PDD Clean

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1.
CDM – Executive Board
CLEAN DEVELOPMENT MECHANISM

PROJECT DESIGN DOCUMENT FORM (CDM-PDD)
Version 03 - in effect as of: 28 July 2006
CONTENTS
A. General description of project activity
B. Application of a baseline and monitoring methodology
C. Duration of the project activity / crediting period
D. Environmental impacts
E. Stakeholders’ comments
Annexes
Annex 1: Contact information on participants in the project activity
Annex 2: Information regarding public funding
Annex 3: Baseline Information
Annex 4: Monitoring Plan
Annex 5: References
Annex 6: Abbreviations
SECTION A. General description of project activity
A.1 Title of the project activity:

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Title: Someshwara small hydropower project (24.75 MW) in Karnataka, India
Version: 04, 19/04/2008
A.2. Description of the project activity:

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The purpose of the project activity is to generate electricity using hydro potential available in
Gaganchukki branch of Cauvery river. The project is a run of the river scheme, utilising a
gradient of about 20 metres downstream of the existing 42 MW Shivasamudram hydroelectric
project. The generated electricity will be exported to a grid system of Karnataka Power
Transmission Corporation Limited (KPTCL), a state government owned power transmission
company.
The project involves construction of a diversion wall, canal intake, power canal, penstock,
powerhouse, power evacuation system and tailrace canal. The powerhouse consists of three
turbine generator sets of capacity 8.25 MW each..
View of project participant about the project activity’s contribution to Sustainable

Development
Ministry of Environment and Forests (MoEF), Government of India, has stipulated the
following indicators for sustainable development in the interim approval guidelines for CDM
projects.
1. Social well being

2. Economic well being
3. Environmental well being
4. Technological well being
The project activity contributes to the above indicators in the following manner.
Social Well being

a) The project activity generates additional employment to an extent of 175 persons
during the construction period, which spreads over a period of 27 months. Majority
of the additional employment opportunities are for unskilled labour, hence
unemployed unskilled labour around the project region will get the benefits directly
from the project activity. Besides, the project activity also generates permanent
employment for about 25 persons during the lifetime of the project activity. This
direct and indirect employment would not take place in the absence of the project
activity.
b) Due to the additional employment opportunities, the project activity also contributes
to the alleviation of poverty in the region to certain extent. Opportunities will be
created without any disparity towards gender, social class etc. The project
participants will provide necessary facilities such as shelter, medical facilities,
communication, education, good sanity conditions, etc., for the employed persons
during their service to the project. Hence, the project activity contributes to the social
well being in the project region.
Economic well being

Apart from the direct and indirect employment, the project activity results in flow of huge
financial resources as investment for the project. Significant part of this investment goes to
the rural economy towards construction activities in the project site as wages for unskilled
labour, construction material, local construction equipment etc. This investment flow will
have a positive impact on the economy in the region; hence, the project activity contributes to
the economic well being.
Environmental well being

The project activity is generation of electricity using hydro potential available in a river and it
does not result in degradation of any resources, cause any negative impact on bio-diversity,
resource sustainability, human health etc. Further the project does not result in environment
pollution. Hence, the project activity contributes to the environmental well being.
Technological well being

The project employees a better approach for utilising the lost potential energy. This is made
possible by new design techniques employed by the project proponents. The project activity
employed innovative approach especially in penstock laying and higher capacity turbines and
reengineering. Thus the project has enabled gaining a higher level technology and building
local capacity in developing similar projects in future.
In view of the above, the project activity contributes to the sustainable development of the
host country.
A.3. Project participants:

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Kindly indicate if the Party
Name of Party involved Private and/or public
involved wishes to be
((host) indicates a host entity(ies) project
considered as project
party participants (as aplicable)
participate (Yes/No)
Private Entity:
India (Host) Pioneer Genco Limited, No
Bangalore
A.4. Technical description of the project activity:
A.4.1. Location of the project activity:

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A.4.1.1. Host Party(ies):
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India
A.4.1.2. Region/State/Province etc.:

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State : Karnataka
A.4.1.3. City/Town/Community etc:

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District : Mandya
Taluk : Malavalli
Village : Shivasamudram,
Panchayat : Hosahalli
A.4.1.4. Detail of physical location, including information

allowing the unique identification of this project activity (maximum one page):
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The project is located downstream of existing 42 MW Shivasamudram hydroelectric project
at a distance of 2 kms from Shivasamudram Village, Hosahalli Panchayat, Malavalli Taluk in
Mandya District of Karnataka. The nearest airport is at Bangalore located at a distance of 130
kms. The geographical location of the project is between Longitude 77 ° 11’ East and
Latitude 12° 18’ North.
The location maps of the projects are furnished below:
A.4.2. Category(ies) of project activity:

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Category : “Energy Industries (Renewable and non-renewable

sources)”
Sectoral Scope Number :1
A.4.3. Technology to be employed by the project activity:
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Technical details of the project activity
The project is designed to generate electricity for grid system using available water sources.
The technology or power generation process using hydro resources is converting the potential
energy available in the water flow into mechanical energy using hydro turbines and then to
electrical energy using alternators. The generated power will be transformed to match the
nearest grid sub-station for proper interconnection and smooth evacuation of power.
No technology transfer is envisaged for the CDM project activity.
The project shall use the potential energy in a flowing river by diversion weir for running
Vertical Shaft Full Kaplan turbines to generate power. The components involved in the hydro
electric scheme consists of construction of a diversion weir, intake structure, power canal,
penstocks, power house and the tailrace discharging water back into the river. Power will be
generated at a lower voltage, which will be stepped up to higher voltage level within the
project boundary to facilitate export of power to Karnataka Power Transmission Corporation
Limited.
The total capacity of the turbine generators are 24.75 MW, which generates electricity at 11
kV level and evacuated at 66 kV level. The annual export of power to the regional grid is
81.48 GWh from the hydroelectric project.
Table A.1: Brief Technical details of the project design
Parameter Specifications
Hydrology
Rated Discharge 56 m3/sec
Rated Head 17.5 m
Plant Equipment
Type of Hydro turbine Vertical Full Kaplan
Type of generator Synchronous
No. of generating units 3
Capacity of each generating units 8.25 MW
Generation voltage 11 kV
Grid interfacing voltage 66 kV
Frequency 50 Htz
KPTCL substation 66 / 11 kV
Energy
Gross energy generation 84 GWh
Annual export to the grid 81.48 GWh
A.4.4 Estimated amount of emission reductions over the chosen crediting

period:
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The project activity will export 81.48 GWh/annum to the southern regional grid after
auxiliary consumptions from the installed capacity of 24.75 MW. The average estimated
amount of emission reductions are 70,144 tCO2 eq. per annum and it is calculated as 701,440
tCO2 eq. for the whole chosen crediting period of 10 years.
Year wise generation of emission reduction during the crediting period is shown below.
Year Period Annual estimation of emission

reductions (tCO2 eq.)
1 2007-08 70,144
2 2008-09 70,144
3 2009-10 70,144
4 2010-11 70,144
5 2011-12 70,144
6 2012-13 70,144
7 2013-14 70,144
8 2014-15 70,144
9 2015-16 70,144
10 2016-17 70,144
Total Emission reductions 701,440
(tonnes of CO2 eq.)
Total number of crediting 10
years
Annual average over the 70,144
crediting period of estimated
reductions
(tonnes of CO2 eq.)
In the above table, the year 2007-08 corresponds to the period starting from 01.06.2007 to
31.05.2008. Similar interpretation shall apply for remaining years.
A.4.5. Public funding of the project activity:

