korindo biomass v02 2 - compa

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PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) - Version 03

CDM – Executive Board

1

CLEAN DEVELOPMENT MECHANISM

PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD)

Version 03 - in effect as of: 22 December 2006

CONTENTS

A. General description of the small scale project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

D. Environmental impacts

E. Stakeholders’ comments

Annexes

Annex 1: Contact information on participants in the proposed small scale project activity

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring Information

Annex 5: Sustainable Development


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Revision history of this document

Version

Number

Date Description and reason of revision

01 21 January

2003

Initial adoption

02 8 July 2005 The Board agreed to revise the CDM SSC PDD to reflect

guidance and clarifications provided by the Board sinceversion 01 of this document.

As a consequence, the guidelines for completing CDM SSCPDD have been revised accordingly to version 2. The latestversion can be found at.

03 22 December

2006

The Board agreed to revise the CDM project designdocument for small-scale activities (CDM-SSC-PDD), taking

into account CDM-PDD and CDM-NM.

http://cdm.unfccc.int/Reference/Documentshttp://cdm.unfccc.int/Reference/Documentshttp://cdm.unfccc.int/Reference/Documents


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SECTION A. General description of small-scale project activity

A.1 Title of the small-scale project activity:

Title: Korindo Biomass Power Plant, IndonesiaVersion: 1.0Date: 01/02/2012

A.2. Description of the small-scale project activity:

The “Korindo Biomass Power Plant, Indonesia” (“the project activity”) undertaken by P.T. KorintigaHutani (the “Project Developer”, or hereafter referred to as “KTH”). P.T. Korintiga is 70% owned byKorindo Group and 30% by Oji Paper Co., Ltd

1., and involves the construction of a 7.3 MW biomass

based power plant in a Greenfield chipping mill in Kumai, Central Kalimantan, Indonesia. The chippingmill main products are wood chips, saw wood, veneer and wood pallets The biomass power plant willgenerate electricity through the combustion of bark waste, mainly a mix of Acacia Mangium and

Eucalyptus Pellita bark residues from the chipping mill, producing mainly wood chips, saw wood, veneerand wood pallets. The chipping mill and project activity will commission in 2013 and uses wood fromthe Project Developer’s own plantation.

The proposed project activity comprises the installation of a boiler and steam turbines with 7.3 MW of

installed capacity. The net power generation would be at 6.5 MW, where approximately 4.5 MW2 will be

used by the chipping mill and the remaining supplied to the Central Kalimantan Grid.

. In the absence of the project activity, electricity would be purchased from Perusahaan Listrik Negara(PLN ,State Electricity Company). In the post-project scenario, renewable electricity generated from biomass power plant will displace this more carbon-intensive grid sourced electricity and will result in areduction in greenhouse gas (GHG) emissions of approximately 59,974 tCO2e equivalent per annum.

The construction of the project activity is estimated to start in March 2012 and it is expected tocommission in September 2013.

The implementation of this project activity would contribute towards sustainable development of theregion in the following ways, as stipulated by the government of the Republic of Indonesia:

1. Sustainable development

The project will contribute to use of sustainable renewable energy sources in a highly efficientmanner, in line with the country’s development policy of renewable energy. This will lead to greaterself-sufficiency of fuel for the energy sector. Currently national fuel oil is subsidized and the projectwill directly lead to reduction of subsidised fuel oil consumed, thus reducing the country’sdependency on fossil fuel.

The biomass energy system is imported by Dohwa Engineering Co.,Ltd Korea, a Korean company.The project leads to technology transfer and knowledge transfer from Korea to Indonesia to facilitate

1 Oji Paper teams up with Korindo for Indonesian Plantation Investment, RISI publication, 22/02/2010

2 Chip Mill Plant Mass balance and power requirement


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local manufacturing of high efficient biomass boilers. Being able to provide such technology locally,the project will ensure local employment and reduce the dependency on foreign expenditures.

2. Environment and Natural Resources

The proposed project will result in significant emission reductions of Greenhouse Gases (GHGs)over the commitment period. In addition, the project will result in improving biomass wastemanagement in the Host Country. No additional resources will be used. The project will be able togenerate renewable electricity resource which will increases diversity and security of energy supply.

The biomass is a biomass residue from the chipping mill process and the project contributes toconservation of natural resources and sustainable use of biomass waste that would otherwise bedisposed left to decay.

Sustainable development and conservation practices are also carried out at the plantation wheretimber is sourced from for the chipping process. The AMDAL (Environmental Impact Assessment)for the plantation of 1998 (when the purchase of land was completed by the Korindo group) refers tothe condition of land as degraded before the purchase by the Korindo Group.

The plantation is under a process of certification for the Global Forest and Trade scheme underWWF. The Appraisal was completed in October 2011 and the draft report was made available. The

certification is under the Korindo Group subsidiary PT Korintiga Hutani.

3. Economic and social development

The proposed project will result in the creation of new jobs and new economic activities by creatingnew employment opportunities during the construction of the biomass power plant and during the

operation and maintenance of the facility. Additional staff are planned to be contracted for theoperation of the monitoring equipment required by the carbon emission reduction project. The proposed project activity will demonstrate that innovative solutions can be applied for the

management of biomass waste creating a dynamic sector of economic activity in the Host Countrythat could have positive employments effects. In addition, the generation of electricity through the

biomass power plant will ease the strain on the Host Country dependent on fossil fuel.

4. Economic sustainability

The project is expected to develop the energy related industries such as promoting local wood product manufacturer/processor to increase energy efficiency of the plant and make use ofagricultural waste or renewable biomass.

The project will lead to economic sustainability; as the fuel source is a sustainable, indigenousresource, this reduces fuel imports and negative impacts on the foreign exchange. The project alsohas a positive impact on the economic performance of the wood manufacturing sector as their energy production will become more reliable, efficient and eliminate risks of fluctuating oil prices or otherfuel prices; this enables a more economically reliable production in general.

5. Transfer of technology


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The proposed project activity utilises agro biomass residues for power generation, this willencourage the adoption of clean technologies for power generation and would bring participation

from the private sector to promote such technologies. The project activity in a small way will alsocontribute to energy security in the country.

The proposed project activity will result in technology and know-how transfer in the Host Country.The project will utilize modern technology adapted to the local conditions. This technology will beimported from the Republic of Korea. The successful design and operation of such a facility willencourage local enterprises, local authorities and financing institutions to support entrepreneurialactivities in the waste management sector at a regional and national level.

A.3. Project participants:

Name of Party involved (*)((host) indicates a host

Party)

Private and/or public entity(ies)Project participants (*)

(as applicable)

Kindly indicate if the Party

involved wished to be considers as

project participant

(Yes/No)

Indonesia (host) PT. Korintiga Hutani No

FinlandSweden

The Nordic Environment FinanceCorporation (NEFCO) in its

capacity as Fund Manager to the

NEFCO Carbon Fund (NeCF)

No

(*) In accordance with the CDM modalities and procedures, at the time of making the CDM-PDD publicat the stage of validation, a Party involved may or may not have provided its approval. At the time of

requesting registration, the approval by the Party(ies) involved is required.

The carbon purchaser is the Nordic Environment Finance Corporation NEFCO in its capacity as FundManager to the NEFCO Carbon Fund (NeCF)

NEFCO Carbon Fund (NeCF)

NEFCO, the Nordic Environment Finance Corporation, is a multilateral risk capital institution financing

environmental projects in Central and Eastern Europe, with an emphasis on the Russian Federation andUkraine. Its purpose is to facilitate the implementation of environmentally beneficial projects in theneighbouring region, with transboundary effects that also benefit the Nordic region. Today, NEFCOmanages funds in an aggregate of approximately €470 million. NEFCO is located in Helsinki, Finland.

