project on ongc validation

7/31/2019 Project on ONGC Validation

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VALIDATION REPORT

DET

NORSKE

VERITAS

51 MWwind power projectof ONGC at Surajbari, Gujarat

in India

REPORT NO.2008-0065REVISION NO. 02


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DET NORSKE VERITASCERTIFICATION AS

Veritasveien 1,1322 HVIK, NorwayTel: +47 67 57 99 00Fax: +47 67 57 99 11http://www.dnv.comOrg. No: NO 945 748 931 MVA

Date of first issue: Project No.:

17-12-2008 PRJC-105320-2008-CCS-INDA roved by: Or anisational unit:

Michael Lehmann Climate Change ServicesClient: Client ref.:

Oil and Natural Gas Corporation Limited Mr. Ashok B. Chakraborty

Project Name: 51 MW wind power project of ONGC at Surajbari, Gujarat in IndiaCountry: IndiaMethodology: ACM0002Version: 07GHG reducing Measure/Technology: Grid connected renewable electricity generationER estimate: 85 762 t CO2 per year.Size

Large ScaleSmall Scale

Validation Phases:

Desk ReviewFollow up interviewsResolution of outstanding issues

Validation Status

Corrective Actions RequestedClarifications RequestedFull Approval and submission for registrationRejected

In summary, it is DNVs opinion that the 51 MW wind power project of ONGC at Surajbari,Gujarat in India, as described in the PDD, version 04 of 16 February 2010, meets all relevantUNFCCC requirements for the CDM and all relevant host Party criteria and correctly appliesthe baseline and monitoring methodology ACM0002 version 07. DNV thus requests theregistration of the project as a CDM project activity.

Re ort No.: Date of this revision: Rev. No. Key words:

2008-0065 2010-02-22 02

Re ort title:

51 MW wind power project of ONGC atSurajbari, Gujarat in India in India

Climate ChangeKyoto ProtocolValidation

Clean Development Mechanism

Work carried out by:Shivraj Sharma, G. Murali,Ravi Kumar Prabhu

No distribution without permission from

the Client or responsible organisational unit

Work verified by:

Limited distributionKakaraparthi Venkata Raman (Draft)Anjana Sharma (Final)

Unrestricted distribution


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DNV report No: 2008-0065, rev. 02

VALIDATION REPORT

Page i

Abbreviations

BM Build MarginCAR Corrective Action RequestCDM Clean Development MechanismCEA Central Eclectricity AuthorityCEF Carbon Emission FactorCER Certified Emission ReductionCL Clarification requestCO2 Carbon dioxideCO2e Carbon dioxide equivalentCM Combined MarginCUF Cost Utilization FactorDNV Det Norske Veritas Certification AS

DNA Designated National AuthorityDPR Detailed Project ReportEB Executive BoardEPC Engineering, Procurement and ConstructionGEDA Gujarat Energy Development agencyGETCO Gujarat Energy Transmission Corporation Ltd.GHG Greenhouse gas(es)GWP Global Warming PotentialGWh Giga Watt HourIRR Internal Rate of ReturnIPCC Intergovernmental Panel on Climate ChangekWh Kilo Watt hourMW Mega WattMP Monitoring PlanNGO Non-governmental OrganizationODA Official Development AssistanceO&M Operation and MaintenanceOM Operating MarginONGC Oil and Natural Gas Corporation Ltd.PDD Project Design DocumentPLF Plant Load FactorPPA Power Purchase AgreementSEL Suzlon Energy Limited

UNFCCC United Nations Framework Convention on Climate ChangeWEG Wind Energy Generators


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Page ii

TABLE OF CONTENTS

1 EXECUTIVE SUMMARY VALIDATION OPINION ..................... .....................1

2 INTRODUCTION ....................................................................................................2

2.1 Objective 2

2.2 Scope 2

3 METHODOLOGY ...................................................................................................3

3.1 Desk Review of the Project Design Documentation 3

3.2 Follow-up Interviews with Project Stakeholders 5

3.3 Resolution of Outstanding Issues 5

3.4 Internal Quality Control 7

3.5 Validation Team 7

4 VALIDATION FINDINGS ......................................................................................8

4.1 Participation Requirements 8

4.2 Project Design 8

4.3 Baseline Determination 9

4.4 Additionality 10

4.5 Monitoring 15

4.6 Estimate of GHG Emissions 16

4.7 Environmental Impacts 16

4.8 Comments by Local Stakeholders 16

4.9 Comments by Parties, Stakeholders and NGOs 16

Appendix A: Validation Protocol

Appendix B: Certificates of Competence


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1 EXECUTIVE SUMMARY VALIDATION OPINIONDet Norske Veritas Certification AS (DNV) has performed a validation of the 51 MW wind

power project of ONGC at Surajbari, Gujarat in India. The validation was performed on the

basis of UNFCCC criteria for the Clean Development Mechanism and host Party criteria, as

well as criteria given to provide for consistent project operations, monitoring and reporting.

The review of the project design documentation and the subsequent follow-up interviews have

provided DNV with sufficient evidence to determine the fulfilment of stated criteria.

The host Party is India and project participant is Oil and Natural Gas Corporation Ltd

(ONGC). No Annex I Party is involved in the project at this stage. The Host Party India fulfils

the participation criteria and has approved the project and authorized the project participant.

The DNA of India confirmed that the project assists in achieving sustainable development.

The project correctly applies ACM0002 Consolidated baseline methodology for grid

connected electricity generation from renewable sources, version 7. The project involves

generation of renewable energy by installing wind turbine generators (WTGs), which will

displace the electricity generation in the fossil fuel dominated Western regional grid of India,

thereby resulting in the reduction of GHG emissions that are real, measurable and give long-

term benefits to the mitigation of climate change.

It is demonstrated that the project is not a likely baseline scenario. Emission reductions

atributable to the project are hence additional to any that would occur in the absence of the

project activity.

The total emission reductions from the project are estimated to be on the average 85 762 tCO2e per year over the selected 7 year renewable crediting period. The emission reduction

forecast has been checked, and it is deemed likely that the stated amount is achieved given

that the underlying assumptions do not change.

The monitoring plan makes sufficient provision for monitoring relevant project and baseline

emission indicators. Detailed responsibilities and authorities for project management,

monitoring and reporting and QA/QC procedures have also been addressed.

In summary, it is DNVs opinion that the 51 MW wind power project of ONGC at Surajbari,

Gujarat in India, as described in the PDD, version 04 of 16 February 2010, meets all

relevant UNFCCC requirement for the CDM and all relevant host Party criteria and

correctly applies the baseline and monitoring methodology ACM0002, version 7. DNV thus

requests the registration of the project as a CDM project activity.


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2 INTRODUCTIONOil and Natural Gas Corporation Ltd. has commissioned Det Norske Veritas Certification AS(DNV) to perform a validation of the 51 MW wind power project of ONGC at Surajbari,

Gujarat in India (hereafter called the project). This report summarises the findings of the

validation of the project, performed on the basis of UNFCCC criteria for the CDM, as well as

criteria given to provide for consistent project operations, monitoring and reporting.UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and

procedures and the subsequent decisions by the CDM Executive Board. This revised

validation report addresses the corrections required by the CDM Executive board in decision44 (aa) of the EB 52 meeting report.

2.1 Objective

The purpose of a validation is to have an independent third party assess the project design. Inparticular, the project's baseline, monitoring plan, and the projects compliance with relevant

UNFCCC and host Party criteria are validated in order to confirm that the project design, as

documented, is sound and reasonable and meets the identified criteria. Validation is arequirement for all CDM projects and is seen as necessary to provide assurance tostakeholders of the quality of the project and its intended generation of certified emission

reductions (CERs).

2.2 ScopeThe validation scope is defined as an independent and objective review of the project designdocument (PDD). The PDD is reviewed against the criteria stated in Article 12 of the Kyoto

Protocol, the CDM modalities and procedures as agreed in the Marrakech Accords and the

relevant decisions by the CDM Executive Board, including the approved baseline andmonitoring methodology ACM0002 version 07.

The validation is not meant to provide any consulting towards the project participants.

However, stated requests for clarifications and/or corrective actions may have provided inputfor improvement of the project design.


