5442 - FVR

VALIDATION REPORT
7 MW HYDEL BASED POWER UNIT ON RIVER JATASHANKARI, CHHATTISGARH IN INDIA
REPORT NO. 2011-0606

REVISION NO. 03
DET NORSKE VERITAS
DET NORSKE VERITAS
VALIDATION REPORT
Date of first issue: ConCert Project No.:
2011-04-17
Approved by: Approved by Ole A. Flagstad Client:
PRJC-289349-2011-CCS-IND
Organisational unit:
DNV CLIMATE CHANGE SERVICES AS

Veritasveien 1, 1322 HVIK, Norway Tel: +47 67 57 99 00 Fax: +47 67 57 99 11 http://www.dnv.com Org. No: NO 994 774 352 MVA
DNV Climate Change and Environmental Services

Client ref.:
M/s Shalivahana Green Energy Limited

Summary:
Mr. M. Komaraiah
Project Name: 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh Country: India Methodology: AMS-I.D Version: 16 GHG reducing Measure/Technology: Grid connected electricity generation from renewable energy source (hydro) Technical area: TA 1.2 Energy generation from renewable energy sources Sectoral Scope: 1 ER estimate: 22 957 tCO2e per year (average) Size Large Scale Small Scale Validation Phases: Desk Review Follow up interviews Resolution of outstanding issues Validation Status Corrective Actions Requested Clarifications Requested Full Approval and submission for registration Rejected In summary, it is DNVs opinion that the project activity 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India, as described in the PDD, version 03 of 28 January 2012, meets all relevant UNFCCC requirements for the CDM and correctly applies the baseline and monitoring methodology AMS-I.D, version 16. Hence DNV requests the registration of the project as a CDM project activity. The validtion report has been revised to address the issues raised during the completeness check stage.
Report No.: Subject Group:
2011-0606
Report title:
Environment
Indexing terms Key words
7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India
Climate Change Kyoto Protocol Validation Clean Development Mechanism No distribution without permission from the client or responsible organisational unit free distribution within DNV after 3 years Strictly confidential Unrestricted distribution
Work carried out by:
Gaurav Srivastava, Shilpa Swarnim, Nitin Kapoor

Work verified by:
Murali Govindarajulu
Date of this revision: Rev. No.: Number of pages:
2012-02-12
03
41
2009 Det Norske Veritas AS All rights reserved. This publication or parts thereof may not be reproduced or transmitted in any form or by any means, including photocopying or recording, without the prior written consent of Det Norske Veritas AS.
Head Office: Veritasvn. 1, N-1322 HVIK, Norway

CDM Validation Report Template, version 16, 2011-09-08
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT
Table of Content
1 2 2.1 2.2 3 3.1 3.2 3.3 3.4 3.5 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11
Page
EXECUTIVE SUMMARY VALIDATION OPINION .......................................... 1 INTRODUCTION .................................................................................................... 2 Objective 2 Scope 2 METHODOLOGY ................................................................................................... 3 Desk review of the project design documentation 3 Follow-up interviews with project stakeholders 8 Resolution of outstanding issues 9 Internal quality control 11 Validation team 11 VALIDATION FINDINGS .................................................................................... 12 Participation requirements 12 Project design 12 Application of selected baseline and monitoring methodology 13 Project boundary 14 Baseline identification 15 Additionality 16 Monitoring 32 Algorithms and/or formulae used to determine emission reductions 35 Environmental impacts 36 Comments by local stakeholders 36 Comments by Parties, stakeholders and NGOs 37
Appendix A Validation Protocol Appendix B Curricula vitae of the validation team members
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Abbreviations
BM CAR CDM CEA CECB CER CERC CL CM CO2 CO2e CREDA CSEB CSERC DNV DNA DOE DPR FAR GHG IDBI INR IPCC LoA MoEF MNRE NCV NEWNE ODA OM PDD PLR PPA RBI SGEL tCO2e UNFCCC VVM Build Margin Corrective Action Request Clean Development Mechanism Central Electricity Authority Chhattisgarh Environment Conservation Board Certified Emission Reduction(s) Central Electricity Regulatory Commission Clarification request Combined Margin Carbon dioxide Carbon dioxide equivalent Chhattisgarh State Renewable Energy Development Agency Chhattisgarh State Electricity Board Chhattisgarh State Electricity Regulatory Commission DNV Climate Change Services AS Designated National Authority Designated Operational Entity Detailed Project Report Forward Action Request Greenhouse gas(es) Industrial Development Bank of India Limited Indian Rupee Intergovernmental Panel on Climate Change Letter of approval Ministry of Environment and Forest Ministry of New and Renewable Energy Sources Net Calorific Value North East West North-Eastern Official Development Assistance Operating Margin Project Design Document Prime Lending Rate Power Purchase Agreement Reserve Bank of India M/s Shalivahana Green Energy Limited Tonnes of CO2 equivalents United Nations Framework Convention on Climate Change Validation and Verification Manual
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1 EXECUTIVE SUMMARY VALIDATION OPINION

DNV Climate Change Services AS (DNV) has performed a validation of the project activity 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India. The validation was performed on the basis of UNFCCC criteria for the Clean Development Mechanism as well as criteria given to provide for consistent project operations, monitoring and reporting. The review of the project design documentation and the subsequent follow-up interviews have provided DNV with sufficient evidence to determine the fulfilment of stated criteria. The sole project participant is M/s Shalivahana Green Energy Limited from host Party India. The host Party India meets all participation requirements. The DNA of India has approved the project on 13 April 2011 and authorized the project participant and also confirmed that the project assists in achieving sustainable development. The project correctly applies the baseline and monitoring methodology AMS-I.D, version 16 Grid connected renewable electricity generation. The project involves generation of renewable energy by installing 23.5 MW hydro turbines, which will displace the electricity generation in the fossil fuel dominated NEWNE grid of India, thereby resulting in the reduction of GHG emissions that are real, measurable and give long-term benefits to the mitigation of climate change. It is demonstrated that the project is not a likely baseline scenario. Emission reductions attributable to the project are hence additional to any that would occur in the absence of the project activity. The total emission reductions from the project are estimated to be on the average 22 957 tCO2e per year over the selected 7 year renewable crediting period. The emission reduction forecast has been checked and it is deemed likely that the stated amount is achieved given that the underlying assumptions do not change. The monitoring plan provides for the monitoring of the projects emission reductions. The monitoring arrangements described in the monitoring plan are feasible within the project design and it is DNVs opinion that the project participants are able to implement the monitoring plan. In summary, it is DNVs opinion that the project activity 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India, as described in the PDD, version 03 dated 28 January 2012, meets all relevant UNFCCC requirements for the CDM and correctly applies the baseline and monitoring methodology AMS-I.D, version 16. Hence, DNV requests the registration of the project as a CDM project activity. Bangalore and Oslo, 2012-02-12
Gaurav Srivastava CDM Validator DNV Bangalore, India
Ole A. Flagstad Approver DNV Climate Change Services AS
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2 INTRODUCTION
M/s Shalivahana Green Energy Limited has commissioned DNV Climate Change Services AS (DNV) to perform a validation of the 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh project in India (hereafter called the project). This report summarises the findings of the validation of the project, performed on the basis of UNFCCC criteria for the CDM, as well as criteria given to provide for consistent project operations, monitoring and reporting. UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and procedures, the simplified modalities and procedures for small-scale CDM project activities and the subsequent decisions by the CDM Executive Board.
2.1 Objective
The purpose of a validation is to have an independent third party assess the project design. In particular, the project's baseline, monitoring plan, and the projects compliance with relevant UNFCCC criteria are validated in order to confirm that the project design, as documented, is sound and reasonable and meets the identified criteria. Validation is a requirement for all CDM projects and is seen as necessary to provide assurance to stakeholders of the quality of the project and its intended generation of certified emission reductions (CERs).
2.2 Scope
The validation scope is defined as an independent and objective review of the project design document (PDD). The PDD is reviewed against the criteria stated in Article 12 of the Kyoto Protocol, the CDM modalities and procedures as agreed in the Marrakech Accords, the simplified modalities and procedures for small-scale CDM project activities and the relevant decisions by the CDM Executive Board, including the approved baseline and monitoring methodology AMS-I.D (version 16) /39/. The validation was based on the recommendations in the Validation and Verification Manual /38/. The validation is not meant to provide any consulting towards the project participants. However, stated requests for clarifications and/or corrective actions may have provided input for improvement of the project design.
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3 METHODOLOGY
The validation consisted of the following three phases: I II a desk review of the project design documents follow-up interviews with project stakeholders
III the resolution of outstanding issues and the issuance of the final validation report and opinion. The following sections outline each step in more detail.
3.1 Desk review of the project design documentation

