time range,

the interval between the project start date and 12/31/2005 has been adopted in order to have a conservative approach. Regarding to Turkish financial market movements, the available historical data of trading days in 887 days before the investment start date is a rational time period to provision the Beta activity profile for the particular investment. This value is unlevered according to the debt to equity ratios of the Electricity Members as of the first quarter of 2008

59. Since the project activity is implemented by

72.80% bank loan, beta had to be levered as per the formula given above to be able to obtain what would those companies‟ Beta would be in such debt structure. This calculation is done according to the “Pure Play Method” which would be the method make an assumption of Beta of a company whose Beta is not calculated since the company is not traded in equity markets

60. When the projects are re-levered the tax

parameter is excluded since the Project IRR is calculated without taking the corporate tax into consideration. When calculated in accordingly with the explanations, the levered and adjusted beta is found to be 2.4885. The Soverign Spread

61 indicates the difference between the rate of return in Turkish Market government

bond and a mature market government bond. This designates the risk difference in a mature market

57

IRR Workbook available upon request.

58 Bloomberg Database.

59 The equity ratios of the four major actors in Electricity Market in Turkey taken from the Bloomberg database as screenshots are

available upon request.

60 “Ascertaining the divisional beta for project evaluation –the pure play method- a discussion”, article by N. R. Parasuraman, The

Chartered Accountant, November 2002 Publication. Available upon request.

61 http://pages.stern.nyu.edu/~adamodar/pc/archives/ -excel sheet of ctryprem08, indicated by Moody‟s rating.

http://www.investopedia.com/terms/t/treasurybill.asp

http://www.investopedia.com/terms/r/risk-freerate.asp

http://www.investopedia.com/terms/b/beta.asp

http://pages.stern.nyu.edu/~adamodar/pc/archives/


v3.0 37

versus an emerging market. In this calculation the Sovereing Spread is estimated by the Moody‟s Ratings that is computed by Mr. Aswath Damodaran

62.

Volatility is computed by dividing the annualized standard deviation of daily percent changes in the equity market index, ISE 100 (Istanbul Stock Exchange) to the annualized standard deviation of daily percent changes of randomly chosen long term four dollar denominated Turkish Government Bonds

63. For the

time range, the interval between the project start date and 12/31/2005 has been adopted in order to have a conservative approach. Regarding to Turkish financial market movements, the available historical data of trading days in 887 days before the investment start date is a conservative time period to project the averaged volatility constant for the particular investment. In the calculations, daily mid-current yield changes of the bid prices and the ask prices of the bonds were embedded in standard deviation method and averaged according to the method. The cost of equity is determined by the formula above, which is 31.65%. The rate applied to determine the cost of debt (Rd) should be the current market rate the company is paying on its debt. Since this information is not available as of the investment decision date a USD denominated Government Bond issued by Ziraat Bankası (A government owned bank operating in Turkey) is assumed to be the cost of debt of the company

64. The yield rate of the bond is 7.11%.

As debt/equity ratio is 72.80 / 27.20

65, the WACC is calculated to be 13.79%.

A reliable risk premium related to hydro power projects in Turkey could not be identified due to a lack of public information in this sector. Energy sector projects face overall levels of risk that may be higher than other sectors of economy, and hydro power plants specifically face significant levels of performance risks, related to uncertain climatic factors. Additionally, there are risks associated with the fact that hydro technology, when compared to conventional thermal power generation, has a high capital cost and low load factor, which result in low financial rates of return. This suggests that a realistically calculated weighted average cost of capital of 13.79% is the benchmark for this investment, suggesting that this approach is a commonly used analysis method whether to decide if the investment is worth making and promising a profitable turnover. Project IRR of the İncirli HEPP has been calculated as 10.42% based on the parameters given above without considering the carbon revenue. Project IRR has been calculated considering the sales revenue, OM costs and fixed asset investment as stated in the applied methodology. Electricity tariff has been applied as €5.5 Cent/kWh. Regarding to the1.5412 EUR/USD parity on the date of investment

66, it turns

out to be $8.5 Cent/kWh. Although €5.5 Cent/kWh ($7.3 Cent/kWh) is the maximum amount and floor price is €5.0 Cents/kWh as given in renewable energy law

67, it has been chosen to do so in order to

highlight the unattractive IRR outcomes. Annual net electricity generation has been taken as 123,460,000 kWh. As “Tool for the demonstration and assessment of additionality” Annex, 3

rd article suggests that the

IRR calculation is limited by the technical lifetime where the project is fully depreciated of the project‟s

62

Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. He is best known as author of several widely used academic and practitioner texts on Valuation, Corporate Finance, and Investment Management.

63 Bloomberg database: Istanbul Stock Exchange equity market index and Randomly chosen USD denominated long-term bonds:

900123AX87, 900123AV22, 90012AR10, 900123AS92

64 http://www.ziraat.com.tr/tr/bankamiz/faiz-ve-ucretler/aspx/eurobond.aspx. The Bond Rates are observed as of the investment

decision date 06/05/2008. Bond, yield rate of US900123BA75 is chosen to be the cost of debt due to its date of maturity being 04/03/2018 which is the closest to 10 years as from the investment decision date of the project activity.

65 BOD minutes for Investment Decision. $40m/$54.9 = 0.728 is debt ratio in total investment. 1-0.728=0.272 is equity ratio in total

investment.

66 http://www.tcmb.gov.tr/. The screenshot of the website showing the EUR/USD Parity as of the date of investment is available

upon request.

67 www.epdk.gov.tr/mevzuat/diger/yenilenebilir/yenilenebilir.doc

http://www.ziraat.com.tr/tr/bankamiz/faiz-ve-ucretler/aspx/eurobond.aspx

http://www.tcmb.gov.tr/

http://www.epdk.gov.tr/mevzuat/diger/yenilenebilir/yenilenebilir.doc


v3.0 38

total investment: which is approximately 10 years in this case. As it is indicated in the article, the leftover value after the time of depreciation has been included in the inflow values of the IRR cash flow. Additionally, the income tax value is not taken into account as a component of the project IRR, therefore the benchmark, WACC, is calculated to be a pre-tax one by not including the tax rate when taking the weighted average of capital and levering the Betas, however it is included when un-levering due to the fact that those values of Betas those belong to the members of the ISE Electricity Members are calculated by taking tax into the account. Thus, the IRR value represents an actual estimation of the realistic set of outcomes in terms of capital investment, OM costs, electricity sales price and electricity generation. The IRR of 10.42%, when compared to the 13.79% benchmark, it has seen that the project is not financially attractive for investors as the weighted average cost of capital is the accepted threshold for the investment to be financially feasible. When we include the carbon revenue in the cash flow, the project IRR increases by 0.83% to 11.25% and the project becomes more attractive and viable for the investors. Additionality of the Project

The IRR of the proposed project will be 10.42% (without VER revenues) with a tariff of €5.5cent/kWh, as indicated in the renewable energy law, by applying the following three conservative input values,

Annual electricity sales revenue

Total fixed asset investment

OM Costs IRR remains below the benchmark of 13.79%. Therefore it is concluded that the proposed project is additional. Sub-step 2d. Sensitivity analysis

The sensitivity analysis shall show whether the conclusion regarding financial attractiveness is robust to be reasonable variations in the critical assumptions. Following key parameters have been selected as sensitive indicators to test the financial attractiveness for the project.

Investment Costs,

Operation and Maintenance Costs,

Electricity Sales Revenue.

By a coefficient of ±10%, fluctuations in parameters above, the various IRR calculations are projected in the table below. Table 10. Sensitivity Analysis for İncirli HEPP Project

Fluctuating Indicators IRR Unit Fluctuations

-10% 0 +10%

Investment Costs Project IRR % 12.62 10.42 8.53

P. IRR with CR

% 13.50 11.25 9.32

Electricity Sales Revenue

Project IRR % 8.11 10.42 12.61

P. IRR with CR

% 8.99 11.25 13.40

Tariff Project IRR % 8.11 10.42 12.61

P. IRR with CR

% 8.99 11.25 13.40


v3.0 39

In order to reach 13.79% benchmark, the electricity sales revenue must be increased by 15.6% to reach the benchmark. The indicators for sales revenue which are annual electricity production and the tariff rates are examined below. Annual Electricity Production: In order to increase the electricity sales, the electricity production must be increased. So the annual operating hours of the project must be increased. The annual operating hours of İncirli HEPP is calculated by the formula below; Annual operating hours represent the hours that the plant equipment is efficiently utilized. According to the methodology, the annual operating hours of the Project can be further defined as “multiple year average annual operating hours” calculated as per the equation below:

As it can be observed from the formula above “Annual Operating Hours” is a direct indicator since it indicates the electricity produced. Plant Load Factor (PLF) Under the circumstance when the plant operates at full capacity continuously for the entire operating hours, the electricity production is 126,020MWh annually for 4417 operational hours. However, realistically speaking, the Project will not operate under full load continuously because of the propogating nature of water flow, causing the actual operating hours of the Project to be 8760 hours annually. Therefore; Table 11. Parameters used for PLF calculation:

Capacity 25.20 MWe / 28.53 MWm

Equipment 3 Turbines

(8.4 MWe / 9.51 MWm + 8.4 MWe / 9.51 MWm+ 8.4 MWe / 9.51 MWm)

Running Modes 25.2 MWe, 16.8 MWe, 8.4 MWe

Annual Electricity Production (MWh) 126.020

Installed Capacity (MW) 28.53

Annual Operating Hours 4417

Three running modes (25.2MWe, 16.8MWe, 8.4MWe)

68 give this plant the flexibility to be able to adapt to

different hydro flows. The plant will keep its efficiency in all high-flow, mean, and dry seasons. Average Capacity Load = Annual Electricity production / Actual Operating Hours Average Capacity Load = 14.38 MW Plant Load Factor = Average Capacity Load / Installed Capacity PLF = 0.50

68

İncirli HPP FSR, December 2008.


v3.0 40

PLF = 50% for the Project, which places within the typical range of 34-60% from the “similar projects”, defined and tested in the Common Practices Analysis in the PDD. Thus it can be concluded that the PLF defined in the Project is suitable and conservative. It is improbable to provision an additional increase of 15.6% annual electricity production due to the installed capacity of the project. In the feasibility report, the annual electricity generation is considered as 126.02GWh with 28.53MWm installed capacity. As assured by the electricity generation license, proposed project had already promised to generate that much electricity with 28.53 MWm installed capacity. For the occasion, it is impossible to increase the annual electricity generation without an increase at the installed capacity of the project. According to the license, such an installed capacity modification is not allowed for the project owner. Moreover, TEIAS‟s transmission line and substation capacity is not available to assess any increase on the electricity generation. Therefore it is not probable to envision an increase for electricity sales to the grid in order to enhance the project IRR upwards

69.