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3 METHODOLOGYThe validation consisted of the following three phases:

I a desk review of the project design documents

II follow-up interviews with project stakeholders

III the resolution of outstanding issues and the issuance of the final validation report and

opinion.

The following sections outline each step in more detail.

3.1 Desk Review of the Project Design Documentation

The following table lists the documentation that was reviewed during the validation:/1/ ONGC: CDM-PDD version 1 dated 8 April 2008, version 3 dated 22 June 2009 and

version 4 dated 16 February 2010

/2/ CDM Executive Board: Validation and Verification Manual. Version 01

/3/ CDM Executive Board: ACM0002, Consolidated baseline methodology for grid connectedelectricity generation from renewable sources, version 7

/4/ CDM Executive Board: Tool for the demonstration and assessment of additionality,

version 05.2.

/5/ DNA of India:Letter of Approval dated 17 April 2009

/6/ CEA: CO2Baseline Database for the Indian Power Sector dated 12 December 2007,

www.cea.nic.in

/7/ MoEF: Notification on requirement of environmental clearance, dated 14 September2006

/8/ ONGC: Notification of Award for purchase of 34 numbers of WEGs issued to Suzlon,

dated 6 November 2007

/9/ ONGC: Inviting quotations for turnkey supply of wind power project in Gujarat on 30March 2007

/10/ ONGC: Inviting tenders for CDM consultancy services, 3 July 2007

/11/ ONGC: Internal office memo on approval of the project and demonstrating CDM

awareness, 26 October 2007.

/12/ ONGC: Letter of Award to consultants "Deloitte for the CDM development of wind

power project in Gujarat, 26 October 2007.

/13/ ONGC: Awarding contracts for land lease, civil and electrical works, erection and

commissioning, 4 January 2008

/14/ GEDA: Permission for power transmission, 24 March 2008.

/15/ GEDA: Commissioning certificates of WEGs, dated 16 April 2008, 12 June 2008,and

23 October 2008,

/16/ GETCO: Agreement with ONGC for wheeling of power to installations in the state of

Gujarat, 27 May 2008.

/17/ ONGC: Invitation of tender for CDM validation of the project, 6 June 2008.

/18/ ONGC: Public notice regarding stakeholder consultation in Kutch Mitra, a local

newspaper, 9 August 2008.

/19/ ONGC: MOM of Stake holder consultation at the project site, 18 August, 2008.


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/23/ ONGC order on benchmark No. MUM/PAS/PROJ/APPR/RR/2007 dated June 11,

2007/24/ SBI: Letter issued by Assistant General Manager dated 23 November 2008 regarding

interest rates for advances for the period of March 1992 to December 2008.

/25/ ONGC: Contract awarded to Suzlon Energy Limited for operation and maintenance of

wind mills dated 28 April 2009.

/26/ Uttar Gujarat Vij Company Limited: Electricity bill for supply of power to ONGC

installation dated 20 March 2007, proof for tariff.

/27/ Gujarat government Wind power policy 2007

/28/ ONGC: Estimated energy generation worked out by the independent consultants for the

bids received

/29/ ONGC letter of 13 September 2008 on price bid opening for WEGs/30/ http://www.windpowerindia.com/statest.html

/31/ ONGC: IRR spreadsheet calculations

/32/ ONGC: Test certificates of energy meters by Secure Meters Limited, dated 7 November

2007.

/33/ CEA web site: Data on hydropower stations in India

http://www.cea.nic.in/hydro/List%20of%20HE%20Stations%20in%20the%20country.pdf

/34/ GEDA: Availability of biomass in the state of Gujarat and potential for power

generation: http://www.geda.org.in/bio/bio_summarybiomass.htm

/35/ Ministry of new and renewable energy: Cost of solar energy

http://mnes.nic.in/press-releases/press-release-21042008-2.pdf/36/ ONGC: Policy on climate change and sustainability, approved by the executive

committee of the Board, dated 2 October 2007.

/37/ ONGC: Project cases, wherein internal benchmark was applied - Re-development ofMumbai High North Phase dated 24 November 2008 and Expenditure Sanction for

replacement of 12 OSV's 15 June 2007 and "Tender No L26BC07013 for construction

of water injection plant at GGS-I, Nambar, A&AA basin, Jorhat dated 18 December

2008

/38/ GERC: Tariff order for Gujarat Vij Company Limited, Case number 945 of 2008 dated

17 January 2009.

/39/ The, Directory Indian Wind Power 2007,

/40/ GEDA: Windfarm generation report of Gujarat for the year 2005-06 & 2006-07

http://geda.org.in/pdf/wind/Windfarms-PowerGeneration.pdf

/41/ UNEP Risoe Centre: Data base of CDM projects CDMpipeline.xls

/42/ ONGC: Annual report for 2007-08.

/43/ Department of Public Sector Enterprises: Revised scales of pay of board and below

board level executives in Central Public Sector Enterprises.

http://dpe.nic.in/newgl/glch04a23.pdf

/44/ Indian Income Tax Act 1961: Section 32 (Rule 5) Appendix 1 and Section 80-1A,

paragraph 2.0.

/45/ GERC: Tariff orders

http://www.gercin.org/docs/Orders/Tariff%20Orders/Year%202006/ugvcl.zip, http://www.gercin.org/docs/Orders/Tariff%20Orders/Year%202007/Tariff%20order-


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3.2 Follow-up Interviews with Project Stakeholders

On 3 December 2008 DNV performed the site visit (Surajbari and Jakhav) with projectstakeholders to confirm selected information and to resolve issues identified in the documentreview. Representatives of ONGC, Suzlon, and Deloitte were interviewed. The main topics of

the interviews are summarized below.

Name Interview Topics

/47/ ONGC

Mr. Ratendra Kumar, SE(M)

Mr. Satendra Mohan, SE(P)

SUZLON

Mr. Dwijal Mamtora, Senior

Executive, Marketing

Mr. S.K. Behena, Deputy Manager

(O&M)

Deloitte

Mr. Vivek. P. Adhia, SeniorConsultant

Host country approval Emission reduction calculations and CEA

data used

Baseline selection Training and maintenance schedule

Additionality and financial analysis

Proof for CDM consideration Start date of the project

Stakeholder consultation

3.3 Resolution of Outstanding IssuesThe objective of this phase of the validation was to resolve any outstanding issues which

needed be clarified prior to DNVs positive conclusion on the project design. In order to

ensure transparency a validation protocol was customised for the project. The protocol showsin a transparent manner the criteria (requirements), means of verification and the results from

validating the identified criteria. The validation protocol serves the following purposes:

It organises, details and clarifies the requirements a CDM project is expected to meet;

It ensures a transparent validation process where the validator will document how aparticular requirement has been validated and the result of the validation.

The validation protocol consists of three tables. The different columns in these tables are

described in the figure below. The completed validation protocol for the 51 MW wind power

project of ONGC at Surajbari, Gujarat in India is enclosed in Appendix A to this report.

Findings established during the validation can either be seen as a non-fulfilment of CDMcriteria or where a risk to the fulfilment of project objectives is identified. Corrective action

requests (CAR) are issued, where:

i) mistakes have been made with a direct influence on project results;

ii) CDM and/or methodology specific requirements have not been met; oriii) there is a risk that the project would not be accepted as a CDM project or that emission

reductions will not be certified.

A request for clarification (CL) may be used where additional information is needed to fully

clarify an issue.


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Validation Protocol Table 1: Mandatory Requirements for CDM Project Activities

Requirement Reference Conclusion

The requirements the

project must meet.

Gives reference to the

legislation or

agreement where the

requirement is found.

This is either acceptable based on evidence provided (OK), a

Corrective Action Request (CAR) of risk or non-compliance

with stated requirements or a request forClarification (CL)

where further clarifications are needed.

Validation Protocol Table 2: Requirement checklist

Checklist Question Reference Means of

verification (MoV)

Comment Draft and/or Final

Conclusion

The various

requirements in Table 2

are linked to checklistquestions the project

should meet. The

checklist is organised in

different sections,

following the logic of the

large-scale PDD

template, version 03 - in

effect as of: 28 July

2006. Each section is

then further sub-divided.