The following tables list the documentation that was reviewed during the validation.
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3.1.1 Documentation provided by the project participants

/1/ M/s Shalivahana Green Energy Limited: CDM-PDD for project activity 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India, Version 01 dated 08 July 2010, version 02 dated 02 September 2011 and final version 03 dated 28 January 2012. M/s Jyoti Ltd: Technical specification sheet for synchronous generators and horizontal Francis turbines dated 22 April 2011. Hydrotech Consultants: Detailed project report for 7 MW Jatashankari hydro power project prepared by Hydrotech Consultant (independent consultant) of October 2007. CREDA: Techno-economic clearance and approval of detailed project report for the 7 MW Jatashankari hydro power project dated 14 December 2007. Chhattisgarh state power distribution company limited: Power purchase agreement signed between Chhattisgarh state power distribution company limited and M/s Shalivahana Green Energy Limited dated 01 January 2011, applicable for 20 years from the date of commissioning and need to be renewed thereafter. M/s Shalivahana Green Energy Limited: Civil construction agreement signed between SGEL and M/s Yeshaswi Infrastructure Limited for the project activity dated 1 December 2009. M/s Shalivahana Green Energy Limited: Work order released to Sri Harshita Construction for fabrication and erection of penstock of the project activity dated 25 November 2010. M/s Shalivahana Green Energy Limited: Purchase order placed to Sri Harshita Construction for fabrication, supply and erection of gates and allied items dated 18 February 2011. M/s Shalivahana Green Energy Limited: Purchase order placed to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipments dated 22 April 2011. M/s Shalivahana Green Energy Limited: Work order released to M/s Balaji hydro Mech Experts to carry out detailed designing of hydro mechanical gates and equipments dated 8 November 2010. M/s Shalivahana Green Energy Limited: Implementation Schedule of project activity dated 03 September 2011. CSERC: Order in the matter of determination of tariff and related dispensation for procurement of power from small hydel power projects dated 28 February 2007. http://cserc.gov.in/pdf/20-2006_final_.pdf CREDA: Memorandum of understanding signed between CREDA and M/s Shalivahana Green Energy Limited for development of project activity dated 7 December 2007. CREDA: In principal approval provided to M/s Shalivahana Green Energy Limited for development of project activity dated 13 November 2007 CECB: Consent for establishment granted to M/s Shalivahana Green Energy Limited for development of project activity dated 5 December 2009. M/s Shalivahana Green Energy Limited: Board resolution passed at the meeting of the Board of Directors of SGEL, dated 24 November 2008. Page 4
/2/ /3/ /4/ /5/
/6/
/7/
/8/
/9/
/10/
/11/ /12/
/13/
/14/ /15/ /16/
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT /17/ SGEL: E-mail with intention to seek CDM status for the project activity sent to UNFCCC secretariat, dated 14 March 2009 and acknowledgement email received from UNFCCC secretariat dated 16 March 2009. SGEL: letter with intention to seek CDM status for the project activity dated 03 March 2009 submitted to DNA of India on 17 March 2009 and acknowledgement received from DNA of India on 17 March 2009. SGEL: CDM consultancy agreement signed between project proponent and Synergy Consortium dated 6 May 2009. SGEL: Minutes of meeting, list of attendees with their signature and photographs of local stakeholder meeting conducted for project activity held at project site dated 22 May 2009. SGEL: CDM validation contract signed with DNV for the project activity dated 11 August 2010. SGEL: Email sent to DNA of India regarding submission of relevant documents to DNA of India to seek Host country approval for the project activity dated 9 September 2010. Ministry of Environment and Forest (DNA of India): Email invitation send by DNA of India to project proponent to provide a brief presentation about the project activity dated 14 September 2010. RBI: Historical Prime Lending rate form the Reserve Bank of India http://www.rbi.org.in/scripts/PublicationsView.aspx?id=12765 Hydrotech Consultants: Revised detailed project report for 7 MW Jatashankari hydro power project prepared by Hydrotech Consultant (independent consultant) of May 2010. CDEDA: Revised techno-economic clearance and approval of revised detailed project report for the 7 MW Jatashankari hydro power project dated 18 March 2011. IDBI Bank: Term loan agreement signed for project activity 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India dated 22 January 2010.
/18/ /19/
/20/ /21/
/22/
/23/ /24/
/25/ /26/
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DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT /27/ MNRE: Scheme to provide financial support for identification of new potential small hydro project sites, preparation of plan and detailed project report up to 25 MW capacity, to the government departments and agencies No 14(1)-2008/SHP. http://www.mnre.gov.in/adm-approvals/shp_scheme.pdf M/s Shalivahana Green Energy Limited: Investment analysis spread sheet for project activity 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India, Version 01 dated 08 July 2010 and final version 03 dated 28 January 2012. Fishery Department: No objection certificate issued for installation and commissioning of project activity dated 05 September 2010. SGEL: copy of notice pasted at village Panchayat Office notice board to invite stakeholders for local stakeholder consultation process dated 22 April 2009. SGEL: Afforestation compensation agreement signed for the project activity dated 11 August 2010. CSEB: No objection certificate issued for installation and commissioning of project activity dated 21 February 2008. Forestry Department: No objection certificate issued for installation and commissioning of project activity dated 12 September 2007. Gram Panchayat: No objection certificate issued for installation and commissioning of project activity dated 22 May 2009. CREDA: No objection certificate issued for installation and commissioning of project activity dated 04 March 2008. Chhattisgarh forest department: Forest land clearance for installation and commissioning of project activity dated 29 November 2010.
/28/
/29/ /30/ /31/ /32/ /33/ /34/ /35/ /36/
3.1.2 Letters of approval

