Gold Standard Validation Report DATANG ZHANGZHOU WIND POWER CO., LTD; CHINA Gold Standard Validation of the Fujian Zhangpu Liuao 45MW Wind Power Project, China Report No. 948571 30 August 2007 TÜV SÜD Industrie Service GmbH Carbon Management Service Westendstr. 199-80686 Munich GERMANY
TÜV SÜD Industrie Service GmbH Carbon Management Service Westendstr. 199-80686 Munich GERMANY
Page 1 of 9 Report No. Date of first issue Revision No. Date of this revision Certificate No. 948571 2 nd April 2007 1 30 th August 2007 - Subject: Gold Standard Validation of a CDM Project Executing Operational Unit: TÜV SÜD Industrie Service GmbH Carbon Management Service Westendstr. 199-80686 Munich Federal Republic of Germany Contact: www.tuev-sued.de Client: Datang Zhangzhou Wind Power Co. Ltd No. 61 Huming Road 361004 Xiamen Fujian Province P.R. of China Contract approved by: Werner Betzenbichler Report Title: Gold Standard Validation of the Fujian Zhangpu Liuao 45MW Wind Power Project, China Number of pages 9 (excluding annexes and cover page) Summary: The Certification Body Climate and Energy has been ordered by Datang Zhangzhou Wind Power Co. Ltd to perform a validation based on Gold Standard of the above mentioned project. In summary, it is TÜV SÜD s opinion that the project Fujian Zhangpu Liuao 45MW Wind Power Project, China, as described in the revised project design document of April 2007, meets all relevant Gold Standard requirements for CDM projects. The project has been submitted for registration already as CDM project. Hence all the UNFCCC requirements have been meet as set by the Kyoto Protocol, the Marrakech Accords and relevant guidance by the CDM Executive Board and that the project furthermore meets all relevant host country criteria and correctly applies the baseline and monitoring methodologies ACM0002 Ver 06. Hence, TÜV SÜD will recommend the project for registration as Gold Standard CDM project activity by the Gold Standard Advisory Board. Additionally the assessment team reviewed the estimation of the projected emission reductions. We can confirm that the indicated amount of emission reductions of 588 910 tonnes CO 2e over a crediting period of seven years, resulting in a calculated annual average of 84 130 tonnes CO 2e represent a reasonable estimation using the assumptions given by the project documents. Work carried out by: Dr. S. Kolmetz Internal Quality Control Javier Castro Cuiyun Zhang by:
Page 2 of 9 Abbreviations CAR CDM CER CR DOE EIA / EA ER GHG GS KP MP PDD TÜV SÜD UNFCCC VVM Corrective Action Request Clean Development Mechanism Certified Emission Reduction Clarification Request Designated Operational Entity Environmental Impact Assessment / Environmental Assessment Emission reduction Greenhouse gas(es) Gold Standard Kyoto Protocol Monitoring Plan Project Design Document TÜV SÜD Industrie Service GmbH United Nations Framework Convention on Climate Change Validation and Verification Manual
Page 3 of 9 Table of Contents Page 1 INTRODUCTION...4 1.1 Objective 4 1.2 Scope 4 1.3 GHG Project Description 4 2 METHODOLOGY...5 3 GOLD STANDARD CRITERIA...6 3.1 Eligibility of the project for Gold Standard 6 3.2 Technological transfer 7 3.3 Sustainable development screen 7 3.4 Use of the additionality tool 7 3.5 ODA Additionality screen 8 3.6 Use of conservativeness 8 3.7 Monitoring of sustainable development parameters 8 3.8 Environmental Impacts 8 3.9 Stakeholder consultation requirements 9 4 VALIDATION OPINION...10 Annex 1: Information Reference List
Page 4 of 9 1 INTRODUCTION 1.1 Objective Datang Zhangzhou Wind Power Co. Ltd has commissioned TÜV SÜD Industrie Service GmbH (TÜV SÜD) to validate the Fujian Zhangpu Liuao 45 MW Wind Power Project, China project in relation to the Gold Standards. The purpose of a validation is to have an independent Third Party perform a compliance test against the additional requirements as set by the Gold Standard for CDM projects. 1.2 Scope The validation scope is defined as an independent and objective review of the project design document, the project s baseline study, monitoring plan and other relevant documents. The information in these documents is reviewed against the Gold Standard requirements. The audit team has been provided with a new PDD for GS in August 2007 that serves as the basis for the final assessment presented herewith. 1.3 GHG Project Description The proposed Fujian Zhangpu Liuao 45 MW Wind Power Project is located in Liuao town, Zhangpu County, Fujian Province, P.R.C. It involves the installation of 36 turbines, each of which has a rated output of 1 250 kw, providing a total capacity of 45 MW. The annual output of the proposed project is estimated to be 95,602 MWh. The electricity to be generated will be sold to the East China Grid through Power Purchase Agreement (PPA). Project participant is Datang Zhangzhou Wind Power Co. Ltd, Host Party of the project activity is China. This is a unilateral project. The category of the project activity is in Scope 1 Energy industries (renewable / nonrenewable sources), applied baselines and monitoring methodologies are ACM0002 / Version 06 "Grid connected electricity generation from renewable sources. According to the PDD and involved parties the starting date of the project activity is 28/12/2006. The crediting period is committed as 7 years renewable.