Gives

reference to

documentswhere the

answer to

the checklist

question or

item is

found.

Explains how

conformance with

the checklistquestion is

investigated.

Examples of means

of verification are

document review

(DR) or interview

(I). N/A means not

applicable.

The section is

used to elaborate

and discuss thechecklist question

and/or the

conformance to

the question. It is

further used to

explain the

conclusions

reached.

This is either acceptable

based on evidence

provided (OK), or acorrective action request

(CAR) due to non-

compliance with the

checklist question (See

below). A request for

clarification (CL) is used

when the validation team

has identified a need for

further clarification.

Validation Protocol Table 3: Resolution of Corrective Action and Clarification Requests

Draft report clarifications

and corrective action

requests

Ref. to checklist

question in table 2

Summary of project

owner response

Validation conclusion

If the conclusions from the

draft Validation are either

a CAR or a CL, these

should be listed in this

section.

Reference to the

checklist question

number in Table 2

where the CAR or CL is

explained.

The responses given by

the project participants

during the

communications with the

validation team should

be summarised in this

section.

This section should summarise

the validation teams

responses and final

conclusions. The conclusions

should also be included in

Table 2, under Final

Conclusion.

Figure 1 Validation protocol tables


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3.4 Internal Quality Control

The validation report underwent technical review. The technical review was performed by atechnical reviewer qualified in accordance with DNVs qualification scheme for CDMvalidation and verification.

3.5 Validation TeamRole/Qualification Type of involvement

Last Name First Name Country Deskr

eview

Sitevi

sit/Interviews

Reporting

Superv

isionofwork

Technicalreview

Expert

input

Project Manager/

CDM validator

Govindarajulu

Kaliaperumal

Murali India

GHG auditor Prabhu Ravi Kumar India GHG auditor Sharma Shivraj India

TechnicalReviewer (Draft)

Kakaraparthi VenkataRaman

India

TechnicalReviewer (Final)

Sharma Anjana India

The qualification of each individual validation team member is detailed in Appendix B to this

report.


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4 VALIDATION FINDINGSThe findings of the validation are stated in the following sections. The validation criteria(requirements), the means of verification and the results from validating the identified criteria

are documented in more detail in the validation protocol in Appendix A.

The final validation findings relate to the project design as documented and described in therevised and resubmitted project design documentation, version 03, 16 February 2010.

4.1 Participation Requirements

The project participant is the public sector undertaking Oil and Natural Gas Corporation

Ltd. of the host Party India. Host Party India meets all the requirements for participating in a

CDM project. The Ministry of Environment and Forests, the DNA of India has approved theproject with a letter of approval dated 17 April 2009 /5/, which also confirms that the project

assists in achieving sustainable development in India. No Annex I Party has yet beenidentified for the project.

The validation did not reveal any information that indicates that the project can be seen as a

diversion of official development assistance (ODA) funding towards India.

4.2 Project DesignThe project activity is the installation of 34 Wind Electricity Generators (WEGs) of 1500kWaggregating to an installed capacity of 51 MW. The entire power generated from the wind

farm is being exported to the Gujarat state grid which is a part of the western regional

electricity grid. The power generated by the project will be wheeled through the grid tovarious installations of ONGC within the state of Gujarat to meet the power requirements of

these installations.

All the WEGs installed under the project are supplied by Suzlon. The installation,

commissioning, operation and maintenance of the WTGs are in the scope of M/s Suzlon. The

technology used in the project activity is indigenously available in India and no transfer of

technology is envisaged. Proposed project is expected to export 95.56 GWh per year after 4%wheeling charges, at a plant load factor (PLF) of 22.28%. The power generated from the

project is wheeled through the state grid which is part of the western regional grid thereby

replacing an equivalent amount of fossil fuel based power generation. Therefore, the project

activity results in an equivalent amount of CO2 emission reduction which otherwise wouldhave resulted from fossil fuel combustion. The power generated by the project will be used to

meet the power consumption of various ONGC installations in Gujarat, which are presentlyconsumers of the local grid.

The expected operational lifetime of the project technology is 20 years, which has been

verified from the inter office memo of ONGC /11/ and is deemed reasonable for a new windmill. The starting date of the project activity has been indicated as 6 November 2007 which is

the date of the purchase order for supply of the 34 Suzlon make 1500 KW WEGs/8/.

The project has selected a renewable crediting period of 7 years starting from the date of

registration of the project, which is expected to be 1 November 2009. The project is estimatedto reduce 85 762 t CO2e per year for the duration of the crediting period chosen.


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4.3 Baseline Determination

The project applies the approved consolidated baseline methodology ACM0002, version 7titled Consolidated baseline methodology for grid-connected electricity generation fromrenewable sources/3/. The methodology is applicable to the project since the project activity

involves grid-connected wind energy generation and the geographic and system boundaries

for the relevant electricity grid can be clearly identified and information on the characteristicsof the grid is available.

Four alternatives to the project activity have been considered as the baseline scenario. These

arei) project activity without CDM benefits;

ii) continuation of current scenario of power generation from existing grid-connected

power plants;

iii)

project activity based on other renewable energy sources like hydropower, solarenergy and biomass

iv) The proposed project activity is taken up as a fossil fuel based project.

Alternative i) - Project activity without CDM revenue is a potential baseline scenario.

Alternative ii) - Continuation of current scenario i.e. generation of same amount ofelectricity in the state grid does not involve any investment neither face any barrier and

hence, is an attractive option in the absence of project activity.

Alternative iii) PP has carried out analysis of power generation units based on renewable

energy sources and the results are as follows:a) Hydropower generation: The state of Gujarat lacks hydro resources for setting up

small and medium scale hydropower plants. According to the data published by CEA/33/, there are only 5 hydropower stations in Gujarat, all of them with installed

capacities of 240 MW and above.

b) Biomass based power generation: According to report of Gujarat Energy DevelopmentAgency (GEDA) /34/ the installed capacity of the biomass based power projects in the

state is only 0.5 MW and the report also indicates that it is not feasible to transport the

biomass to faraway locations. Based on the above mentioned statements it has beenverified that the availability of surplus biomass in the state is limited to support power

plants. .

c)

Solar Energy based power generation: The solar power generation is yet to gainground in the country because of the high cost. According to the data available in theministry of new and renewable energy website, the cost of setting up 1MW solar plant

is in the range of INR 160 to 200 million and the generation cost is around INR 12 to

15 per unit /35/Based on the above analysis, none of the renewable energy based power generation units

can be considered as credible alternatives for the project developer in the absence of

project activity.

Alternative iv) - Fossil fuel based power generation unit: The fossil fuel based power plant

was not considered by PP because of its commitment to develop alternative energy

sources. ONGCs Policy on climate change and sustainability /36/ states that We shalldevelop and invest in advanced low carbon technologies to meet growing demand for

affordable energy products while improving security of supply and reducing


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Thus alternatives iii) and iv) are eliminated due to the non-availability of other renewable

sources in Gujarat and the commitment of the project proponent to take up environmentfriendly and pollution free energy production, respectively.

This leaves only alternates i) and ii) for further analysis. Both alternatives are in

compliance with the laws and regulations of India and might be considered as baseline

scenarios. However, as discussed in the section 4.4. below, the proposed project activity(without CDM income alternative i) faces barriers compared to other alternative i.e.

continuation of current practice (alternative ii) which does not require any investment.

Hence, alternative (ii) has been selected as a baseline scenario. The selected baseline

scenario is also in line with the approved baseline methodology ACM0002.

DNV considers the list of realistic and credible alternatives to be complete.

As the project activity supplies electricity to the Gujarat state electricity grid which forms a

part of the western region electricity grid, the baseline for this project activity is a function ofthe generation mix of the western region grid. The selection of the western region grid as the

grid system boundary for the project activity is in line with the EB guidance for large

countries such as India. In line with the guidance provided in the methodology, the weightsfor OM and BM have been taken as 75:25. The OM emission factor in the CEA database is

calculated ex-ante using the simple OM approach based on the generation-weighted average

emissions per electricity unit over a three year period of 2004-2005, 2005-2006 and 2006-2007. The BM emission factor is calculated ex-ante based on 20% most recent capacity

additions in the grid based on net generation as described in ACM0002 version 07. The

operating margin has been determined to be 0.99 kg CO2e/kWh and the build margin to be0.59 kg CO2e/kWh. Taking the weight of OM:BM as 75:25, the combined margin emission

coefficient for the western grid of India has been calculated at 0.89 kg CO2e/kWh. These

values have been sourced from data by the Central Electricity Authority (CEA) of the

Ministry of Power, Government of India /6/.