/37/ Ministry of Environment and Forest (DNA of India): Letter of approval dated 13 April 2011.
3.1.3 Methodologies, tools and other guidance by the CDM Executive Board
/38/ /39/ /40/ /41/ /42/ /43/ CDM Executive Board: Validation and Verification Manual, version 1.2 CDM Executive Board: Baseline and monitoring methodology AMS-I.D, version 16 CDM Executive Board: Tool to calculate the emission factor for an electricity system, Version 1.1. CDM Executive Board: Appendix B of the simplified modalities and procedures for small-scale CDM project activities Attachment A to Appendix B. CDM Executive Board: Guidance on assessment of investment analysis Version 05. CDM Executive Board: Guidelines on the demonstration and assessment of prior consideration of the CDM version 03 EB 49 Annex 22.
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/44/ /45/ /46/ /47/
CDM Executive Board: Guidelines for the reporting and validation of plant load factors version 01, EB 48 Annex 11. CDM Executive Board: General guidelines to small scale CDM methodologies version 17. CDM Executive Board: Glossary of CDM terms version 05. CDM Executive Board: Tool to calculate project or leakage CO2 emissions from fossil fuel combustion version 02.
3.1.4 Documentation used by DNV to validate / cross-check the information provided by the project participants
/48/ CEA: CO2 Baseline Database for the Indian Power Sector. Version 5, Date: November 2009. http://www.cea.nic.in/reports/planning/cdm_co2/cdm_co2.htm CDM India: Designated National Authority of India Website (CDM India): http://www.cdmindia.in/project_details_view.php?id=168&oid=1&page=11&reporttyp e=1 Ministry of Environment and Forest: 2004: Indias national communication to UNFCCC. http://www.natcomindia.org/publication_govt.htm 2006 IPCC Guidelines for National Greenhouse Gas Inventories. CERC: Terms and Conditions of Tariff Regulations, 2009. http://www.cercind.gov.in/2009/February09/SOR-regulations-on-T&C-of-tariff05022009.pdf Ministry of Finance: Income Tax Act 1961, sourced from Income Tax Department, Ministry of Finance. http://law.incometaxindia.gov.in/DIT/Income-tax-acts.aspx Labour bureau, Government of India: Statistical data for labour cost: http://labourbureau.nic.in/indtab.pdf Renewable Energy and energy efficiency partnership: a report on the current scenario of developments in renewable energy in India of August 2008, relevant section has been used to evaluate PLF in state of Chhattisgarh. Ministry of commerce and industries: Wholesale price index manufactured products and all commodities annual average 1970-71 to 2009-2010. Ministry of commerce and industries: Wholesale price index for cement and steel annual average 2005 to 2010. Indian Oil Corporation Limited (IOCL): Density of diesel sourced from official website of IOCL: http://www.iocl.com/Products/DieselSpecifications.pdf
/49/
/50/
/51/ /52/
/53/
/54/ /55/
/56/ /57/ /58/
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/59/
Ministry of Environment and Forests (MoEF), India: As per Ministry of Environment and Forests (MoEF) notification dated 1 December 2009, Hydroelectric power projects below 25 MW capacity have been exempted from EIA: http://mnre.gov.in/notification/env-notifn.pdf
Main changes between the version of the PDD published for the 30 days stakeholder commenting period and the final version of the PDD submitted for registration: Change in start date of crediting period from 1 December 2009 to 1 April 2012 in line with the revised timelines of validation. Correction of gross electricity generation figures (from 27.93 GWh to 27.89 GWh) as provided in the detailed project report and techno economic clearance provided by CREDA. Correction of gross electricity generation value also resulted in correction of PLF value provided in the webhosted PDD and final PDD (45.55% to 45.48%). Changes related to CAR/CLs identified in table 3 of the report.
The validation report has been revised to address the following issues raised during the completeness check stage: 1. The DOE is requested to include a clear validation opinion on the compliance of the project activity with the requirements made in EB 49 Annex 22 as per VVM v1.2 paragraph 104(c). The DOE is requested to report how it has reviewed the prior consideration form sent to the DNA also and the confirmation received from the DNA as per EB 49 Annex 22, 11 Sep 2009 which is applicable to the project since the project starting date is 1 Dec 2009. The final validation report (page 15) only reported regarding the form sent to the UNFCCC and the confirmation received from the UNFCCC. 2. The DOE is requested to include information on how it has validated the input values to the financial calculations as per VVM v 1.2 paragraph 114 (a). The DOE is requested to report how escalation of 5% considered for annual O&M cost in the investment analysis is appropriate given that the income for the project (electricity tariff) has been kept as fixed.
3.2 Follow-up interviews with project stakeholders

On 14 March 2011, DNV performed interviews with project stakeholder to confirm selected information and to resolve issues identified in the document review. At that time, the civil construction for the project activity was just begun, and hence the interview was carried out at the project proponents office. Representatives of project proponent (M/s Shalivahana Green Energy Limited) were interviewed during the desk review meeting. The main topics of the interviews are summarized below. Date Name Organization Topic
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DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT /60/ 2011-03-14 Mr. Kiran Kumar Naguri Mr. Raja Shekar Mr. Kishore Ponnam Mr. Rudra Pratap Karanam M/s Shalivahana Green Energy Limited Project Boundary Baseline methodology of the project activity Environmental compliance Estimated emission reductions Project additionality Stakeholders consultation process Technology applied and operational lifetime Monitoring and reporting procedures Calibration, internal audit and corrective action procedures
3.3 Resolution of outstanding issues

The objective of this phase of the validation was to resolve any outstanding issues which needed be clarified prior to DNVs positive conclusion on the project design. In order to ensure transparency a validation protocol was customised for the project. The protocol shows in a transparent manner the criteria (requirements), means of verification and the results from validating the identified criteria. The validation protocol serves the following purposes: It organises, details and clarifies the requirements a CDM project is expected to meet; It ensures a transparent validation process where the validator will document how a particular requirement has been validated and the result of the validation. The validation protocol consists of four tables. The different columns in these tables are described in the figure below. The completed validation protocol for the project activity 7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India is enclosed in Appendix A to this report. A corrective action request (CAR) is raised if one of the following occurs: (a) The project participants have made mistakes that will influence the ability of the project activity to achieve real, measurable additional emission reductions; (b) The CDM requirements have not been met; (c) There is a risk that emission reductions cannot be monitored or calculated. A clarification request (CL) is raised if information is insufficient or not clear enough to determine whether the applicable CDM requirements have been met. A forward action request (FAR) is raised during validation to highlight issues related to project implementation that require review during the first verification of the project activity. FARs shall not relate to the CDM requirements for registration. Page 9