Tariff: The feasibility team that have prepared the FSR Amendment have clearly taken different tariffs into consideration. This difference occurs due to the different point of views of the different government entities that regulate the renewable energy market. In the economical analysis section of the FSR, the project‟s energy sales income has been calculated in accordance with the average of the total energy purchase unit prices of 2007, determined by Electricity Market Regulatory Authority (EMRA). In accordance with the previous year‟s prices, a hydroelectric energy power plant would sell its firm electricity production with a rate of $6 cent/kWh and its secondary electricity production with a rate of $3.3 cent/kWh

70 If this standard is adopted the weighted average of the tariff applied to this specific project

comes up to €4.6 cent/kWh. Please see table 12 below. Table 12.Tariffs applicable to the Project Activity

Tariff $/kWh Electricity Produced Total Sales

Firm Energy 0.06 59.810.000 3.588.600

Secondary Energy 0.033 66.210.000 2.184.930

W. Ave. Tariff of Total Production

0.046 126.020.000 5.773.530

The other point of view which is imposed by the Ministry of Energy of Turkey guaranteeing to buy the electricity produced at €5.5cent/kWh

71. Therefore, to adopt this value as the tariff is more conservative

and realistic. Since the Project has not yet contracted a PPA with TEİAŞ (Türkiye Elektrik İletim A.Ş / Turkish Electricity Transmission Co.

72) there is no real tariff applicable to the Project that can be adopted

in our calculations as of today73

. In order to reach the benchmark rate keeping the electricity production amount as it is, the feed-in tariff of the project has to increase of the officially defined maximum tariff. To address the concerns recently raised by the EB, such as EB49, para. 48, EB53, Annex 32, the policy changes which impact the tariff applicable to the project activity are determined and the highest tariff of the region is applied to the

69

Transmission Capacity: http://www.teias.gov.tr/istatistik2008/53.xls, Peak Load: http://www.teias.gov.tr/istatistik2008/20(2006-2008).xls

70 İncirli HEPP Revised Feasibility Report, December 2008, Section 9, Page 295.

71 Renewable Energy Law #5346

72 http://www.teias.gov.tr

73 Project Progress Report, İncirli FSR December 2008.

http://www.teias.gov.tr/istatistik2008/53.xls

http://www.teias.gov.tr/istatistik2008/20(2006-2008).xls


http://www.teias.gov.tr/


v3.0 41

sensitivity test as the Renewable Energy Law directs to74

. Prior to 2002, private enterprises in energy generation sector in Turkey were rare and the agreements on purchase guarantees and tariff rates were confidential between the project owner and the government. Therefore, the tariff must be at the $9.79cent/kWh in order to reach the benchmark level. Taking the current regulations into account it is improbable for the project activity to reach the benchmark Project IRR. Total fixed asset investment Bearing in mind of 13.79% benchmark, the project IRR will reach 12.62% with a 10% decrease in the investment cost without VER revenues. Considering the VER revenues, the project IRR will reach 13.50% when the total fixed asset investment cut by 10%. The total fixed asset investment of the Project was estimated US$ 54,941,699 excluding VAT. In order to reach 13.78% IRR, total fixed asset investment shall be diminished by 14.6%. And in such a case, the total fixed asset investment decreases to $ 46.920.211. However, since the project is already implemented and operational, such cut back is improbable. Outcome of Step 2: In conclusion, the project is not most financially attractive when VERs revenue is not considered. Three running modes (25.2MWe, 16.8MWe, 8.4MWe)

75 give this plant the flexibility to be able to adapt to

different hydro flows. The plant will keep its efficiency in all high-flow, mean, and dry seasons. Therefore, the project activity is additional. Step 3: Barrier Analysis: According to the "Tool for the Demonstration and Assessment of Additionality" (ver.05.2), Step 3. Barrier Analysis is not applicable (only Step 2 is selected). Step 4. Common Practice Analysis: As indicated in „Tool for Demonstration and Assessment of Additionality‟ (version 05.2), „the above generic additionality tests shall be complemented with an analysis of the extent to which the proposed project type (e.g. technology or practice) has already diffused in the relevant sector and region‟. The existing common practice aspects will be identified and discussed in the following section. The common practice analysis has been carried out based on the publicly available lists of operative energy generation licenses issued by EMRA, which are taken from the official EMRA website

76. This list

shows all the operative energy generation licenses including hydro, wind, biomass, geothermal and thermal power plants. As the rest of the power plants in the list do not share the same technology with İncirli HEPP, the list has been narrowed down to only hydro power plants. In year 2011, the total capacity of all the hydro power licenses issued in the country sums up to 29981.9 MW. But, to conduct an objective analysis, the hydro power plants in different regions and provinces have been excluded and only the hydro power plants in Rize province have been analized. The list of all the hydro power plants in Rize province can be seen in the table in below section. The proposed project İncirli HEPP has been defined within the sector of private energy generation from renewable resources, specifically hydroelectric power plants. This sector has been narrowed down to

74

www.epdk.gov.tr/mevzuat/diger/yenilenebilir/yenilenebilir.doc

75 İncirli HPP FSR, December 2008.

76 http://www2.epdk.org.tr/lisans/elektrik/lisansdatabase/verilenuretim.asp

http://www.epdk.gov.tr/mevzuat/diger/yenilenebilir/yenilenebilir.doc


v3.0 42

hydraulic electricity generation only due to the same fuel-type that is needed as resource, implementing under the same regulatory bodies and regulatory framework (DSI, EPDK, Ministry of Environment and Agriculture, TEIAS) and regarding the resembling financial aspects such as investment structure, operation and maintenance costs and sales revenue correlations (same electricity tariff rates). As the regional definition, the analysis will be held according to the geographical and physical scope of Rize Province, where the project is located. The analysis will not be held nationwide since the renewable electricity generation is completely reliant on climatic and geographic factors. Regarding the various geographical aspects, with the First Geography Congress in 1941, Turkey has been separated into seven geographical regions which are still used today.

77 This separation has been basically performed

considering the climatic and topographical conditions resulted by mountain ranges, sea costs, and natural plant covers. Rize province, that the proposed project is located, rests on the East Black Sea Region at the east corner of the region, Rize province neighbours the Eastern Anatolia Region. Due to this unique positioning, Rize shows different climatic characteristics than other provinces of Black Sea Region. In order to perform an objective, conservative and profound analysis, the other hydro projects that have diffused in the region is analyzed in terms of scale, electricity production and ownership is being reviewed within the limits of Rize Province considering the technology of the run-of-river power plants and its direct dependency on the geographical formations, climate and hydrology profiles. In order to project the specific similarities and differences between the facilities under the resembling nature-controlled circumstances and financial profiles, the existing common practice aspects will be identified and discussed in the following section. Regarding the large number of hydroelectric plant projects that are recently being implemented or proposed nationwide, it has been thought that emphasizing significant points in this stage is necessary to project the dissimilarity and unique distinctions of İncirli HEPP in the region and its need to be granted by carbon credits. Sub-step 4a: Analyze other activities similar to the proposed project activity: The purpose of the common practice is to analyse the projects with similar conditions to the proposed project, such as investment conditions (including technology, scale, regulatory, tax and financing conditions, etc.) and natural conditions (including geographical, climate, development conditions, etc.) in order to demonstrate the additionality of the project. In addition, according to the Tool for the Demonstration and Assessment of Additionality, projects are considered „similar‟ (hereafter defined as „similar project‟) in case they are located in the „same country/region‟, are of „similar scale‟, and „take place in a comparable environment with respect to regulatory framework, investment climate, access to technology, access to financing, etc.‟ When conducting the similar projects analysis, the most recent data and statistics of Electricity Market Regulatory Authority (EMRA) has been used. But since the statistics are updated at the end of every year and belong to the previous year, we could use 2009 data which is the only available one In 2009, Turkish electricity generation came from three main sources: natural gas by 48,6%, coal by 28,3%, hydroelectric by 18,5%, liquid fuels by 3,4%, and renewable resources by 1,1%.

78

As of the end of 2009, out of Turkey's total installed power composes of;

54,2% is in EÜAŞ, (Electricity Generation A.Ş), which is a government body. A government owned corporation is a legal entity created by a government to undertake commercial activities on behalf of an owner government.

77

http://www.anatolia.com/regions_of_turkey/

78 http://www.enerji.gov.tr/index.php?dil=en&sf=webpages&b=elektrik_EN&bn=219&hn=&nm=40717&id=40732

http://en.wikipedia.org/wiki/Government

http://www.anatolia.com/regions_of_turkey/

http://www.enerji.gov.tr/index.php?dil=en&sf=webpages&b=elektrik_EN&bn=219&hn=&nm=40717&id=40732


v3.0 43

16,4% in private production companies. A privately owned enterprise refers to a commercial enterprise that is owned by private investors, shareholders or owners (usually collectively, but they can be owned by a single individual), and is in contrast to state institutions, such as publicly owned enterprises and government agencies. İncirli HEPP is owned by a private energy production company.

13,7% in build-operate power plants, BO is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract.. These facilities are not subject to electricity generation licensing from EPDK. İncirli HEPP doesn‟t adapt such measures.

8,1% in autoproducers, Autoproducers are licensed juristic persons that generate energy for their own consumption. Via mutual legal contracts, they are allowed to sell the excess energy production (up to 20% of the annual production and up to 50% in special circumstances according to the relevant regulation) to clients. İncirli HEPP doesn‟t adapt such measures. Total production of the proposed project will be delivered to the grid.

5,5% in build-operate-transfer power plants, BOT is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract. This enables the project proponent to recover its investment, operating and maintenance expenses in the project during the operational phase. Regarding the confidential mutual contracts, the facilities are transferred to the national power organization after the specified period of time of operation. In this model, the object is to decrease the burden of power plants on the state budget.These facilities are not subject to electricity generation licensing from EPDK. İncirli HEPP doesn‟t adapt such measures.

1,5% in transferred power plants, These power plants are the power plants developed under BOT scheme explained above and that are transferred to the public entities.During “Build and Operate” period, it sells the electricity that it has generated to the national electricity organization, and at the end of the period, it transfers the power plant. The transfer operation may have a certain price, but a transfer without a price is desired by the government. The most important issue in the BOT model is the dependence of the unit electricity cost on the transfer period. İncirli HEPP doesn‟t adapt such measures.

0,6% in mobile power plants. These powerplants differ from usual power plants in ways of easy transportation and rapid implementation. They are classified under thermal power plants. İncirli HEPP doesn‟t adapt such measures.