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The project activity does not involve any public funding from Annex-1 countries.
SECTION B. Application of a baseline and monitoring methodology
B.1. Title and reference of the approved baseline and monitoring methodology
applied to the project activity:
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Baseline Methodology: Consolidated baseline methodology for grid-connected electricity
generation
from renewable sources, ACM0002, Version 06, and;
Monitoring Methodology: Consolidated monitoring methodology for zero-emissions grid-
connected
electricity generation from renewable sources, ACM0002, Version 06
Additionality Tool: Tool for the demonstration and assessment of additionality, Version
03, EB29
B.2 Justification of the choice of the methodology and why it is applicable to the
project activity:
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The project activity meets all the applicability conditions of the approved consolidated
methodology ACM0002, as described below.
a) The project activity is a grid-connected renewable power generation project

constructed as a run-of-the-river hydropower project without any reservoir.
b) The geographic and system boundaries for the relevant electricity grid are clearly
identified and information on the characteristics of the grid is available.
As explained earlier, the project activity is envisaged across the Gaganchukki Branch of the
river Cauvery. The water from the branch is diverted using a diversion structure to power
canal and then to the powerhouse. The water will be fed back to branch through the tailrace
canal. The diversion structure does not result in storage of water or does not effect in any way
the volumes of existing reservoirs that are existing downstream of the project.
The relevant electricity grid system is Southern Region comprising the state level subsystems
of Andhra Pradesh, Karnataka, Tamilnadu, Kerala and Puducherry. The electricity system is
managed by Southern Regional Electricity Board (SREB). Central Electricity Authority
(CEA), a central level authority for electricity in India, monitors power generation from all
plants connected to the grid system. Hence, the geographic and system boundaries of the
southern regional grid system can be clearly identified.
Hence, the approved consolidated methodology is applicable to the project activity.
B.3. Description of the sources and gases included in the project boundary
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Project boundary covers the geographical location of the entire project site comprising
diversion structure, power canal, penstocks, powerhouse, power evacuation system and
tailrace channel. Spatial extent of the project activity covers all power plants that are in
operation and connected to the southern regional electricity system. The following gases and
sources have been considered in the project activity.
Table B.1: Gases and sources considered in the project activity
Source Gas Included/Excluded Justification / Explanation

CO2 Included Main emission source.
Baseline Grid electricity CH4 Excluded Excluded for simplification.
N2O Excluded Excluded for simplification.
CO2 Excluded Not applicable, since no
emissions occur from
Project Electricity project operation.
Activity generation CH4 Excluded Not applicable since no

project operation.
N2O Excluded Not applicable since no
project operation.
B.4. Description of how the baseline scenario is identified and description of the
identified baseline scenario:
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The most plausible baseline scenario identified for the project activity is continuation of
current practice i.e. operation of grid connected power sources. As per the approved
consolidated methodology ACM0002, since the project activity does not modify or retrofit an
existing facility, the applicable baseline shall be the electricity delivered to the grid by the
project would have otherwise been generated by the operation of grid-connected power plants
and by the addition of new generation sources, as reflected in the combined margin (CM)
calculations.
The most plausible baseline scenario has been identified using step 1 and step 2 of the tool for
demonstration and assessment of additionality.
The implementation of the project activity is not required by any State or National law and is
implemented by the promoters voluntarily. If the project is not implemented, then the
possible alternatives to the project activity are as follows:
1. No investment, which means that no power from renewable source would have been
produced, and the regional power demand would have been met by sources of the
current grid electricity mix (dominated by thermal sources).
2. The project activity not undertaken as CDM project activity. The hydro power plant
would have been implemented, but without returns from carbon credits.
The purpose of the following analysis is to demonstrate that Alternative 2 is less likely than
Alternative 1, and therefore the project activity is not the baseline scenario in the absence of
CDM benefits.
The above mentioned alternatives are tested for their compliance with the applicable legal and
regulatory requirements. All alternatives are found to meet all the legal and regulatory
requirements in India. In addition, implementation of the project activity is not required by
any law.
B.5. Description of how the anthropogenic emissions of GHG by sources are reduced
below those that would have occurred in the absence of the registered CDM project
activity (assessment and demonstration of additionality):
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Additionality of the project activity is demonstrated using the “Tool for the demonstration
and assessment of additionality” Version 03, as specified by the approved methodology
ACM0002 as described below:
Step 1: Identification of alternatives to the project activity consistent with current laws
and regulations
The purpose of the project is to generate power based on hydroelectricity for sale to the grid.
Under this step the project participant shall identify other alternatives.
Sub-step1 a: Define alternatives to the project activity:
1. Continuation of current situation of energy and peak deficits and demand would have
been met by sources of current grid electricity mix. In this option there will not be any
investment in the renewable energy project.
2. The project activity not undertaken as CDM activity. The hydro power plant would have
been implemented without revenue from carbon credits.
3. A possible third alternative could be the realisation of the project activity by an investor
of the public sector such as Karnataka Power Corporation Limited, Visveswaraya Vidyut
Nigam Limited. The issue, which is identical with alternative 2 is discussed subsequently.
Based on the barrier analysis explained at section B.4 of PDD, alternative 1 is the most likely
scenario in the absence of project activity. Therefore the project activity passes through Step
1a.
Sub-step1b: Consistency with mandatory laws and regulations:
The above mentioned alternatives are tested for their compliance with the applicable legal and
regulatory requirements. These alternatives are found to meet all the legal and regulatory
requirements in force.
Therefore the project activity passes through Sub-step 1b.
Step 2: Investment analysis
Sub-step 2 a: Determine appropriate analysis method
The tool for additionality provides three options for investment analysis viz., Option –I:
Simple cost analysis, Option-II: Investment comparison analysis and Option-III: Benchmark
analysis. Option I is not applicable for the project activity as the CER revenues are not the
only means of income. Out of the remaining options, project participants selected Option III:
Benchmark analysis.
Sub-step 2 b: Option III. Apply Benchmark analysis
Weighted average cost of capital (WACC) has been used for the benchmark analysis. WACC
is compared with IRR of the project activity to demonstrate additionality. IRR is the most
common financial indicator used by bankers as well as investors to gauge the financial
viability of the project. IRR has been computed by taking into account the cash outflows
(capital investment in the project) and cash inflows comprising profit after tax, depreciation,
interest on term loan and salvage value (in the terminal year). While working out the IRR,
subsidy available from Ministry of Non-conventional Energy Sources (MNES) to an extent of
Rs.38.44 millions has been accounted for. The Internal Rate of Return(IRR) of the project is
compared with WACC to prove that the proposed CDM project activity is unlikely to be
financially attractive without CER revenue.
For the project proponent, this is the first investment and hence there was no occasion to
make any evaluation of projects. Hence, there was not occasion for the PP to use of any
financial indicator to assess the viability of the project(s) in the past. For this project, PP has
chosen WACC as the benchmark. Since the project is financed by both debt and equity, it is
imperative that the project should generate cash surplus, which should enable the PP to earn a
return equivalent to the expected return on equity after servicing the debt. Hence, WACC,
which takes into account the cost of debt and expected return on equity, remains the most
suitable indicator for the assessment of financial viability, provided the required return on
equity (which enters the WACC calculation) is derived in a robust way.
In the above background WACC has been worked out considering the cost of borrowings as
well as expected return on equity. A detailed working has been done to ascertain the expected
rate of return by the equity investor, which is used in the computation of WACC.
WACC is computed using the following formula