CEA has published a database of carbon dioxide emission factors from the power sector in

India based on detailed authenticated information obtained from all operating power stationsin the country. This CO2 baseline database provides information about the OM and BM

factors of all the regional electricity grids in India. DNV confirms that the database is an

official publication of the Government of India for the purpose of CDM baselines. Theselected sources and gases are justified for the project activity.

4.4 AdditionalityThe additionality of the project activity is demonstrated using the Tool for demonstration of

additionality, version 5. /4/

4.4.1 CDM consideration and continued action to secure CDM statusThe chronology of events and the evidences provided to demonstrate the prior consideration

of the CDM and the real and continued actions undertaken to secure CDM status are given

below:

CDM was seriously considered in the decision to proceed with the project activity inaccordance with EB41 annex 46 and was evidenced through the four activities listed below


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c) Internal office memo of ONGC demonstrating CDM awareness, 26 October 2007 /11/.

d) Letter of Award to consultants "Deloitte" for the CDM development of wind powerproject in Gujarat, 26 October 2007 /12/.e) Notification of Award (NoA) for purchase of 34 numbers of WEGs issued to Suzlon /8/

on 6 November 2007, which is the start date of the project.

Efforts to secure CDM status in parallel with the physical implementation was shown by thefollowing sequence that was consider satisfactory by DNV:

a) Awarding contract for land lease, civil and electrical works, erection and

commissioning, 4 January 2008 /13/.b) Permission from GEDA for power transmission, 24 March 2008 /14/.

c) Commissioning of first set of WEGs, 4 April 2008 /15/

d)

Agreement with GETCO for wheeling of power to various installations of ONGC inGujarat, 27 May 2008 /16/.

e) Invitation of tender for CDM validation of the project, 6 June 2008 /17/.

f) Public notice in local newspaper on stakeholder consultation, 9 August 2008 /18/.

g) Stake holder consultation at the project site, 18 August, 2008 /19/.h) Commissioning of last set of WEGs, 29 September 2008 /15/.

i) Notification of award (NOA) for CDM validation the project 27 October 2008 /20/.

j) Host Country Approval meeting at the National CDM authority, New Delhi on 17November 2008./21/.

k) Start of validation (global stakeholder consultation) on 4 November 2008.

l) Receipt of host country approval, 17 April 2009 /5/.

4.4.2 Identification of alternatives to project activityTwo alternatives to the project activity have been considered as the baseline scenario. These

are i) project activity without CDM benefits and ii) continuation of current scenario of power

generation from existing grid-connected power plants. Both alternatives are in compliancewith the laws and regulations of India and might be considered as baseline scenarios.

However, as discussed in the following sections of this report, the project without CDMbenefits faces barriers in implementation.

4.4.3 Investment analysis: Choice of approachTo demonstrate the additionality of the project, the project proponent has calculated the IRR

of the project for a period of 20 years.The project generates revenues without CDM and the alternative of grid based electricity

generation does not involve any investment on the part of the project participant. Therefore, a

benchmark analysis is considered suitable for demonstrating the additionality of the project.

4.4.4 Investment analysis: Benchmark selectionONGC being a government of India public sector undertaking has an established benchmark

of 12 % post tax return on the investment for the development projects, according to ONGC

order No. MUM/PAS/PROJ/APPR/RR/2007 dated June 11, 2007 /23/. This internalbenchmark has been consistently applied by the project participant for other projects also.

This has been verified by DNV in project casesRe-development of Mumbai High North Phase

dated 24 November 2008/37/ andExpenditure Sanction for replacement of 12 OSV's 15 June2007 internal benchmark was used for acceptance of projects and project case "Tender NoL26BC07013 for construction of water injection plant at GGS-I, Nambar, A&AA basin,


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The lending rate of the largest bank in India State Bank of India (SBI) at the time of taking

decision to go ahead with the project was 12.75% /24/. The internal benchmark of ONGC istherefore deemed to be conservative when compared with the applicable bank lending rate atthe time of decision making for the project. The applied benchmark is thus comparable to the

benchmark that would apply to a different entity potentially developing this project.

4.4.5 Investment analysis: Input parameters

DNV has verified the input parameters for the financial analysis, which were mainly sourced

from the approval note of the 51 MW wind energy project of Oil and Natural Gas CorporationLtd. (ONGC) dated 26 October 2007 /11/, submitted to the management of ONGC. The

investment decision of the project activity was taken by the management comprising of the

General Manager (Finance & Accounts), the Executive Director (Corporate Finance) and theDirector (Finance). The note elaborates in detail the project activity parameters like the total

project cost, O&M cost and the internal rate of return (IRR). The ultimate approval for the

project was provided by the Chairman and Managing Director on 26 October 2007, based onthe recommendation of the above mentioned management team.

The input parameters used in the investment analysis has been sourced from the approval

note, and has been cross checked with publicly available sources and actual invoices, in line

with paragraph 109 of the VVM.

Input parameter

used in the

financial analysis

Source of input value used by

DNV for verification

Source of input value used by

DNV for cross checking

Project cost Project approval note /11/ Notification of award of contract to

Suzlon dated 6 November 2007

(project starting date) /8/.

O&M costs Project approval note /11/ O&M contract entered into between

ONGC and Suzlon Energy Limiteddated 28 April 2009 /25/.

Cost of 2 ONGC

officers for project

supervision

Project approval note /11/ Revised scales of pay of board and

below board level executives in

Central Public Sector Enterprises,from the official website of

Department of Public SectorEnterprises /43/.

GEDA certification

fee and lease rental

Project approval note /11/ Notification of award of contract to

Suzlon dated 6 November 2007 /8/.

Tax benefits:

Accelerateddepreciation @ 80%

& Corporate tax @

33.99%

Project approval note /11/ Indian Income Tax Act 1961,

Section 32 (Rule 5) Appendix 1 andSection 80-1A, paragraph 2.0 /44/.

PLF of 22.28% Project approval note /11/ Report of the third party consultant

/28/, engaged by ONGC for

evaluation of offers received againstopen tender call. This is in line with

the guidance on PLF, EB 48


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VALIDATION REPORT

company). The estimated PLF as

suggested by the consultant wasused in the commercial evaluation

of the offers received.

4% Wheeling

charges

Gujarat government wind power

policy 2007

Gujarat government wind power

policy 2007 /27/.

Tariff Project approval note Electricity bill of ONGC for the

month of October 2007 /26/.

The incentives in the form of accelerated depreciation and tax holidays from the Governmentof India for the renewable energy projects have been taken into consideration for the financial

analysis. The estimates of project cost and O&M costs were further verified from the actual

costs incurred from the following documents and deemed appropriate. Contracts for supply of the equipments for verification of equipment cost /8/

Contracts for erection and commissioning /13/

Contracts for operation and maintenance, for verification of O&M costs /25/

The input parameters were verified to be valid at the time of decision making and hence inline with the VVM requirements, and section 6 of the Guideline on Investment Analysis, EB

41 Annexure 45, which states the Input values used in all investment analysis should be valid

and applicable at the time of the investment decision taken by the project participant.

4.4.6 Investment analysis: Calculation and conclusionThe IRR calculations were provided in a spreadsheet and verified by DNV. The project IRR

was verified to be 10.59% which is less than the benchmark IRR of 12%. The assumptionsand the source documents used for the financial calculations have also been verified. Theproject IRR increases to 12.69% with CDM benefits and thus makes the project feasible.

