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Reports of CDM/JI Feasibility Studies: FY2011

Title of Feasibility Study (FS)CDM Feasibility Study for Wind Power Generation for Hambantota International Convention Centre in Sri Lanka
FYrFY 2011
Main Implementing EntityTakasago Thermal Engineering Co., Ltd.
FS Partner(s)Urban Development Authority (UDA) Sri Lanka
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
Location of Project ActivitySri Lanka
Category of Project ActivityRenewable Energy
Targeted GHGCarbon Dioxide (CO2) and Methane (CH4)
Description of Project ActivityThe project involves the construction of a 4 MW wind power plant that will supply power to the Ceylon Electricity Board (CEB) grid for the newly-built International Convention Center in Hambantota. The project is located at an area specially designated by the Urban Development Authority (UDA) of Sri Lanka. The plant will provide renewable energy to the fossil fuel dominated CEB grid and lead to CO2 emissions reductions.
Methodology to be appliedAMS-I.D. “Grid connected renewable electricity generation” (ver. 17)
Baseline ScenarioThe base line scenario is electricity generation by the plants connected to the CEB grid. The combined margin emission factor for wind power projects connected to the CEB grid is estimated to be CM = 0.6564 tCO2/MWh.
Monitoring PlanThe project will monitor two parameters, grid electricity export and electricity import in order to calculate the net electricity export to the CEB grid by the project.
Estimation of GHG Emission Reductions4,599 tCO2/y
Duration of Project Activity/ Crediting PeriodThe project will use a 7-year renewable crediting period, as the project lifetime is expected to be at least 20 years.
Environmental Impact AnalysisThe project is proposed to be built on the territory of an existing solar park. As this is a non-residential area, the project has extremely little impact on the neighboring population. Additionally, the environmental impact assessment has already been completed for the solar park and no significant issues were identified.
Demonstration of AdditionalityThe project is additional as it faces insurmountable financial barriers. In order to demonstrate additionality, investment benchmark analysis is performed. The pre-tax IRR is calculated for a period of 20 years (the project lifetime) and is compared with a benchmark value. The benchmark is selected as the long-term lending rate of commercial banks in Sri Lanka, which as of September 30, 2011 stood at 13.62%.
The IRR is estimated to be 9.77%, which is significantly lower than the benchmark, making the project unattractive for investment on a business-as-usual basis. Therefore, the project is additional.
Project FeasibilityAs grid’s stability in Sri Lanka is deteriorating, it is not deemed possible to obtain approval for a new wind-only plant. However, taking into account the possibility of applying a special new feed-in tariff, a hybrid wind and solar thermal system that will stabilize grid supply is considered highly feasible. We will aim to register the project as a CDM activity before the end of 2012.
"Co-benefits" (i.e. Improvement of Local Environmental Problems)In selecting the project evaluation category, the wind power plant and the entire CEB grid are considered, as all electricity generated will be purchased by the grid. The project will be assessed under “Air Quality Improvement” category. Power generation usually leads to CO2, emissions; however, wind-generated electricity is a clean energy source and is not linked to any greenhouse gas emissions.
Contribution to Sustainable Development in Host CountryThe proposed project is a renewable energy generation activity and reduces the dependence of Sri Lanka on imported fossil fuels, as well as contributes to the improvement of trade balance of the country. Additionally, the project provides a boost to the local economy in the southern part of Sri Lanka and is expected to alleviate the problems associated with insufficient power supply. A future possibility is to supply the surplus electricity generated at night-time to refrigerating and freezing facilities that supercool (at temperatures below - 50C) fish caught by fishermen living in the vicinity of the project. The operation of the facilities will allow the fish to be kept fresh for much longer without increasing the peak electricity load at day time.

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