According to the methodological tool Tool for the Demonstration and Assessment of Additionality under Sub-step 4a, the paragraph states that “provide an analysis of any other activities that are operational and that are similar to the proposed project activity.” The list below shows all the licensed hydro power plants in Rize Province

79:

List of Power Plants in Rize Province

Company Name Plant Name

Fuel Type

Total Installed Power (MW)

Operational Installed Power (MW)

Investment Amount

(TL)

Realized Investment

(TL)

Expected Generation (kWh/year)

1 Adacami Enerji

El.Ür.San ve Tic. A.Ş

Adacami HEPP

HEPP 35,76 0,00 57.216.000 31.794.931 127.800.000

2 Akım Enerji

Üretimi Sanayi ve Ticaret A.Ş

Cevizlik HEPP

HEPP 92,96 91,40 148.736.000 148.736.000 330.000.000

79

http://www2.epdk.org.tr/data/EPDSantral/rize.pdf

http://en.wikipedia.org/wiki/Corporation

http://en.wikipedia.org/wiki/Sole_proprietorship

http://en.wikipedia.org/wiki/State_Enterprise

http://en.wikipedia.org/wiki/State_Enterprise

http://en.wikipedia.org/wiki/Government_agencies

http://en.wikipedia.org/wiki/Concession_(contract)

http://en.wikipedia.org/wiki/Public_sector

http://en.wikipedia.org/wiki/Concession_(contract)

http://en.wikipedia.org/wiki/Public_sector

http://www2.epdk.org.tr/data/EPDSantral/rize.pdf


v3.0 44

3 Akım Enerji


Yokuşlu Kalkandere

HEPP HEPP 43,47 37,90 69.552.000 65.796.192 178.000.000

4

Ambarlık Elektrik Üretim Dağıtım

Pazarlama Sanayi ve Ticaret A.Ş

Ambarlık HEPP

HEPP 9,45 0,00 15.120.000 3.991.680 40.890.000

5 ASA Enerji

Elektrik Üretim San A.Ş

Kale Diversion Weir and

HEPP

HEPP 9,75 9,57 15.600.000 15.600.000 39.550.000

6 Atabey Enerji

Üretim San ve Tic A.Ş

Uzundere II HEPP

HEPP 20,42 0,00 32.672.000 30.646.336 100.646.000

7 Ayen Enerji A.Ş Paşalar HEPP

HEPP 41,50 0,00 66.400.000 0 151.309.000

8 Ayone Enerji

Üretim Ltd. Şti

Gürpınar Diversion Weir and

HEPP

HEPP 24,24 0,00 38.784.000 2.947.584 100.854.616

9 Baysan Elektrik

Üretim A.Ş

Rüzgarlı I and II HEPP

HEPP 10,13 0,00 16.208.000 2.836.400 38.312.000

10 Bess Elektrik

Üretim San ve Tic A.Ş

Dereköy-Demirkapı

HEPP HEPP 111,93 0,00 179.088.000 895.440 395.710.000

11 Baro Elektrik Üretim A.Ş

Alicik I-II Diversion Weir and

HEPP

HEPP 9,37 0,00 14.992.000 0 37.470.000

12 Damlapınar

Elektrik Üretim San ve Tic A.Ş

Dumankaya HEPP

HEPP 2,51 0,00 4.016.000 1.610.416 5.260.000

13 Direnç Enerji

Üretimi San ve Tic A.Ş

Selin I HEPP

HEPP 23,00 0,00 36.800.000 515.200 93.120.000

14 Direnç Enerji

Üretimi San ve Tic A.Ş

Selin II HEPP

HEPP 25,00 0,00 40.000.000 40.000 104.290.000

15 Hilal Enerji Üretim Sanayi ve Ticaret

A.Ş

Arı Diversion Weir and

HEPP

HEPP 37,96 0,00 60.736.000 5.284.032 145.820.000

16 İyon Enerji


Kayalar HEPP

HEPP 39,15 0,00 62.640.000 125.280 155.760.000

17 Kaçkar Enerji

Elektrik Üretim A.Ş

Çiğdemli Diversion Weir and

HEPP

HEPP 4,74 0,00 7.584.000 1.107.264 19.826.000

18 Kaçkar Enerji


Ayvasıl Diversion Weir and

HEPP

HEPP 2,63 0,00 4.208.000 1.695.824 11.188.000

19 Karadeniz Elektrik

Üretim Sanayi A.Ş

Uzundere I HEPP

HEPP 63,07 62,20 100.908.800 100.908.800 164.571.000

20 Laskar Enerji

Üretim Pazarlama Ltd. Şti

İncirli Diversion Weir and

HEPP

HEPP 28,53 0,00 45.648.000 41.996.160 126.020.000

21 Melikom Elektik

Üretim A.Ş

Melikom Diversion Weir and

HEPP

HEPP 11,73 0,00 18.768.000 2.002.546 49.041.000

22 Ortu Elektrik

Üretim ve Ticaret Ltd. Şti

Karaağaç Diversion Weir and

HEPP

HEPP 1,26 0,00 2.016.000 34.272 6.380.000


v3.0 45

23 Redaş Elektrik

Üretim Dağ. Paz. San ve Tic. A.Ş

Ambarlık HEPP

HEPP 9,45 0,00 15.120.000 0 40.890.000

24 Rizbaş Enerji

Üretim Anonim Şirketi

Başköy Diversion Weir and

HEPP

HEPP 14,78 0,00 23.648.000 1.466.176 60.979.810

25 Rize İpekyolu

Enerji Üretim ve Dağ A.Ş

Tepe HEPP HEPP 15,00 0,00 24.000.000 0 45.900.000

26 STY Enerji


Turhan HEPP

HEPP 9,44 0,00 15.104.000 483.328 48.380.000

27 Şaraksel Elektrik

Üretim A.Ş

Dikmen Diversion Weir and

HEPP

HEPP 10,50 0,00 16.800.000 403.200 46.568.000

28 Türkoğlu Elektrik Üretim ve Ticaret

Ltd. Şti

Nebioğlu Diversion Weir and

HEPP

HEPP 2,40 0,00 3.840.000 0 10.290.000

29 Yeşilköy Elektrik Üretim ve Tic Ltd.

Şti

Yeşilköy Diversion Weir and

HEPP

HEPP 3,09 0,00 4.944.000 296.640 12.829.000

30 Zeki Enerji Üretim Dağ. Paz. San ve

Tic. A.Ş

Çatak Diversion Weir and

HEPP

HEPP 10,40 0,00 16.640.000 0 42.530.000

31 Zorlu Doğal

Elektrik Üretimi A.Ş

İkizdere Diversion Weir and

HEPP

HEPP 18,60 18,60 29.760.000 29.760.000 111.000.000

As directed by the tool and to make a comparison of similar projects with İncirli HEPP in terms of scale, the list of all power plants in Rize province has been divided into two as large scale and small scale projects as shown below; List of Power Plants above 15 MW in Rize Province:

35.76 MW Adacami HEPP, Adacami Enerji El.Ür.San ve Tic. A.Ş

92.96 MW Cevizlik HEPP, Akım Enerji Üretimi Sanayi ve Ticaret A.Ş

43.47 MW Yokuşlu-Kalkandere HEPP, Akım Enerji Üretimi Sanayi ve Ticaret A.Ş

20.42 MW Uzundere II HEPP, Atabey Enerji Üretim San ve Tic A.Ş

41.50 MW Paşalar HEPP, Ayen Enerji A.Ş

24.24 MW Gürpınar HEPP, Ayone Enerji Üretim Ltd. Şti

111.93 MW Dereköy-Demirkapı HEPP, Bess Elektrik Üretim San ve Tic A.Ş

23 MW Selin I HEPP, Direnç Enerji Üretimi San ve Tic A.Ş

25 MW Selin II HEPP, Direnç Enerji Üretimi San ve Tic A.Ş

37.96 MW Arı HEPP, Hilal Enerji Üretim Sanayi ve Ticaret A.Ş

39.15 MW Kayalar HEPP, İyon Enerji Üretimi Sanayi ve Ticaret A.Ş

63.07 MW Uzundere I HEPP, Karadeniz Elektrik Üretim Sanayi A.Ş

18.60 MW İkizdere HEPP, Zorlu Doğal Elektrik Üretim A.Ş. List of Power Plants below 15 MW in Rize Province:

9.45 MW Ambarlık HEPP, Ambarlık Elektrik Üretim Dağıtım Pazarlama San ve Tic A.Ş.

9.75 MW Kale HEPP, ASA Enerji Elektrik Üretim San. A.Ş.

10.13 MW Rüzgarlı I and II HEPP, Baysan Elektrik Üretim A.Ş.

9.37 MW Alicik I and II HEPP, Baro Elektrik Üretim A.Ş.

2.51 MW Dumankaya HEPP, damlapınar Elektrik Üretim San ve Tic A.Ş.


v3.0 46

4.74 MW Çiğdemli HEPP, Kaçkar Enerji Elektrik Üretim A.Ş.

2.63 MW Ayvasıl HEPP, Kaçkar Enerji Elektrik Üretim A.Ş.

11.73 MW Melikom HEPP, Melikom Elektrik Üretim A.Ş.

1.26 MW Karaağaç HEPP, Ortu Elektrik Üretim ve Tic. Ltd. Şti.

9.45 MW Ambarlık HEPP, Redaş Elektrik Üretim Dağ. Paz. San ve Tic A.Ş.

14.78 MW Başköy HEPP, Rizdaş Enerji Üretim A.Ş.

15 MW Tepe HEPP, Rize İpekyolu Enerji Üretim ve Dağ. A.Ş.

9.44 MW Turhan HEPP, STY Enerji Elektrik Üretim A.Ş.

10.50 MW Dikmen HEPP, Şaraksel Elektrik Üretim A.Ş.

2.40 MW Nebioğlu HEPP, Türkoğlu Elektrik Üretim ve Ticaret Ltd. Şti.

3.09 MW Yeşilköy HEPP, Yeşilköy Elektrik Üretim ve Tic. Ltd. Şti.

10.40 MW Çatak HEPP, Zeki Enerji Üretim Dağ. Paz. San ve Tic. A.Ş. Sub-step 4a of the Tool for the Demonstration and Assessment of Additionality states that, Provide an analysis of any other activities that are operational and that are similar to the proposed project activity. In order to conduct a stepwise approach, the operational power plants in Rize Province have been listed below;

92.96 MW Cevizlik HEPP

9.75 MW Kale HEPP

63.07 MW Uzundere I HEPP

18.60 MW İkizdere HEPP From the list of power plants that are licensed from EMRA for energy generation, only Cevizlik HEPP, Kale HEPP, Uzundere I HEPP and İkizdere HEPP are the operational power plants enjoying similar technology with İncirli HEPP. Even though the rest of the power plants listed above enjoy the similar region, climate and technology with the proposed İncirli HEPP, they are eliminated from the common practice analysis since as confirmed by the officially announced progress reports of EMRA, they do not start operation yet. Cevizlik HEPP, Kale HEPP, Uzundere HEPP and İkizdere HEPP are considered similar with the proposed project in terms of technology, region, fuel type and private ownership as disclosed by EMRA as private entities granted by the electricity generation licence

80.

