Annex I Parties which have ceilings for GHG emissions (emission caps), assist non-Annex I Parties which do not have emission caps, to implement project activities to reduce GHG emissions (or remove by sinks), and credits will be issued based on emission reductions (or removals by sinks) achieved by the project activities.
Cd mability of off grid electrification projects
CDMability of off-grid electrification projects Pallav Purohit International Institute for Applied Systems Analysis (IIASA), Austria Prepared for - International workshop on off-grid electrification in South Asia CEPMLP, University of Dundee, UK 6th July 2011
Contents Why off-grid electrification? Clean Development Mechanism (CDM)? Off-grid rural electrification projects under CDM CDM Programme of Activities (PoA) Summary
Why off-grid electrification? • Over 1.4 billion people – over 20% of the global population - lacks access to electricity (~ 85% of them in rural areas). • Over 2.7 billion people - some 40% of the global population – rely on traditional use of biomass for cooking. • Over 2.0 million premature deaths per year are associated with the burning of solid fuels indoors in unventilated kitchens. • Over 400 million people not having access to electricity in 2009, India hosts the world’s largest population deprived of electricity. • Over 800 million people in India relying on biomass for cooking in traditional cookstoves.Source: IEA(2010); WHO (2009)
Number of people without access to electricity in rural and urban areas (million)Source: IEA(2010)
Overview of Indian power sector Thermal Hydro Renewable Nuclear Total 113,559 MW 37,567 MW 18,455 MW 4,780 MW 174,361 MW As on 30th April 2011Source: CEA (2011)
Installed capacity of renewables in India - until 31st March 2011 Grid-interactive renewable power Off-Grid/Distributed Renewable Power (19974 MW) (including Captive/CHP Plants) (511 MW)Source: MNRE (2011)
Status of renewables in India Annual global (total + diffue) radiation varies from 1600 to 2200 kWh/m2. The equivalent energy potential is about 6,000 million GWh of energy per year. National Solar Mission 20000 MW of solar power 2000 MW solar PV for off-grid applications 20 million m2 solar thermal collector area 20 million solar lighting systems for rural areasSource: MNRE (2011)
Financial attractiveness of solar energy technologies?Source: Purohit and Michaelowa (2006)
Clean Development MechanismCDM: a development tool or a market mechanism?
Key CDM terms - I• Baseline – Emissions level that would have existed in the business-as-usual CO2 emissions Business as usual: situation (in the absence baseline of the CDM project)• Additionality Reduced emissions – A CDM project should be when credited: CERs motivated by the revenue Project implemented coming from the CER sales. If it is already an Year attractive business without the CER benefit, it is not additional
Key CDM terms - II• Crediting period – Duration for which a CDM project can generate CERs. Either 10 years or three times 7 years• Small-scale projects – Projects of less than • 15 MW for renewable energy • 60 GWh annual savings for energy efficiency • 60,000 t annual CO2 reductions for other types• SSC projects benefit from – simplified rules, especially pre-defined baseline methodologies – lower fees
Key CDM statistics - I Annual average CERs Expected CERs until end of 2012 CDM project pipeline: N/A > 2,700,000,000 > 5600 of which: --- 3212 are registered 485,818,373 > 2,020,000,000 --- 108 are requesting registration 10,342,872 > 10,000,000Source: cdm.unfccc.int/
Key CDM statistics - II 63% (3952) renewable energy projects out of 6292 CDM projects in the pipeline constitute 35% CERs. 1.9% (117) HFCs, PFCs and N2O reduction projects constitute 27% CERs. Off-grid electrification projects are rare in the project pipeline.Source: Fenhann (2011)
Off-grid solar energy projects for rural electrification Globally, 103 solar Solar projects in the pipeline (103) can generate 5.9 million CERs until 2012. Solar PV Solar thermal (73) (30) Solar PV Solar water heating (71/26) (13/3) Solar PV water Solar cooking disinfection (2/0) (12/5) Solar thermal power (3/2) Solar thermal (2/0) • Out of 36 registered solar energy projects under CDM pipeline until 1st June 2011, only three projects (2 from India and 1 from Morocco) are based on off-grid electrification - generating 394,000 CERs until 2012 and 897,000 CERs until 2020.Source: Fenhann (2011)
Project size, types & total transaction costs Size Type Reduction Transaction (t CO2 per yr) cost (€/tCO2) Very Large Large hydro, geothermal, >200,000 0.1 landfill methane Large Wind power, solar thermal, 20,000 – 200,000 0.3 – 1 energy efficiency Small Boiler conversion, DSM, 2000 – 20,000 10 small hydro Mini Energy efficiency in 200 – 2000 100 housing, mini-hydro Micro PV < 200 1000Source: Michaelowa et al. (2003) >800 SHS of 37 Wp
Break-even price of CER for solar energy technologies Break-even price of CER <15 Euro??Source: Purohit and Michaelowa (2006)
Barriers to the deployment of off-grid renewable energy based CDM projects Technology adoption and diffusion (characteristics of the technologies, adopters etc.) High up-front (capital) cost, high transaction cost, risk for investors, financing, etc. High transaction cost, risk for investors (plitical, CER price, renewable market, etc.), low energy potential, high CER price etc. risk, etc.Source: Río (2005)
Programme of activities (PoA)/ CDM programme activity (CPA)• A programme of activities (PoA) is – a voluntary coordinated action; – by a private or public entity which coordinates and implements any policy/measure or stated goal (i.e. incentive schemes and voluntary programmes); – which leads to GHG emission reductions or net removals by sinks that are additional to any that would occur in the absence of the PoA; – via an unlimited number of CDM programme activities (CPAs) .• A CDM programme activity (CPA) is : – a project activity under a programme of activities (PoA), – a single, or a set of interrelated measure(s), to reduce GHG emissions or result in net removals by sinks, applied within a designated area defined in the baseline methodology.
Status of CPA projects from South Asia 32% projects are on efficient lighting and improved cookstoves Type of projects Bangladesh India Nepal Pakistan Sri LankaBiomass energy 0 2 0 0 2EE households 4 7 0 2 0EE industry 0 2 0 0 0EE service 0 2 0 0 0Energy distribution 0 2 0 0 0Landfill gas 0 2 0 0 2Methane avoidance 2 2 2 2 0Solar 2 4 0 0 0Total 8 23 2 4 4 20% projects are on biogas SHS projects
Summary• Off-grid electrification projects especially contribute to sustainable development but are rare in the CDM project pipeline.• CDM in its current state and design has typically failed to deliver the promised benefits with regard to development objectives in rural areas.• For the renewable energy based off-grid electrification projects in rural areas – A more credible roadmap towards post 2012 scenario will help instill more confidence among project developers. – The provisions of the Programme of Activities (PoA) or Programmatic CDM is critical for promotion of off-grid electrification projects in rural areas (Flexibility in terms of implementation schedules, sectoral spread of the individual activities, transaction costs of the CDM project cycle, etc).
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