Page 5 of 9 2 METHODOLOGY The Gold Standard (GS) validation of the project must be seen in conjunction with the validation report and protocol for the project (TÜV SÜD Report No: 948571, dated 30 August 2007). The Gold Standard criteria could be divided in the following points: Eligibility of the project for GS Technological transfer Sustainable development screen Use of the additionality tool ODA Additionality screen Use of conservativeness Monitoring of sustainable development parameters Environmental Impacts Stakeholder consultation requirements A discussion is made for every of these points in chapter 3.
Page 6 of 9 3 GOLD STANDARD CRITERIA The correct application of the baseline has been confirmed by a third independent local expert in China (see CDM validation report the local expert is Ms. Cuiyun Zhang from TUEV SUED China, 16F, West Building New Hua Lian Mansion, No. 775 Huai Hai Road, 200020 Shanghai) The reference list of all the documents submitted by the project proponent and use for this validation is included in Annex 1. 3.1 Eligibility of the project for Gold Standard According to the Gold Standards all projects technologies included in the figure below are eligible. The assessed project uses a renewable energy technology namely wind energy. This project uses an ecologically sound electricity generation and the emission reductions due to replacement of electricity generated mainly by grid connected coal-fired power plants count towards the project s overall emission reductions. Hence the project is eligible under Gold Standard.
Page 7 of 9 3.2 Technological transfer The project activity results in technology transfer and knowledge innovation related to: Import of wind turbines from abroad (Suzlon, India) Training of skilled labor to operate and maintain the power plant 3.3 Sustainable development screen The project has used the sustainable development indicators matrix as required by the Gold Standards. The total score obtain is a +10 where: Local/regional/global environment has a subtotal of +1 Social sustainability and development has a subtotal of +6 Economic and technological development has a subtotal of +3 For none of the indicator a negative score has been given. All the assumptions used to define the score values have been revised by the validator, base on submitted documentation and the on-site visit made during the validation of the project for the UNFCCC. Hence this criterion has been correctly demonstrated by the project proponents. 3.4 Use of the additionality tool (version 2) The project follows in a correct form every step of the approved additionality tool. Step 0 is not applicable as the project is not a retroactive project Step 1 defines correctly all the alternative scenarios and the consistence with the laws and regulations. Step 2 is done base on option III of the investment analysis method. The calculations presented have been checked and found correct and appropriate for this specific project activity. Step 3 has also been discussed in the PDD even though is an optional step in the case that step 2 is used. The barriers given are plausible, hence accepted during the validation. Step 4 shows that there is no similar project. There was a reform of the Chinese electric power market in 2002 and all projects installed after 2002 have to compete economically. There are no other projects not applying for CDM after 2002. Step 5 give a clear description of the impact of CDM in the project. Hence the project has demonstrated the additionality correctly using the tool approved by the EB.