But 9,75 MW Kale HEPP differs from 28.53 MWm İncirli HEPP in terms of scale. Comparing with 28.53 MWm İncirli HEPP, 9.75 MW Kale HEPP with 39.5 GWh annual electricity generation cannot be considered similar and due to this reason Kale HEPP has been eliminated from the common practice analysis. On the other hand, Cevizlik HEPP, Uzundere HEPP and İkizdere HEPP are classified as large-scale projects. Regarding the installed capacity and CDM methodology ACM0002, they shall be discussed as eligible for large-scale CDM project activity. İncirli HEPP meets the applicability criteria stated in the methodology ACM0002

81.

Cevizlik HEPP, Uzundere HEPP and İkizdere HEPP are determined as privately owned, large-scale, operational power plants sharing the same technology, regional and commercial characteristics with the proposed İncirli HEPP. According to the methodological tool Tool for the Demonstration and Assessment of Additionality under Sub-step 4a, the paragraph states that “provide an analysis of any other activities that are operational and that are similar to the proposed project activity.” However to analyse and compare these projects to the proposed projects in financial terms, there is no satisfactory and transparent data due to their privately owned natures. The subsidies, financial flows, and economic

80


81 Please refer to Section 2.2, Applicability of Methodology for further information.



v3.0 47

sponsorships cannot be determined and not publicly available,but their pre-determined investment amounts and the status of the investments can be monitored from the investment progress reports announced by EMRA. In revised feasibility report of İncirli HEPP dated December 2008, the total investment was calculated to be USD 54.941.699 and TL 87.126.546 multiplied by1.5858 indicative exchange rate

82. Bearing TL 87.126.546 investment amount of İncirli HEPP in mind, 92,96 MW Cevizlik

HEPP with TL 148.736.000 investment and 63.07 MW Uzundere I HEPP with TL 100.908.800 can be excluded from the common practice analysis due to their high capacities and investments. The public companies in Turkey are the enterprises whose shares are publicly traded and open corporations registered under Capital Markets Board of Turkey

83. Majority of these companies are listed

on Istanbul Stock Exchange as well.84

The public companies registered to CMB are required to keep accounts both according to national tax and commercial regulations and IFRS (International Financial Reporting Standards)

85. The annual accounts are subject to independent external auditing and the

transparency of the companies is compulsory allowing the financial statements and commercial informations to be publicly available

86. The project owners of the Cevizlik HEPP, and Uzundere HEPP‟s

indicated above are not registered to CMB and hence their monetary and fiscal arrangements are considered confidential. Thus their need of carbon crediting cannot be accurately determined for these certain projects. Only the project owner company of İkizdere HEPP is registered to CMB, but still this project has a great dissimilarity with İncirli HEPP, since it was first owned and operated by the government entity EÜAŞ

87 and then sold to the private entity project owner by tender offer

88,89

. Although this project has been first invested by the government and then sold to a private entity,18.60 MW İkizdere HEPP with TL 29.760.000 and 9.75 MW Kale HEPP with TL 15.600.000 investment have been neglected from the common practice analysis due to their capacity and investment differences with İncirli HEPP initially. According to the Electricity Market License Regulations

90 Article 43 and Electricity Market Law numbered

462891

Article 6, Clause 4, the provided commercially sensitive information to the regulatory establishments by the private entities are subject to confidentiality agreements and can‟t be shared with any other private entity, real person or public. Since this condition prevents the comparison of investment climates of the projects listed above with İncirli HEPP, they may be neglected on common practice comparison with the proposed project. Sub-step 4b: Discuss any similar options that are occurring: As to highlight the unattractive financial structure of the proposed project‟s investment, enjoying similar technology and equipment such as turbines and alternators, three large-scale projects which are located in the same region with the proposed project are indicated below. They may be recognized as supportive evidence due to the fact that it had applied to derive benefit from carbon crediting as well via relevant standards

92.

82

http://www.tcmb.gov.tr/kurlar/200812/01122008.html

83 http://www.cmb.gov.tr

84 http://www.cmb.gov.tr/indexcont.aspx?action=showpage&menuid=7&pid=0&subid=1&submenuheader=0

85 http://www.ifrs.com/

86 http://www.kap.gov.tr/yay/Sirket/sirketListe.aspx

87 http://www.teias.gov.tr/ist2006/10-11.xls

88 www.oib.gov.tr/tedas/elek_uretim_tesis.htm

89 www.zoren.com.tr/TR/INVESTORS/haberler.asp?fPage=4&fId=424

90 www.epdk.org.tr/documents/10157/1c4c70ab-db06-4b42-6259-2570099f3aa43

91 www.epdk.org.tr/documents/10157/35a7a0c-52a9-40d5-8e12-f8e61afe7247

92 Project owners of Cevizlik HEPP, Yokuslu HEPP and Uzundere HEPP provided e-mails stating that they applied for carbon

crediting. E-mails will be provided upon request.

http://www.tcmb.gov.tr/kurlar/200812/01122008.html

http://www.cmb.gov.tr/

http://www.cmb.gov.tr/indexcont.aspx?action=showpage&menuid=7&pid=0&subid=1&submenuheader=0

http://www.ifrs.com/

http://www.kap.gov.tr/yay/Sirket/sirketListe.aspx

http://www.teias.gov.tr/ist2006/10-11.xls

http://www.oib.gov.tr/tedas/elek_uretim_tesis.htm

http://www.zoren.com.tr/TR/INVESTORS/haberler.asp?fPage=4&fId=424

http://www.epdk.org.tr/documents/10157/1c4c70ab-db06-4b42-6259-2570099f3aa43

http://www.epdk.org.tr/documents/10157/35a7a0c-52a9-40d5-8e12-f8e61afe7247


v3.0 48

These projects are;

92.96 MW Cevizlik HEPP (validated)93

43.47 MW Yokuşlu Kalkandere HEPP (validated)

63.07 MW Uzundere I HEPP (registered) Outcome of Step 4: As being discussed above, similar activities with the proposed project in the region are observed. However the essential distinctions between the project activity and similar projects have been reasonably explained and it is concluded that the proposed project is additional.

2.6 Methodology Deviations

Not applicable.

3 QUANTIFICATION OF GHG EMISSION REDUCTIONS AND REMOVALS

3.1 Baseline Emissions

Baseline emissions include only CO2 emissions from electricity generation in fossil fuel fired power plants that are displaced due to the project activity. The methodology assumes that all project electricity generation above baseline levels would have been generated by existing grid-connected power plants and the addition of new grid-connected power plants. The baseline emissions are to be calculated as follows: BEy = EGPJ,y X EFgrid,CM,y

Where: BEy = Baseline emissions in year y (tCO2/yr) EGPJ,y = Quantity of net electricity generation that is produced and fed into the grid as a result of the implementation of the CDM project activity in year y (MWh/yr) EFgrid,CM,y = Combined margin CO2 emission factor for grid connected power generation in year y calculated using the latest version of the .Tool to calculate the emission factor for an electricity system. (tCO2/MWh) Calculation of EG PJ,y The calculation of EG PJ,y is different for (a) greenfield plants, (b) retrofits and replacements, and (c) capacity additions. The project activity is not the retrofit or replacement of an existing grid-connected renewable power plant, the project activity is not a capacity addition to an existing renewable energy power plant. Therefore options b) and c) are excluded. The project is a green field plant; the project activity is the installation of a new grid-connected renewable power plant/unit at a site where no renewable power plant was operated prior to the implementation of the project activity, Therefore EG PJ is calculated as follows;

93 https://vcsprojectdatabase1.apx.com/myModule/Interactive.asp?Tab=Projects&a=2&i=753&lat=40%2E843611&lon=40%2E474721&bp=1

https://vcsprojectdatabase1.apx.com/myModule/Interactive.asp?Tab=Projects&a=2&i=753&lat=40%2E843611&lon=40%2E474721&bp=1


v3.0 49

EGPJ,y = EGfacility,y Where: EGPJ,y = Quantity of net electricity generation that is produced and fed into the grid as a result of the implementation of the CDM project activity in year y (MWh/yr) EGfacility,y = Quantity of net electricity generation supplied by the project plant/unit to the grid in year y (MWh/yr) EGPJ,y = 123.46 GWh/year

94

Calculation of EF grid,CM,y The following procedures are undertaken according to the “Tool to calculate the emission factor for an electricity system” (ver. 02.2.1). The following 6 steps will be applied; STEP 1. Identify the relevant electricity systems. STEP 2. Choose whether to include off-grid power plants in the project electricity system (optional). STEP 3. Select a method to determine the operating margin (OM). STEP 4. Calculate the operating margin emission factor according to the selected method. STEP 5. Calculate the build margin emission factor. STEP 6. Calculate the combined margin (CM) emissions factor. Step 1: Identify the relevant electricity systems

According to the ”Tool to calculate the emission factor for an electricity system”, (Ver. 02.2.1) project electricity system is defined by the spatial extent of the power plants that are physically connected through transmission and distribution lines to the project activity and that can be dispatched without significant transmission constraints.

Connected electricity system, is defined as an electricity system that is connected by transmission lines to the project electricity system. Power plants within the connected electricity system can be dispatched without significant transmission constraints but transmission to the project electricity system has significant transmission constraint.

According to the “Tool to calculate the emission factor for an electricity system”, if the DNA of the host country has published a delineation of the project electricity system and connected electricity systems, these delineations should be used. If this information is not available, project participants should define the project electricity system and any connected electricity system, and justify and document their assumptions in the CDM-PDD. The following criteria can be used to determine the existence of significant transmission constraints:

94

İncirli HEPP FSR


v3.0 50

• In case of electricity systems with spot markets for electricity: There are differences in electricity prices (without transmission and distribution costs) of more than 5% between the systems during 60 percent or more of the hours of the year;

• The transmission line is operated at 90% or more of its rated capacity during 90% or more of the hours of the year.