The NEFCO Carbon Fund (NeCF) was established as a Public Private Partnership in April 2008, to provide financial assistance to projects by purchasing emission reduction credits from projects under the

JI and CDM mechanisms. The NEFCO Carbon Fund (NeCF) has the Danish Energy Agency, DONGEnergy, Eesti Energia, the Industrialisation Fund for Developing Countries (Denmark), Ministries ofEnvironment and Foreign Affairs of Finland, Etelä-Pohjanmaan Voima Oy (Finland), Kymppivoima Oy

(Finland), GDF Suez, the Norwegian Finance Ministry and NEFCO itself, as participants in the fund. Thetotal available resources are ca. €165 million.


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NEFCO is the Fund Manager of the NeCF, and has been authorised by the governments investing in the NeCF to participate on their behalf in actions leading to the generation, transfer and acquisition of CERs

under Article 12 of the Kyoto Protocol.

A.4. Technical description of the small-scale project activity:

A.4.1. Location of the small-scale project activity:

A.4.1.1. Host Party(ies):

Indonesia

A.4.1.2. Region/State/Province etc.:

Central Kalimantan

A.4.1.3. City/Town/Community etc:

Kumai

A.4.1.4. Details of physical location, including information allowing the

unique identification of this small-scale project activity :

The project site is located in Desa Natai Peramuan, Kelurahan Kumai Hulu, Kecamatan Kumai,

Kabupaten Kotawaringin Barat, Central Kalimantan. Indonesia.The GPS coordinates for the project site are: 111 49’ 19.46” E, 2 36’ 21.20” S.


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Figure 1: Location of project site

Figure A.1: Project location


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A.4.2. Type and category(ies) and technology/measure of the small-scale project activity:

(1) Types and categories of the small-scale project activity

In accordance with Appendix B of the simplified modalities and procedures for small-scale CDM projectactivities (“SSC M&P”), the proposed project activity falls under the following types and categories.

The capacity of the proposed CDM project is 7.3 MW, which is below the capacity limit of 15 MW asoutlined in section ID of Appendix B of the simplified modalities for small scale CDM project activities.The biomass power plant will be connected to the grid and the electricity produced by the plant willdisplace existing fossil fuel generated electricity utilized within the factory. Any excess electricity produced will be exported to the Central Kalimantan Grid.

As the generated electricity is included in the project boundary; the applicable methodology is AMS-I.F.

The relevant type and category is shown below.

Type I : Renewable Energy ProjectsCategory F : Renewable energy generation for captive use and mini-gridReference : Version 02, EB 61, Scope 1

As the maximum electricity generating capacity is limited by its design and construction, there is no possibility of exceeding the limits of small-scale project activities during the crediting period and the project activity will remain as a small scale project activity.

(2) Technology of the small-scale project activity

The project activity is designed to generate carbon-neutral electricity using biomass residues from thedebarking process of timber. The biomass residue produced consist primarily of Acasia Mangium andEucalyptus Pellita bark. The boiler technology applied is of a water-tube boiler, with a capacity of 34tonnes per hour of superheated steam, and a turbo-generator with a capacity of 7,300 kW.

The fuel undergoes the following processes for combustion; pre-drying, degassing, main combustion, and

burning-out, each with individually controlled air supply. The boiler is designed with a reciprocating step-grate stoker combustion technology, with 4-6 individual air zones, for firing barks with very highmoisture content. Superheated steam of 45kg/mm

2 @ 440°C from the bark fired boiler expands through

the steam turbine to generate electricity at the main terminal. The steam turbine is a extraction-

condensing turbine with a multistage impulse design.

This system will generate 7.3MW gross power and the net power generation would be at 6.5 MW, where

approximately 4.5 MW will be used by the chipping mill and the remaining supplied to the CentralKalimantan Grid.

The biomass power plant technology is designed in Korea and the main boiler and turbo-generators, aresupplied by well-known Korean, USA and German manufacturers. All equipment are designed in

accordance with international industry guidelines and meet the national environmental and safetyrequirements.


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Table A.1: Summary of Equipments3

Power Boil er Power Boiler capacity (at 100% load) 34 TPH

Steam pressure at super heater outlet 45 Kg/cm2

Steam temperature at super heater outlet 440 ⁰C

Tur bo Generator

Steam pressure at the TG inlet 43 Kg/cm2

Steam temperature at the TG inlet 435 ⁰C

Generator Voltage 6.6 kV

Energy production

Gross power 7.3 MW

Auxiliary consumption 0.8 MW

Net power 6.5 MW

A.4.3 Estimated amount of emission reductions over the chosen crediting period:

YearsAnnual estimation of emission

reductions in tonnes of CO2e

*2013 59,974

2014 59,974

2015 59,974

2016 59,974

2017 59,974

2018 59,974

2019 59,974

2020 59,974

2021 59,974

2022 59,974

Total estimated reductions (tonnes of CO2e) 599,740

Total number of crediting years 10

Annual average over the crediting period of estimated

reductions (tonnes of CO2e) 59,974

*The 1 st

year of crediting is the date of commissioning on 01/06/2013 or date of registration, whicheveris later.

A.4.4. Public funding of the small-scale project activity:

There is no public funding for this project.

A.4.5. Confirmation that the small-scale project activity is not a debundled component of a

large scale project activity:

3 KTH Biomass Fired Power Plant Proposal Specification from DOHWA Engineering Co. Ltd., Doc No. DCE-

KTH-PS-001, dated June 2011.


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Based on the information provided in Appendix C of the Simplified Modalities and Procedures for Small-Scale CDM project activities

4, the project is not a part of any large-scale project or program and is not a

debundled component of a large project activity.The project participants have not registered or are not applying to register any other small-scale CDM project activity:

With the same project participants;

In the same project category and technology/measure; and

Registered within the previous 2 years; and

Whose project boundary is within 1 km of the project boundary of the project at the closest point.

4 http://cdm.unfccc.int/Projects/pac/howto/SmallScalePA/sscdebund.pdf

http://cdm.unfccc.int/Projects/pac/howto/SmallScalePA/sscdebund.pdfhttp://cdm.unfccc.int/Projects/pac/howto/SmallScalePA/sscdebund.pdfhttp://cdm.unfccc.int/Projects/pac/howto/SmallScalePA/sscdebund.pdfhttp://cdm.unfccc.int/Projects/pac/howto/SmallScalePA/sscdebund.pdf


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SECTION B. Application of a baseline and monitoring methodology

B.1. Title and reference of the approved baseline and monitoring methodology applied to the

small-scale project activity:

AMS-I.F. Renewable Electricity Generation for Captive Use and Mini Grid (Version 02, EB 61).

B.2 Justification of the choice of the project category:

The proposed project activity is eligible to utilise AMS-IF. Renewable Electricity Generation for CaptiveUse and Mini Grid (Version 02; EB 61) as it meets all of the applicability conditions of the methodologyas described in Table B.1 below.

Table B.1: Applicability conditions for AMS-I.F.

# Applicability conditions Project Scenario

1 This category comprises renewable energygeneration units, such as photovoltaic, hydro,tidal/wave, wind, geothermal and renewable biomass that supply electricity to user(s). The project activity will displace electricity froman electricity distribution system that is orwould have been supplied by at least onefossil fuel fired generating unit i.e. in the

absence of the project activity, the userswould have been supplied electricity fromone or more sources listed below:

(a) A national or a regional grid (gridhereafter);

(b) Fossil fuel fired captive power plant

(c) A carbon intensive mini-grid.

The proposed project activity uses combustion of biomass residues to generate electricity. Theelectricity generated displaces electricity thatotherwise would have been sourced from theCentral Kalimantan Grid for use on-site/locally by the chipping mill with. Excess electricity to be exported to the Central Kalimantan Grid. In theabsence of project activity, the electricity would

be purchased from Central Kalimantan Grid,which is operated by PLN (State ElectricityCompany).

2 For the purpose of this methodology, a mini-

grid is defined as small-scale power systemwith a total capacity not exceeding 15 MW(i.e. the sum of installed capacities of allgenerators connected to the mini-grid is equalto or less than 15 MW) which is notconnected to a national or a regional grid.

In the absence of project activity, the electricity

would be imported from Central Kalimantan Grid

3 Project activities supplying electricity to anational/regional grid or supplying electricityto an identified consumer facility vianational/regional grid shall apply AMS-I.D.