4.4.7 Investment analysis: Sensitivity analysisA sensitivity analysis has been carried out for the parameters PLF, project cost, operational

cost and tariff which contribute to more than 20% of revenues or costs to check the robustnessof the financial analysis. The level of variation assumed for the sensitivity analysis has been

suitably justified with relevant documents pertaining to the presented analysis and has been

verified by DNV, such as

The basis for the assumed annual electricity generation/ plant load factor (PLF) of

22.28% in the PDD is based on the estimated generation figures of the machinesprovided by the machine supplier, and ratified by the external independent consultant

/28/ engaged by ONGC for evaluation of bids received against the tender for windmills. It was observed that with an increase of 10%, the plant load factor works out to

be 24.5 % and the project IRR of 12.73% is crossing the benchmark of 12.0%.

The PLF used in the financial analysis is sourced from the third party (MP Wind farms

Limited) assessment of the wind potential in the region /28/. The PLF was also usedfor evaluating the various offers received by ONGC against the open tender call. DNV

has verified the third party assessment report and the letter informing the bidders that

the estimated PLF will be the basis for the evaluation of the tender. Thus the PLF of

the project activity is in line with the guidance on PLF as per paragraph 4 and 5 of

Annex 11, EB 48.

DNV has also cross checked the PLF against the Gujarat Electricity Regulatory

5


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25.68% respectively, a standard CUF of 23% is stated for all the wind energy projects

in Gujarat for tariff calculation.DNV has also verified from the Directory Indian Wind Power 2007 /39/, Page 50

which reports the annual average power generation in four locations in Gujarat (Dhankin district Rajkot, Kalyanpur, Lamba and Navadra in district Jamnagar), that the

highest CUF is 14.5%. The report is attached as Annex II to this response. Further,

DNV has verified the wind-farm generation report for the year 2006-07 from theofficial web site of Gujarat energy development authority (GEDA) /46/, which states

the average capacity utilization of wind mills in Gujarat during 2006-07 to be 9% with

the highest at 18.8 % in the Kutch district where the project activity is located. The

figures for the year 2005-06 given in the report for locations in Kutch are still lower.DNV has concluded that a variation of +10% from 22.28% is unlikely after scrutiny of

the above mentioned data.

Hence it is DNVs opinion that the selection of the PLF of the project activity of

22.28%, which a) has been estimated by third party consultants, b) has been the basisfor the evaluation of the offers and c) the financial analysis, is reasonable.

The project has been contracted on a turn key basis to Suzlon Energy Limited by theproject proponent ONGC Ltd. /13/&/25/. It was also observed that if the project costgoes down by 10% then the IRR touches the benchmark of 12.0%. However, this is

not a likely scenario in DNVs opinion as the project has been contracted on a turn key

basis and the project cost is not likely to have any increase or decrease. The turn key

price of INR 3072.8 million constitutes 98.6% of the total project cost, which points tothe fact that 10% reduction in project cost is not plausible.

It was also observed that if the O&M cost goes down by 10% then the IRR touches thebenchmark of 12.0%. ONGC has signed a long term fixed rate O&M contract with

Suzlon for a period of 20 years /25/ and the same rates were used for financial

analysis. Therefore, any chances of reduction in O&M costs is not plausible

The applicable industrial tariff of INR 4.05 + 15% surcharge for ONGC at the time ofdecision making has been used in the investment analysis of the project activity. This

has been verified from the energy bill for the month of October 2007 from Uttar

Gujarat Vij Company Ltd.

The HT industrial consumer tariff for the period from 2002-03 to 2010-11 as per thetariff orders of GERC sourced from their official web site /45/ is stated hereunder:

- For the years 2002-03, 2003-04, 2004-05 and 2005-06: INR 4.10

- For the year 2006-07 and 2007-08: INR 4.05- For the year 2008-09, 2009-10 and 2010-11: INR 4.15

The tariff trend in Gujarat over the period of 9 years from 2002-03 to 2010-11 showsthat the increase in tariff for the period is only 1.22%. Since the industrial tariff in

Gujarat is one of the highest in India and a number of large scale power plants with

better efficiency are due for commissioning in the near future, the tariff increase infuture is expected to be small and no significant changes are expected. Based on the

assessment of the above mentioned sources, it was DNV opinion that the increase in


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Comment by:

Accredited NGO Party StakeholderInserted on:

Subject:

Comment:

1. As the PDD clearly states that the power will be wheeled to different assests of ONGC the

benchmark used in the PDD is not applicable. Please refer to Additionality tool version 05 that states

that "Only in the particular case where the project activity can be implemented by the project

participant, the specific financial/economic situation of the company undertaking the project activity

can be considered". As the same wind based energy can be supplied by other party to ONGC internal

benchnmark cannot be applied. DOE is requested to check the suitability of benchmark during

validation process.

2. The power tariff has been taken as 4.05 Rs/kWh. Is the basis of this value taken from PPA? If yesthan it is not correct value applied for financial analysis. As wind energy supplied to ONGC assestsand it is displacing the assest electricity the cost of electricity to the assests have to be used in financial

analysis. DOE is requested to check the basis of this parameter in financial analysis.

3. As per the latest guidance on investment analysis the sensitivity has to be done for positive as well

as negative variation. The Generation parameter has only be varied towards negative variation. As

evident from many Wind Projects installed in India the generation value fluctuates based on the Wind

speed and also seasons and the generation can also increase than the value committed by the supplier.

This parameter have to be varied for positive side atleast towards +10% as stated in the guidance and

than it has to be compared against suitable benchmark.

Submitted by: Mahendra Jadhava

Comment by:

Accredited NGO Party Stakeholder

Inserted on:

Subject:

Comment:

1. How road network of area has been increased due to this particular project as mentioned in

social aspect because other windmills are also in same area?

2. What is total energy requirement of all ONGC operations as listed in PDD? Whether this

weather based wind energy will certainly fulfill electricity demands of all location round the year?

3. What would be impact of negative environmental conditions in area upon project? What

would be alternatives?

4. How many skilled/unskilled people from surrounding area were employed at this project

during commissioning and operation?

5. Whether NOC from state departments has been issued to this project?

6. Whether local villagers would be beneficiary of CDM revenue earned by company? Any plan

has been develop to earmark certain fund from CDM revenue for community welfare to improve

social well being of local people?

From

Hiral Mehta/Mahesh Pandya

Environmental Engineers


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VALIDATION REPORT

Submitted by: paryavaranmitra

.

The response received from the project participant to the comments:

S.No. Comments from GlobalStakeholder Process (GSP)

PP Response

A Stakeholder : Mahendra Jadhava

1 As the PDD clearly states that thepower will be wheeled to differentassets of ONGC the benchmark usedin the PDD is not applicable. Please

refer to Additionality tool version 05that states that "Only in the particularcase where the project activity can beimplemented by the projectparticipant, the specificfinancial/economic situation of thecompany undertaking the projectactivity can be considered". As thesame wind based energy can besupplied by other party to ONGCinternal benchmark cannot be applied.DOE is requested to check thesuitability of benchmark during

validation process.

The project activity replaces the grid based powergeneration which is being used by the projectproponent in the absence of the project activity. Thisgrid based power is now being replaced by captive

power generation by ONGC using wind energy. Ascaptive generation of power for own requirements canbe done by ONGC in this case, thus the use of theinternal benchmark is appropriate.

The benchmark used by the project proponent is acommon benchmark applicable to ONGCdevelopment projects and the ONGC Circular No.MUM/PAS/PROJ/APPR/RR/2007 dated June 11,2007 is submitted as Annexure II to establish thisinternal benchmark. Thus, the internal benchmark hasbeen applied correctly and in line with the guidance ofthe CDM Executive Board as provided in the

Additionality Tool, Version 5.2, Clause 13.

2 The power tariff has been taken as4.05 Rs/kWh. Is the basis of this valuetaken from PPA? If yes than it is notcorrect value applied for financialanalysis. As wind energy supplied toONGC assests and it is displacing theassest electricity the cost of electricityto the assests have to be used infinancial analysis. DOE is requested tocheck the basis of this parameter in

financial analysis.

As the project baseline is the grid power purchased bythe ONGC assets, the power tariff considered for thefinancial analysis is the power tariff applicable to theseassets. The power tariff considered for financial analysisis the power tariff drawn from the electricity bills of theONGC assets. Copy of the power bill is submitted as

Annexure XXIV to the validator at Dehradun visit.Thus, the power tariff used is Rs.4.05 Rs./Kwh + 15%surcharge = Rs.4.66 Rs./Kwh.