N
Ko = Σ XiKi
I=1
Where K0 is the WACC
Xi is the proportion of the sources i in the capital structure
Ki is the return on the source i and N is the number of sources constituting the capital
structure.
Since the project activity is being financed by 2 different sources, the WACC will be
Ko = Σ [(XdKd) + (XeKe)]
Where
Xd is the proportion of debt in the total sources of finance
Kd is the rate of interest payable thereon
Xe is the proportion of equity in the total sources of finance
Ke is the cost / return expected thereon.
While the rates of interest payable on various loans and the proportion of each source of
finance are known and is available in the loan sanction letter, the cost of (expected return)
equity (Ke) is a derived figure.
The expected return on equity investment has been arrived at as the average of the following
on the basis of the latest available data.
• average yearly return of the Indian stock market (S&P CNX Nifty) over three year period1,
i.e., April 2002-March 05, and
• a risk-adjusted return computed from estimated risk levels (which correspond to the risk
perception2 of investors) of Government Securities and equity. (In the attachment the risk
adjusted return has been approximated by multiplying the risk free return with the ratio of the
respective risk levels which is working out to 7% x 82/25 =22.96%.)
While computing the WACC an average of the above two has been taken to represent the
expected rate of return on equity. The use of stock market return as one of the proxies for the
expected rate of return on equity by investors is considered conservative for the following
reason:
Security analysts classify the risk into systematic and unsystematic risks. While the former
cannot be minimized or eliminated, the intensity of the latter can be reduced substantially, if
not eliminated altogether. A private equity investment into a single project involves both
systematic and unsystematic risks. The risks are substantially high in the case of an
infrastructure project, such as the one under consideration, as it suffers risk of delays in
commissioning, technical performance risks, hydrological risks affecting power generation,
regulatory risks affecting revenues (tariffs, water flow) and costs (e.g. taxes), etc. On the
other hand, investment in a basket of listed stocks (it is possible to purchase Nifty futures and
options – the market return proxy considered in the present case) is bereft of unsystematic
risk. It is for this reason that private equity investors require returns substantially above those
offered by the market.
Based on the expected rate of return on equity and the cost of debt, the WACC has been
arrived at, which works out to 17.11%. In order to further support the credibility of the
selected benchmark, the PP has done an alternative benchmark based on the return on equity
for power-sector investments recommended by the Central Electricity Regulatory
Commission (CERC) at the time of investment decision. In computing the WACC, the cost of
debt financing has been retained unaltered and the ROE recommended by CERC has been
used to represent the expected rate of return on equity. Taking into account the changing
leverage over the 20-year lifetime, the resulting benchmark IRR works out to 18.50%. This
underlines that the original benchmark of 17.11% is conservative.
Sub-step 2 c: Calculation and Comparison of Financial Indicators
Total cost of setting up of the project is estimated at Rs. 959 millions. The project is funded
by the way of term loan of Rs.639 millions (66.63%) and share capital of Rs.320 millions
(33.37%).
1
A period of 3 years has been taken into account because “About one-fourth of share owners had
been holding at least some of their shares for over 10 years and another one fourth for 5
to 10 years. Thus, about one half of our sample shareowners had held some of their shareholding
for over 5 years. About three fourths had shares which had been held for over 3 years (emphasis
added) - L.C. Gupta, Indian Shareowners- A Survey, Society for Capital Market Research and Development,
New Delhi (1991) P. 133
2
How Good Are Mutual Funds, L.C. Gupta and Utpal K. Choudhury, Society for Capital Market
Research and Development, New Delhi (2001), p.48
IRR analysis was worked out for a 10 year period and presented to the validator. The original
focus of the PP on a 10-year time horizon was justified on the following reasons:
- As per the PPA entered into with the State Utility by the PP, the power tariff is valid only
for 10 years and thereafter it is subject to review. Any assumptions on the tariff applicable
from 11th year onwards are necessarily highly uncertain today and do not provide a reliable
basis for investment decisions. However, it is clear that this tariff will be substantially lower
for the following reasons:
- By that time there will not be any element of interest as the loan would have been fully
repaid.
- In the absence of a liberalized electricity market, the PP will have a very weak negotiating
position vis-à-vis the State Utility, who themselves have a strong interest to minimize tariffs.
This urge to bring down the tariff is evident from the fact that the tariff, which was Rs.2.90
per kWh with 2% escalation every year, has been brought down to Rs.2.80 without escalation
for subsequent projects.
- the risk faced by the project on account of dispute between the States of Karantaka and
Tamil Nadu over sharing of Cauvery river water on which the project is located.
- In the absence of any certainty regarding both tariff and operating costs in years 11 to 20,
particularly having regard to the unique risks faced by this project, it is of utmost important
for the PP to recover its cost at the earliest.
However, when the EB in its 35th Meeting recommended that investment analysis should not
be restricted to the crediting period, IRR analysis was prepared for 20 years and the soft copy
of the same are furnished separately. The extension of projections for 20 years has
necessitated the estimation of tariff from the 11th year onwards. This is because, as stated
above, the PPA is for only 10 years only and thereafter it is subject to review. The State
Utility might renew the PPA at the end of 10th year and such renewal could be for another 10
years. What tariff the State Utility would offer at that point of time is not certain as of today.
However, the general trend has been to lower the tariff progressively. This is evident from the
fact that while the tariff was fixed originally at Rs.2.90/kWh with 2% escalation, it was
brought down to Rs.2.80/kWh without any escalation for all future projects. Therefore any
assumption on the tariff applicable from 11th year onwards is necessarily highly uncertain
today and do not provide an objective reliable basis for making investment decisions.
However, it is clear that the tariff would be substantially lower for the reasons that by that
time, there would not be any element of interest on loans and the PP would have a very weak
negotiating power with the State Utility, who are themselves interested in bringing down the
tariff. It is against this background that PP has estimated the 'would be tariff ' from 11th year
onwards based on the cost plus basis. The total cost of generation of power as of 11th year (O
& M expenses, Interest on working capital and depreciation) and return on equity (at 16%)
has been added and divided by the total power generation during that year to arrive at the
cost, and hence the tariff likely to be provided by the State Utility per kWh. The projections
from 11th year onwards are based on this tariff.
Since the Electricity Regulatory Commissions adopt cost plus basis in recommending the
tariff and that there is no better method to estimate the tariff PP has projected the 'would be
tariff ' from 11th year onwards based on the cost plus basis. The total cost of generation of
power as of 11th year - O & M expenses, Interest on working capital, depreciation and return
on equity at 16% - is divided by the net exports to the utility during that year to arrive at the
cost of generation, and hence the tariff likely to be provided by the State Utility. The
projections from 11th year onwards are based on this tariff.
As the internal rate of return has been computed based on 20 years cash flows, the benchmark
return has also been refined by taking into account changes in the relative weights of debt and
equity over the 20-year horizon and the WACC has been arrived at to demonstrate the
financial unattractiveness of the project without CDM benefits.
Table B.2: Assumptions for Financial Analysis
Project Cost Rs.959 millions

Means of Finance:
- Share Capital Rs.320 millions
- Term Loan Rs.639 millions
Annual net energy export 81.48 GWh

Electricity tariff Rs.2.90 with an yearly increase
of 2% and cost-plus basis after
11th year
Interest on Term Loans 11.5 %
Operation & Maintenance 4% on Capital cost with yearly
escalation of 10 %
Salvage value 5% of the cost of plant and
machinery and 100% of the
value of land
Book Depreciation (Average) 3.4%
Tax holiday U/s.80IA 10 years
Minimum Alternate Tax (MAT) 11.22 %
Annual emission reductions 70,144 tCO2
CER Price Euro 8
Exchange Rate INR = Euro 56
The input values for the investment analysis are based on the Detailed Project Report
prepared by Tata Consulting Engineers(TCE), a reputed consulting organization(of Tata
Group) , the loan sanction letter, Provisions of IT Act, Companies Act etc and the same have
been furnished to the validator for verification. In the expenses considered for arriving at the
profitability, O&M expenses require some explanation.
The O&M cost in the case of this project includes not only stores and spares, but also salaries
and wages to the staff. The project, being located in a remote area, has to pay additional
incentives to attract and retain skilled man power for plant operations. In order to retain the
staff, the project has to offer increment, which would be in the range of 15-20% per annum.
Apart from salaries and wages, the project has to incur expenses on stores, spares, repairs and
maintenance. Due to steep increase in the steel and other input costs, these expenses have
been increasing year after year. The general boom in renewable energy investments, triggered
in part by the CDM, is also likely to contribute to the scarcity of qualified staff and increased
prices charged by service providers. Apart from salaries and wages, the project has to incur
expenses on stores, spares, repairs and maintenance. Due to steep increase in the steel and
other input costs, these expenses have been increasing year after year. Considering the above
parameters 10% escalation is considered reasonable for this particular project which cannot
be compared with similar project activities.
The increased O&M expenses cannot be passed on to the consumer, which in this case is the
state utility. In the state of Karnataka the tariff is fixed by regulatory commission. The tariff
was originally fixed at Rs.2.25 per kWh with 5% increase every year. Subsequently, the tariff
was reduced to Rs.2.9 per kWh with 2% increase every year. The present applicable tariff,
which is available for a period of 10 years, is Rs.2.80 per kWh without any escalation. As
such, the escalation has no relationship whatsoever with any costs. The objective of the
Regulatory Commission is to bring down the tariff progressively. Hence, the tariff and O&M
have expenses do not have any correlation at all.
Though a 10% escalation has been assumed in the O&M expenses, for the purpose of
sensitivity analysis, impact on the IRR has been computed with O&M cost escalation set at
5%. The results are as follows::
- With 20 year time horizon and O&M cost escalation at 10% - 14.63%
- With 20 year time horizon and O&M cost escalation at 5% in the first 10 years and at 10%
in the subsequent 10 years - 16.05%
With 20 year time horizon and O&M cost escalation at 5% throughout - 16.37%
It is important to note that even at 5% O&M cost escalation throughout the 20 year period,
the gap between the IRR and the benchmark return is substantial (2.13%) and CDM benefits
are still required to achieve the benchmark.
The PP has considered salvage value at 5% of the cost of plant and machinery and 100% of
the value of land at the end of 20th year. The assumption of a salvage value of 5% of cost of
plant and machinery is based on the following reasons:
a) The assets have been built based on the site specific activity.
b) The project civil works and plant and machinery have been designed based on the site
hydrology and geology.
c) The plant and machinery is subject to much higher wear and tear caused by various
geographical barriers faced by the project activity and
d) Finally, the cost of fixed assets are historical in nature and none can determine accurately
its scrap value, as it depends on the condition of the asset, the price prevailing at that time, the
demand, the technology developments and economic conditions prevailing at that point of
time.
Based on the above assumptions, the IRR for the project activity without CDM revenue is
14.63 % in contrast to IRR with CDM revenue which works out to 18.19 %.
Therefore it is evident that the project is not the baseline scenario and attractive only with
CDM revenues.
Sub-step 2 d: Sensitivity Analysis
A sensitivity analysis has also been carried out made for the project activity considering
reasonable variations in the critical factors, viz., PLF
Table B.3: Sensitivity Analysis
Scenario IRR (%)