The proposed project activity displaces gridelectricity consumption and captive fossil fuelelectricity generation at the user end, with excesselectricity being exported to the grid. Therefore


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Project activities supplying electricity to

household users located in off grid areas shallapply AMS-I.A.

AMS-I-D and AMS-I-A are not applicable.

4 Hydro power plants with reservoirs thatsatisfy at least one of the followingconditions are eligible to apply thismethodology:

The project activity is implemented in an

existing reservoir with no change in thevolume of reservoir;

The project activity is implemented in anexisting reservoir, where the volume of

reservoir is increased and the powerdensity of the project activity, as perdefinitions given in the Project Emissionssection, is greater than 4 W/m

2;

The project activity results in new

reservoirs and the power density of the power plant, as per definitions given inthe Project Emissions section, is greaterthan 4 W/m

2.

The proposed project activity is not a hydropower plant and therefore this requirement is notapplicable.

5 For biomass power plants, no other biomassother than renewable biomass are to be usedin the project plant

According to Annex 18 of EB 23, the definitionof renewable biomass is based on either one ofthe five conditions spelt out. One of theconditions that meet the requirements of this project activity is :

4. The biomass is a biomass residue and the useof that biomass residue in the project activitydoes not involve a decrease of carbon pools,in particular dead wood, litter or soil organiccarbon, on the land areas where the biomassresidues are originating from.

The biomass used in this project activity is aresidue or waste streams from a chipping mill

facility, and therefore qualifies as renewable biomass.

6 This methodology is applicable for projectactivities that (a) install a new power plant ata site where there was no renewable energy power plant operating prior to theimplementation of the project activity(Greenfield plant); (b) involve a capacity

The project complies with option (a); installationof a new power plant at a site where there was norenewable energy power plant operating prior tothe implementation of the project activity(Greenfield plan).


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addition, (c) involve a retrofit of (an) existing

plant(s); or (d) involve a replacement of (an)existing plant(s).

7 In the case of project activities that involve

the addition of renewable energy generationunits at an existing renewable power

generation facility, the added capacity of theunits added by the project should be lowerthan 15 MW and should be physically

distinct from the existing units.

There is no capacity addition in the Project as it is

a Greenfield project.

8 In the case of retrofit or replacement, toqualify as a small-scale project, the totaloutput of the retrofitted or replacement unitshall not exceed the limit of 15 MW.

The project is not a retrofit or replacement project. This is a Greenfield project.

9 If the unit added has both renewable and non-renewable components (e.g., a wind/dieselunit), the eligibility limit of 15 MW for asmall-scale CDM project

The proposed project activity does not involvenon-renewable components. The installedcapacity of the project activity is 7.3 MW whichis less than the eligibility limit of 15MW for

small scale CDM project activities.

10 Combined heat and power (co-generation)systems are not eligible under this category.

The project does not involve combined heat and power systems.

11 If electricity and/or steam/heat produced bythe project activity is delivered to a third

party i.e. another facility or facilities withinthe project boundary, a contract between thesupplier and consumer(s) of the energy willhave to be entered that ensures that there isno double counting of emission reductions.

The electricity generated from the project activitywill be supplied to the chipping mill that belongs

to the same project owner.


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B.3. Description of the project boundary:

In line with the guidance in “Appendix B of the simplified modalities and procedures for small -scaleCDM project activities” the boundary “encompasses the physical, geographical site of the renewablegeneration source”.

The project boundary is shown in Figure B.1 below:

Figure B.1: Project boundary

Excess power exported to grid

Wood Bark residue fromchipping mill

Biomass Power Plant

Chipping Mill

CentralKalimantan Grid

Power

Biomass waste

Project Boundary

Project Boundary

Excess power exported to grid

Biomass

Wood Bark residue from

chipping mill

Biomass Power Plant

Chipping Mill

CentralKalimantan Grid

Power

Biomass waste

Project Boundary

Project Boundary


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B.4. Description of baseline and its development:

Baseline Electricity Generation

In the absence of the proposed project activity, electricity that will be generated by the proposed projectactivity would have otherwise been generated by the operation of grid connected power plants, and by theaddition of new generation sources.

As per paragraph 14 of AMS-I.F. (Version 02; EB61) the baseline emissions are the product of theelectrical energy baseline EGBL,y expressed in MWh of electricity produced by the renewable generatingunit multiplied by the grid emission factor. The emission factor is calculated in accordance with paragraph 12, option (a), as a Combined Margin, consisting of the combination of Operating Margin andBuild Margin according to the procedures prescribed in the “Tool to calculate the emission factor for an

electricity system” (Version 02.2.0, EB61),which are outlined in detail in Section B6 and Annex 3 of thePDD.

There are no national and/or sectoral policies or regulations that give comparative advantages to moreemissions-intensive technologies or fuels over less emissions-intensive technologies or fuels; or nationaland/or sectoral policies or regulations that give comparative advantages to less emissions-intensivetechnologies over more emissions-intensive technologies prior to decision 17/CP.7, 11 November 2001.

In November 2009, a feed-in-tariff mechanism was introduced that allows for small scale (


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The selected benchmark is the Weighted Average Cost of Capital as on 03/06/2011, the date the board

decided to pursue the proposed project activity. The use of a Weighted Average Cost of Capital as a benchmark is appropriate for comparison to a Project IRR as stipulated in the “Guidelines on the Assessment of Investment Analysis” which states “Local commercial lending rates or weighted averagecosts of capital (WACC) are appropriate benchmarks for a project IRR” . The Project IRR representsmaximum rate that could be paid for the funds employed without loss to the project, while the WeightedAverage Cost of Capital represents the opportunity cost of the capital.

Parameters used in the financial assessment are not subject to the project developer’s perception of riskinvolved in the project activity but based on standard returns for comparable investments. The benchmarkapproach applied is the same as what any third party local or foreign investor in a similar economicsituation in the Host Country would apply as a benchmark for similar renewable energy power plantinvestments with a similar risk profile.

The WACC is calculated as follows:

r = Wd x K d x (1-T) + We x K e

Where:r = WACC

Wd = Percentage of debtWe = Percentage of equityK d = Average cost of debtK e = Average cost of levered equityT = Applicable corporate tax rate

A value of 35% equity and 65% debt is applied as the long-termproposed capital structure for this

project. The applicable corporate tax rate in Indonesia is 25% (Indonesia tax guide 20105)

The average lending rate for debt in the year 2010 is sourced from Central Bank of Indonesia 6 ’ . The

averageinvestment lending rates by Central Bank of Indonesia for May 2010 till May 20117 averaged at

6.57%. This valueof 12.0% is applied as the average cost of debt (K d)

A default value for expected Return on Equity of 12.50% for Energy Industries (Group 1, Sectoral Scope1), in the Host Country, Indonesia is applied as defined in Appendix A of ‘Guidelines on the Assessmentof Investment Analysis’ . As the proposed project activity is financed by both debt and equity, the levered

Return on Equity given the project’s capital structure is calculated according to the following equation:

8

ROE L = ROEU + D/E x (1-T) x (ROEU -R F ), and ROE L = K e

5 Indonesia Tax Guide 2010, pg 10. http://www.deloitte.com/assets/Dcom-

Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdf

6 Bank Sentral Republik Indonesia (Central Bank Indonesia), Average lending rate for Jan 2010 to June 2011

http://www.bi.go.id/web/en/Moneter/BI+Rate/Data+BI+Rate/

7 Bank Sentral Republik Indonesia (Central Bank Indonesia)

http://www.bi.go.id/web/en/Moneter/BI+Rate/Data+BI+Rate/

8 http://pages.stern.nyu.edu/~igiddy/capstr.htm

http://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.bi.go.id/web/en/Moneter/BI+Rate/Data+BI+Rate/http://www.bi.go.id/web/en/Moneter/BI+Rate/Data+BI+Rate/http://pages.stern.nyu.edu/~igiddy/capstr.htmhttp://pages.stern.nyu.edu/~igiddy/capstr.htmhttp://pages.stern.nyu.edu/~igiddy/capstr.htmhttp://pages.stern.nyu.edu/~igiddy/capstr.htmhttp://www.bi.go.id/web/en/Moneter/BI+Rate/Data+BI+Rate/http://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdf


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Where:

ROE L = Expected return on equity, due to a leveraged capital structure

ROEU = Expected return on equity, default value of 12.50% from Appendix A of Guidelines onthe Assessment of Investment Analysis’

D/E = 65% / 35%

T = 25%

R F = Risk free rate, default value of 3% from Appendix A of Guidelines on the Assessment

of Investment Analysis’

ROE L = 25.7%.