3 As per the latest guidance oninvestment analysis the sensitivity hasto be done for positive as well asnegative variation. The Generationparameter has only be varied towardsnegative variation. As evident frommany Wind Projects installed in Indiathe generation value fluctuates basedon the Wind speed and also seasonsand the generation can also increase

than the value committed by thesupplier. This parameter have to be

varied for positive side atleast towards

The sensitivity analysis has been conducted for theentire range between +10% to -10% of threeparameters Capex, Opex and Generation in the updatedPDD. The results of the sensitivity analysis arepresented in Section B.5 of the updated PDD.


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1 How road network of area has beenincreased due to this particular projectas mentioned in social aspect becauseother windmills are also in same area?

Section A.2 of the PDD states that The projectactivity requires additional investment to be made to setup the wind turbines, including additional infrastructurelike approach roads, substations, transport ofconstruction materials, etc. by way of which the projectis leading to development of additional sectors,generation of new jobs and avenues of employment forthe local people. The project proponent has set up 34machines in an underdeveloped area in District Kutch.

The road network in the area is largely underdeveloped.To establish this project activity, ONGC has signed acontract with the equipment supplier for machinesupply, land, infrastructure, civil works for erection andcommissioning of the project activity. Please see

submitted Annexures V and VI. The contract price isinclusive of the internal roads and approach roads thatSuzlon would need to construct / pay fees to localauthorities to construct. Thus, the project proponenthas funded the road network that is being used for theproject activity.

2 What is total energy requirement of allONGC operations as listed in PDD?

Whether this weather based windenergy will certainly fulfill electricitydemands of all location round the

year?

Section 4.3 of the PDD lists out the percentage ofelectricity that would be wheeled to each asset locationfrom each machine. The electricity demands of theselocations will be met from the project activity as long asthe project activity generates wind power and it is

wheeled to the asset locations. The plant load factorused to calculate the estimated generation from theproject activity has already factored in the inherentintermittent nature of wind power.

3 What would be impact of negativeenvironmental conditions in area uponproject? What would be alternatives?

The wind potential pattern of the project area has beenmapped out by responsible agencies and it is expectedthat the wind potential as estimated would not changesubstantially within the next twenty years (the lifetimeof the project activity).The only environmentalcondition to have a negative impact on the projectactivity is the case of zero or less than 5m/s wind

speed. However, since Surajbari area in District Kutchis an identified wind power site, the probability of thissite not having any wind speeds is remote.

4 How many skilled/unskilled peoplefrom surrounding area were employedat this project during commissioningand operation?

During the construction phase, 38 skilled and 152unskilled locals were employed in the project. Duringthe operation phase, 14 unskilled locals are employed.

5 Whether NOC from state departmentshas been issued to this project?

The clearances received for the project activity havebeen submitted as Annexure-X (GEDA Transferpermission) and Annexure-XI (Chief ElectricalInspector Certificate) at Dehradun.

6 Whether local villagers would bebeneficiary of CDM revenue earned by

The benefits from CDM have boosted the IRR of theproject activity to commit the project proponent to go


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VALIDATION REPORT

increased business opportunities for the local people asmore people related to the project come to visit theproject site.

How DNV has considered the comments received in its validation:

ONGCs responses are considered acceptable in the light of the explanations given. Since theproject is connected to the local grid and the power generated will be used for meeting

ONGCs own electricity consumption, applying an internal benchmark of ONGC is

considered appropriate. Also, it was verified that the internal benchmark has been consistently

applied across for other projects. Moreover, as mentioned under section 4.4.4, the lending rateof the largest bank in India State Bank of India (SBI) at the time of taking decision to go

ahead with the project was 12.75% /24/. The internal benchmark of ONGC is thereforedeemed to be conservative when compared with the applicable bank lending rate at the timeof decision making for the project. The applied benchmark is thus comparable to the

benchmark that would apply to a different entity potentially developing this project.

The power tariff (4.05 Rs./kWh + 15% surcharge) applicable to the ONGC installations isevidenced by the monthly bills from Uttar Gujarat Vij Company Ltd. /26/. Sensitivity analysis

has been done for +/- 10% variation in the applicable parameters, as per the EB guidelines.

This has been detailed in section 4.4.7 of this report.

The construction of road network to the project activity has been included the EPC contractfor setting up of the WEGs, which is verified from the purchase order placed on Suzlon.

The estimated power generation is based on the PLF evaluated by an independent consultant

and is likely to meet the power requirement of the ONGC installations listed in the PDD.

Negative environment conditions in the area are unlikely to affect the project activity.

The project employed 38 skilled and 152 unskilled locals during the construction phase and

14 unskilled locals in the operation phase, as confirmed by ONGC.

The project has obtained all the applicable statutory approvals.

The project will result in overall development of the area through construction of roadnetwork and employment generation.


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APPENDIX A

CDM VALIDATION PROTOCOL


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CDM Validation Protocol Report No.2008-0065, rev. 02

Table 1 Mandatory Requirements for Clean Development Mechanism (CDM) Project A

Requirement Reference Co

About Parties

1. The project shall assist Parties included in Annex I in achieving

compliance with part of their emission reduction commitment under

Art. 3.

Kyoto Protocol Art.12.2 Th

an

2. The project shall assist non-Annex I Parties in contributing to the

ultimate objective of the UNFCCC.

Kyoto Protocol Art.12.2. OK

3. The project shall have the written approval of voluntary participation

from the designated national authority of each Party involved.

Kyoto Protocol

Art. 12.5a,

CDM Modalities and

Procedures 40a

CA

Th

ho

OK

4.

The project shall assist non-Annex I Parties in achieving sustainable

development and shall have obtained confirmation by the host country

thereof.

Kyoto Protocol Art. 12.2,

CDM Modalities and

Procedures 40a

OK

5. In case public funding from Parties included in Annex I is used for the

project activity, these Parties shall provide an affirmation that such

funding does not result in a diversion of official development assistance

and is separate from and is not counted towards the financial

obligations of these Parties.

Decision 17/CP.7,

CDM Modalities and

Procedures Appendix B, 2

OK

Th

inf

pro

of

(O

6. Parties participating in the CDM shall designate a national authority for

the CDM.

CDM Modalities and

Procedures 29

Th

AuN

M

7. The host Party and the participating Annex I Party shall be a Party to

the Kyoto Protocol.

CDM Modalities 30/31a Th

the


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20

8. The participating Annex I Partys assigned amount shall have been

calculated and recorded.

CDM Modalities and

Procedures 31b

NA

9. The participating Annex I Party shall have in place a national system

for estimating GHG emissions and a national registry in accordance

with Kyoto Protocol Article 5 and 7.

CDM Modalities and

Procedures 31b

NA

About additionality

10.Reduction in GHG emissions shall be additional to any that would

occur in the absence of the project activity, i.e. a CDM project activity

is additional if anthropogenic emissions of greenhouse gases by sources

are reduced below those that would have occurred in the absence of the

registered CDM project activity.

Kyoto Protocol Art. 12.5c,

CDM Modalities and

Procedures 43

CL

OK

About forecast emission reductions and environmental impacts

11.The emission reductions shall be real, measurable and give long-term

benefits related to the mitigation of climate change.

Kyoto Protocol Art. 12.5b CA

OK

For large-scale projects only

12.Documentation on the analysis of the environmental impacts of theproject activity, including transboundary impacts, shall be submitted,

and, if those impacts are considered significant by the project

participants or the Host Party, an environmental impact assessment in

accordance with procedures as required by the Host Party shall be

carried out.

CDM Modalities andProcedures 37c

OK

About small-scale project activities (if applicable)

13.The proposed project activity shall meet the eligibility criteria for small

scale CDM project activities set out in 6 (c) of the Marrakech

Accords and shall not be a debundled component of a larger project

Simplified Modalities and

Procedures for Small Scale

CDM Project Activities

NA


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activity. 12a,c

14.The proposed project activity shall confirm to one of the project

categories defined for small scale CDM project activities and use the

simplified baseline and monitoring methodology for that project

category.