Page 8 of 9 3.5 ODA Additionality screen The chapter A.4.4 clearly shows that ODA funding has not been included to realise any step of the process and even the bank s funds do not include any ODA funding. Hence the project complies with the requirements. 3.6 Use of conservativeness The PDD has been prepared in a professional way. All the assumptions and parameters used for in the PDD comply with the conservativeness criteria. To show how the PDD presents this criterion, following examples are given: For the additionality proof instead of the grid factors published by the Chinese DNA (NDRC) smaller figures are used based on their own calculation using conservative assumptions despite the NDRC calculation follows the ACM00002 methodology. Hence it is clear that the project proponent is aware of this criteria and applies the same in every item where is possible. 3.7 Monitoring of sustainable development parameters The PDD shows all the parameters to be monitored. The monitoring process of every parameter is clearly explained in the PDD. Hence the monitoring plan is plausible and verifiable if implemented as stated in the PDD. As there is no critical parameter according to the Sustainable Development Assessment Matrix no further monitoring regarding sustainability is necessary. 3.8 Environmental Impacts An environmental impact analysis is required by China and has been approved by the local Chinese authorities, the Fujian Environmental Protection Bureau in November, 2005. According to the GS an EIA should be performed if any sustainable development indicator is scored with -1. Hence this project does not need an EIA to comply with the GS requirements. All the possible impacts caused by the project activities have been clearly explained in the PDD. The diagnostic includes all the relevant environmental issues as land use, noise, waste water and sewage, dust and air quality, ecological environment and interference with communication. Every of this aspect have been clearly described in the PDD and the complete information has been submitted to the validator. Hence the project does comply with the environmental impact criterion.
Page 9 of 9 3.9 Stakeholder consultation requirements The project proponent has carried out two stakeholder consultations as required by the Gold Standards. All relevant stakeholders have been invited through the project owner s website and through notices posted on the bulletin board 10 days before the meeting. As required by the GS a list of the consulted stakeholders has been submitted to the validator. The initial stakeholder process included a questionnaire to determine the environmental impacts caused by the project. This questionnaire has been fulfilled by all the participants of the consultation. The presentation has been held in Chinese and has been a non-technical summary of the project. Based on the results of the consultation it is clear that no EIA is necessary for this project. For the second stakeholder consultation questionnaires considering the comments from the initial stakeholder consultation have been submitted to all the relevant stakeholders. Moreover, NGO s such as WWF, Greenpeace and REEEP have been invited to participate. The response letters from the NGO s have been seen by the validator. The letters were supportive to the project but all NGO could not participate due to unavailability. Hence the requirements has been fulfil totally.
Page 10 of 9 4 VALIDATION OPINION The Certification Body Climate and Energy has been ordered by Datang Zhangzhou Wind Power Co. Ltd to perform a validation based on the Gold Standard of the above mentioned project. In summary, it is TÜV SÜD s opinion that the project Fujian Zhangpu Liuao 45MW Wind Power Project, China, as described in the revised project design document of August 2007, meets all relevant Gold Standard requirements for CDM projects. Hence all the UNFCCC requirements have been meet as set by the Kyoto Protocol, the Marrakech Accords and relevant guidance by the CDM Executive Board and that the project furthermore meets all relevant host country criteria and correctly applies the baseline and monitoring methodology ACM0002. Hence, TÜV SÜD will recommend the project for registration as Gold Standard CDM project activity by the Gold Standard Advisory Board. Additionally the assessment team reviewed the estimation of the projected emission reductions. We can confirm that the indicated amount of emission reductions of 588 910 tonnes CO 2e over a crediting period of seven years, resulting in a calculated annual average of 84 130 tonnes CO 2e represent a reasonable estimation using the assumptions given by the project documents. The validation is based on the information made available to us and the engagement conditions detailed in this report. The only purpose of this report is its use during the registration process as GS-CDM project. Hence, TÜV SÜD can not be held liable by any party for decisions made or not made based on the validation opinion, which will go beyond that purpose. Munich, 30.8.07 Munich, 30.8.07 Javier Castro Deputy Head of certification body climate and energy Dr. Sven Kolmetz Project Manager