Base Case 14.63
10% decrease in PLF 11.65
10% increase in PLF 17.50
As could be seen from the above, the IRR is quite sensitive to any decrease in PLF and CDM
benefits would go a long way in keeping the project activity attractive even under such
situations. The drop in PLF is a very reasonable expectation for a hydro electric power
project for the monsoons play a major role in generation and poor monsoon could bring down
the generation.
In view of the above it is concluded that project activity is unlikely to be the most financially
attractive proposition.
Step 3: Barrier Analysis
Sub-step 3a: Identify barriers that would prevent the implementation of the proposed
CDM project activity.
The following barriers are identified for the project activity.
Hydrological Barriers
Even during moderate floods in the river the tail water level raises abnormally because of the
narrow width of the gorge reducing operating head of the projects leading to generation losses
and at times shut down. If more than 50,000 cusecs of water is discharged, project needs to be
shut down.
Turbine and its auxiliaries run the risk of higher wear and tear due to excessive water
availability in monsoon months as the head comes down due to higher tail race level.
The project is at the tail end of Cauvery river with in Karnataka in respect of usage of water.
Therefore during the lean flow year the availability of water is marginal.
Geological Barriers
The project location is in a very deep gorge of 125 meters depth with steep slopes on both
sides of the river making the approach itself very hard. The terrain is a hard strata and the
project involved in excavation of nearly 5 lakh cubic meters of hard rock and up to a depth of
60 meters for powerhouse foundation. The project involved about 45,000 cubic meters of
concrete with powerhouse at an elevation of 55 meters from foundation to the top of the
powerhouse, which is not the case with any of the other hydro projects.
The water currents are very high during the normal season as well as during floods due to
narrow width of the gorge. The river width of 400 meters gets reduced to 100 meters in the
gorge near the powerhouse. This poses a reduction in generation capacity of the hydropower
plant.
Barriers due to Lack of Infrastructure

Since the project is located in a remote area, the project proponent spent an additional
investment of around Rs.21 millions towards network augmentation to the utility. An
approach road of 5 kms was constructed up to the power house and necessary infrastructure
had to be created. This is an added cost to the project.
Institutional Barriers
There has been frequent change in the tariff proposed by the state utility. Originally KPTCL
was offering the tariff recommended by Ministry of New & Renewable Energy (then
Ministry of Non-conventional Energy Sources) which was favorable for development of
renewable energy projects. Subsequently the tariff was revised to Rs.2.90 per kWh with an
increase of 2% every year for escalation. This policy again underwent further change and the
price is now fixed at Rs.2.80 per kWh. Though the company is having firm power purchase
agreement with a tariff rate of Rs.2.90 per kWh with 2% escalation, still the project could
face uncertainties with respect to tariff policy.
Other Barriers
- Health Hazards – Malaria

The project site is on the left bank of river Cauvery and is highly prone to Malaria. The work
force had malaria attacks upto the extent of 50 % during the summer months when the
construction activity is at its peak. Continual medical care, anti mosquito prevention measures
and extra incentives were also not adequate to retain the work force. The reluctance of the
work force to work in this health hazard has been a major impediment, and is continuing even
after commissioning and will continue during the operational life cycle of the plant. The
project is delayed because of the menace of Malaria and the project implementation took 27
months as against planned time of 18 months.
Sub-step 3b: Show that the identified barriers would not prevent the implementation of
atleast one of the alternatives.
The identified barriers are not affecting the other alternatives identified in Step 2, which are
continuation of existing practice of operation of existing plants / planned projects and
construction of a fossil fuel power project.
Step 4: Common Practice analysis
Sub-step 4 a: Analyse other activities similar to the project activity
In the Indian power sector, the common practice is investing in only medium or large scale
fossil fuel fired power projects. In order to demonstrate that project activity i.e. generation of
electricity through a small hydro project of 24.75 MW, is not a common practice reliance has
been placed on the published statistics in respect of installations of small hydro projects in
India, in the Southern region as well as in the state of Karnataka in relation to the total
installed capacity of power generation.
Table B.4: Installed Capacity as on 31st January 2003 3
Percentage of SHP
Small with total installed
Region Hydro Thermal Nucl Wind Total Hydro4 capacity (%)
ear
All India 26,660.23 76,525.11 2,720 1,628.36 107,533.70 1463.44 1.36
Southern 10,012.84 16,638.22 780 1,020.7 28,451.76 451.03 1.58
Region
Karnataka 2,938.75 2,728.42 130 68.6 5,865.77 156.90 2.67
As seen from the Table B.4 above, the total installed capacity of power projects in India is
107,533.70 MW as on 31st January 2003. Against this small hydro projects in operation in
India is 1,463.44 MW, giving an idea of the contribution of SHP in the total power generation
at 1.36%, which is negligible.
In the Southern region, the installation of SHP is only 1.58 % against the total installed
capacity of power plants. Whereas, in the state of Karnataka,, installed capacity of SHP is
only 2.67% among the total installed capacity of power plants.
The estimated small hydropower potential in the state of Karnataka is 1500 MW5 and out of
which only 156.90 MW has been commissioned so far over number of years. Thus, the
penetration of small hydro power in Karnataka is hardly significant.
These percentages are only related to the installed capacities. It is a well known fact that plant
load factor (PLF) of the small hydro projects is always less, sometimes as low as below 30%,
compared to the thermal plants. Therefore, if the actual generation is taken into consideration,
the contribution of small hydro power projects to over all power generation would be
negligible.
The reasons for such a poor implementation rate are reported to be hydrological barriers
(dependence on monsoon and river flow as the projects are located normally at the tail end),
geological barrier (hard terrain), infrastructural barrier (absence of physical, social and
institutional infrastructure) and consequent health hazards. Such barriers are reported to have
dissuaded many entrepreneurs from implementing the project.
The project activity has faced several barriers such as hydrological, geological problems with
respect to involvement of large excavation as well as situation of power house at an elevation
3
Page No: 114 to 119, Statement – I, Annual Report, 2002-03, Ministry of Power, Govt. of India
4
Page No: 61, Table – 5.17, Annual Report, 2002-03, Ministry of Non-Conventional Energy Sources,
Govt. of India
5
Karnataka Renewable Energy Development Limited, http://www.kredl.kar.nic.in/ProgressReport.htm
of 55 Meters, power evacuation problems requiring payment of augmentation charges etc. are
unique to this project and not being faced by other hydro projects. It is against this
background the project proponent has justified the requirement of CDM benefits for the
project activity to make it attractive.
In Karnataka, both the public sector companies namely Karnataka Power Corporation
Limited and Visveshwaraya Vidyut Nigam Limited, mandated for implementation of hydro
power projects, implement large hydro projects only. Development of small hydro power
projects, therefore, has been left to private investors. Small hydro power projects have not
become a common practice in Karnataka, because the barriers faced by the project proponents
are so many. Other wise, there is no reason as to why as much as 84% of the projects
approved by the nodal agency should become non-starters. This is evident from the
publication of KREDL, the nodal agency for the promotion of small hydro projects in
Karnataka, reveals. The publication states that only projects involving installed capacity of
139 MWs have been implemented till the year 2002-03 over many years as against projects
involving installed capacity of 876 MWs allotted by the agency (Source:
http://kredl.kar.nic.in/Docs/Year%20wise%20details.xls ).
Many of the projects are implemented when attractive tariff regime was in place which was
reduced substantially subsequently. Reasons for such a poor take-off rate should be found in
barriers and this is what the PP has demonstrated in the PDD.
The barriers, highlighted by the PP are, therefore, consistent with the common practice
analysis.
From the above it can be concluded that SHP projects is not a common practice. Moreover,
SHP projects face higher risks due to natural vagaries. They are also accorded unfavorable
power purchase tariffs by State Electricity Regulatory Commission (SERC) in comparison
with other renewables like wind. They also do not get other fiscal benefits like accelerated
depreciation, concessions in excise duties, sales tax etc.
(Source: Financial Incentives for Wind, http://www.kredl.kar.nic.in/FISmallHydro.htm,