CDM Project Activities 22e

NA

15.If required by the host country, an analysis of the environmental

impacts of the project activity is carried out and documented.



CDM Project Activities 22c

NA

About stakeholder involvement

16.Comments by local stakeholders shall be invited, a summary of these

provided and how due account was taken of any comments received.

CDM Modalities and

Procedures 37b

OK

17.Parties, stakeholders and UNFCCC accredited NGOs shall have been

invited to comment on the validation requirements for minimum 30

days, and the project design document and comments have been made

publicly available.

CDM Modalities and

Procedures 40

OK

Other

18.The baseline and monitoring methodology shall be previously approved

by the CDM Executive Board.

CDM Modalities and

Procedures 37e

OK

19.A baseline shall be established on a project-specific basis, in a

transparent manner and taking into account relevant national and/or

sectoral policies and circumstances.

CDM Modalities and

Procedures 45c,d

OK

20.

The baseline methodology shall exclude to earn CERs for decreases inactivity levels outside the project activity or due to force majeure. CDM Modalities andProcedures 47 OK

21.The project design document shall be in conformance with the

UNFCCC CDM-PDD format.

CDM Modalities and

Procedures Appendix B, EB

Decision

OK


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22.Provisions for monitoring, verification and reporting shall be in

accordance with the modalities described in the Marrakech Accords

and relevant decisions of the COP/MOP.

CDM Modalities and

Procedures 37f

OK


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* MoV = Means of Verification, DR= Document Review, I= Interview


Table 2 Requirements Checklist

CHECKLIST QUESTION Ref. MoV* COMMENTS

A. General Description of Project ActivityThe project design is assessed.

A.1. Project Boundaries

Project Boundaries are the limits and borders defining the

GHG emission reduction project.

A.1.1. Are the projects spatial boundaries

(geographical) clearly defined?/1/ DR/I Yes, the projects spatial

defined. The project site is loc

Jakhau and Budiya in Abdasa

A.1.2. Are the projects system boundaries (components

and facilities used to mitigate GHGs) clearly

defined?

/1/

/6/

DR/I The project system boundar

defined and consist of the 34 W

make and each having a capac

The spatial boundary also

Western regional grid of Ind

project is connected. India

which earlier had 5 regional

reorganized in to two region

and NEWNE) vide the CE

version 04 released on 8the S

Hence the project activity is c

NEWNE regional grid as per

data.

PDD is to be corrected to refle

A.2. Participation RequirementsReferring to Part A, Annex 1 and 2 of the PDD as well

as the CDM glossary with respect to the terms Party,

Letter of Approval, Authorization and Project

Participant.


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A.2.1. Which Parties and project participants are

participating in the project?

/1/ DR/I India is the host party and O

Gas Corporation Limited (Project participant.

A.2.2. Have all involved Parties provided a valid and

complete letter of approval and have all

private/public project participants been authorized

by an involved Party?

/1/

/5/

DR/I The LoA from the DNA, In

provided.

A.2.3. Do all participating Parties fulfil the participation

requirements as follows:

- Ratification of the Kyoto Protocol

- Voluntary participation

- Designated a National Authority

/1/

/5/

DR/I The Designated National Au

is Ministry of Environmental

India ratified the Kyoto P

August 2002.

The letter of approval is to be

A.2.4. Potential public funding for the project from

Parties in Annex I shall not be a diversion of

official development assistance.

/1/ DR/I No public funding has been

project activity.

A.3. Technology to be employed

Validation of project technology focuses on the project

engineering, choice of technology and competence/

maintenance needs. The validator should ensure that

environmentally safe and sound technology and know-how isused.

A.3.1. Does the project design engineering reflect

current good practices?/1/ DR/I The wind turbines have been

and erected by Suzlon Energ

turbines are designed for cut i

and cut out speed of 20m


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features of the project include

electromechanical pitch sysblade and via Suzlon-Fle

These features indicate

proponents intention for

engineering design and practic

The Purchase order has b

during the site visit.

A.3.2. Does the project use state of the art technology or

would the technology result in a significantly

better performance than any commonly used

technologies in the host country?

/1/ DR/I The Project utilizes

manufactured equipments

generation.

A.3.3.Does the project make provisions for meeting

training and maintenance needs?/1/ DR/I The operation and maintenanc

is contracted to the man

suppliers of the equipment Su

training is not envisaged.

A.4. Contribution to Sustainable Development

The projects contribution to sustainable development is

assessed.

A.4.1. Has the host country confirmed that the project

assists it in achieving sustainable development?/1/

/5/

DR/I The letter of approval fr

confirming that the proje

achieving sustainable develop

be provided for verification.

The host country LoA needs

B.1.1. Will the project create other environmental or

social benefits than GHG emission reductions?/1/ DR/I Yes. Apart from GHG reducti

envisages following benefits:

The project will help t

dependence on fossil fu


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generation.

The project activity employment opportun

construction and operation

B. Project Baseline

The validation of the project baseline establishes whether the

selected baseline methodology is appropriate and whether the

selected baseline represents a likely baseline scenario.

B.1. Baseline Methodology

It is assessed whether the project applies an appropriate

baseline methodology.

B.1.2. Does the project apply an approved methodology

and the correct version thereof?

/1/

/3/

DR/I The project correctly applie

baseline methodology Consomethodology for grid-conne

generation from renewable

0002, version 07 for larg

projects.

B.1.3. Are the applicability criteria in the baseline

methodology all fulfilled?/1/

/6/

DR/I The applicability criteria is dis

The project activity is the

modification/retrofit of

plant/unit.

The project activity is the in

MW wind energy based powe

The geographic and systfor the relevant electrici

clearly identified and info

characteristics of the grid

The geographic and system

the western regional grid (WR


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been clearly identified. The

the characteristics of the WThis however needs to be co

line with the latest CEA bifurc

B.2. Baseline Scenario Determination

The choice of the baseline scenario will be validated with

focus on whether the baseline is a likely scenario, and

whether the methodology to define the baseline scenario

has been followed in a complete and transparent manner.

B.2.1. What is the baseline scenario? /1/ DR/I The baseline scenario as per th

is that in the absence of the p

electricity would have been g

existing or by new additions idominated grid.

B.2.2. What other alternative scenarios have been

considered and why is the selected scenario the

most likely one?

/1/ DR/I Other alternatives for the pro

mentioned below:

Alternative 1: The proposed

not undertaken as a CDM proj

Alternative 2: No project activ

However, the PP is requested

justify on the other alternative

fossil fuel, renewable sources

and state why these are not

scenarios.B.2.3. Has the baseline scenario been determined

according to the methodology?/1/ DR/I Yes, the baseline scenar

determined according to the

However CL-1 needs to be ad

B.2.4. Has the baseline scenario been determined using /1/ DR/I Refer to B.2.2


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conservative assumptions where possible?

B.2.5. Does the baseline scenario sufficiently take into

account relevant national and/or sectoral policies,

macro-economic trends and political aspirations?

/1/ DR/I Yes, national and sectoral pol

taken into account.

B.2.6. Is the baseline scenario determination compatible

with the available data and are all literature and

sources clearly referenced?

/1/ DR/I Yes.

B.4.1. Have the major risks to the baseline been

identified?/1/ DR/I The baseline scenario has b

using conservative assumption

B.3. Additionality Determination

The assessment of additionality will be validated with

focus on whether the project itself is not a likely baseline

scenario.

B.3.1. Is the project additionality assessed according to

the methodology?/1/

/4/

/31/

/23/

/28/

/30/

DR/I The assessment and demon

additionality has been done a

additionality tool, version 5.2.

Step 1a: Define alternatives

activity:

Alternative 1: The proposed

not undertaken as a CDM proj

Alternative 2: No project a

continuation of the presen

drawing power from the grid.

Both alternatives are realistic

the project activity.


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Step 1b: Consistency with m

and regulations: Both alternatives are in complianc

and regulations.