Validation Protocol Table 1: Mandatory Requirements for CDM Project Activities Requirement The requirements the project must meet. Reference Gives reference to the legislation or agreement where the requirement is found. Conclusion This is either acceptable based on evidence provided (OK) or a corrective action request (CAR) if a requirement is not met.
Validation Protocol Table 2: Requirement Checklist Checklist question The various requirements in Table 1 are linked to checklist questions the project should meet. The checklist is organised in different sections, following the logic of the CDM-PDD Reference Gives reference to documents where the answer to the checklist question or item is found. Means of verification (MoV) Means of verification (MoV) are document review (DR), interview (I) or any other follow-up actions (e.g., on site visit and telephone or email interviews) and cross-checking (CC) with available information relating to projects or technologies similar to the proposed CDM project activity under validation. Assessment by DNV The discussion on how the conclusion is arrived at and the conclusion on the compliance with the checklist question so far. Draft and/or Final Conclusion OK is used if the information and evidence provided is adequate to demonstrate compliance with CDM requirements. A corrective action request (CAR) is raised when project participants have made mistakes, the CDM requirements have not been met or there is a risk that emission reductions cannot be monitored or calculated. A clarification request (CL) is raised if information is insufficient or not clear enough to determine whether the applicable CDM requirements have been met. A forward action request (FAR) during validation is raised to highlight issues related to project implementation that require review during the first verification of the project activity.
Validation Protocol Table 3: Resolution of Corrective Action and Clarification Requests Corrective action and/ or clarification requests The CARs and/ or CLs raised in Table 2 are repeated here. Ref. to checklist question in table 2 Reference to the checklist question number in Table 2 where the CAR or CL is explained. Response by project participants The responses given by the project participants to address the CARs and/or CLs. Validation conclusion
The validation teams assessment and final conclusions of the CARs and/or CLs.
Validation Protocol Table 4: Forward Action Requests Forward action request The FARs raised in Table 2 are repeated here. Ref. to checklist question in table 2 Reference to the checklist question number in Table 2 where the FAR is explained. Response by project participants Response by project participants on how forward action request will be addressed prior to first verification.
Figure 1: Validation protocol tables
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3.4 Internal quality control

The validation report underwent a technical review performed by a technical reviewer qualified in accordance with DNVs qualification scheme for CDM validation and verification.
3.5 Validation team

Type of involvement
Site visit / Interviews Supervision of work TA 1.2 competence Financial expertise Technical review
Desk review
Role Team leader (Validator) Assessor under training Financial Expert Technical reviewer
Last Name Srivastava Swarnim Kapoor Govindarajulu
First Name Gaurav Shilpa Nitin Murali
Country India India India India
The qualification of each individual validation team member is detailed in Appendix B to this report.
Reporting
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4 VALIDATION FINDINGS
The findings of the validation are stated in the following sections. The validation criteria (requirements), the means of verification and the results from validating the identified criteria are documented in more detail in the validation protocol in Appendix A. The final validation findings relate to the project design as documented and described in the PDD, version 03 dated 28 January 2012 /1/.
4.1 Participation requirements

The project participant is M/s Shalivahana Green Energy Limited from the host Party India. The project is proposed as a unilateral project. The host Party India meets all the requirements for participating in a CDM project. The Ministry of Environment and Forests, the DNA of India has approved the project with a letter of approval dated 13 April 2011, which also confirms that the project assists in achieving sustainable development in India /37/. DNV has cross checked from the CDM India (DNA of India) website that the project has been approved by the DNA of India /49/. DNV considers the letter is in accordance with paragraphs 45- 48 of the VVM /38/. No public funding from an Annex I Party is involved in the project and the validation did not reveal any information that indicates that the project can be seen as a diversion of official development assistance (ODA) funding towards India.
4.2 Project design

The proposed project activity involves installation of two small hydro power units (23.5 MW) with an aggregated capacity of 7 MW. The project is located at Jatashankari river in Korba district of Chhattisgarh state, India. The geographical coordinates of the power house are 22 35 00 N and 82 25 00 E. The project activity will use two synchronous generators with a rated capacity of 3.5 MW each coupled to two horizontal Francis turbines with output capacity of 3.5 MW each /2/. The technology is available indigenously. The project activity is expected to generate 27.89 GWh per year at a plant load factor of 45.48% /3/. The electricity generated by project activity will be sold to Chhattisgarh State Electricity Board (CSEB). The electricity generation details have been checked through detailed project report prepared by independent technical consultant (Hydrotech Consultants) /3/ and the techno economic clearance issued by Chhattisgarh State Renewable Energy Development Agency, government of Chhattisgarh on 14 December 2007 based on the review of this DPR /4/. The project is expected to export 27.33 GWh (after deducting 2% of electricity as an account of auxiliary consumption, outages, transformer and transmission losses) to Chhattisgarh state electricity board which is the part of north east west north eastern grid of India /48/ and has been verified by DNV from the power purchase agreement signed between M/s Shalivahana Green Energy Limited and Chhattisgarh state power distribution company limited dated 1 January 2011 /5/. The starting date of the project activity has been identified as 1 December 2009, which is the date of civil construction agreement signed between M/s Shalivahana Green Page 12
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT Energy Limited and M/s Yeshaswi Infrastructures Limited for the project activity /6/ and the first among all major financial commitments for the project activity. It is DNVs opinion that the starting date selected for the project activity is in line with the EB guidance on starting date of project activity /46/. This has been concluded based on verification of the dates of the following activities: a) Work order released to M/s Balaji hydro Mech Experts to carry out detailed designing of hydro mechanical gates and equipments dated 8 November 2010 /10/. b) Work order released to Sri Harshita Construction for fabrication and erection of penstock dated 25 November 2010 /7/. c) Purchase order placed to Sri Harshita Construction for fabrication, supply and erection of gates and allied items dated 18 February 2011 /8/ and d) Purchase order placed to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipment dated 22 April 2011 /9/. The construction for the project activity started on 28 August 2010, and the project is expected to be commissioned by 1 December 2011 /11/. The lifetime of the project is indicated as 35 years, which is reasonable and has been verified from the Central electricity regulatory commission tariff regulations 2009 /52/. A renewable crediting period of seven years has been selected, starting from the date of registration or from 1 April 2012, whichever is later. The project activity generates electricity using renewable source of energy and displaces an equivalent power in the fossil fuel dominated NEWNE grid of India and thereby results in reduction of approximately 22 957 tCO2 of GHG emissions /1/. The project activity is an independent activity and not a de-bundled component of a larger project activity as there is no registered small scale CDM project activity or a request for registration by the same project proponent in the same project category and technology/measure or one that has been registered in the previous two years; whose project boundary is within 1 kilometer of the project boundary of the proposed small scale project activity at the closest point as checked from the UNFCCC website (Project Search Interface) and discussions held during the site visit /60/. DNV considers the project description of the project contained in the PDD to be complete and accurate. The PDD complies with the relevant forms and guidance for completing the PDD.
4.3 Application of selected baseline and monitoring methodology