Financial Incentives for Small Hydro, http://www.kredl.kar.nic.in/FIWind.htm)
In view of this, the 24.75 MW Someshwara project is not a common practice project.
Sub-step 4b. Discuss any similar options that are occurring

The Someshwara project being developed by the project participants is the difficult one on
the Cauvery river. It is on the last portions of the river Cauvery before it enters the state of
Tamilnadu and the Mettur dam. As mentioned earlier, in order to optimize power generation
potential, Pioneer Genco Limited had to dig deeper tailrace channel. The drop available for
the Someshwara project is hardly 20 m. As against this, gross head available for some of the
other projects with similar capacity are:
Table B.5: Available Gross Head

Gross Head
S. Project (meter) Source6
No
1. 6 MW Somanamarandi 35.74 Page No: 5, Section A.4 of PDD, Ref. No:
227
2. 20 MW Kabini SHP 21.94 Page No: 7, Section A.4.3 of PDD, Ref. No:
87
3. 18 MW Kemphole SHP 68 Page No: 5, Section A.4.3 of PDD, Ref. No:
312
4. 22.5 MW Varahi SHP 47.5 Page No: 2, Section A.2 of PDD, Ref. No:
816
Moreover, the Someshwara project faces uncertainty in water availability, as the water
allocation to the project is after fulfilling the growing needs of Bangalore water supply and of
the existing hydropower projects on the river. Thus, although many SHP projects are under
development in the state of Karnataka, present project faces higher risks. Further the barriers
listed under technology and investment are not common for other hydro projects implemented
in Karnataka.
As mentioned above other similar options are taking place in Karnataka as the topography of
the state is laced with the Western Ghats. The major difference between these and the project
is lower risk from water availability as they are tied to the tailrace of a single reservoir
upstream. The majority of the projects have been implemented during the regime of attractive
tariff that was offered under the tariff guidelines of the Ministry of Non-Conventional Energy
Sources (MNES)7. This policy was considerably attractive as it offered a base year tariff of
Rs. 2.25 for the FY 1994-95 and escalated @ 5% p.a. This policy faced resistance from the
power purchasing utilities in all the states. With the advent of state electricity regulatory
commissions (SERC) the tariff fixation to the renewable energy based power projects was
differed and lowered considerably. The KERC, which regulates power sector in Karnataka,
issued a policy paper and subsequently reduced tariff paid to the renewable energy based
power producers. The PPA of the power project was approved with a tariff of Rs.2.90 per
kWh as against Rs.3.66 per kWh had the MNES policy been continued. Thus, one can
conclude new barriers have emerged as the earlier promotional policy has ended.
A question may be relevant here whether public sector investors would likely to realise the
project activity if it was not realised by private promoters. In this respect the table furnished
below indicates the projects implemented by Karnataka Power Corporation Limited and,
Visveshwaraya Vidyut Nigam Limited.
Table B.6: List of Power Stations under Karnataka Power Corporation Limited8
S. No. Power Station Capacity

(MW)
6
For Sl. No: 1, 2, 3 http://cdm.unfccc.int/Projects/registered.html ,
For Sl. No: 4 http://cdm.unfccc.int/Projects/request_reg.html
7
Guidelines for fixation of purchase price for power produced from non-conventional energy, Ministry
of New and Renewable Energy, Govt. of India, http://mnes.nic.in/guide.htm
8
www.karnatakapower.com/projects.asp
1 Sharavathi Generation Station 1035

2 Gerusoppa Dam Power House 240
3 Linganamakki Dam Power House 55
4 Bhadra Right Bank Canal Power House 13.20
5 Bhadra Left Bank Canal Power House 26
6 Supa Dam Power House 100
7 Nagjhari Power House 855
8 Kadra Dam Power House 150
9 Kodasalli Dam Power House 120
10 Varahi Underground Power House 230
11 Mani Dam Power House 9
12 Ghatapragha Dam Power House 32
13 Almatti Dam Power House 290
14 Mallapur Mini Hydel Scheme 9
15 Sirwar Mini Hydel Scheme 1
16 Kalmala Mini hydel Scheme 0.40
17 Ganekal Mini Hydel Scheme 0.35
Total Capacity (MW) 3165.95
Table B.7: List of Power Stations under Vishveswaraya Vidyut Nigam Limited (VVNL)9
S. No. Power Station Capacity

(MW)
1 Sri K.Sheshadri Iyer Hydro Electric Station 42
(Shivanasamudram)
2 Shimshapura Hydro Electric Station 17.2
3 Mahatma Gandhi Hydro Electric Station 139.2
Total Capacity (MW) 198.4
As could be seen from the above the composition of large hydro projects in respect of KPCL
is 99 % and in respect of Visveswaraya is 91%. This gives a conclusion that implementing
small hydro project is not preferred business option of government owned institutions.
Thus, the project satisfies Sub-steps 4.a and 4.b.
Thus, all the steps specified above to determine additionality are satisfied and the project
activity is not the baseline scenario.
B.6. Emission reductions:
B.6.1. Explanation of methodological choices:

>>
Spatial extent
9
www.karnatakapower.com/projects.asp
The Someshwara small hydro project will generate and sell power to the Karnataka grid
managed by KPTCL, which is a part of the southern regional grid, comprising the states of
Andhra Pradesh, Karnataka, Kerala, Puducherry, and Tamilnadu.
For the baseline determination, project participants account CO2 emissions from electricity
generation in fossil fuel fired power that is displaced due to the project activity. The spatial
extent includes all plants connected physically to the southern regional electricity system to
which the CDM project is connected and power flows within the grid system exists without
any significant transmission constraints. The plants in the southern regional grid can be
dispatched without any significant transmission constraints. The national grid is under
development in India. There are only few interregional transmission lines that generally
operate at higher voltage levels and some are also based on DC circuits. Thus, there are
constraints related to transmission voltages and nature of current. However, some power
transfers do take place over these interregional links. Hence the neighbouring regional grids
viz. Eastern and western regional grids are considered as Connected Electricity system as
defined in ACM0002. These definition help in determining the operating and build margins
of the electricity system and to estimate the baseline emission factor or the combined margin.
The above definitions are in line with the latest guidance provided by the Meth Panel10. The
power transferred from connected system to the project system is considered as electricity
imports and from project system to connected system is considered exports. As this is lesser
than 20%, the average emission rate of the exporting grid is taken into consideration to
determine the CO2 emission factor(s) for net electricity imports (COEFi,j, imports) from the
connected electricity system.
Baseline
As the project activity does not modify or retrofit an existing electricity generation facility,
the baseline scenario is: electricity delivered to the grid by the project that would have
otherwise been generated by the operation of grid-connected power plants and by the addition
of new generation sources, as reflected in the combined margin (CM) calculations described
below.
The baseline emission factor (EFy) is calculated as a combined margin (CM), consisting of
the combination of Operating Margin (OM) and Build Margin (BM) factors.
Central Electricity Authority have worked out baselines for various grids in India and made
them publicly available i.e “CO2 Baseline Database”, Version 1.1, 21st December 2006 at
http://www.cea.nic.in/planning/c%20and%20e/Govertment%20of%20India%20website.htm
Since the data released by CEA is verifiable, the same is considered for the estimation of
emission reduction. For the Southern region, CEA has published the following emission
factors for the year 2004-05.
Simple Operating Margin : 1003.76 tCO2/GWh