The WACC is calculated as:

r = Wd x K d x (1-T) + We x K e

= 65% x 6.5712.0% x (1-25%) + 35% x 25.7%

= 3.25.9 % + 9.0%

= 12.214.9%

The benchmark level for the project activity is determined as 12.214.9%.

Project IRR of the Proposed Project Activity

The project IRR of the proposed project activity without the additional revenue from the sale of CERs is

3.16.9% which is lower than the nominated benchmark.

The key technical and financial parameters used to calculate the project IRR are shown in Table B.2 below.

Table B.2: Key technical and financial parameters used in the calculation of the Project IRR

Description Units Value Data Source

Electricity Generation

Installed capacity MW 7.30 Technical Specification, June 2011, Section8.2 Steam Turbine Generator, pg 23

Generation capacity MW 6.50 Technical Specification, June 2011, Section

8.2 Steam Turbine Generator, pg 23Project lifetime Years 20

No. working daysoperating in a year

Days 302 Calculated as : 365 Days - 52 Sundays – 11 Public Holidays

Daily operating hours Hours/day 24 Calculated conservatively as continuous

operations per day.

Operating hours in ayear

Hours 7,248 Calculated based on number of workingdays per year and total hours per day

Annual gross power

generation

kWh 52,910,400 Calculated based on Installed capacity of

7.3MW and total operation hours per year

Nett power generation kWh 47,112,000 Calculated based on net generation capacity


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of 6.5MW and total operational hours per

year.

Electricity sold to PLNfrom KTH

kWh 14,496,000 Calculated based on power generated by the biomass power plant minus the chip millconsumption.

Electricity sold to KTBfrom PLN

kWh 32,616,000 Calculated based on 4.5MW usage for plant(Chip Mill Plant Design)

Electricity Export Tariff(KTH sales to PLN)

IDR/kWh 1,170853 PT Perusahan Listrik Negara (PT PLN)meeting minutes with project director date

18/11/11Feed-in Tariff Regulations(Peraturan Menteri ESDM 31 Tahun 2009)

Electricity Import Tariff(PLN sales to KTH)

IDR/kWh 7361,020 Request for electrical installation from PTPLN, dated 04/04/2011 (Doc 1.1 )TariffRegulations (Category I-3 Industrial Tariff

Group) Project Costs

Total Initial CapitalCost

USD 22,860,000 Refer to "Detailed Project & OM Costs"tabEstimated

Refurbishment Cost (at

the end of 10 years)

USD 4,500,000 Refer to "Detailed Project & OM Costs"

tabEstimated

Operation andMaintenance Cost

USD 2,646,170632,717

Refer to "Detailed Project & OM Costs"tabEstimated

Financing Term

Debt % 65%

Equity % 35%

Effective Loan InterestRate

% 6.57

Bank Sentral Republik Indonesia (CentralBank Indonesia)http://www.bi.go.id/web/en/Moneter/BI+Rate/Data+BI+Rate/

Loan Term Years 10

Tax

Corporate Income Tax % 25.00% Indonesia Tax Guide 2010, pg 10.http://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdf

Construction and Operation Lifetime Detail

Construction Period Months 1218 Technical Specification, June 2011, Chap15, pg 174, Project master schedule. BoardApproval

Depreciation

Heavy Equipment andMobile

Years 8 Indonesian Pocket Tax Book 2011, PWC pg 41-43

Non- permanentConstruction

Years 10 Indonesian Pocket Tax Book 2011, PWC pg 41-43

Investment AnalysisPeriod

Years 20 Default Value from Guidelines on the Assessment of Investment Analysis

http://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdfhttp://www.deloitte.com/assets/Dcom-Indonesia/Local%20Assets/Documents/Tax%20guide%202010.pdf


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The project IRR has been calculated based on a full technicalproject lifetime of 20 years. It is assumed

that the fair value of the asset at the end of the 20 years operational life is zero, in accordance with localaccounting regulations as the assets have fully devalued, as the investment period is equal to the technicallifetime of the equipment. This is in line with the Guidelines on the Assessment of Investment Analysis (Version 05 ; EB 62) as follows

a) Investment period = expected technical lifetime, therefore no fair value is included. (para 3)

b) The fair value in accordance with local accounting regulations = 0, (para 4)

c) Book value of the asset = 0, and the reasonable expectation of the potential profit or loss on the

realization of the assets = 0. (para 4)"

The resulting project IRR and the benchmark rate is summarised in Table B.3.

.

Table B.3: Summary of Project Financial Analysis

Project IRR Benchmark

Value 3.16.9% 12.214.9%

1.1. Sensitivity Analysis:

Parameters which have an impact greater than 20% on the total costs or revenues of the project areincluded in a sensitivity analysis. The sensitivity analysis examines the potential effects of variables on

the resulting financial indicator in order to evaluate the potential feasibility of the project. The variation

that would need to occur in variables for the project IRR to meet or exceed the benchmark level of12.214.9% is determined. The results are presented in the table below.

Table B.4: Sensitivity Analysis

Scenario Required change Change in Value

i) Increase in electricity tariff for powersold to PLN, or increase in amount

exported to grid

84.4145.2% Increase from 1,170IDR853IDR /kWh

to 2,158091 IDR/kWh

ii) Increase in electricity tariff for power purchased from PLN (Cost saving fromdisplacement of electricity imported fromgrid)

59.454.0% Increase from 7351,020 IDR/kWhto 1,172571 IDR/kWh

ii) Increase in net power generation 2544.7% Increase net power generation from47.1 GWh to 59.24GWh68.19GWh

iii) Decrease in capital costs -4846.0% Reduce from USD 22.86 million toUSD 11.8912.35 million

iv) Decrease in operational costs -60.379.4% Reduced from USD 2.6563 million per annum to USD 1.050.54 million per annum

Such variations are unlikely to occur and are discussed in detail below:


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i. Increase in electricity tariff for power sold to grid

One of the sources of revenue for the project would be excess power sold to grid. The project wouldneed to achieve a 84.4145% higher tariff than expected (i.e. Increase from 1,170853 IDR/kWh to2,158091 IDR/kWh) in order to reach the benchmark IRR target of 12.214.9%. The electricity tarifffor power sold to the grid is fixed as per meeting minutes between the Project Director and PT PLNdated 18/11/2011 at IDR1,170/kWh, and is unlikely to increase by more than 84145%

ii. Increase in electricity tariff for power purchased from PLN (Cost saving from displacement ofelectricity imported from grid)In absence of the project activity, the chipping mill would have purchased power from the grid. As per Decree No. 70,20109, attachment 4, the power purchased from PLN is fixed for the amount usedfor industries and it is unlikely the tariff will increase in excess of 5954% from 735average of 1,020 IDR/kW to 1,172571 IDR/kWh

iii. Increase in electricity generationThe electricity requirement of the chipping mill is approximately 32.6 GWh/year. This is the amountof grid electricity displaced by the project activity and the remaining 2MW or 14.5GWh is sold togrid. The annual generation is calculated based upon maximum generation at 7,248 hours per year, or302 days@24 hours, which also takes into account potential downtimes. To achieve the benchmarkthe plant would need to operate 9,11410,488 hours per year, or 380437 days per year, which is not

possible.

iv. Decrease in investment costsA 4846% reduction in Investment costs not a reasonable variation that can be justified, for a similarlevel of output. This is appropriate as all costs have been taken conservatively and represents the

actual and reasonable market rates based on contracts and/or proposals from suppliers.

