Economic Analysis with basic definition and Clean Development Mechanism

1.  From: Ruchit Pandya(140020119549)

2.  Design, construction and implementation of
engineering systems are ultimately decided by
economic decisions.
 Renewable energy system require more capital
investment than conventional.
 Demand Of renewable energy system is
increased,
so study of economic analysis became
Important.

3. •If system design for 100%,It will become oversized
and Initial cost high.
•C=Cf + Cv ( Cf = fixed cost
Cv = variable cost )
•Variable cost are cost of collector,storage,etc and
depends on collector area.

4. •Net annual cost including running of plant ,
maintenance cost, various tax paid , repayment of
loans and all expenditure.
•Net Annual cost=cost of fuel/electricity +
Repayment of Loans + maintenance charges +
Taxes – Tax deduction.

5. •Annual Savings= Savings on fuel/electricity –
Repayment on loan taken for solar system –
(Maintenance charges , local taxes , etc)+ Tax
deduction
•Cumulative savings:- It is the sum of the annual
savings over the period plus the cost of an
equivalent conventional system minus the initial
down payment made at the time of installation.

6. •Life cycle savings:- It is the cumulative renewable
energy saving calculated over the life time of the
system plus the resale value of the system at the
end of its life time.
•Payback Period:- Income from power fed grid to
become equal to the total investment in
renewable energy system.

9. CDM: the basic idea
What is the Clean Development Mechanism (CDM) ?
A mechanism that allows Developed Countries to undertake GHG
emission reduction projects in developing countries, and to use the
achieved emission reductions to meet their own emission goal.
> In CDM projects, the Developed country fund the project and
provides any necessary know-how and technology transfer to the
Developing country where the project is implemented.
 CDM works because emission reductions are many times more
expensive to achieve in Developed countries than in developing
countries (the opportunities for emission reduction are bigger there).

10. About Kyoto Protocol
Signed in 1997; in force since 16 February 2005.
Ratified by more than 130 countries
Commits Annex 1 countries to reducing greenhouse gas emissions.
> GHG emissions may be reduced by ~ 5% below 1990 levels in 2008-2012;
> Individual, quantified emission targets for each industrialized country;
> 6 greenhouse gas covered: CO2, CH4, N2O, HFC, PFC, SF6.
3 flexibility mechanisms for financing emission reduction abroad.
> Clean Development Mechanism (CDM)
> Joint Implementation (JI)
> International Emissions Trading (IET)

11. BASICS
Additionality and baselines
“A project is eligible for CDM if greenhouse gas emissions are reduced
below those that would have occurred in the absence of the CDM
project.”
Years
GHG emissions
(tCO2eq)
Project implementation
Emissions baseline
Emissions after the project
1. Validation of project design,
baseline and monitoring plan
2. Verification /
Certification of emission
reductions
ADDITIONAL
EMISSION
REDUCTIONS

12.  CER unit equals to reduction of one tonne of
carbon dioxide equivalent
 There are more than 3000 registered project
delievering 500 million CERs per year
 In 2008-2010 EU used 277 million CERs to meet
their target.
 So Its can brings financial benefits to it.

13.  1 billion tonnes of emission reduction up to
2012,with projects in 81 countries and also
leads to $19.8 billion market investment
driving to clean development mechanism in
2010.
 Estimates 44% involve of pipeline projects
needs to involve some form of technology
transfer.

14.  One of largest Host is India for CDM projects
 From 2003 to 2011, a total 2295 projects
 Govt does not promotes or discourage CDM in
some parts
 Some States Like Gujarat, Maharashtra are
much aware of the CDM due to
industrialisation.
.