Build Margin : 717.98 tCO2/GWh
10 “Determination of relevant electricity grid boundaries in India – State Grid Vs Regional Grid Vs.
National Grid” Oct 2005.
Combined Margin : 860.87 tCO2/GWh
Leakage
As specified in ACM0002, project participants do not need to consider leakage in applying
this methodology.
Emission Reductions
The emission reductions are calculated as per the following equation as specified in
ACM0002.
The project activity mainly reduces carbon-di-oxide through substitution of grid electricity
generation with fossil fuel fired power plants by renewable electricity. The emission
reductions ERy by the project activity during a given year y is the difference between
baseline emissions (BEy), project emissions (PEy) and emissions due to leakage (Ly) as
follows.
ERy = BEy − PEy − Ly
Where, BEy = EFy * EGy
EGy is the power exported to the grid by the project activity

PEy is the project emissions = 0
Ly is the Leakage emissions = 0
Therefore the annual emission reductions from the project activity are
ERy = 860.87 * 81.48 = 70,144 tCO2 per year
B.6.2. Data and parameters that are available at validation:
Data / Parameter: GENj,y

Data unit: GWh
Description: Generation from plant sources j, during the year y
Source of data used: The “Operating Margin” emission factor has been adopted from the
“CO2 Baseline Database” published by CEA.
http://www.cea.nic.in/planning/c%20and%20e/Govertment%20of%20I
ndia%20website.htm
Value applied: All values taken from CEA database.

Justification of the choice of CEA monitors the generation data from each plant, every year as per
data or description of their standard practices. Project Participants have no control on these
measurement methods and measurements. Hence, no measurements procedures have specified
procedures actually applied : here.
Any comment: Data item used for ex ante calculation of operating margin emission
factor. The year indicated above corresponds to April 2004 to March
2005.
Data / Parameter: GENm,y

Data unit: GWh

Description: Generation from plant sources of group m, during the year y
Source of data used: The “Build Margin” emission factor has been adopted from the “CO2
Baseline Database” published by CEA.
http://www.cea.nic.in/planning/c%20and%20e/Govertment%20of%20I
ndia%20website.htm
Value applied: All values taken from CEA database.

Justification of the choice of CEA monitors the generation data from each plant, every year as per
data or description of their standard practices. Project Participants have no control on these
measurement methods and measurements. Hence, no measurements procedures have specified
procedures actually applied : here.
Any comment: Data item used for ex ante calculation of build margin emission factor.
The year indicated above corresponds to April 2004 to March 2005
B.6.3 Ex-ante calculation of emission reductions:

>>
Baseline emissions
Baseline emissions calculated as explained in section B.6.1 above are summarised as below.
Year (Season) Estimation

of baseline
emissions
2007-08 70,144
2008-09 70,144
2009-10 70,144
2010-11 70,144
2011-12 70,144
2012-13 70,144
2013-14 70,144
2014-15 70,144
2015-16 70,144
2016-17 70,144
Total 701,440
Project emissions
The project emissions calculated for the proposed project activity for each year of the
crediting period are mentioned below.
Estimation
S. No Year of project
emissions
(tCO2eq.)
1. 2007-08 0
2. 2008-09 0
3. 2009-10 0
4. 2010-11 0
5. 2011-12 0
6. 2012-13 0
7. 2013-14 0
8. 2014-15 0
9. 2015-16 0
10. 2016-17 0
Total 0
Leakage
The leakage emissions calculated for the proposed project activity for each year of the
crediting period are mentioned below.
Estimation
S. No Year of leakage
emissions
(tCO2eq.)
1. 2007-08 0
2. 2008-09 0
3. 2009-10 0
4. 2010-11 0
5. 2011-12 0
6. 2012-13 0
7. 2013-14 0
8. 2014-15 0
9. 2015-16 0
10. 2016-17 0
Total 0
B.6.4 Summary of the ex-ante estimation of emission reductions:

>>
Summery of the ex ante estimation of emission reductions are furnished below.
Year Estimation of Estimation Estimation of Estimation of

(Season) Project activity of Baseline Leakage Emission
Emissions Emissions reductions
2007-08 0 70,144 0 70,144
2008-09 0 70,144 0 70,144
2009-10 0 70,144 0 70,144

2010-11 0 70,144 0 70,144
2011-12 0 70,144 0 70,144
2012-13 0 70,144 0 70,144
2013-14 0 70,144 0 70,144
2014-15 0 70,144 0 70,144
2015-16 0 70,144 0 70,144
2016-17 0 70,144 0 70,144
Total 0 701,440 0 701,440
B.7 Application of the monitoring methodology and description of the monitoring

plan:
B.7.1 Data and parameters monitored:

>>
Data / Parameter: EGy
Data unit: GWh
Description: Electricity supplied to the grid by the project
Source of data to be used: On-site measurements
Value of data applied for the 81.48 GWh
purpose of calculating expected
emission reductions in section
B.5
Description of measurement Measured monthly using calibrated meters and aggregated annually.
methods and procedures to be
applied:
QA/QC procedures to be Meters will be calibrated as per industry standards. Sales records to the
applied: grid and other records are used to ensure consistency.
Any comment: Electric power sold to the grid will be measured by main meter and
check meter by both PGL and KPTCL as specified in the PPA and
records maintained. To be cross-checked with monthly invoices or
receipts of payments.
B.7.2 Description of the monitoring plan:

>>
As detailed in Section B.7.1., Electricity supplied to the grid by the project activity will be
monitored using calibrated meters. The project design employed latest microprocessor based
high accuracy monitoring and control equipment that will measure, record, report, monitor
and control of various key parameters like generation by the project and net energy exported
to the grid. Necessary standby meters or check meters are installed, to operate in standby
mode when the main meters are not working. All meters will be calibrated and sealed as per
the industry practices at regular intervals. Hence, high quality is ensured for all the above
parameters. Sales records will be used and kept for checking the consistency of the recorded
data.
The Power Purchase Agreement signed by the Project Participants and the KPTCL provides
procedures for monitoring the energy fed to the grid, emergency preparedness, calibration of
monitoring equipment, company’s operation and maintenance responsibilities etc. The same
will be adopted for GHG audits and will form part of the monitoring plan. Hence, no separate
procedures for QA/QC are provided in this monitoring plan.
The project has necessary provisions for emergency preparedness so that any unforeseen
events such as fire etc. could be averted. The provisions include fire fighting systems, standby
features for critical items etc.
All the data monitored under the monitoring plan will be kept in electronic form and hard
copy format for 2 years after the end of crediting period or the last issuance of CERs for this
project activity whichever occurs later. The monitored data will be presented to the
verification agency or DOE to whom verification of emission reductions is assigned.
B.8 Date of completion of the application of the baseline study and monitoring
methodology and the name of the responsible person(s)/entity(ies)
>>
Date of completion of the baseline study and monitoring methodology: 20/10/2006
Name of the Entity: Zenith Energy Services (P) Limited, Hyderabad.
Contact information is provided below.
Organization: Zenith Energy Services (P) Limited

Street/P.O. Box, Building: 10-5-6/B, My Home Plaza, Masabtank,
City: Hyderabad
State/Region: Andhra Pradesh
Postfix/ZIP: 500 028
Country: India
Telephone: +91- 40- 2337 6630, 2337 6631
FAX: +91- 40- 2332 2517
E-Mail: zenith@zenithenergy.com
URL: www.zenithenergy.com
Represented by:
Title: Director
Salutation: Mr.
Last Name: Reddy
Middle Name: Mohan
First Name: Attipalli
Mobile +91- 9849408485
Direct Fax +91- 40- 2332 2517
Direct Telephone +91- 40- 2337 6630, 2337 6631
Personal E.mail attipallimohan@gmail.com
The project proponent has appointed the above-mentioned as the CDM official contact entity
and the same is not the project participant.
SECTION C. Duration of the project activity / crediting period
C.1 Duration of the project activity:
C.1.1. Starting date of the project activity:

>>
01/06/2003
C.1.2. Expected operational lifetime of the project activity:

>>
30 years
C.2 Choice of the crediting period and related information:
C.2.1. Renewable crediting period

>>
Not chosen
C.2.1.1. Starting date of the first crediting period:

>>
Not Applicable
C.2.1.2. Length of the first crediting period:

>>
Not Applicable
C.2.2. Fixed crediting period:
C.2.2.1. Starting date:

>>
01/01/2008 or from the date of registration of the project activity whichever is later
C.2.2.2. Length:
>>
10 y – 0 m
SECTION D. Environmental impacts

>>
D.1. Documentation on the analysis of the environmental impacts, including
transboundary impacts:
>>
As per the prevailing regulations of the Host Party i.e. India represented by the Ministry of
Environment and Forests (MoEF), Govt. of India and also the line ministry for environmental
issues in India, Environmental Impact Assessment (EIA) studies need not to be conducted for
the projects less than Rs. 1000 millions. Since the total cost of the project is only Rs.959
millions, the project activity doesn’t call for EIA study. Also, S.O. 153311, dated 14th
September 2006, Ministry of Environment & Forests (MoEF), Govt. of India, states that the
hydroelectric projects with less than 25 MW need not to get Prior Environmental Clearance
(EC) either from State or Central Govt. authorities. However the project activity is required to
get permission from Karnataka State Pollution Control Board for setting up of the project.
The project proponents have obtained necessary clearance in this regard.
The project activity is not likely to have any impact on the environment either during
construction phase or post project implementation. During the construction as well operation
phase it was ensured that air quality is not effected, noise levels are maintained and there is
no effect on water resources, land and ecology.
A report prepared by the project proponent on Compliance to Environment Management,

Health and Safety Policy is available for verification by the DOE.
D.2. If environmental impacts are considered significant by the project participants

or the host Party, please provide conclusions and all references to support
documentation of an environmental impact assessment undertaken in accordance with
the procedures as required by the host Party:
>>
As required for the approval from the Karnataka State Pollution Control Board (KSPCB), the
project participants have conducted an assessment study of the Someshwara small hydro
project. The objective of the study is to identify, predict and assess the likely environmental
impact of the Someshwara small hydro project during its construction and operational stages.
The study also aims at developing an appropriate Environment Management Plan (EMP) for
mitigating adverse environmental impact of the project, if any. As per the assessment of the
project proponent, no negative environmental impacts would result as a result of the project
activity. Documentation will be made available to the DOE for validation. The project has
already obtained approval and clearance from the KSPCB. Copy of the environmental
clearance is available for validation.
11
Page No: 10, Section 1(c), River Valley Projects, Ministry of Environment & Forests (MoEF), Govt.
of India, http://envfor.nic.in/legis/eia/so1533.pdf
page 29
SECTION E. Stakeholders’ comments

>>
E.1. Brief description how comments by local stakeholders have been invited and compiled:
>>
There are certain procedural requirements, which every project investor needs to follow before
implementing any project. The project investors / developers need to identify the stakeholders, prepare
necessary documents, approach the identified stakeholders directly and obtain required clearances /
approvals. The stakeholders after review of documents and investment profile, will accord approvals /
licences or send comments in writing to project investors for further clarifications / corrections. In case
they are not satisfied with the project design or they feel that the project impacts any of the local
environment / social / economical environments, they will not issue clearances / approvals and stop the
implementation of the project.
Identification of the Stakeholders:
The project participants identified the following stakeholders for the project activity.
Stakeholder Name Function of Stakeholder

Karnataka Renewable Policy implementation body in respect of renewable energy projects in
Energy Development Karnataka. KREDL reviews the project documentation and accords
Limited clearance for utilizing renewable energy sources in the state
(KREDL)
Karnataka Power The state owned electricity utility company that manages the electricity
Transmission transmission and distribution in Karnataka state. Any electricity generation
Corporation Limited project proposed in Karnataka shall approach KPTCL for power evacuation
(KPTCL) arrangements.
Karnataka State Pollution A statutory local body that oversees the pollution control aspects in the
Control Board (KSPCB) state. Any project activity shall obtain clearance from the KSPCB before
implementation.
Irrigation Department Is part of Government of Karnataka and overseas utilization of water in the
state of Karnataka.
Revenue Department Is part of Government of Karnataka and monitors utilization of land in the
state of Karnataka.
Local Village Panchayat Elected statutory body of the local populace will issue NOC for
implementing any project in the jurisdiction of the panchayat.
Stakeholders’ Involvement
Department of Energy
The Department of Energy, Govt. of Karnataka has issued consent for setting up of the project vide
DE/38/NCE/2002 dated 13th June 2002.
The Department of Energy, Govt. of Karnataka has issued consent for enhancing the capacity from 2 MW
to 21 MW vide DE/38/NCE/2002 dated 7th December 2002.
page 30
The Department of Energy, Govt. of Karnataka has issued consent for enhancing the capacity from 21
MW to 24.75 MW vide DE/277/NCE/2003, Bangalore dated 15th November 2003.
Pollution Control Board

The Karnataka State Pollution Control Board (KSPCB) has issued ‘Consent for Establishment’ to the
project vide KSPCB/RO – MND/SG/CFE/2003-04/1584 dated 12th January 2004.
KREDL
Karnataka Renewable Energy Development Limited (KREDL) has issued its clearance for the project
vide KRED/06/PIONEER GENCO/2002/1597 dated 22nd November 2002.
KPTCL
• The project has got approval for power evacuation from Karnataka Power Transmission
Corporation Limited (KPTCL) vide CEE (P&C)/SEE(PLG)/EE (PSS)/F-179/CYS-249 dated
17th December 2003.
• The project has entered into Power Purchase Agreement (PPA) with KPTCL on 15th September
2003.
Stakeholder’s Comments
The project participants already consulted and approached the above stakeholders for implementation of
the project. No negative comments are received from them. Necessary clearances / approvals are already
released in favour of the project.
E.2. Summary of the comments received:

>>
No comments are received on the project.
E.3. Report on how due account was taken of any comments received:
>>
No comments are received; hence, no action taken report is applicable
page 31
Annex 1
CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY
Organization: Pioneer Genco Limited