In view of the fact that the project capacity is less than 15 MW, the project is eligible as type I small-scale CDM project activity and can apply a simplified baseline methodology. The project applies the baseline methodology stipulated for category I.D of the simplified modalities and procedure for small scale CDM project activity. The simplified baseline methodology AMS-I.D, version 16 is applicable for grid connected renewable electricity generation /39/ as: The project is construction of new grid connected run of river hydro power project, which utilizes hydro resources available at project site to generate electricity and displaces the grid electricity and same has been verified by DNV Page 13
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT from power purchase agreement, signed between M/s Shalivahana Green Energy Limited and Chhattisgarh state power distribution company limited dated 1 January 2011 /5/ and memorandum of understanding signed between project proponent and Chhattisgarh Renewable Energy Development Agency dated 7 December 2007 /13/. The installed capacity of the project activity is 7 MW, which is less than 15 MW as verified from the purchase order placed to M/s Jyoti Limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipment dated 22 April 2011 /9/, in principal approval provided by Chhattisgarh Renewable Energy Development Agency dated 13 November 2007 /14/, memorandum of understanding signed between project proponent and Chhattisgarh Renewable Energy Development Agency dated 7 December 2007 /13/ and consent to establish issued by Chhattisgarh Environmental Conservation Board dated 5 December 2009 /15/. The geographic and system boundaries for the relevant electricity grid have been clearly identified and information on the characteristics of the grid is available, as the electricity generated from the project activity will be sold to Chhattisgarh state electricity board (part of NEWNE grid of India) /5/. The system boundary and its characteristics are available on central electricity authority /48/, Government of India web site and publications. The assessment of the projects compliance with the applicability criteria of AMS-I.D (version 16) /39/ are documented in detail in section B.2 of Table 2 in the validation protocol in Appendix A to this report.
4.4 Project boundary

Since the project activity displaces electricity from NEWNE grid of India, the baseline for this project activity is a function of the generation mix of the NEWNE grid, which is dominated by fossil fuel, fired thermal plants. The selection of the grid as NEWNE grid of India as system boundary for the project activity is in line with the CDM EB guidance regarding selection of geographical and system boundaries for large countries such as India provided in Tool to calculate the emission factor for an electricity system/40/. The spatial boundary of the project includes the project site, power generation equipment, substation and north east west north eastern grid of India to which the generated electricity will be exported. The selected sources and gases are justified for the project activity. GHGs involved Baseline emissions CO2 Description The major emission source. The GHG emission reduction is achieved by replacing the electricity generated by fossil fuel based power plants in the north east west north eastern grid of India. Project activity will be equipped with diesel generator to meet the emergency requirements of power house; hence Page 14
Project emissions
CO2
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT emissions due to usage of diesel will be accounted as project emissions. Leakage No Leakage Not Applicable
The identified boundary and selected sources and gases are justified for the project activity. The validation of the project activity did not reveal other greenhouse gas emissions occurring within the proposed CDM project activity boundary as a result of the implementation of the proposed project activity which are expected to contribute more than 1% of the overall expected average annual emission reduction, which are not addressed by AMS-I.D (version 16) /39/.
4.5 Baseline identification

As this project installs a new grid connected renewable power plant, the baseline scenario according to AMS-I.D, version 16 /39/, is the net electricity delivered to the grid by the project activity that otherwise would have been generated by the operation of grid-connected power plants and by the addition of new generation sources. As the project activity supplies electricity to Chhattisgarh state electricity grid (part of north east west north-eastern grid of India), the baseline for this project activity is a function of the generation mix of the north east west north-eastern grid of India. In line with the guidance provided in the Tool to calculate the emission factor for an electricity system/40/, the weights for OM and BM have been taken as 50:50. The combined margin emission coefficients for the north east west north-eastern grid of India have been calculated at 0.840 tCO2e/MWh /48/. The combined margin (CM) emission coefficient is fixed ex ante for the first seven-year renewable crediting period. The CM emission factor value has been sourced from data by the Central Electricity Authority (CEA) of the Ministry of Power, Government of India /48/. CEA has published a database of carbon dioxide emission factors for the power sector in India based on detailed authentic information obtained from all operating power stations in the country. This CO2 baseline database provides information about the OM and BM factors of all the regional electricity grids in India. DNV confirms that the database is an official publication of the Government of India for the purpose of CDM baselines /48/. The approved baseline methodology has been correctly applied and the baseline scenario has been identified in line with the requirement of applied version of the methodology AMS-I.D, version 16 /39/. The identified baseline scenario reasonably represents what would occur in the absence of the proposed CDM project activity. DNV confirms that all the assumption and data used by the project participants are listed in the PDD and/or supporting documents. All documentation relevant for establishing the baseline scenario are correctly quoted and interpreted in the PDD. Assumptions and data used in the identification of the baseline scenario are justified appropriately, supported by evidence and can be deemed reasonable. Relevant national and/or sectoral policies and circumstances are considered and listed in the PDD.
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4.6 Additionality
The additionality of the project activity has been demonstrated as per the Attachment A to Appendix B of simplified modalities and procedures for small-scale CDM project activities /41/.
4.6.1 Evidence for prior CDM consideration and continuous actions to secure CDM status
Project start date: The starting date of the project activity has been identified as 1 December 2009, which is the date of which is the date of civil construction agreement signed between M/s Shalivahana Green Energy Limited and M/s Yeshaswi Infrastructures Limited for the project activity /6/. This was the first among all major financial commitments for the project and in line with the EB guidance on starting date of project activity /46/. This has been concluded based on verification of the date of: a) Work order released to M/s Balaji hydro Mech Experts to carry out detailed designing of hydro mechanical gates and equipments dated 8 November 2010 /10/. b) Work order released to Sri Harshita Construction for fabrication and erection of penstock dated 25 November 2010 /7/. c) Purchase order placed to Sri Harshita Construction for fabrication, supply and erection of gates and allied items dated 18 February 2011 /8/ and d) Purchase order placed to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipment dated 22 April 2011 /9/. CDM Consideration: The detailed project report for the project activity was prepared by independent technical consultant (Hydrotech Consultants) in October 2007 /3/. On 14 December 2007 project proponent received the techno-economic clearance and approval of detailed project report from CREDA /4/. The board of directors of M/s Shalivahana Green Energy Limited reviewed the approved detailed project report from CREDA in its board of directors meeting held on 24 November 2008 /16/ and decided to implement the project activity considering CDM revenue and same has been verified by DNV from minutes of meeting of board of directors of SGEL held on 24 November 2008 /16/, which is before the starting date of the project activity. Considering the scenario that in EB 41 CDM, executive board introduced Guidelines on the demonstration and assessment of prior consideration that proposed project activities with a start date on or after 2 August 2008, the project participant must inform a Host Party designated national authority (DNA) and the UNFCCC secretariat in writing. Hence in line with the requirement the project proponent notified their intention to seek CDM status for the project activity to the DNA of India via letter dated 03 March 2009 on 17 March 2009 /17/ and to UNFCCC secretariat through an email communication on 14 March 2009 /17/. The acknowledgement on the submitted notification has been received from DNA of India on 17 March 2009 /17/ and on 16 March 2009 from UNFCCC secretariat /17/. The letter submitted to DNA of India and Page 16
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT email sent to UNFCCC and the acknowledgement received from DNA of India and UNFCCC has been verified by DNV. The start date of the project activity (1 December 2009) is after 2 August 2008 and considering the above mentioned fact that the project participant has informed the DNA of India and UNFCCC of their intention to seek CDM status for the project activity even prior to project start date clearly demonstrates that the CDM revenue has been seriously considered in the decision to implement the project activity and thus complying with the requirements of Guidelines on the demonstration and assessment of prior consideration of the CDM version 03 EB 49 Annex 22 /43/.
4.6.2 Investment analysis