Turkey does not have a DNA established yet therefore a published delineation of the project electricity system and connected electricity systems cannot be found. Therefore the project electricity system is defined for the Project activity as the Project site and all power plants attached to the National Grid, which is operated by TEİAŞ (Please refer to Figure 7).

There is no spot market for electricity in Turkey therefore this criterion can‟t be used to determine the existence of significant transmission constraints.

As seen from Figure 7, the transmission line is operated below 90% of its rated capacity therefore the project electricity system can be dispatched without significant transmission constraints.

Turkey is connected to the national grids‟ of neighbouring countries. These neighbour countries‟ grids are the connected electricity system for the project activity. Import and export of electricity between these countries take place, according to the “Tool to calculate the emission factor for an electricity system” (ver. 02.2.1), emission factor for imports from neighbouring countries is considered zero tons CO2e/MWh for determining the OM. There is no information about interconnected transmission capacity investments.

Figure 9: The Turkish National Grid

95

95

http://www.geni.org/globalenergy/library/national_energy_grid/turkey/turkishnationalelectricitygrid.shtml

http://www.geni.org/globalenergy/library/national_energy_grid/turkey/turkishnationalelectricitygrid.shtml


v3.0 51

Table 13: Turkish Transmission Line Capacity

96

Years 2007 2008

Transmission Capacity (MVA) 82056.0 89476.0

Peak Load (MW) 29215.0 30532.0

Peak Load /Capacity 35.6% 34.1%

Step 2: Choose whether to include off-grid power plants in the project electricity system (optional) Project participants may choose between the following two options to calculate the operating margin and build margin emission factor: Option I: Only grid power plants are included in the calculation. Option II: Both grid power plants and off-grid power plants are included in the calculation.

96

Source: Transmission Capacity: www.teias.gov.tr/istatistik2008/53.xls

Peak Load: www.teias.gov.tr/istatistik2008/20(2006-2008).xls




v3.0 52

Option I is selected because there is no available data on off-grid power plants in Turkey. STEP 3. Select a method to determine the operating margin (OM): The baseline methodology allows a choice among four methods for the calculation of OM emission factor;

a) Simple OM, or b) Simple adjusted OM, or c) Dispatch data analysis OM, or d) Average OM

There exist no publicly available data for the dispatch data analysis (c) or for the simple adjusted OM (b). The simple OM emission factor can be calculated using either of the below given two options;

Ex-ante option where a three year generation-weighted average based on the most recent data is used. Monitoring and recalculation of the emission factor is not required, or

Ex-post option, where the data of the year is used, in which the project activity displaces grid electricity. Yearly update of the emission factor is required.

The Ex-ante option is selected to carry out the baseline methodology for the Project. The Option B (based on the total net electricity generation of all power plants serving the system and the fuel types and total fuel consumption of the project electricity system) in the "Tool to calculate the emission factor for an electricity system" version 02.2.1, is selected. The Option B of the Simple OM can be used, because;

a) The necessary data for Option A is not available, b) Only renewable sources are considered as low cost/must run sources. The quantity of electricity

supplied to the grid by these sources is known. c) Off-grid power plants are not included in the calculation.

As explained above, the ex-ante combined margin method will be used. There exists no nuclear power plant in Turkey, and there is no indication that coal or lignite is obviously used as must-run. . Low-cost/must-run resources are defined as power plants with low marginal generation costs or power plants that are dispatched independently of the daily or seasonal load of the grid. They typically include hydro, geothermal,wind, low-cost biomass, nuclear and solar generation as indicated in the”Tool to calculate the emission factor for an electricity system” Version 02.2.1. As particularly for Turkey, the coal and lignite fired electricity generation constitutes 28.3% of the national power production profile. Due to the fact of operating such facilities are fully dependant on coal cost, relatively, the hydro geothermal and wind activities don‟t have such cost since their fuel is renewable resources. Therefore coal-fired plants can‟t be determined as low cost compared to the renewable alternatives. At a period of nationwide excess electricity supply and/or lower load demand period, the coal fired powerplants will be asked to undertake their functioning so as to maximize the utilization of hydro, thermal and wind activities that will consume renewable resources with no cost of raw material to generate power. Therefore in Turkey, coal and lignite-fired electricity production doesn‟t belong to „must run‟ category compared to the alternatives above.

To calculate the emission factor of Turkey „Simple OM‟ is used on the grounds that low cost/must run resources in Turkish National Grid constitute less than 50% of the grid resource mix, excluding the coal lignite-fired power plants for the reasons that are above. Hydro, geothermal, wind power plants and other renewable are included as low- cost/must- run resources, which turns out to be 19.33% of the total electricity generation on average between the years 2007 and 2009. Since the share of low-cost/must-run resources are less than 50% on average of the 5 most recent years and as the available data are limited, the simple OM method will


v3.0 53

be implemented. It can be seen from the table below that the share of generation by low-cost/must-run resources is under 50%. Available statistics for the most recent years have been used.

Table -14: Electricity Generation Breakdown of the Turkish Grid for the Last 3 Years97

2007 2008 2009

THERMAL (GWh) 155.196.2 164,139.3 156.923.4

LOW COST/MUST RUN (GWh) 36.361.9 34,278.7 37.889.5

TOTAL (GWh) 191.558.1 198,418.0 194.812.9

LOW COST/MUST RUN PROPORTION ( %) 19 20 19

STEP 4. Calculate the operating margin emission factor according to the selected method: According to the methodology, the simple OM emission factor (EFOM Simple, y) is calculated as 2006-2008 generation-weighted average emissions per electricity unit (tCO2/MWh) of all generating sources serving the system excluding low-operating cost and must-run power plants. The formula of EFOM Simple, y calculation is;

EFgrid, OM simple, y = ∑FCi,y × NCVi,y × EFco2,i,y ∕ ∑EGy (3) Where; EFgrid,OMsimple,y = Simple operating margin CO2 emission factor in year y (tCO2/MWh) FCi,y = Amount of fossil fuel type i consumed in the project electricity in year y (mass or volume unit) NCVi,y = Net calorific value(energy content) of fossil fuel type i in year y (GJ / mass or volume unit) EFCO2,i,y = CO2 emission factor of fossil fuel type i in year y (tCO2/GJ) EGm,y = Net electricity generated and delivered to the grid by power plant / unit m in year y (MWh) i = All fossil fuel types combusted in power sources in the project electricity system m in year y y = Either three most recent years for which data is available at the time of submission of the VCS-PD to the DOE for validation (ex-ante option) or the applicable year during monitoring (ex-post option). Data about the fuel consumption for electricity generation, electricity generation by fuel type, import and export were obtained from the Turkish Electricity Distribution Company (TEİAŞ) web site. Operating and Build Margin calculations have been based on the data for 2007-2009. Details of the data used for the calculations are given in Annex 3. Using the available data and ACM0002 methodology, the tables of information required for the calculations are as follows:

97

www.teias.gov.tr/istatistik2007/31(40-07).xl

http://www.teias.gov.tr/istatistik2007/31(40-07).xl


v3.0 54

Table -15. Fuel Generation Sources Connected to the Grid (2006-2008)98

Fci, y Units: tones for solid fuels, 1000 m3 for gaseous fuels.

2007 2008 2009 TOTAL

Hard Coil + Import Coil

6029143 6270008 6621177 18920328

Lignite 61223821 66374120 63620518 191218459

Fuel Oil 2250686 2173371 1594321 6018378

Diesel Oil 50233 131206 180857 362296

LPG 0 0 111 111

Naphta 11441 10606 8077 30124

Natural Gas 20457793 21607635 20978040 63043468

Table -16. NCV and Emission Factors of Fossil Fuel Types

99

NCV1 (TJ/tons), for gaseous fuels; (TJ/1000m3) EF CO2,l (tCO2/TJ)

2008 2009 2007

Hard Coal + Imported Coal 0,02160 0,02160 0,02160 94,6

Lignite 0,00550 0,00550 0,00550 90,9

Fuel Oil 0,03980 0,03980 0,03980 75,5

Diesel Oil 0,04140 0,04140 0,04140 72,6

LPG 0,04480 0,04480 0,04480 61,6

Naphta 0,04180 0,04180 0,04180 69,3

Natural Gas 0,04650 0,04650 0,04650 54,3 Table -17. Relation Between Net and Gross Electricity Generation

100

EGy (GWh)

Gross

Generation Net

Generation Net/Gross

Gross Generated Thermal

Net Generated Thermal

Import Total

2007 191558,1 183339,7 0,95710 155196,2 148537,8313 864,3 149402,1

2008 198418 189761,9 0,95637 164139,3 156978,6281 789,4 157768

2009 194812.9 186619.3 0.95794 156923.4 150323,3875 812 151135,4

Total Net Thermal Gen.

455839.847 2465,7 458305,5

As calculated by equation 3, using values from tables 15 to 17, EFgrid, OM simple,, y = 312,703,437.6 (tCO2) / 458,3055 (MWh) = 0.682 (tCO2/MWh)

STEP 5. Calculate the Build Margin Emission Factor:

98

www.teias.gov.tr/ist2008/43.xls and www.teias.gov.tr/ist2008/44.xls

99 www.teias.gov.tr/ist2008/46.xls

100 www.teias.gov.tr/ist2007/30(84-07).xls

www.teias.gov.tr/istatistik2008/32(75-08).xls

http://www.teias.gov.tr/ist2008/43.xls



http://www.teias.gov.tr/ist2007/30(84-07).xls



v3.0 55

In this step, a generation-weighted average emission factor is calculated based on a sample of power plants, which have been taken into operation recently. The sample group of power plants m used to calculate the build margin consists of either:

a) The set of 5 power units that have been build most recently. b) The set of power capacity additions in the electricity system that comprise 20% of the system

generation (in MWh) and that have been build most recently.

For conducting the calculations option (b) is selected, because this option results in a larger electricity generation. The "Tool to calculate the emission factor for an electricity system" requires the sample list of recent capacity additions to constitute at least 20% of the system generation. This requirement is met as shown in the table below; Table -18. Generation of Recent Capacity Additions

102

Generation of the Sample List Generation (GWh)

2009 Generation, GWh 194,812.9

UNFCCC Threshold, % of Generation 20%

UNFCCC Threshold, GWh 38,962.58

Capacity Additions, 2003-2006 GWh 41,053.83

In terms of vintage data, there are two available options; Option 1: For the first crediting period, calculate the build margin emission factor ex-ante based on the most recent information available on units already built for sample group m at the time of PDD submission to the DOE for validation. For the second crediting period, the build margin emission factor should be updated based on the most recent information available on units already built at the time of submission of the request for renewal of the crediting period to the DOE. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. This option does not require monitoring the emission factor during the crediting period. Option 2: For the first crediting period, the build margin emission factor shall be updated annually, ex-post, including those units built up to the year of registration of the project activity, or, if information up to the year of registration is not yet available, including those units built up to the latest year for which information is available. For the second crediting period, the build margin emission factor shall be calculated ex-ante, as described in option 1 above. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. Option 1 is selected. The data of the most recent commissioned power plants are being published by Turkish Electricity Transmission Company (TEİAŞ) on annual basis. For build margin calculations, the power plants taken into operation between 2004-2008 are included in the cohort of power units. Performance revisions, modifications, retrofits and dismantling of power plants have been excluded from the samples list for the build margin calculations.