Street/P.O. Box: Golf Link Road,
Amarajyothi Layout, Koramangala Ring Road, Domlur
Building: #156,
City: Bangalore
State/Region: Karnataka
Postfix/ZIP: 560 071
Country: India
Telephone: +91- 80- 4130 0550
Fax: +91- 80- 4130 0660
E.Mail: pioneergenco@yahoo.co.in
URL:
Represented by:
Title: Chief Executive Officer
Salutation: Comdr. (Retd.)
Last Name: K. C
Middle Name:
First Name: Shibu
Department:
Mobile:
Direct Fax: +91- 80- 4130 0660
Direct Tel: +91- 80- 4130 0550
Personal E.Mail: pioneergenco@yahoo.co.in
page 32
Annex 2
INFORMATION REGARDING PUBLIC FUNDING
The project would not receive any public funding from the ODA or other funds provided by any Annex I
countries
page 33
Annex 3
BASELINE INFORMATION
The methodology adopted for the calculation of the baseline is “Combined Margin (Including
Imports)” of Southern Region for the year 2004-05. The baseline emission factor has been adopted from
the “CO2 Baseline Database” published by Central Electricity Authority (CEA), Govt. of India, Version
1.1, dated 21st December 2006.
http://www.cea.nic.in/planning/c%20and%20e/Govertment%20of%20India%20website.htm
page 34
Annex 4
MONITORING INFORMATION
This monitoring plan is designed for the 24.75 MW Someshwara small hydro project which is being
implemented in Karnataka, India and this monitoring plan describes about the monitoring organisation,
parameters and variables, monitoring practices, QA and QC procedures, data storage and archiving etc.
Project participants implement this monitoring plan right from the start of the implementation of the
project.
MONITORING ORGANISATION
The authority and responsibility for registration, monitoring, measurement, reporting and reviewing of the
data rests with the Board of Directors who may delegate the same to the Plant Manager or an internal
auditor.
The primary responsibility for the data measurement as per the monitoring plan will be carried out by the
Plant Manager and necessary reports will be generated for the management i.e., Board of directors or its
committee for review.
The management will review the data collected with reference to the criteria determined in the MP and
also suggest corrective actions wherever required. Management will also examine the internal audit
reports independent of the plant manager’s report. Management will in particular take note of deviations
in data over the norms and monitor that the corrective actions have resulted in adherence to the standards.
It will also be the responsibility of Plant Manager to report to the management about the compliance of
management’s instructions on corrective actions.
The company will introduce an internal audit system for the GHG compliance. The internal auditor
appointed for the purpose will be an individual with necessary experience exclusively in GHG audits. The
person so appointed as an internal auditor will be given clear instructions about his scope of work and
reporting requirements. He will carry out his work on monthly basis or as required by the monitoring
plan. His report will indicate the compliance requirements and achievements. He will work directly under
the control of the Board of Directors and all his reports will be addressed to the Board directly. The
internal auditor in particular will report to the management any non-compliance of corrective actions by
the operating staff.
CALIBRATION
The calibration of monitoring equipment is being maintained as per the requirement of KPTCL and the same
is being done regularly. Power Generation, Export & Auxiliary Consumption, are being recorded daily and the
same is being verified and approved by Manager of the plant.
The plant is equipped with energy meters/export meters for monitoring and control purpose. There are two
energy meters at KPTCL sub station to measure the export power, namely main meter and check meter with
0.2 class accuracy. The energy meters shall be tested and calibrated utilizing a standard meter. The standard
meter shall be calibrated once in a year at the approved laboratory of Govt. of India or Govt. of Karnataka as
per terms and conditions of supply. The tests of meters shall be jointly conducted by authorised representatives
page 35
of both the parties and the results and correction so arrived at mutually will be applicable and binding on both
the parties. The energy meters shall not be interfered with, tested or checked except in the presence of
representatives of company and KPTCL. If any of the meters is found to be registered inaccurately, the
affected meter will be immediately replaced. The meters will be checked in presence of both the parties on
mutually agreed periods. If during the test checks both the meters are found beyond permissible limits of error,
both the meters shall be immediately replaced and the correction applied to the consumption registered by the
main meter to arrive at the correct energy exported for billing purposes for the period of one month up to the
time of test check, computation of exported energy for the period thereafter till next monthly reading shall be
as per the replaced meter.
Corrections in exported energy shall be applicable to the period between the two previous monthly reading
and the sate and time of test calibration in the current month when error is observed. Power generation, export
and auxiliary consumption are being recorded at the plant from the installed meters. However, for applying
monthly bill to KPTCL the meter readings will be taken every month by KPTCL officials in presence of
company representatives and readings will be jointly certified.
The following log sheets are being maintained for the critical equipment of the plant and readings are
being recorded on day to day basis:
1. Turbine log
3. Electrical log
If both check meters fail to record or if any of the PT fuses are blown out, the export energy will be computed
on a mutually agreeable basis for the point of defect. Power generation, export and auxiliary consumption, are
being recorded at the plant daily and the same is being verified by Manager of the plant. These records sent to
head office for review by the director and for corrective actions if necessary.
PARAMETERS REQUIRING MONITORING
As detailed in the project design document under Section – B, the following parameters / variables will be
monitored under this monitoring protocol.
Project Emissions:
As described in the PDD, no significant emissions by sources within the project boundary are identified
by the project participants. Hence, no parameters or variables are to be monitored under project
emissions.
Leakage:
As described in the PDD, no significant measurable emissions by sources attributable to the project
activity but located outside the project boundary are identified by the project participants. Hence, no
parameters or variables are to be monitored under leakage.
Baseline:
The following parameters / variables are to be monitored under this monitoring protocol. These
parameters / variables are in accordance with the approved methodology i.e. consolidated methodology
for grid connected zero emission project activities.
1. Electricity supplied to the grid by the project

2. Emissions reductions due to the project activity
page 36
The data “CO2 Database” published by Central Electricity Authority (CEA) every year will be considered
to calculate the baseline emissions and emission reductions as referred in ACM0002. The Operating
Margin, Build Margin and Combined Margin are taken readymade from CEA website.
QA AND QC PROCEDURES
The project incorporates latest state of art microprocessor based high accuracy monitoring and control
equipment that will measure, record, report, monitor and control of various key parameters like
generation by the project, auxiliary consumption and net energy exported to the grid. Necessary standby
meters or check meters will be installed, to operate in standby mode when the main meters are not
working. All meters will be calibrated and sealed as per the industry practices at regular intervals. Hence,
high quality is ensured with the above parameters. Sales records will be used and kept for checking
consistency of the recorded data.
DATA STORAGE AND ARCHIVING
All the above parameters monitored under the monitoring protocol will be kept for 2 years after the end of
crediting period or the last issuance of CERs for this project activity whichever occurs later.
The monitored data will be presented to the DOE to whom verification of emission reductions is assigned.
Necessary formats / tables / log sheets etc. will be developed by the project participants for monitoring
and recording of the data and will be made part of the registered monitoring protocol.
page 37
Annex 5
REFERENCES
1. Website of Clean Development Mechanism (CDM) section of United Nations Framework

Convention on Climate Change (UNFCCC), http://cdm.unfccc.int
2. UNFCCC document: Clean Development Mechanism, Project Design Document For Large Scale
Project Activities (CDM PDD), Version 03.1
3. Consolidated baseline methodology for grid-connected electricity generation from renewable

sources, ACM0002, Version 6, Sectoral Scope: 01, 19th May 2006
4. Tool for the demonstration and assessment of additionality, Version 03, EB 29.
5. Detailed Project Report (DPR) of the project.

page 38
Annex 6
ABBRÉVIATIONS
BESCOM Bangalore Electricity Supply Company Limited

BWSSB Bangalore Water Supply and Sewerage Board
CEA Central Electricity Authority
CFE Consent for Establishment
CFO Consent for Operation
CO2 Carbon dioxide
EIA Environment Impact Assessment
GHG Greenhouse gas
GWh Giga watt hour
IPCC Inter Governmental Panel on Climate Change
KERC Karnataka Electricity Regulatory Commission
KPCL Karnataka Power Corporation Limited
KPTCL Karnataka Power Transmission Corporation Limited
KREDL Karnataka Renewable Energy Development Limited
KSPCB Karnataka State Pollution Control Board
kWh Kilo watt hour
MW Mega watt
MNES Ministry of Non Conventional Energy Sources
MNRE Ministry of New & Renewable Energy
MoEF Ministry of Environment & Forest
MT Metric Tonne
PDD Project Design Document
PGL Pioneer Genco Limited
PPA Power Purchase Agreement
UNFCCC United Nations Framework Convention on Climate Change
VVNL Visveshwaraya Vidyut Nigam Limited

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PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1.

CDM – Executive Board

CLEAN DEVELOPMENT MECHANISM

A. General description of project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

Annex 1: Contact information on participants in the project activity

Annex 2: Information regarding public funding

Annex 3: Baseline Information

Annex 4: Monitoring Plan

CDM – Executive Board

SECTION A. General description of project activity

A.1 Title of the project activity:

A.2. Description of the project activity:

View of project participant about the project activity’s contribution to Sustainable

1. Social well being

Social Well being

CDM – Executive Board

Economic well being

Environmental well being

Technological well being

A.3. Project participants:

A.4. Technical description of the project activity:

A.4.1. Location of the project activity:

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

CDM – Executive Board

A.4.1.3. City/Town/Community etc:

A.4.1.4. Detail of physical location, including information

The location maps of the projects are furnished below:

A.4.2. Category(ies) of project activity:

CDM – Executive Board

Category : “Energy Industries (Renewable and non-renewable

No technology transfer is envisaged for the CDM project activity.

CDM – Executive Board

A.4.4 Estimated amount of emission reductions over the chosen crediting

Year Period Annual estimation of emission

A.4.5. Public funding of the project activity:

SECTION B. Application of a baseline and monitoring methodology

CDM – Executive Board

electricity generation from renewable sources, ACM0002, Version 06

a) The project activity is a grid-connected renewable power generation project

Hence, the approved consolidated methodology is applicable to the project activity.

Table B.1: Gases and sources considered in the project activity

Source Gas Included/Excluded Justification / Explanation

CDM – Executive Board

Activity generation CH4 Excluded Not applicable since no

CDM – Executive Board

Sub-step1 a: Define alternatives to the project activity:

Sub-step1b: Consistency with mandatory laws and regulations:

Therefore the project activity passes through Sub-step 1b.

Step 2: Investment analysis

Sub-step 2 a: Determine appropriate analysis method

Sub-step 2 b: Option III. Apply Benchmark analysis

CDM – Executive Board

WACC is computed using the following formula

CDM – Executive Board

Sub-step 2 c: Calculation and Comparison of Financial Indicators

CDM – Executive Board

CDM – Executive Board

Table B.2: Assumptions for Financial Analysis

Project Cost Rs.959 millions

Annual net energy export 81.48 GWh

CDM – Executive Board