Choice of approach The project proponent has selected the benchmark analysis for demonstrating the additionality of the project activity. The project generates revenues without CDM and the alternative of grid based electricity generation does not involve any investment on the part of the project proponent. Therefore the selected benchmark analysis is considered appropriate for demonstrating the additionality of the project and meets the requirement of CDM EB guidance on assessment of Investment analysis /42/. Benchmark selection The benchmark selected for the project activity is as per the CDM EB guidance on assessment of investment analysis /42/. The project activity is electricity generation based on hydro resource which could be developed by an entity other than project participant. The benchmark should thus be based on publicly available data sources. The financial indicator applied for the project activity is project IRR and the benchmark used for the project activity is average prime lending rate of 12.5% (average value of the range of 12.25% to 12.75%) quoted by RBI (The Reserve Bank of India) for the financial year 2007-08 /23/ (applicable at the time of investment decision). It is DNVs opinion that the selected benchmark is appropriate since this value has been sourced directly from the RBI website, which is reliable and has been verified from the website of Reserve Bank of India /23/. DNV has further cross checked the 5 year historical average prime lending rates indicated by RBI (10.25% 12.75%) prior to the investment decision (2003-04 to 2007-08) and has confirmed that the chosen value is reasonable /23/. Input parameters The input parameters used in the financial analysis of the project activity have been sourced from the detailed project report prepared by independent technical consultant (Hydrotech Consultants) in October 2007 /3/. On 14 December 2007 project proponent received the techno-economic clearance and approval of detailed project report from CREDA /4/. On 24 November 2008 /16/, project proponent took the decision to invest in the project activity considering recommendation of the DPR and signed the civil construction agreement on 1 December 2009 /6/ (start date for the project activity). Subsequently project proponent had deliberate discussions with equipment suppliers and project consultants and based on which DPR was revised in May 2010 /24/. The revised DPR was prepared considering installation of two sets of 3500 kW rated Page 17
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT capacity Horizontal Pelton turbine against the initial design of 2333 kW rated Horizontal Pelton turbine for optimum utilisation of turbines as well as convenience of plant operations. The project proponent submitted the revised DPR to CREDA and received a revised techno economic clearance on 18 March 2011 /25/ considering revised DPR /24/. Based on revised DPR on 22 April 2011 project proponent placed a purchase order to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipments /9/. DNV has crosschecked that there is no increase in electricity output due to change in unit size of the plant. As there is gap between the detailed project report preparation (October 2007) and project start date (1 December 2009) DNV has compared the project cost considered in the detailed project report of October 2007 and cost provided in revised DPR of May 2010 and confirmed that the actual project cost has gone up in revised DPR. Hence use of input values as provided in detailed project report (October 2007) for investment analysis is more conservative. In line with the requirement of VVM Para 111, DNV has performed a detailed assessment of input parameters (considering both values as provided in detailed project report of October 2007 and revised detailed project report of May 2010) used for the investment analysis as described below: Values used for investment Analysis Technical Parameters Capacity of the 7000 project in kW Input parameter Source for Value considered in investment analysis As stated in above paragraph, the initial DPR was prepared considering installation of three units of 2333 kW rated capacity /3/, however based on discussions with equipment suppliers and project consultants a revised DPR considering two units of 3500 kW was prepared in May 2010 /24/ and same was submitted to CREDA to receive revised techno economic clearance. The revised techno economic clearance was received on 18 March 2011 /25/. Reference used by DNV for cross checking
The installed capacity (7000 kW), number of units (2) and rated capacity of each unit (3500 kW) has been cross checked by DNV from the revised DPR prepared in May 2010 /24/, based on which the project proponent received the revised techno economic clearance from CREDA on 18 March 2011 /25/. The installed capacity (7000 kW), number of units (2) and rated capacity of each unit (3500 kW) has been further cross checked by DNV from the purchase order placed to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipment dated 22 April 2011/9/ and DNV confirms that the installed capacity of the project activity is 7000 kW Page 18
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT only. Operational Parameters: Plant Load 45.48% Factor in % The plant load factor considered for the investment analysis was based on the detailed project report of October 2007 /3/. On 14 December 2007 project proponent received the techno-economic clearance and approval of detailed project report from CREDA /4/. This has been cross checked by DNV from the hydrological data and power study provided as a part of detailed project report of October 2007 prepared by independent consultant (Hydrotech Consultant) /3/. On 14 December 2007 project proponent received the techno-economic clearance and approval of detailed project report from CREDA /4/. DNV has checked the revised DPR prepared by independent consultant (Hydrotech Consultant) of May 2010 /24/ and confirms that there is no change in electricity generation estimates in revised DPR, due to change in unit size and number of units. DNV has further cross checked the gross electricity generation figures provided in revised techno economic clearance received from CREDA on 18 March 2011 /25/ and confirms that there is no change in electricity generation estimates in revised DPR /24/, due to change in unit size and number of units. Thus DNV confirms that the plant load factor considered for the project activity meets the requirement of EB 48 Annex 11 Para 3 (b) plant load factor determined by a third party (engineering company) contracted by the project participants /44/. Gross 27.89 electricity generation in GWh Auxiliary 2% of gross consumption, electricity generated Calculated based on the Calculated based on the installed installed capacity and capacity and plant load factor. plant load factor. In detailed project DNV has cross checked the report of October 2007 detailed project report of October Page 19
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT outages, transformer and transmission losses (in % of gross electricity generation) /3/, the auxiliary consumption, losses due to plant outages, transformer and transmission are considered as 2% of the gross electricity generation from the project activity. 2007 /3/ and revised DPR of May 2010 /24/ and confirms that in both DPRs the auxiliary consumption, losses due to plant outages, transformer and transmission are considered as 2% of the gross electricity generation from the project activity. DNV has cross checked the value considered in detailed project report of October 2007 and revised detailed project report of May 2010 from the Chhattisgarh state electricity regulatory commission order dated 28 February 2007 /12/ (latest applicable at the time of investment decision states that a maximum 2% may be allowed towards auxiliary consumption and transformation losses) and confirms that the value considered is reasonable. Calculated based on gross electricity generation and auxiliary consumption, losses due to plant outages, transformer and transmission.
Net electricity generation in GWh
27.33
Calculated based on gross electricity generation and auxiliary consumption, losses due to plant outages, transformer and transmission. In detailed project report of October 2007 /3/, the O & M cost is considered as 2.5% of the total project cost.
O & M cost (% of project cost)
2.5%
DNV has cross checked the detailed project report of October 2007 /3/ and revised DPR of May 2010 /24/ and confirms that in both DPRs the O & M cost is considered as 2.5% of the total project cost. DNV has cross checked the value considered in detailed project report of October 2007 and revised detailed project report of May 2010 from the Chhattisgarh state electricity regulatory commission order dated 28 February 2007 /12/ (latest applicable at the time of investment decision) and confirms that the value considered is Page 20