102

www.teias.gov.tr/ist2006/8.xls www.teias.gov.tr/istatistik2005/7.xls www.teias.gov.tr/istat2004/7.xls www.teias.gov.tr/istatistik/7.xls www.teias.gov.tr/istat2002/7.xls www.teias.gov.tr/istatistikler/7.xls



http://www.teias.gov.tr/istat2004/7.xls

http://www.teias.gov.tr/istatistik/7.xls


http://www.teias.gov.tr/istatistikler/7.xls


v3.0 56

Based on these requirements and conditions, the final list of selected power plants is summarized in the Baseline Information in Annex 3. As can be seen from the tables on Annex 3, the Iskenderun GR I-II plant is included fully in the calculation since part of its capacity falls in 20% of 2009 Generation. Therefore in table 18, capacity additions included in the calculation is higher than the 20% threshold. The build margin emission factor is the generation-weighted average emission factor (tCO2/MWh) of all power units m during the most recent year y for which power generation data is available, calculated as follows;

EFgrid, BM, y = ƩEGm, y x EFEL, m, y / ƩmEGm, y (4)

Where: EF grid,BMsimple,y = Build margin CO2 emissions factor in year „y‟ (tCO2/GWh) EGm,y = Net quantity of electricity generated and delivered to the grid by power unit m in year y (GWh) EF EL,m,y = CO2 emission factor In accordance with the Emission Factor Tool, the CO2 emission factor of each power unit m (EF EL,m,y) should be determined by the guidance in step 3a) for the simple OM. Using options A1,A2 or A3, using for y the most recent historical year for which power generation data is available, where m is the power units included in the build margin. As plant specific fuel consumption data is not available for Turkey, Option A2 has been selected for the calculation of the CO2 emission factor of each power unit where: And the EFEL, m, y is found as;

EFEL, m, y = EFCO2, m, i, y x 3.6 / ηm, y (5)

EF EL,m,y = CO2 emission factor of the power unit in year „y‟ (tCO2/MWh) EF CO2m,i,y = Average CO2 emission factor of fuel type „i‟ used in power unit „m‟ in year „y‟ (tCO2/GJ) ηm,y = Average net energy conversion efficiency of power unit „m‟ in year „y‟(%) Using the data given in tables 19 and 20 the Build Margin emission factor is calculated as follows; Table -19. Net quantity of electricity generated and delivered to the grid by power unit ‘m’

103

103

www.teias.gov.tr/istatistik/7.xls

www.teias.gov.tr/istat2004/7.xls

www.teias.gov.tr/istatistik2005/7.xls

www.teias.gov.tr/ist2006/9.xls

http://www.teias.gov.tr/istatistik/7.xls





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EGm,y (MWh)

Fuel Type 2006 2003 2004 2005 Total

Hard Coal 0 9315000 337500 1125000 10777500

Lignite 7020000 0 0 4420000 11440000

Fuel Oil 0 0 466200 99100 565300

Natural Gas 0 692300 8834170 7117700 16644170

Diesel Oil 0 0 4100 0 4100

Total Renawable 0 347800 241760 1033200 1622760

Total 41.053.830,00 Table -20. Emission Factor of the Power Units

104

2001 EFCO2 (tCO2/TJ) η EFEL (tCO2/MWh)

Hard Coal 94,6 0,34 1,014

Lignite 90,9 0,33 0,998

Fuel oil 75,5 0,35 0,774

Natural Gas 54,3 0,46 0,425

Diesel Oil 72,6 0,28 0,950 EF grid,BMsimple,y = 29,851949.11 (tCO2) / 41,053,830 (MWh)

EFgrid, BMsimple,y = 0.727 (tCO2/MWh) STEP 6. Calculate the Combined Margin Emission Factor The Operating Margin refers to a cohort of power plants that reflect the existing power plants whose electricity generation would be effected by the proposed Project activity. The Build Margin refers to a cohort of power plants that reflect the type of power units whose construction would be effected by the proposed Project activity. The Combined emission factor EFgrid,CM,y for the Project activity is calculated as a weighted average of the Operating Margin emission factor and Build Margin emission factor as described in the baseline methodology;

EFgrid,CM,y = WOM x EF + WBM x EFgrid,BM,y (6)

Where: EF grid,BM,y = Build margin CO2 emission factor in year „y‟ (tCO2/MWh) EF grid,OM,y = Operating margin emission factor in year „y‟ (tCO2/GWh) wOM = Weighting of operating margins emissions factor (%) wBM = Weighting of build margin emission factor (%) (wom and wbm are the default values stated in the Emission Factor Tool and are both 0.5 for the first crediting period)

104

The lower limits of the 95% confidence interval stated in the "2006 IPCC Guidelines for National Greenhouse Gas Inventories"


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Using equation 6 and the values calculated above the combined margin emission factor is: EF grid,CM,y = EF grid,OM,y x wOM + EFgrid,BM,y x wBM (7) EF grid,CM,y = (0.682x0.5)+( 0.727 x 0.5) = 0.341 + 0.3635 EF grid,CM,y = 0.7045 (tCO2/MWh) For the sake of being conservative, the emission factor is rounded down to 0.704 (tCO2/MWh).

3.2 Project Emissions

According to the consolidated methodoly ACM0002 “For most renewable power generation project activities, PEy = 0. However, some project activities may involve project emissions that can be significant. These emissions shall be accounted for as project emissions by using the following equation:” PEy =PE FF,y ,+PE GP,y + PE HP,y

Where: PE y = Project emissions in year y (tCO2e/yr) PE FF,y = Project emissions from fossil fuel consumption in year y (tCO2/yr) PE GP,y = Project emissions from the operation of geothermal power plants due to the release of non-condensable gases in year y (tCO2e/yr) PE HP,y = Project emissions from water reservoirs of hydro power plants in year y (tCO2e/yr)

Emissions from water reservoirs of hydro power plants (PE HP,y)

For hydro power project activities that result in new reservoirs and hydro power project activities that result in the increase of existing reservoirs, project proponents shall account for CH4 and CO2 emissions from the reservoir, estimated as follows: (a) If the power density of the project activity (PD) is greater than 4 W/m2 and less than or equal to 10 W/m2: PEHP,y = EFRes x TEGy / 1000 Where: PEHP,y = Project emissions from water reservoirs (tCO2e/yr) EFRes = Default emission factor for emissions from reservoirs of hydro power plants in year y (kgCO2e/MWh) TEGy = Total electricity produced by the project activity, including the electricity supplied to the grid and the electricity supplied to internal loads, in year y (MWh) (b) If the power density of the project activity (PD) is greater than 10 W/m2: PE HP,y = 0


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The power density of the project activity (PD) is calculated as follows: PD = CAPPJ – CAPBL / APJ - ABL

PD = Power density of the project activity (W/m2) CapPJ = Installed capacity of the hydro power plant after the implementation of the project activity (W) CapBL = Installed capacity of the hydro power plant before the implementation of the project activity (W). For new hydro power plants, this value is zero APJ = Area of the reservoir measured in the surface of the water, after the implementation of the project activity, when the reservoir is full (m2) ABL = Area of the reservoir measured in the surface of the water, before the implementation of the project activity, when the reservoir is full (m2). For new reservoirs, this value is zero.

According to the consiledated methodolgy ACM0002 version 12.2.0, a reservoir is defined as a water body created in valleys to store water generally made by the construction of a dam. According to this definition, the project activity neither results in a new reservoir nor implemented on an existing reservoir and hence it is concluded that; PEy = 0 ; Fossil Fuel Combustion (PEFF,y) PE FF,y = Project emissions from fossil fuel consumption in year y (tCO2/yr) is calculated according to the UNFCCC tool “Tool to calculate project or leakage CO

2 emissions from fossil fuel combustion”

(Ver.02)”

Where: PE Fc,j,y = Are the CO2 emissions from fossil fuel combustion in process j during the year y (tCO2/yr); FC i,j,y = Is the quantity of fuel type i combusted in process j during the year y (mass or volume unit/yr);

COEF i,y = Is the CO2 emission coefficient of fuel type i in year y (tCO2/mass or volume unit)

i = Are the fuel types combusted in process j during the year y

Since the project activity is a hydro electrical power plant there is no use of any fuel tpe. Therefore FC i,j,y

= 0. Hence, project emissions from fossil fuel consumption in year y for all years of the project activity are zero;

PE FF,y = 0

Emissions of non-condensable gases from the operation of geothermal power plants (PEGP,y)

PE GP,y is calculated as follows:


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PE GP,y = ( W steam,CO 2,y + W steam,CH 4,y * GWP CH 4 ) * M steam,y

Where: PEGP,y = Project emissions from the operation of geothermal power plants due to the release of non-condensable gases in year y (tCO2e/yr) Wstream,CO2,y = Average mass fraction of carbon dioxide in the produced steam in year y (tCO2/t steam) Wstream,CH4,y = Average mass fraction of methane in the produced steam in year y (tCH4/t steam) GWPCH4 = Global warming potential of methane valid for the relevant commitment period (tCO2e/tCH4)

Mstream,y = Quantity of steam produced in year y (t steam/yr)

The project activty does not involve any Geothermal components hence;

PE GP,y = 0 The project emissions assessment concludes that the project emissions are zero.

3.3 Leakage

According to the methodology, leakage from related emission sources do not need to be considered, thus leakage is zero. Ly = 0

3.4 Summary of GHG Emission Reductions and Removals

According to the calculations in section 3.1, the baseline emission factor for the project activity is 0.704 tCO2/MWh in the first crediting period and the annual electricity generation supplied to the grid is 123,460 MWh. Therefore, BEy, during the first crediting period is calculated as follows; BEy = EFy x EGy BEy = 0.704 tCO2/MWh x 123,460 MWh BEy = 86,915 tCO2 To sum up, the project activity will supply 123,460MWh electricity to the National Grid and the annual emission reductions will be 86,915.84 tCO2. Table -21. Summary of Baseline calculations

Parameter Definition Value

EFgrid,OM,y Operating Margin Emission Factor in year y.