Step 2: Investment Analysis:

The benchmark analysis has b

demonstrate the additionality

The internal rate of return (

considered as the benchmark p

The project proponent, ON

sector undertaking and has

internal benchmark (hurdle (post tax) for developmenta

document confirming the inte

ONGC Order

MUM/PAS/PROJ/APPR/RR/

June, 2007, Para 3.1.has been

is reasonable compared to th

benchmark. The order also cl

target IRR for acceptance

proposals (development proje

be considered at a minimum

(post tax). However, in resp

with IRR of less than 12% right to reject such projects wo

vest with the Corporate Manag

The IRR of the project act

calculated to be at 10.59%

revenues) and lower than the


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12% and hence project is

attractive.The following need to be

evidence.

a) The appropriateness of

selected

As per the EB 41, Annex 45, P

is also requested to demon

internal benchmark has be

applied by the company for at

relation to similar projects

financial statements, and

evidence on the acceptance a

project with this benchmark (h

b) It also needs to be clarifi

load factor used in the IRR c

PDD states the PLF as 22.2

consultants recommendation

worksheet uses a PLF of 23.4

also to be justified as the GE

11 August 2006 states the CU

site to be 25.68%.

c) The PP is requested

application of MAT to the

and ONGC and also on the vused in the calculation. It al

clarified if the MAT is to be

entire 20 years or till the time

holiday exists.

d) O& M values used for O


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justified with a split-up.

Step 2d: Sensitivity Analysis:The sensitivity analysis h

considering the parameters of

a) Capex Capital Expen

project

b) Opex - Operating expense

c) Generation - Electricity g

project.

considering an variation of +

% in Capex and Opex value

on 10 % to 20 % in gener

decrease of the IRR for the proThe sensitivity analysis is to

considering increase in g

analysis is also to be ca

variations at which the IR

benchmark and also justify w

is not likely.

Step 3: Barrier Analysis:

As per the PP, after conduc

analysis, the CDM project

financially attractive, the

discussed the Barrier AnalysisStep 4: Common Practice Ana

Step 4a: Analyze other activ

the proposed project activity:

The PP has provided inform


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power generation capacity o

respective state along capacities.

As per the information, In

potential of 45195 MW o

against which only 5340.6

utilized. Thus only 4.2 %

installed capacity for pow

(including fossil fuel based po

For the case of Gujarat sta

gross potential for wind pow

9675 MW and out of that o

has been utilized as of 31/03/2

The data provided for install

Gujarat state needs to be upda

The PP is requested to also

reference of gross potentia

capacity from more authentic

Step 4b: Discuss any similar

occurring:

As argued by the PP, a cou

energy based power proje

independent power projects

capacity similar to the pr

activity in Gujarat. Howe

projects are being impleme

projects. Its because IPPs o

not financially attractive with

The PP is requested to provi


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many projects are implemen

out such project how implemented keeping CDM in

It is also to be clarified as

projects of similar capacity a

location are CDM projects o

CDM revenues?

B.3.2. Are all assumptions stated in a transparent and

conservative manner?/1/ DR/I Refer to B.3.1

B.3.3. Is sufficient evidence provided to support the relevance

of the arguments made?/1/ DR/I Refer to B.3.1

B.3.4.

If the starting date of the project activity is before the

date of validation, has sufficient evidence been provided

that the incentive from the CDM was seriously

considered in the decision to proceed with the project

activity?

/1/

/8/

DR/I The starting date of the pro

stated to be 06 November 200

of Award for the project activ

And it is before the start of va

The serious consideration of

CDM has been demonstrated

note mentioning the expected

less than the benchmark and

revenue from CDM project,

been implemented.

Chronological order of evconceptualization of the proj

approaching the DOE for v

with reasons for delay need

with supporting evidences.

B.4. Calculation of GHG Emission Reductions Project


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emissions

It is assessed whether the project emissions are statedaccording to the methodology and whether the

argumentation for the choice of default factors and values

where applicable is justified.

B.4.2. Are the calculations documented according to the

approved methodology and in a complete and

transparent manner?

/1/ DR/I There are no project emission

activity.

B.4.3. Have conservative assumptions been used when

calculating the project emissions?/1/ DR/I Refer to B.4.1

B.4.4. Are uncertainties in the project emission estimates

properly addressed?/1/ DR/I Refer to B.4.1

B.5. Calculation of GHG Emission Reductions Baselineemissions

It is assessed whether the baseline emissions are stated

according to the methodology and whether the



B.3.5. Are the calculations documented according to the

approved methodology and in a complete and transparent

manner?

/1/

/6/

DR/I Baseline emissions have bee

the product of net electricity

Western regional grid by the

per year and grid emissionWestern regional grid, wh

obtained from the official

Central Electricity authority

Baseline Database for the

Sector User Guide - Version 3


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Baseline emission factor fo

regional grid is established exthe approved methodology us

margin approach consisting

margin and 25% build margin

combined margin emission co

southern regional grid of I

determined to be 0.89 t CO

operating margin has been e

1.00 t CO2/MWh and the bui

0.59 tCO2/MWh.

The PP needs to apply the la

the CEA database for fixin

factor.

B.3.6. Have conservative assumptions been used when

calculating the baseline emissions?/1/ DR/I Yes. The chosen baseline is

with the baseline methodology

B.3.7. Are uncertainties in the baseline emission estimates

properly addressed?/1/ DR/I There are no uncertainties

emissions.

B.6. Calculation of GHG Emission Reductions Leakage

It is assessed whether leakage emissions are stated

according to the methodology and whether the



B.6.1. Are the leakage calculations documented

according to the approved methodology and in a

complete and transparent manner?

/1/ DR/I For Wind based energy gen

Project the PP do not nee

leakage in applying this metho


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B.6.2.

Have conservative assumptions been used whencalculating the leakage emissions?

/1/ DR/I NA

B.6.3. Are uncertainties in the leakage emission

estimates properly addressed?/1/ DR/I NA

B.7. Emission Reductions

The emission reductions shall be real, measurable

and give long-term benefits related to the mitigation

of climate change.

B.7.1. Are the emission reductions real, measurable and

give long-term benefits related to the mitigationof climate change.

/1/ DR/I The project activity is expec

emission reduction of 85 762 through out the first creditin

years.

This figure is to be recalcu

latest grid emission factors p

CEA.

B.8. Monitoring Methodology

It is assessed whether the project applies an appropriate

monitoring methodology.

B.8.1. Is the monitoring plan documented according to

the approved methodology and in a complete and

transparent manner?

/1/

/3/

DR/I The monitoring plan documen

approved consolidate method

0002, version 07 and in

transparent manner.

The monitoring of the

generated is not clear in the P

to be elaborated conside

uploading meter is not de


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DET NORSKE VERITAS




project activity.

B.8.2.

Will all monitored data required for verificationand issuance be kept for two years after the end of

the crediting period or the last issuance of CERs,

for this project activity, whichever occurs later?

/1/ DR/I Yes, all monitored data verification and issuance will

years after end of the crediting

B.9. Monitoring of Project Emissions

It is established whether the monitoring plan provides for

reliable and complete project emission data over time.

B.9.1. Does the monitoring plan provide for the

collection and archiving of all relevant data

necessary for estimation or measuring the

greenhouse gas emissions within the projectboundary during the crediting period?

/1/ DR/I Being a wind power proj

emissions are expected to occu

B.9.2. Are the choices of project GHG indicators

reasonable and conservative?/1/ DR/I NA

B.9.3. Is the measurement method clearly stated for each

GHG value to be monitored and deemed

appropriate?

/1/ DR/I NA

B.9.4. Is the measurement equipment described and

deemed appropriate?/1/ DR/I NA

B.9.5. Is the measurement accuracy addressed and

deemed appropriate? Are procedures in place on

how to deal with erroneous measurements?

/1/ DR/I NA


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B.9.6. Is the measurement interval identified and

deemed appropriate?

/1/ DR/I NA

B.9.7. Is the registration, monitoring, measurementand

reporting procedure defined?/1/ DR/I NA

B.9.8. Are procedures identified for maintenance of

monitoring equipment and installations? Are the

calibration intervals being observed?

/1/ DR/I NA

B.9.9. Are procedures identified for day-to-day records

handling (including what records to keep, storage

area of records and how to process performance

documentation)

/1/ DR/I NA

B.10.Monitoring of Baseline Emissions

It is established whether the monitoring plan provides for

reliable and complete baseline emission da

project on ongc validation

Documents