Therefore, it is unlikely that the total investment cost will be 4846% less than anticipated.

v. Decrease in operational costs

The Project IRR reached the benchmark with a 60.379% decrease in the operation cost. Annualoperating cost includes property tax/insurance, maintenance and spare parts, electricity, and other

miscellaneous costs. It is highly unlikely that the annual operational cost can be reduced significantly by more than 6079%

Based on the above investment analysis, it can be concluded that the project activity is not financially

feasible without the revenue from Certified Emission Reductions, and is therefore additional.

Earl y Consideration of CDM

The Project is not financially attractive and therefore the project developer considered CDM to be a vitalcomponent needed in order to build the project, from an early stage of project planning The projectdeveloper assessed the CDM potential of the project, which led to a quantification of the likely revenuesthat could accrue from registration as a CDM project. This led to the signing of the Contract Agreement

9 Regulation of the Ministry and Mineral Resources No 07, Year 2010 on “Electricity Tariff prepared by PT PLN

(Persero)”.


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for Supply and Erection of KTH Biomass FPP 21/07/2011, hence referred to as the start date of the project activity in accordance with the CDM Glossary of Terms..

Table B.6: Timeline of the Project

Event Date

Grid connection master plan for 2010-2019 from the Ministry ofEnergy and Natural Resource on availability of grid connectedelectricity.

08/07/2010

Local Stakeholders Meeting 10/08/2010

Environmental Impact Analysis report for cultivation of forestry woodfor own use. (Ref No. 522/323/VII/2010)

12/2010

Board Meeting for CDM consideration 02/05/2011

Board approval to pursue the proposed project activity 03/06/2011

Proposal Specification by DOHWA for KTH Biomass FPP (No:DCE-KTH-PS-001, Rev.03)

06/2011

Project Idea Note Completed by SIG Clean Energy Investment PteLtd

01/07/2011

Contract Agreement for Supply and Erection of KTH Biomass FPP(NO.KTH-DEC-002)

21/07/2011

Contract Agreement for EPC of Biomass FPP Project 12/09/2011

Boiler order confirmation by Sookok Corporation (No.SKE-2011-

0916-001)

16/09/2011

PO by DOHWA Engineering to Sookok Corporation for TurbineGenerator (No.KTH-PO-M-002)

20/09/2011

Steam Turbine Generator order confirmation by Sookok Corporation(No.SNME/0926/11)

26/09/2011

Agreement between Perenia and NEFCO for development of the

project activity as a CDM project

22/11/2011

Application for electrical installation (No.882/04/APRY/2011) 24/11/2011

Prior consideration posted on UNFCCC website 24/11/2011

Prior consideration posted on Indonesian DNA website 28/11/2011


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B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

Renewable electricity generation for captive use and mini-grid (as per AMS-I.F.)

The proposed project activity will generate renewable electricity from combustion of biomass residues.This electricity will displace the import of electricity from the grid. Therefore emission reductions have been calculated using AMS-I.F. (Version 02; EB 61).

Baseline Emissions

As per AMS-I.F (Version 02; EB 61), the baseline emissions for other system are the product of amountelectricity displaced with the electricity produced by the renewable generating unit and an emission

factor.

yCO y BL y EF EG BE ,, 2* (1)

Where:

BEy Baseline emissions in year y (tCO2)EGBL,y Quantity of net electricity displaced as a result of the implementation of the CDM project

activity in year y (MWh)EFCO2,y Emission factor (tCO2/kWh). Emission factor of a grid shall be calculated as per

procedures provided in AMS-I.D.

The baseline emission factor is published by the Ministry of Energy and Mineral Resources

10

. The Gridemission factor for South and Central Kalimantan is 1.273 tCO2/MWh and is available on the NationalCommittee on CDM webpage .

The EF CO2,y is determined ex-ante for the fixed crediting period.

Project Activity Emissions

As per AMS-I.F (Version 02; EB 61) paragraph 20, CO2 emissions from on-site consumption of fossil

fuels due to the project activity shall be calculated using the latest version of the “Tool to calculate projector leakage CO2 emissions from fossil fuel combustion” (Ver 02 ; EB41) (“Tool”).

The CO2 emissions from fossil fuel combustion (in this case, diesel) in process j (in this case dieselgenerators) are calculated based on the quantity of fuels combusted and the CO 2 emission coefficient of

those fuels, as follows:

PE FC,j,y = i

FCi,j,y * COEFi,y

Where:

10South and Central Kalimantan Grid Emission factor , Ministry of Energy and Mineral Resources, Indonesia.

http://pasarkarbon.dnpi.go.id/web/index.php/komnasmpb/read/19/faktor-emisi-jaringan-listrik-kalimantan-dan-

sulawesi-2009.html

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PE FC,j,y Are the CO2 emissions from fossil fuel combustion in process j (back up diesel generator)

during the year y (tCO2/yr); FCi,j,y Is the quantity of fuel type I (Diesel) combusted in process j during the year y (mass or

volume unit/yr);COEFi,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

The “Tool” provides for two options to calculate the CO2 emission coefficient, COEFi,y:

Option A, where the CO2 emission coefficient, COEFi,y is calculated based on the chemical

composition of fossil fuel type i; or

Option B, where the CO2 emission coefficient, COEFi,y is calculated based on the net calorificvalue and CO2 emission factor of the fuel type i.

Option B has been selected as the data required to utilize Option A is not readily available.

The CO2 emission coefficient COEFi,y is thus calculated as follows:

COEFi,y = NCV i,y * EF CO2 i,y

Where:

COEF i,y Is the CO2 emission coefficient of fuel type i in year y (tCO2/mass or volume unit) NCV i,y Is the weighted average net calorific value of the fuel type i in year y (GJ/mass or volume

unit) EF CO2,i,y Is the weighted average CO2 emission factor of fuel type i in year y (tCO2/GJ)i Are the fuel types combusted in process j during the year y

As combustion of diesel by the back-up generators is expected to be negligible, PEFF,y is assumed to bezero for the purpose of the ex-ante emission reduction calculations. Actual project emission due tocombustion of diesel will be monitored.

As this project activity is a biomass power plant, the project activities are zero.

PEy = 0

Leakage Emissions

I. Leakage due to transfer of energy generating equipment

As per AMS-I.F (Version 02; EB 61) paragraph 21 leakage is equal to zero unless the energy generatingequipment is transferred from another activity. This is a Greenfield project activity, hence no energygenerating equipments are transferred from another activity.


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II. Leakage due to use of biomass

Paragraph 17 of Attachment C to Appendix B11

for selected small scale methodologies; “General guidance on leakage in biomass project activities (Version 03; EB 47)” states that “Competing use ofbiomass are not relevant, where the biomass is generated as part of the project activity”.

As detailed in Annex 5 of the PDD, the biomass waste used in the power plant will be sourced entirelyfrom the chipping mill, which belongs to the same project developer. Based on mass balance

calculations, the annual requirement of the biomass power plant is approximately 86,131 tons of barkwaste per year based on the installed capacity of the boiler, operational hours and moisture content of the

bark waste.

The chipping mill has a capacity of processing 1.7 million tonnes of wood per year, and generating 10%or 171,000 tonnes bark waste per year. The bark waste produced is in excess of the requirements of the boiler capacity. Also, all of the wood residues are generated from the process, and wood used in the

chipping mill is from the mill’s own plantation, there is no competing used of the biomass waste. Sincethe biomass power plant and the chipping mill are both Greenfield projects, the biomass waste would not

have been used anywhere else.

Therefore, leakage assessment for competing use of biomass is not relevant as the biomass waste used inthis project activity is waste bark residues entirely from the chipping process.

III. Leakage due to transportation of biomass to the plant site

The biomass power plant is located within the chipping mill facility and all the biomass waste used in the power plant is from the chipping mill. Biomass residues are not transported.

On this basis, LEy = 0

Emission Reductions

Emission reductions from grid connected renewable electricity generation are estimated ex ante usingAMS-I.F (Version 02; EB 61) as follows:

ER ,y = BEy - PEy - LEy

Where:ER y Emission reduction in year y (tCO2e)BEy Baseline emissions in year y calculated as per equation 1 (tCO2e) PEy Project emissions in year y (tCO2e) LEy Leakage emissions in year y (tCO2e)

11 EB47 Annex 28, Version 03, Indicative Simplified Baseline and Monitoring Methodologies for selected small -

scale CDM project activity categories, General Guidance on leakage in biomass project activities.