0.682 (tCO2/MWh)

EFgrid,BM,y Build margin Emission Factor in 0.727 (tCO2/MWh)


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tear y.

EFgrid,CM,y Combined Margin Emission

Factor in year y. 0.704 (tCO2/MWh)

EGİncirli,y Net Electricity Delivered to the Grid by İncirli HEPP

123,460MWh

ERy Emission Reductions in year y. 86,915 tCO2

Table - 22. The ex-ante estimation of emission reductions for İncirli HEPP

Year

Estimation of the Project activity

emissions (tons of CO2e)

Estimation of baseline emission

reductions (tons of CO2e)

Estimation of leakage (tons of

CO2e)

Estimation of emission

reductions (tons of CO2e)

01/06/2011 0 86,915 0 86,915

01/06/2012 0 86,915 0 86,915

01/06/2013 0 86,915 0 86,915

01/06/2014 0 86,915 0 86,915

01/06/2015 0 86,915 0 86,915

01/06/2016 0 86,915 0 86,915

01/06/2017 0 86,915 0 86,915

01/06/2018 0 86,915 0 86,915

01/06/2019 0 86,915 0 86,915

01/06/2020 0 86,915 0 86,915

01/06/2021 0 86,915 0 86,915

TOTAL 0 869,150 0 869,150

4 MONITORING

4.1 Data and Parameters Available at Validation

Data Unit / Parameter: EFCO2,i,y

Data unit: tCO2/TJ

Description: CO2 emission factor of fossil fuel type i in year y.

Source of data: IPCC default values at the lower limit of the uncertainty at a 95% confidence interval as provided in table 1.4 of Chapter1 of Vol.2(Energy) of the 2006 IPCC Guidelines on National GHG Inventories

105

Value applied: See Table 20.

Justification of choice of data or description

of measurement methods and procedures

applied:

Data used for OM and BM calculations.

105

“Tool to calculate the emission factor for an electricity system” (Version 02.2.1)


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Any comment:

Data Unit / Parameter: EGfacility,y

Data unit: MWh

Description: Net electricity delivered to the grid by İncirli

HEPP project in year “y”.

Source of data: Feasibility Study Report submitted by the project

owner.




applied:


Any comment:

Data Unit / Parameter: EGy

Data unit: GWh

Description: Net electricity generated by power plants in

Turkey in years 2007, 2008 and 2009.

Source of data: TEIAS web site: www.teias.gov.tr




applied:

Data used for emission reduction calculation.

Any comment:

Data Unit / Parameter: FCi,y

Data unit: tCO2/TJ

Description: Tons or 1000 m3 for gasses. Amount of fuels

consumed by thermal power plants for electricity

generation in terms of fossil fuel type “i” in year

“y”.

Source of data: Teias web site.




applied:

Data used for OM calculation.

http://www.teias.gov.tr/


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Any comment:

Data Unit / Parameter: NCV

Data unit: TJ/kt

Description: Net calorific values of fuel combusted in power

plants.

Source of data: The lower limits of the 95% confidence interval

stated in the "2006 IPCC Guidelines for National

Greenhouse Gas Inventories".




applied:


Any comment:

Data Unit / Parameter: η

Data unit: -

Description: Average net energy conversion efficiency of power unit m or k in year y

Source of data: Environmental Map of Turkey by The MoEF




applied:

Data used for OM calculation.

Any comment:

Data Unit / Parameter: EFgrid,CM,y

Data unit: tCO2/MWh

Description: Combined margin CO2 emission factor for grid connected power generation in year y calculated using the latest version of the „Tool to calculate the emission factor for an electricity system‟

Source of data: As per the „Tool to calculate the emission factor for an electricity system‟, the data flow will be conducted with the project activity and Turkish Electricity Transmission Company (TEİAS) is the relevant source to obtain statistical information for the necessary calculations.

Description of measurement methods and

procedures to be applied:

As per the „Tool to calculate the emission factor for an electricity system‟; once in every crediting


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period.

Frequency of monitoring/recording: As per the „Tool to calculate the emission factor for an electricity system‟; annually during verification.

Value applied: 0.704

Monitoring equipment: NA

QA/QC procedures to be applied: NA

Calculation method: As per the „Tool to calculate the emission factor for an electricity system‟

Any comment: Calculations are made ex-ante, therefore no

measurement is made. Data is only taken from

TEIAS and IPCC 2006

4.2 Data and Parameters Monitored

Data Unit / Parameter: EGfacility,y

Data unit: MWh/y

Description: Quantity of net electricity supplied to the grid by İncirli HEPP in year “y”.

Source of data: Project activity site. Meter reading. Invoices of electricity sales to the grid.

Description of measurement methods and

procedures to be applied:

Quantity of net electricity supplied to the grid by

the project activity will be measured and

monitored continuously using cumulative

electricity meters that are sealed by the official

distribution company.

Frequency of monitoring/recording: Collected data will be noted and archived hourly,

daily and monthly by the plant operators.

Value applied: 123.46 GWh.

Monitoring equipment: ELSTER A1500 ALPHA Accuracy Class: Class

0.5S106

QA/QC procedures to be applied: Turkish Electricity Transmission Company (TEİAŞ) is responsible of calibrating the electricity meters and of checking them monthly for accuracy. Cross check measurement results with records for sold electricity.

Calculation method: The electricity taken from the grid subtracted from

the total electricity production to the grid.

Any comment:

106 http://www.elster.com.tr/downloads/ESC_A1500_DS_TR_01-00.pdf


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4.3 Description of the Monitoring Plan

The Monitoring Plan (MP) used for determining the emission reduction by the İncirli HEPP Project is based on the methodology ACM0002. Since the project activities involve electricity generation from renewable sources and there is no significant leakage source and environmental impacts, the MP will include monitoring electricity generation by the project activities and key sustainable development indicators. The project owner will establish and implement the Monitoring Protocol before the start up of the Project production. The objective of the Monitoring Protocol is to provide credible, accurate, transparent and conservative monitoring data of the emission reductions. Moreover, the real, measurable and long term global environmental benefits relating to the GHG emission reduction accrued by the Project can be verified and certified. Data to be monitored

Annual gross electricity generation of the project (TEGy)

Electricity delivered by the Project to the Grid (EGfacility,y)

As shown in the figure below the main and back-up electricity meters of İncirli HEPP are installed in İyidere substation next to each other in individual sealed cabinets. Same day of each month, the generated electricity by İncirli HEPP is read by the officers of TEIAS from the main meter. The back-up meter is always operative but only used for double checking in case of a miscalculation is observed in main meter readings. The net electricity generation will already be measured and recorded by both TEIAS and the project owner after the implementation of the project. The Plant Manager and its appointed team (whom will be informed about VER concepts and mechanisms and how to monitor and collect the data) will be responsible for the electricity generation, gathering all relevant data and keeping the records. The same procedure applies for the monitoring of the annual installed capacity after implementation of the project. Figure 10. Location of electricity meters of İncirli HEPP in İyidere substation


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The structure figure of the monitoring team is the following: Plant Manager: Responsible for running the İncirli HEPP and keeping the compliance with VER monitoring plan. Electrical Technician: Responsible for daily electrical operations and recording and monitoring of relevant data and periodic reporting. Account Manager: Responsible for keeping data about power sales, invoicing and purchasing. Board Operator: Responsible for day to day operation and monitoring of the plant. BorgaCarbon Consultancy Ltd: Responsible for emission reduction calculations, preparing monitoring report and periodical verification process. Figure 11. İncirli HEPP Organization Chart

Plant Manager


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Electrical Technician

Accounting Manager

Board Operator

BorgaCarbon Consultancy Ltd.

Calibration Calibration of the Electronic Meters: Elster A1500 meters are factory calibrated and delivered to the customer with the “Calibration Titles and Values Report‟ separately for each meter with serial numbers of 361530 and 361531

107.The periodic

calibration process of the meters are subject to The Directive on Metering and Meter Calibration Procedures that is published in the Official Gazette, number 22000, on the date of 24/07/1994 and executed under the authority of the Ministry of Industry and Trade

108. The meters that are subject to billing

are regulated under this protocol nationwide. In Article 9, it is clearly stated that it is mandatory to perform calibration on the electricity meters once in every ten years. The periodic duration starts as of the first calibration and the official sealing day of the devices. Article 6 regulates the periodic calibration applications. Every year, by the start of January till the end of February, the Ministry announces on the government television and radio, the addressed government offices for receiving the periodic calibration requests based on the perimeters and types of the meters. The distribution company who uses the meters at distribution is responsible for application and execution of the calibration control. Article 8 states that the periodic calibrations are performed by the Measurement and Regulation Organization of the Ministry and the appointed Municipal Measurement and Regulation Offices. The mandatory or voluntary calibration reports will be provided to Borga Carbon by the project owner and will be archived as planned in the Monitoring Plan. The net electricity fed to the grid by the project activity will be monitored in accordance with the approved methodology. The electricity generated by the project activity will be measured by two (a main and a back-up) Elster A 1500 meters

109. Elster A 1500 meters are in direct accord with the Decleration on Meters that are Used in

the Electricity Market110

that is announced by Electricity Market Regulatory Authority and the minimum requirements that the electrical meters must satify which are stipulated by TEDAS

111. The meters are in

compliance with International Electrotechnical Commision112

standards and Turkish Standards

107

Initial calibration reports are available upon request..