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT consistent with value provided in CSERC order. DNV has checked the detailed project report of October 2007 /3/ and revised DPR of May 2010 /24/ and confirms that in both DPRs the an escalation factor of 5% on annual basis in O & M cost is considered. DNV has cross checked the annual escalation in O & M cost value considered in detailed project report of October 2007 and revised detailed project report of May 2010 against the Chhattisgarh state electricity regulatory commission order dated 28 February 2007 /12/ (latest applicable at the time of investment decision) and confirms that the value considered in DPR and revised DPR are consistent with value provided in CSERC order. DNV has checked that even after considering no escalation in operation and maintenance cost the IRR for the project activity (10.81%) is below than the benchmark applied (12.5%) for the project activity. DNV has cross checked the detailed project report of October 2007 /3/ and revised DPR of May 2010 /24/ and confirms that in both DPRs a general and administrative expense of 2.1 million INR has been considered. DNV has cross checked the value considered in detailed project report of October 2007 and revised detailed project report of May 2010 from the Chhattisgarh state electricity regulatory commission order dated 28 February 2007 /12/ (latest applicable at the time of investment decision) and found Page 21
Annual escalation in O & M cost (in %)
5%
In detailed project report of October 2007/3/, an escalation of 5% on annual basis in O & M cost has been considered.
General and administrative expense in million INR
2.1 million INR
In detailed project report of October 2007/3/, a general and administrative expense of 2.1 million INR has been considered.
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT that CSERC order does not consider any expense under general and administrate expense. Hence DNV cross checked that even after considering this cost as zero the project IRR (10.94%) is less than the benchmark value considered for the project activity. DNV has cross checked the detailed project report of October 2007 /3/ and revised DPR of May 2010 /24/ and confirms that in both DPRs an annual escalation factor of 10% in general and administrative expense has been considered. DNV has cross checked the value considered in detailed project report of October 2007 and revised detailed project report of May 2010 from the Chhattisgarh state electricity regulatory commission order dated 28 February 2007 /12/ (latest applicable at the time of investment decision) and found that CSERC order does not consider any expense under general and administrate expense. Hence DNV cross checked that even after considering this cost as zero the project IRR (10.94%) is less than the benchmark value considered for the project activity. DNV confirms that the levelized electricity tariff considered for investment analysis was sourced from the detailed project report of October 2007 /3/. DNV has also checked that though in revised DPR of May 2010 /24/, the project cost has gone up. However as per the conditions set for revision of DPR by CREDA, project proponent cannot revise the levelized electricity tariff for the project, even though the project cost has gone up. Hence in Page 22
Annual escalation in general and administrative expenses (in %)
10%
In detailed project report of October 2007 /3/, an annual escalation factor of 10% in general and administrative expense has been considered.
Levelized electricity tariff (in INR/kWh)
2.71 INR/kWh for 35 years
The levelized electricity tariff of 2.71 INR/kWh for 35 years considered for investment analysis has been sourced from detailed project report of October 2007 /3/.
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT levelized tariff considered in revised DPR is the same as provided in the detailed project report of October 2007 /3/. The levelized electricity tariff is calculated based on two component : a) Fixed cost (major component) b) Variable cost (minor component) Fixed Cost: this contributes to 95% - 97% of the levelized electricity tariff and is calculated based on interest on loan, operation and maintenance expense, other administrative expenses, depreciation, expected return on equity and annual electricity generation. After commissioning of the project the project proponent will start paying interest on quarterly basis and the loan component will reduce on quarterly basis which will result in decrease in the interest paid on loan after each quarter and by the end of 10 year of operation the loan component will become zero, the interest on term loan component will also become zero. Hence though there is increase in annual O & M and other administrative expense, the other component of fixed cost will either decrease or remain constant (e.g. depreciation, return on equity and electricity generation). This will result in net decrease in fixed cost on annual basis and there will be a significant decrease in fixed cost once the term loan is totally repaid and the interest on term loan becomes zero. Variable Cost: this contributes to 3% - 5% of the levelized Page 23
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT electricity tariff and this component covers spare cost (1% of project cost), O & M expenses (for 1 month) and receivable (for 2 months). Based on the these parameter the working capital is calculated and the variable cost is calculated based on the working capital required each year, interest paid against working capital and annual electricity generation. Based on the above mentioned assumptions the levelized cost in DPR is calculated as: a) For first 5 years: 3.21 INR/kWh b) For first 10 years: 3.08 INR/kWh c) For first 15 years: 2.84 INR/kWh d) For first 20 years: 2.75 INR/kWh e) For first 25 years: 2.72 INR/kWh f) For first 30 years: 2.71 INR/kWh g) For all 35 years: 2.71 INR/kWh DNV confirms that the cost estimates used for levelized electricity tariff calculation is prepared based on the Guidance for preparation of estimates for the river valley projects issued by Central Water Commission and Indian Standard IS: 4877 Guide for preparation of estimate for river valley projects. DNV consider the use of levelized electricity tariff of 2.71 INR/kWh as provided in approved DPRs is reasonable as the techno economic clearance from CREDA (nodal Page 24
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT agency) was provided only based on the levelized electricity tariff as provided in the revised DPR. DNV has cross checked the levelized electricity tariff considered in detailed project report of October 2007 /3/ and revised detailed project report of May 2010 /24/ from the power purchase agreement signed with Chhattisgarh state power distribution company limited dated 01 January 2011 /5/ and confirms that the levelized electricity tariff of 2.71 INR/kWh is calculated based on norms specified in the CSERC order on determination of tariff and related dispensation for procurement of power from small hydel power projects dated 28 February 2007 /12/. DNV has checked that the PPA is applicable for 20 years from the date of commissioning of the project and need to be renewed the PPA thereafter and any revision in levelized electricity after 20 year of operation after 20 year of operation is difficult to predict at this point of time. However DNV has checked that for the project activity even if project proponent able to receive a levelized electricity tariff of 2.75 INR/kWh (levelized tariff for 20 years as per DPR), even after the 20 year of operation till 35 year of operation the IRR will remain lower than the benchmark applied for the project. The formal price of the electricity tariff will only be fixed once the project is commissioned and will be fixed only based on the provisions of the CSERC order on determination of tariff and related dispensation for procurement of power from small Page 25
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT hydel power projects dated 28 February 2007 /12/. DNV has further checked that even after considering no escalation in operation and maintenance cost and other administrative cost the IRR for the project activity (11.62%) is below than the benchmark applied (12.5%) for the project activity. DNV has cross checked that royalty of 0.3 INR/kWh considered for investment analysis is consistent with detailed project report of October 2007 /3/. However in revised DPR the royalty has been considered as 0.06 INR/kWh only /24/ . Hence DNV cross checked that even after considering royalty as provided in revised DPR (0.06 INR/kWh) the project IRR (10.34%) for the project activity is below than the benchmark value considered for the project. DNV has also checked even after considering royalty component as zero, the project IRR (10.59%) for the project activity is below than the benchmark value considered for the project. DNV confirms that the project cost (including land cost and margin money for working capital) considered for investment analysis is consistent with detailed project report of October 2007 /3/. DNV has cross checked the project cost (including land cost and margin money for working capital) considered in detailed project report of October 2007 /3/ with project cost (including land and margin money for working capital) provided in technoeconomic clearance received the Page 26
Royalty from 6th year onwards in INR/kWh
0.3 INR/kWh
The royalty of 0.3 INR/kWh considered for investment analysis has been sourced from detailed project report of October 2007 /3/.
Total Project Cost: Total project cost in million INR (including land cost and margin money for working capital)
384.81