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B.6.2. Data and parameters that are available at validation:

Data / Parameter: EFCO2,grid,y Data unit: tCO2/MWh

Description: Emission factor for PLN grid (South and Central Kalimantan)

Source of data used: National Committee on CDM, Ministry of Energy and Mineral Resources

Value applied: 1.273

Justification of the

choice of data ordescription of

measurement methodsand proceduresactually applied :

Calculated based on the “Tool to calculate the emission factor for an electricity

system”

Any comment: The value applied is fixed ex-ante.

Data / Parameter: NCVi,y

Data unit: Tj/Gg

Description: Weighted average net calorific value of diesel in year y

Source of data used: In accordance with the “Tool to calculate project or leakage CO2 emissions fromfossil fuel combustion” (Version 02, EB 41) data will be sourced from IPCCdefault values as provided in Table 1.2 of Chapter 1 of Vol. 2 (Energy) of the2006 IPCC Guidelines on National GHG Inventories. The default value at theupper limit of the uncertainty at a 95% confidence Interval has been applied.

Value applied: 43.3

Justification of thechoice of data ordescription ofmeasurement methods

and proceduresactually applied :

According to the “Tool to calculate project or leakage CO2 emissions from fossilfuel combustion” (Version 02, EB 41).

Any comment: -

Data / Parameter: EFCO2,i,y

Data unit: tCO2/GJ

Description: Weighted average CO2emission factor of diesel in year y

Source of data used: In accordance with the “Tool to calculate project or leakage CO2 emissionsfrom fossil fuel combustion” (Version 02, EB 41), data will be sourced from theIPCC default values provided in table 1.4 of Chapter 1 of Vol. 2 (Energy) of the2006 IPCC Guidelines on National GHG Inventories. The default value at theupper limit of the uncertainty at a 95% confidence Interval has been applied

Value applied: 0.0748

12 http://pasarkarbon.dnpi.go.id/web/index.php/komnasmpb/read/19/faktor-emisi-jaringan-listrik-kalimantan-dan-

sulawesi-2009.html (as of 2009)

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Justification of thechoice of data or

description ofmeasurement methods

and proceduresactually applied :

According to the “Tool to calculate project or leakage CO2 emissions from fossilfuel combustion” (Version 02, EB 41).

Any comment: -

Data / Parameter: Moisture content of the biomass

Data unit: %

Description: Moisture content of the biomass (wet basis)

Source of data used: Lab test certificate

Value applied 50

Justification of thechoice of data ordescription of

measurement methodsand procedures actually

applied :

The ex-ante moisture content was determined in the laboratory using a standardtest method.

Any comments -

B.6.3 Ex-ante calculation of emission reductions:

Emission reductions due to displacement of electricity

Emission reductions due to the displacement of electricity are calculated by multiplying the net quantityof increased electricity generated with biomass residues as a result of the project activity ( EG Bl,y) with theCO2 baseline emission factor for the electricity displaced due to the project ( EF CO2)

yCO y BL y EF EG BE ,, 2*

Where:BEy Baseline emissions in year y (tCO2)EGBL,y Quantity of net electricity displaced as a result of the implementation of the CDM project

activity in year y (MWh)EFCO2,y Emission factor (tCO2/kWh). Emission factor of a grid shall be calculated as per

procedures provided in AMS-I.D.

Table B.7: Descriptions of parameters

BEy = EGBL,y * EFCO2

Parameter Value Unit Source

BECO2,y 59,974 tCO2/year Baseline emissions in year y

EGBL,y 47,122 MWh/year

Quantity of net electricity produced as a result of the

implementation of the project activity in year y. Based on 6.5MW net power generation capacity of the biomass fired power plant.


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EFCO2,grid,y13

1.273 tCO2/MWh

http://pasarkarbon.dnpi.go.id/web/index.php/komnasmpb/read/

19/faktor-emisi-jaringan-listrik-kalimantan-dan-sulawesi-

2009.html (as of 2009)

Project emissions

As outlined in Section B.6.1, the project activity, PEy is equal to zero.

Leakage emissions

As outlined in Section B.6.1, the project activity, LEy is equal to zero.

Emission reductions

Total emission reductions from the proposed project activity are estimated ex ante using AMS-I.F.(Version 02; EB61) as follows:

ER y, = BEy - PEy - LEy

Parameter Value Description Source

ER y = 59,974 Emission reduction in year y (tCO2e) Calculated

BEy = 59,974 Baseline emissions in year y calculatedas per equation 1 (tCO2e)

Calculated

PEy = 0 Project emissions in year y (tCO2e) Calculated

LEy = 0 Leakage emissions in year y (tCO

2e) Calculated

13 Grid Emission Factor (EFCO2,grid,y) for the project is determined ex-ante

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B.6.4 Summary of the ex-ante estimation of emission reductions:

Years

Estimation of

project activity

emissions (tonnes

of CO2 e)

Estimation of

baseline emissions

(tonnes of CO2e)

Estimation

of leakage

(tonnes of

CO2 e)

Estimation ofemission

reductions

(tonnes of CO2

e)

*2013 0 59,974 0 59,974

2014 0 59,974 0 59,974

2015 0 59,974 0 59,974

2016 0 59,974 0 59,974

2017 0 59,974 0 59,974

2018 0 59,974 0 59,974

2019 0 59,974 0 59,974

2020 0 59,974 0 59,974

2021 0 59,974 0 59,974

2022 0 59,974 0 59,974

Total (tonnes ofCO2)

0 599,740 0 599,740

*The 1 st

year of crediting is the date of commissioning on 01/06/2013 or date of registration, whicheveris later.

B.7 Application of a monitoring methodology and description of the monitoring plan:

B.7.1 Data and parameters monitored:

Data / Parameter: EGBL,y

Data unit: MWh/year

Description: Quantity of net electricity displaced in year y

Source of data to beused:

Metered on site

Value of data applied 47.1

Description ofmeasurement methodsand procedures to be

applied:

Measured continuously by on-site electricity meter(s). Data will be recordedcontinuously and aggregated monthly.

QA/QC procedures to

be applied:

The meters will undergo maintenance/calibration as per manufacturer’s

specification, but at least once every three years.

Any comment:

Data / Parameter: Qbiomass,y

Data unit: Ton/y

Description: Quantity of biomass consumed in year y


Plant records

Value of data applied 86,97686,131 (As received basis); 42,889 (Air dry basis)


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Description of

measurement methods

and procedures to beapplied:

Mass based measurements will be adopted. Adjustments would be made for

Moisture content in order to determine the quantity of dry biomass. The

quantity of biomass shall be measured in batches for the bark waste.If other type of biomass fuel besides bark waste is consumed, each shall bemonitored separately. Amount of biomass consumed shall be recorded monthly.

QA/QC procedures to be applied:

The measurements will be cross checked with an annual energy balance that is based on purchased quantities like sales receipts and stock changes. Furtherchecks will be conducted on the consistency of measurements ex post withannual data on energy generation, fossil fuels and biomass used and theefficiency of energy generation as determined ex ante.

Any comment: The data will archived for the entire crediting period and 2 years post crediting period.

Data / Parameter: NCVbiomass,k,y

Data unit: Kcal/kg

Description: Net calorific value of bark waste.


Lab test certificate

Value of data applied 2,184 (50% as received) – Dry – 4386 (Average of Acacia and Ecly) 2,184

Description ofmeasurement methods


Measurement of the NCV is based on dry biomass. The data will be measuredin laboratories according to relevant national/international standards.

Measurement shall be taken quarterly, taking at least three samples for eachmeasurement. The average value in the first year, shall be used for the rest ofthe crediting period.The consistency of the measurements shall be checked by comparing themeasurement results with relevant data sources (e.g. values in the literature,values used in the national GHG inventory) and default values by the IPCC. Ifthe measurement results will differ significantly from previous measurementsor other relevant data sources, additional measurements shall be conducted.