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Annex 1: Reference List
Final Report 2007-08-30 Validation of the Fujian Zhangpu Liuao 45MW Wind Power Project Information Reference List Page 1 of 3 Reference Document or Type of Information No. 1 Project Design Document for CDM project Fujian Zhangpu Liuao 45MW Wind Power Project, dated on Jan. 5 th, 2007, version 1 2 Consolidated baseline methodology for grid-connected electricity generation from renewable sources, version 06 3 Tool for the demonstration and assessment of additionality, version 03 4 Participant list of on-site interview, signed on Jan. 27 th, 2007 5 On-site interviews and inspection at the office conducted on Jan. 27 th, 2007 by validators of TÜV SÜD. Validation team: Sven Kolmetz TÜV SÜD Industrie Service GmbH Cuiyun Zhang Jiangsu TUV Product Service Ltd. Interviewed persons: Mr. Zheng Xipeng China National Water Resources & Electric Power Materials & Equipment Co., Ltd. Project manager Ms. Xia Xiaoshu China National Water Resources & Electric Power Materials & Equipment Co., Ltd. Project manager Mr. Zhai Wenfeng Datang Zhangzhou Wind Power Co., Ltd. Project manager Mr. Rui Shaoqi Datang Zhangzhou Wind Power Co., Ltd. Project manager 6 Feasibility report of Fujian Zhangpu Liuao 45MW Wind Power Project, dated in June, 2005, Fujian Yongfu Engineering Consulting Co., Ltd., submitted on Jan. 27 th, 2007 7 Approval of feasibility report of Fujian Zhangpu Liuao 45MW Wind Power Project dated on Dec. 31 st, 2006, Fujian Development and Reform Commission, submitted on Jan. 27 th, 2007 8 Interim Rules on Economic Assessment of Electrical Engineering Retrofit Projects, State Power Corporation of China, submitted on Jan. 27 th, 2007 9 Purchasing contract of turbines, dated on Sept. 27 th, 2006, Datang Zhangzhou Wind Power Co., Ltd. and Suzlon Energy (Tianjing) Ltd., submitted on Jan. 27 th, 2007 10 Commitment of connection to grid, dated on Aug. 3 rd, 2004, Fujian Economic and Trading Committee submitted on Jan. 27 th, 2007 TÜV SÜD INDUSTRIE SERVICE GMBH
Final Report 2007-08-30 Validation of the Fujian Zhangpu Liuao 45MW Wind Power Project Information Reference List Page 2 of 3 Reference Document or Type of Information No. 11 Commitment of commercial loan, dated on July 5 th, 2005, China Merchants Bankd, submitted on Jan. 27 th, 2007 12 Approval of investment to Zhangpu Liuao 2 nd phase, dated on June 27 th, 2006, China Datang Group, submitted on Jan. 27 th, 2007 13 Overview of windfarms in China. Wind Power Generation, dated in 2003, China Electric Power Press, submitted on Jan. 27th, 2007 14 Carbon emission factor spreadsheet, China National Water Resources & Electric Power Materials & Equipment Co., Ltd., submitted on Jan. 27 th, 2007 15 China Electric Power Yearbook 2003-2005, submitted on Jan. 27 th, 2007 16 China Energy Statistical Yearbook 2000-2005, submitted on Jan. 27 th, 2007 17 IPCC, 2006 version 18 Financial analysis, China National Water Resources & Electric Power Materials & Equipment Co., Ltd., submitted on Jan. 27 th, 2007 19 Training schedule of operation and maintenance provided by turbine manufacture, Suzlon Energy (Tianjing) Ltd., submitted in Mar., 2007 20 EIA of Fujian Zhangpu Liuao 45MW Wind Power Project, dated in Nov., 2005, Datang Zhangzhou Wind Power Co., Ltd., submitted on Jan. 27 th, 2007 21 Approval of EIA, date on Nov. 16 th, 2005, Fujian Environment Protection Bureau, submitted on Jan. 27 th, 2007 22 Questionnaire of local stakeholder comments, dated in Dec., 2006, China National Water Resources & Electric Power Materials & Equipment Co., Ltd., submitted on Jan. 27 th, 2007 23 Project introduction for local stakeholder meeting, China National Water Resources & Electric Power Materials & Equipment Co., Ltd., submitted on Jan. 27 th, 2007 24 Participant list of local stakeholder meeting, China National Water Resources & Electric Power Materials & Equipment Co., Ltd., submitted on Jan. 27 th, 2007 25 Support letter to the Fujian Zhangpu Liuao 45 MW Wind Power Gold Standard CDM Project, dated on Dec. 27 th, 2006, REEEP East Asia Regional Secretariat, submitted on Jan. 27 th, 2007 26 Support letter to the Fujian Zhangpu Liuao 45 MW Wind Power Gold Standard CDM Project, Green Peace, submitted on Jan. 27 th, 2007 TÜV SÜD INDUSTRIE SERVICE GMBH
Final Report 2007-08-30 Validation of the Fujian Zhangpu Liuao 45MW Wind Power Project Information Reference List Page 3 of 3 Reference Document or Type of Information No. 27 Project Design Document for CDM project Fujian Zhangpu Liuao 45MW Wind Power Project, dated on Aug. 22 th, 2007, version 05, submitted on Aug. 28 th, 2007 TÜV SÜD INDUSTRIE SERVICE GMBH