108 http://osgm.sanayi.gov.tr/Files/Mevzuat/olcu-ve-olcu-aletleri-mua-22042010183044.pdf

109 http://www.elster.com.tr/downloads/ESC_A1500_PB_TR_01-00.pdf

110 www.epdk.gov.tr/documents/10157/326b88e3-e36f-4d7c-af43-1f8b5959a203

111 www.tedas.gov.tr/attached/Duyurular/tedas-elktro-sayac.doc

112 www.iec.ch

http://osgm.sanayi.gov.tr/Files/Mevzuat/olcu-ve-olcu-aletleri-mua-22042010183044.pdf

http://www.elster.com.tr/downloads/ESC_A1500_PB_TR_01-00.pdf

http://www.epdk.gov.tr/documents/10157/326b88e3-e36f-4d7c-af43-1f8b5959a203

http://www.tedas.gov.tr/attached/Duyurular/tedas-elktro-sayac.doc

http://www.iec.ch/


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Institution113

requirements. The meters are capable of measuring the active and reactive energy on buy and sell aspects as well as they are qualified for advanced measuring of the power quality and saving historical data. The meters are located in the İyidere substation, which is a separate building from the powerhouse. The meters are locked and sealed preventing any external interference other than the distribution company officials. The meters can determine the auxiliary consumption and display it on the same screen as well as the gross production. The commands can be typed via different codes on the meter for providing the metering results.The indexes are read by the operators of the control room on hourly basis, recorded on the „daily meter operation fact sheet‟ and archived. The monthly readings are done electronically via RS485 port connected to the meter and the inventory obtained qua hourly energy supply and draw as PMUM (Piyasa Mali Uzlastirma Merkezi – Market Financial Settlement Center)

114

directs to. The monthly reading procedure is executed and archived by the plant manager as well as it has been stored on PMUM‟s DGPYS system. The billing is performed by the distribution company, after the tenth day of their meter reading. The electricity generation data is electronically mailed to TEDAS and TEIAS within the first 3 days of each month. In case of a malfunction of a meter, the undefected one‟s readings are subject to determine the monthly index. In such cases, the person in charge of the distribution company, is notified and the sealed and locked meters are opened in the presence of the representatives from the official distribution company in order to determine and record the breakdown and the reason. The official record of the electricity generation and the breakdown report in case of a malfunction will be submitted to Borga Carbon Ltd., monthly.

Data collection The correct readings of the meters are used for calculating the emission reductions of the project. The monitoring processes are as follows: (1) For each month, the designated persons from TEIAS will record the readings of the meter for the electricity delivered to the grid. The daily data which is sent to TEIAS in electronic form will be carbon copied to Borga Carbon Ltd. Monitoring team as well and be assessed, archived and reported by them. (2) Sales receipts will be provided from the project owner and the copies will be saved. Maintenance of Equipments The periodic maintenance of the electromechanical equipments will be conducted in accordance with the maintenance instructions set out in the manual that is provided by Zheijang Jinlun Electromechanic Co. Ltd. The technical staff trained by the manufacturer company between 31/01/2011 – 04/02/2011

115 for

plant operation will carry out the maintenance in line with the specific maintenance instructions of the turbine and generator units for İncirli HEPP

116.

Training program

The project owner and Borga Carbon Ltd. Monitoring team will train all the related staffs by the time of the validation of the project on VER crediting structure, operational regulations, quality control (QC), quality assurance (QA), data monitoring requirements and data management regulations, etc. Monitoring report

113 www.tse.org.tr/

114 http://www.teias.gov.tr/mali/maliuz.asp

115 Project owner’s official report about the staff training is available upon request.

116 Maintenance instruction set out in the turbine purchase agreement with the manufacturer.

http://www.tse.org.tr/

http://www.teias.gov.tr/mali/maliuz.asp


v3.0 69

The monitoring report is prepared by Monitoring Manager, and be submitted to the duly authorized and appointed Designated Operational Entity „DOE‟ before each verification period. The report should cover the monitoring of grid-connected power generation, calculation reports of the emission reduction as well as maintenance and calibration reports. All written documentation such as maps, drawings, the Environmental Impact Assessment or EIA exemption report, should be well maintained and retained and should be available to the verifier upon request. Thus the creditability, reliability, transparency and traceability of the project records and calculation of emission reductions could be ensured. Record management All relevant VER data will be measured and collected as detailed in Section 4.1. All data required for verification and issuance will be backed-up and retained for at least two years after the end of the crediting period or the last issuance of VERs of these Projects, whichever occurs later. Data collected on-site will be compiled in an electronic format which will be sent to BorgaCarbon Consultancy Ltd. (the carbon project developer) on a regular basis.

5 ENVIRONMENTAL IMPACT

The Project Introductory File was completed by Skopsu Proje Mühendislik Ltd. and submitted to the Ministry of Environment and Forestry on 07/07/2009. After the Ministry assessment based on the PTD, İncirli Hydro Power Plant had obtained Environmental Impact Assessment Exemption Decision from the Ministry of Environment and Forestry on 17/07/2008

117.

The environmental impacts of the project activity have been assessed by The Ministry of Environment and Forestry of the host party (Turkey) by a submitted Project Introductory File. As a result of careful assessments, the environmental impacts of the project activity determined as negligible and the project activity has been exempted from the Environmental Impact Assessment

118.

6 STAKEHOLDER COMMENTS

N/A

ANNEX – 1: INFORMATION REGARDING PUBLIC FUNDING

117

The EIA Exemption Decision is available for validation.

118 The Environmental Impact Assessment Exemption letter is available for validation.


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ANNEX - 2: BASELINE INFORMATION


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TÜRKİYE KURULU GÜCÜNÜN YILLAR İTİBARİYLE GELİŞİMİANNUAL DEVELOPMENT OF TURKEY'S INSTALLED CAPACITY

(1913 - 2009)

Birim(Unit) : MW

YIL TERMİK HİDROLİK TOPLAM ARTIŞ YIL TERMİK HİDROLİK JEOTER.+RÜZ. TOPLAM ARTIŞ

YEAR THERMAL HYDRO TOTAL INCREASE YEAR THERMAL HYDRO GEOTHERM.WIND TOTAL INCREASE

% %

1913 17.2 0.1 17.3 - 1966 1028.0 616.3 1644.3 10.3

1923 32.7 0.1 32.8 89.6 1967 1257.4 701.7 1959.1 19.1

1924 32.8 0.1 32.9 0.3 1968 1243.4 723.2 1966.6 0.4

1925 33.3 0.1 33.4 1.5 1969 1243.4 723.8 1967.2 0.03

1926 48.4 0.2 48.6 45.5 1970 1509.5 725.4 2234.9 13.6

1927 51.5 0.4 51.9 6.8 1971 1706.3 871.6 2577.9 15.3

1928 64.4 1.5 65.9 27.0 1972 1818.7 892.6 2711.3 5.2

1929 68.9 3.2 72.1 9.4 1973 2207.1 985.4 3192.5 17.7

1930 74.8 3.2 78.0 8.2 1974 2282.9 1449.2 3732.1 16.9

1931 98.7 3.2 101.9 30.6 1975 2407.0 1779.6 4186.6 12.2

1932 99.8 3.5 103.3 1.4 1976 2491.6 1872.6 4364.2 4.2

1933 104.3 3.5 107.8 4.4 1977 2854.6 1872.6 4727.2 8.3

1934 112.9 4.5 117.4 8.9 1978 2987.9 1880.8 4868.7 3.0

1935 121.2 5.0 126.2 7.5 1979 2987.9 2130.8 5118.7 5.1

1936 133.3 5.2 138.5 9.7 1980 2987.9 2130.8 5118.7 0.0

1937 161.7 5.4 167.1 20.6 1981 3181.3 2356.3 5537.6 8.2

1938 173.1 5.4 178.5 6.8 1982 3556.3 3082.3 6638.6 19.9

1939 210.1 5.5 215.6 20.8 1983 3695.8 3239.3 6935.1 4.5

1940 209.2 7.8 217.0 0.6 1984 4569.3 3874.8 17.5 8461.6 22.0

1941 213.8 8.2 222.0 2.3 1985 5229.3 3874.8 17.5 9121.6 7.8

1942 218.5 8.2 226.7 2.1 1986 6220.2 3877.5 17.5 10115.2 10.9

1943 228.2 8.2 236.4 4.3 1987 7474.3 5003.3 17.5 12495.1 23.5

1944 233.7 8.2 241.9 2.3 1988 8284.8 6218.3 17.5 14520.6 16.2

1945 237.7 8.2 245.9 1.7 1989 9193.4 6597.3 17.5 15808.2 8.9

1946 238.5 9.0 247.5 0.7 1990 9535.8 6764.3 17.5 16317.6 3.2

1947 242.3 9.1 251.4 1.6 1991 10077.8 7113.8 17.5 17209.1 5.5

1948 296.2 9.3 305.5 21.5 1992 10319.9 8378.7 17.5 18716.1 8.8

1949 371.8 10.0 381.8 25.0 1993 10638.4 9681.7 17.5 20337.6 8.7

1950 389.9 17.9 407.8 6.8 1994 10977.7 9864.6 17.5 20859.8 2.6

1951 399.2 24.0 423.2 3.8 1995 11074.0 9862.8 17.5 20954.3 0.5

1952 412.0 25.8 437.8 3.4 1996 11297.1 9934.8 17.5 21249.4 1.4

1953 470.1 29.4 499.5 14.1 1997 11771.8 10102.6 17.5 21891.9 3.0

1954 480.2 36.7 516.9 3.5 1998 13021.3 10306.5 26.2 23354.0 6.7

1955 573.5 38.1 611.6 18.3 1999 15555.9 10537.2 26.2 26119.3 11.8

1956 731.9 154.2 886.1 44.9 2000 16052.5 11175.2 36.4 27264.1 4.4

1957 777.6 161.8 939.4 6.0 2001 16623.1 11672.9 36.4 28332.4 3.9

1958 809.1 220.9 1030.0 9.6 2002 19568.5 12240.9 36.4 31845.8 12.4

1959 843.4 317.6 1161.0 12.7 2003 22974.4 12578.7 33.9 35587.0 11.7

1960 860.5 411.9 1272.4 9.6 2004 24144.7 12645.4 33.9 36824.0 3.5

1961 878.6 445.3 1323.9 4.0 2005 25902.3 12906.1 35.1 38843.5 5.5

1962 901.2 469.6 1370.8 3.5 2006 27420.2 13062.7 81.9 40564.8 4.4

1963 902.6 478.5 1381.1 0.8 2007 27271.6 13394.9 169.2 40835.7 0.7

1964 921.1 497.2 1418.3 2.7 2008 27595.0 13828.7 393.5 41817.2 2.4

1965 985.4 505.1 1490.5 5.1 2009 29339.1 14553.3 868.8 44761.2 7.0

Not:Jeotermal santralının kurulu gücü 2003 Note: Installed capacity of Geothermal P.P. Is revised and

yılında EÜAŞ tarafından revize edilerek 15 MW'a decreased to 15 MW in 2003 by EÜAŞ.

düşürülmüştür. reflected to all installed capacity table as well.

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ANNEX – 3: MONITORING INFORMATION

Data which is subject to Monitoring

Electricity

Generation (EGfacility, y)

Net electricity supplied to the grid

Emission Factor (EFgrid,CM,y)

Installed Capacity (CAPpj)

Responsible Appointed Staff of the Facility for Data Collecting and Plant Manager

Record Type Electronic

Record Management

The monitored data will be transferred monthly to the project owner and Borga Carbon Ltd. under the responsibility of the plant manager as well as meter

maintenance and calibration conditions. They will be reviewed, assessed and archived by Borga Carbon Ltd. for the purpose of the verification procedure.


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