QA/QC procedures to be applied:

If other types of biomass are used, they would be monitored separately NCV is 2,184 (dry basis) and 4,386 Kcal/kg (Wet basis)

Any comment:

Data / Parameter: FCi,j,y

Data unit: m /yr

Description: Quantity of diesel combusted in diesel generators during the year y.


Onsite measurements

Value of data: 0

Description ofmeasurement methods

Diesel consumption will be measured using a flow meter or ruler gaugeattached to the diesel storage tank in order to determine the volume of diesel


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consumed.The flow meter or ruler gauge will be calibrated at least once every three years

and all measurements will be recorded and retained. The calibrations will beundertaken at standard operating conditions.

QA/QC procedures to

be applied:

Metered fuel consumption quantities will be cross-checked with available

purchase invoices from the financial records, as described in section B.7.2.

Any comment: Diesel consumption is expected to be negligible as the generators are only usedduring emergencies and start up.

B.7.2 Description of the monitoring plan:

The purpose of the monitoring plan is to ensure that the required data is monitored, recorded and storedappropriately to enable the calculation of the emission reductions achieved by the proposed projectactivity. ‘P.T. Korintiga Hutani ‘is responsible for the implementation of the monitoring plan.

Table B.8: CDM monitoring responsibilities

Position Outline of Responsibilities Reporting

ProjectDirector

Overall management of the CDM monitoring and to achieve boththe commercial goal and environmental goal.

Ensures ongoing compliance with the CDM monitoring plan.

Review the monitoring report prepared by the CDM Project

Manager for Management discussion and final approval.

Provides support on data management and assessing anydiscrepancies or non-conformance.

Reports to Projectmanagementteam and the

Board ofDirectors for P.T.Korintiga Hutani

CDMProjectmanager

Setting up Standard Operating Procedure and training plans forOperations and maintenance Team.

Responsible for the completeness and reliability of the data.

Responsible for carrying out meter calibration.

Reports to theProject Director

Project Management Team

(Project Director)

CDM Management Team(CDM Project Manager)

Operations and MaintenanceTeam

(Shift Supervisor)


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Reviews and approves quarterly Metered Net ElectricityGeneration reports.

Calculates Emission Reductions. Prepares the CDM Monitoring Report.

ShiftSupervisor

(Shift Based)

Operation of the overall power plant

Conducting sampling and checking test results

Responsible for monitoring measurements, and ensuring thatmeters are functioning correctly.

Supervises meter calibration requirements and preparation of the

Meter Calibration Report.

Oversees the collection, recording and storage of data.

Reports to theCDM ProjectManager

Proposed Monitoring Provisions

Training

All individuals that are to be involved in the CDM monitoring process will receive appropriate training to be conducted under the direction of P.T. Korintiga Hutani. The training will provide an overview of theCDM and will cover all elements of the monitoring plan in detail. A copy of the project monitoring planwill be made accessible to all training participants.

A record of all training undertaken will be included within the CDM Monitoring Report for eachmonitoring period.

Quali ty Assurance and Quali ty Control

The CDM Management team mentioned above will ensure proper and timely calibration as scheduled for

applicable monitoring instrumentation in accordance with the manufacturer’s specification of system,data acquisition and storage. The responsible person will also undertake regular follow ups to ensure datameasured is consistent.

Emergency Preparedness

The project activity is not expected to result in any emergency that can result in substantial emissions.The proposed project activity will develop the necessary provisions for emergency preparedness to dealwith any unforeseen events such as fire or an electrical blackout.

An emergency management procedure will be developed that will outlines steps to be followed toquantify emission reductions in the event of equipment or meter failures.

Uncertainty in Data and Data Management

Some uncertainties may result due to malfunction of meters, calibration issues and wrong data collection(gaps in manual log sheets, human errors by plant operators, electronic recording system failure, etc.).The operator is expected to put best efforts to prevent such errors, however regular internal checks shallrectify any such uncertainty in the monitored data.


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In the situation where an emergency causes unintended emissions, attempts will be to quantify theseemissions and summarized in a discrete section of the Monitoring Report.

The management of data records shall be kept both in soft copy and hard copy format with proper archivesystem by the CDM management team. All data should be electronically archived for a period of twoyears from the end of the crediting period.

B.8 Date of completion of the application of the baseline and monitoring methodology and the

name of the responsible person(s)/entity(ies)

Date of completion of the baseline development: 01/02/2012

Company Name: Perenia Pty Ltd

Email Address: [email protected] Contact AddressHead Office: Level 7, 111 Pacific Highway

North Sydney, NSW 2060Australia

Telephone Number: +61 2 9926 1700Fax Number: +61 2 9926 1799

Perenia Pty Ltd is not a project participant.

mailto:[email protected]:[email protected]:[email protected]


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SECTION C. Duration of the project activity / crediting period

C.1 Duration of the project activity:

C.1.1. Starting date of the project activity:

21/07/2011(Signing of Contract Agreement for Supply and Erection of KTH Biomass FPP (NO.KTH-DEC-002)

C.1.2. Expected operational lifetime of the project activity:

20 years 0 month14

C.2 Choice of the crediting period and related information:

C.2.1. Renewable crediting period

C.2.1.1. Starting date of the first crediting period:

Not applicable

C.2.1.2. Length of the first crediting period:

Not applicable

C.2.2. Fixed crediting period:

C.2.2.1. Starting date:

01/06/2013 or the date of registration, whichever occurs later.

C.2.2.2. Length:

10 years 0 month

14 http://www.rcogenasia.com/other-resources/frequently-asked-questions/

http://www.rcogenasia.com/other-resources/frequently-asked-questions/http://www.rcogenasia.com/other-resources/frequently-asked-questions/http://www.rcogenasia.com/other-resources/frequently-asked-questions/http://www.rcogenasia.com/other-resources/frequently-asked-questions/


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SECTION D. Environmental impacts

D.1. If required by the host Party, documentation on the analysis of the environmental impactsof the project activity:

The project activity has already completed the AMDAL in December 2010 which was consequentlyapproved by the Provincial Environmental Impact Management Agency.

The biomass waste used in the project activity is from the chipping mill. Feed material for the chippingmill is from the plantation belonging to the same project owner. The plantation is also under a process ofcertification for the Global Forest and Trade scheme under WWF. The appraisal was completed in

October 2011 and the draft report was made available. The certification is under the Korindo Groupcompany PT Korintiga Hutani. Environmental impacts possibly caused by the project activity are

analyzed as follows:

1. Impact on Micro Climate

During the construction process, land clearing will increase the atmospheric temperature and

decrease air humidity. This is caused by the opening of land for the chipping mill. The impactoccurred due to project activity is very small and insignificant, and would have occurred anyway dueto construction of the chipping mill.

2. Ambient Air Impact

Operation of power plant with biomass-fired boiler could potentially have an impact on air quality.

Combustion of biomass in power plant will generate waste-containing gases such as CO, SO2, NO2,Cl2 and elevate the level of dust in ambient air. Gas emissions from the operation of power plant fluegases contain particulates and scatter in the air moving freely in all directions thus expanding theimpact outside of the project boundary. Waste and flue gas dust concentration also fluctuatesaccording to frequency of activity, climatic conditions, the direction and speed of wind, and duringtransitions between night and day.

To minimize levels of contaminants that degrade the quality of air, PT.KH may apply the followingapproaches; using components for the power plant capable of not exceeding the quality standardsemission, ensuring that the emissions dust collector is equipped with emission control and safetydevices, installation of gauges on the stack emissions monitoring to ensure accuracy, and planting of

trees and shrubs.

3. Impact on Water Quality

The domestic wastewater will be treated by using aerobic pond before being discharged to river. PT.KTH will do the recycle of water cooling. Water then will be used again for cooling process.Therefore the impact on water usage of the project activity is small.

\4. Impact on Noise

There will be an increase in noise due to the operation of the power plant. Operation of power plantwith biomass-fired boiler has the potential to cause impacts to noise caused by generators. The range


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of noise levels that occur during these activities will decrease the quality of the environment. Highnoise levels as a result of the project activity engine generators and wood processing machines may

cause some impact on recipients, such as hearing loss and difficulty sleeping.

However, the noise arising as a result of the activity will only be potentially felt by the projectworkers. Outside the project area little disruption is expected due to noise because the settler populations are quite far from the noise source. Disruption felt by workers due to noise can be easilyresolved. This noise can be reduced by using protective equipment (ear plugs) for workers, periodicalmaintenance of the equipment, machineries, tools and other components of the power plant in orderto maintain low noise levels, planting trees around the power plant site and installing silencers on the building of the power plant.

5. Impact on Public Health

Once the power plant is operational, negative impacts on air quality if not managed properly can leadto health problems, in particular will increase the number of patients with respiratory disorders whichis the most common health problem suffered by the village community in Keluharan Kumai Huluand Desa Mulya Jadi. This condition if not managed properly may lower the quality of public health.The same measures for addressing air quality can be easily implemented by PT. KH, hence minimalimpact towards public health is expected.

The project activity is in compliance to applicable regulations and, as a small power plant, negativeenvironmental impacts are expected to be minimal.

D.2. If environmental impacts are considered significant by the project participants or the host

Party, please provide conclusions and all references to support documentation of an environmental

impact assessment undertaken in accordance with the procedures as required by the host Party:

Environmental impacts are not considered significant by the project participants or the Host Party.


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SECTION E. Stakeholders’ comments

E.1. Brief description how comments by local stakeholders have been invited and compiled:

An AMDALA public consultation forum15 was conducted by PT. Korintiga Hutani on 10 th August 2010,

in Balai Kelurahan Kumai Hulu Kecamatan Kumai Kabupaten Kotawaringin Barat. The project developersent invitation letters to the various identified stakeholders and the public were informed of the forum via

notices in the local newspapers. Finally, in order to remind the local residents on the forum, banners weredisplayed at the local settlements.

The meeting extensively discussed the development of the biomass power plant and use of biomass barkresidue from the chipping mill , forest cultivation, and potential use of energy generated. After the forum,an advert was placed in the local newspapers on 17

th August 2010

16, announcing that the AMDAL for the

project was open for public comment for a limited time.

Forty four (44) people attended the public consultation forum. The participants were invited to commenton the project during this event.

E.2. Summary of the comments received:

Overall, no negative comments or concerns were raised during the stakeholder meeting. Most of thequestions raised were concerning land clearance and overall impact on jobs and global warming. Thefollowing summarises the comments received during the stakeholder meeting :

The community welcomed this project in their area and hope it will help to improve job

opportunities and standard of living in the area. Will the land clearance for building and operation of the mill and power plant harm the

environment / cause water pollution. Are there any guidelines set up to control this?

E.3. Report on how due account was taken of any comments received:

The management of PT Korintinga Hutani responded to the comments by assuring that job position forthe locals will be created to run the day to day operations of the mill and biomass power plants. Otheropportunities may exist in setting up small provision shops, transport, food outlets for the employees

located at the site.

PT Kotintiga Hutani is required to follow the environmental guidelines set up by the EnvironmentalMonitoring Plan and assures the stakeholders that the guidelines are followed during the construction andoperation phase of the mill and biomass plant.

No other comments were received after the stakeholder meetings that required further actions.

15 Stakeholder meeting documents and attendance sheet (Doc 8.7 Meeting for initial environmental analysis Dec

2010)

16 Advert highlighting EIA open for public comments


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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

Organization: PT. Korintiga Hutani

Street/P.O.Box: Wisma Korindo, Jl. MT. Haryono Kav. 62,

Building: Wisma Korindo

City: Jakarta

State/Region:

Postfix/ZIP: 12780

Country: Indonesia

Telephone: +62 811 962 8927

FAX: +62 21 7976388

E-Mail: [email protected] or [email protected]

URL: www.korindo.co.id

Represented by:

Title: Senior Advisor

Salutation: Mr.

Last Name: Peck

Middle Name:

First Name: Kwangyul

Department: Management

Mobile: +62 811 962 8927

Direct FAX: +60 84 313328+62 21 7976388

Direct tel: +60 84 320200+62 21 7975959 ext 334

Personal E-Mail: [email protected]

Organization: Nordic Environment Finance Corporation ( NEFCO in its capacity as FundManager to the NEFCO Carbon Fund (NeCF)

Street/P.O.Box: Fabianinkatu 34, P.O. Box 249, Fl-00171

Building: -34

City: Helsinki

State/Region:

Postfix/ZIP: FI-00171

Country: Finland

Telephone: +358(0)10618003 10 618 003

FAX: +358(0)9630976 9 630 976 E-Mail:

URL: www.nefco.org/cff

Represented by: Ash Sharma

Title: Vice President, Head, Carbon Finance and Funds Unit .

Salutation: Mr.

Last Name: Sharma

Middle Name:

First Name: Ash

Department:

Mobile: +358 10 618 644

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://www.korindo.co.id/http://www.korindo.co.id/mailto:[email protected]:[email protected]:[email protected]://www.korindo.co.id/mailto:[email protected]:[email protected]


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Direct FAX: +358 9 630 976

Direct tel: -+ 358 10 618 644

Personal E-Mail: [email protected]


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Annex 2

INFORMATION REGARDING PUBLIC FUNDING

The financial plan for the project does not involve public funding from annex 1 countries


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Annex 3

BASELINE INFORMATION


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Annex 4

MONITORING INFORMATION

Please refer to section B.7


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Annex 5

General Guidance on leakage in biomass project activities.

Energy Production Calculation

Main Assumption

Parameter Units Value Source

Boiler Output SteamEnergy

kcal/kg 788.6 Heat Balance Diagram, Section 7.1, TechnicalSpecification

Boiler Steam Flow t/h 34.17 Heat Balance Diagram, Section 7.1, Technical

Specification

Feedwater Energy kcal/kg 135.4 Heat Balance Diagram, Section 7.1, TechnicalSpecification

Boiler efficiency % 86% Section 8.1 ,Technical Specification , June2011, (DCE_KTH_PS_001)

Energy required at boiler

input from biomasswaste

kcal/hr 25,953,307 Calculated

Fuel Lower HeatingValue as received

kcal/kg 2,184 Based on 50% Moisture content - as received(Section 8.1, Boiler performance data,Technical Specification)

Biomass wasteenergyrequired at boilerinput (as received basis)

kg/hr 11,883 Calculated

Power output MW 7.3 Heat Balance Diagram, Section 7.1, Technical

SpecificationMill operational hours per year

hr/yr 7,248 Calculated based on total mill operationalhours per annum

Biomass waste per

annum, dryas receive(wet) basis

Ton/yr 86,131 Calculated based on dryas received wood bark

waste and 2,184 kcal/kg as received LHV

Biomass waste perannum, wetair dry basis

Ton/yr 42,889 Calculated based on 50% moisture air dry basis

Specific FuelConsumption

Ton/MWh 1.63 Calculated

Electrical Efficiency % 24.2% Calculated

Theoretical Mass balance of biomass availability

Main Assumption

Parameter Units Value Source

Debarking ProcessCapacity

BDT / T/hr 236 As Per Project Design

Total wood used per year BDTT/yr 1,710,528 Calculated based on mill operational hours per year

Bark Shavings fromDebarking Process

BDT / T/hr 24 Based on chip mill mass balance diagram(10% of total wood processed.17%)


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Total Bark residueavailable

BDTT/yr 173,952 Based on mill operating hours per year and50% moisture as received

Total bark waste requiredin boiler as recieved basis

BDTT/yr 86,131 Based on boiler capacity, mill operationhours, and 50% moisture as received

Excess bark waste BDTT/yr 87,821 Calculated

Unit conversion http://www.globalwood.org/tech/tech_wood_weights.htm

1 GMT (Green MatricTonne) = 1.3262 m

3(Wood residues for chips, shavings, sawdust and bark)

1 BDT (Bone DryTonne) = 2.6525 m

3(Wood residues for chips, shavings, sawdust and bark)