The project cost (including land cost and margin money for working capital) considered for investment analysis has been sourced from detailed project report of October 2007 /3/.
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT from CREDA dated 14 December 2007 and confirms that the values are consistent. DNV has cross checked the project cost (including land cost and margin money for working capital) considered for investment analysis with project cost (including land cost and margin money for working capital) provided in revised DPR dated May 2010 /24/ and revised techno economic clearance received from CREDA on 18 March 2011 /25/ and confirms that the project cost provided in revised DPR dated May 2010 and revised techno economic clearance is higher (419.10 million INR) than value considered for investment analysis (384.81 million INR). Hence, the use of project cost provided in detailed project report of October 2007/3/ is conservative. DNV has checked that the project proponent have already signed the contracts for civil construction and electro mechanical work. DNV confirms that these costs are 9.7% higher than the cost considered in detailed project report of October 2007 /3/. DNV confirms that even after considering other cost as zero the project IRR is below than the benchmark applied for the project activity. DNV confirms that 100% land cost has been added back in last year of operation. DNV confirms that margin money for margin money for working capital has been added in last year of operation. Means of Finance: Debt in Million INR (including 269.37 This has been sourced DNV has cross checked that the from detailed project debt considered in detailed project Page 27
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT MNRE subsidy) report of October 2007 report of October 2007 /3/ has /3/. been calculated based on the debt equity ratio prescribed by central electricity regulatory commission for power sector in India /52/. The debt also include MNRE subsidy as subsidy of 24 million INR, will be paid directly to bank and same has been has cross checked by DNV based on the provision provided by MNRE for small scale hydro power projects /27/. DNV confirms the project activity had received a term loan of 310.5 million INR from IDBI bank and same has been verified by DNV from the financial closure letter from IDBI bank dated 22 January 2010 /26/. This has been sourced This has been calculated based on from detailed project the total project cost, debt and report of October 2007 subsidy received for the project. /3/. DNV confirms that the interest rate used for investment analysis is consistent with interest rate provided in detailed project report of October 2007 /3/. DNV has cross checked the interest rate used for investment analysis with actual interest rate prescribed in term loan agreement signed with IDBI bank dated 22 January 2010 /26/ and confirms that the actual interest rate applicable to project is 12.75%. DNV has cross checked that even after considering actual interest rate of 12.75%, the project IRR (9.25%) for the project activity is below than the benchmark value applied for the project. This has been sourced DNV confirms that the loan tenure from detailed project (excluding moratorium period) report of October 2007 considered from detailed project /3/. report of October 2007 /3/ is Page 28 This has been sourced from detailed project report of October 2007 /3/.
Equity in Million INR
115.44
Terms of loan Interest rate
12.5%
Loan tenure (excluding moratorium period)
10
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT consistent with the loan tenure (excluding moratorium period) prescribed by central electricity regulatory commission for power sector in India /52/ and term loan agreement signed with IDBI bank dated 22 January 2010 /26/. Moratorium 3 This has been sourced DNV has cross checked the period from detailed project moratorium period considered for report of October 2007 investment analysis is consistent /3/. with detailed project report of October 2007 /3/. DNV has cross checked that central electricity regulatory commission prescribes a moratorium period of 1 year only for power sector in India /52/. Hence, DNV cross checked that even after considering moratorium period of 1 year, the project IRR for the project activity is below than the benchmark value applied for the project. Depreciation Rate (based on written down value as per Income Tax Act) Buildings & 10% The Depreciation rate DNV has verified from the income Civil Works (based on written down tax act that the Depreciation rate value) considered in (based on written down value) DPR was based on the applied is in line with Income Tax Income Tax act 1961 Act 1961 of India /53/. /53/. Plant and 15% The Depreciation rate The Depreciation rate (based on Machinery (based on written down written down value) considered in value) considered in DPR was based on the Income Tax DPR was based on the act 1961 /53/. Income Tax act 1961 /53/. Power 15% The Depreciation rate The Depreciation rate (based on evacuation (based on written down written down value) considered in value) considered in DPR was based on the Income Tax DPR was based on the act 1961 /53/. Income Tax act 1961 /53/. Depreciation rate (as per straight line method) on all assets Life time of 35 The lifetime of the DNV has cross checked the project plant in project is 35 years and lifetime of the project from the years has been sourced from Central electricity regulatory detailed project report commission tariff regulations 2009 Page 29
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT of October 2007 /3/. /52/ and confirms the value considered in DPR is consistent with commission tariff regulations 2009 /52/. DNV has verified from the CSERC order on determination of tariff and related dispensation for procurement of power from small hydel power projects dated 28 February 2007/12/, depreciation can be claimed for 90% of the asset (except land and working capital).
Book depreciation up to (% of asset value)
90%
Book depreciation rate (as per straight line method) on all assets in million INR Salvage Value
9.78
As per CSERC order on determination of tariff and related dispensation for procurement of power from small hydel power projects dated 28 February 2007/12/, depreciation can be claimed for 90% of the asset (except land and working capital). This has been calculated based on the total project cost excluding land cost and working capital and lifetime of the project activity. A salvage value of 10% of the equipment cost has been sourced from detailed project report of October 2007 /3/.
This has been calculated based on the total project cost excluding land cost and working capital and lifetime of the project activity.
10%
A salvage of 10% of the equipment cost has been considered in investment analysis and same has been added back in last year cash flow this is in line with the guidance provided by Central electricity regulatory commission tariff regulations 2009 /52/. 100% land cost and working capital has been added back in cash flow of last year of operation.
Tax Rate: Corporate Tax
33.99%
Minimum 11.33% Alternative Tax Working Capital Calculations Receivables 60 (no of days)
As per Income Tax act As per Income Tax act 1961 /53/. 1961 /53/. As per Income Tax act As per Income Tax act 1961 /53/. 1961 /53/.
This has been sourced from detailed project report of October 2007 /3/.
This has been calculated based on the provisions prescribed in Central electricity regulatory commission tariff regulations 2009 Page 30
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT /52/. O & M expenses (no of days) 30 This has been sourced from detailed project report of October 2007 /3/. This has been calculated based on the provisions prescribed in Central electricity regulatory commission tariff regulations 2009 /52/.
Maintenance Spares (% of project cost)
1%
This has been sourced from detailed project report of October 2007 /3/.
Interest rate on working capital in %
13%
This has been calculated based on the provisions prescribed in Central electricity regulatory commission tariff regulations 2009 /52/. This has been sourced DNV has verified from the from detailed project CSERC order on determination report of October 2007 of tariff and related dispensation /3/. for procurement of power from small hydel power projects dated 28 February 2007/12/, that the interest rate prescribed in order is 1% above term loan interest hence the interest rate considered for working capital in investment analysis is conservative.
Calculation and conclusion The project IRR calculations and assumptions provided in a spreadsheet are consistent with the values provided in the detailed project report and have been cross checked by DNV. The calculations were verified and found to be in line with CDM EBs guidance on assessment of investment analysis /42/. For the purpose of tax computation the project participant has considered the tax benefits from interest payments /28/. The assumptions used in the calculations are appropriate and have been verified by DNV. The project IRR of the project over 35 years is 9.24% without the income from CERs /28/. The project is therefore not financially attractive compared to the benchmark of 12.5% in the absence of CDM benefits. CDM revenues, improves the financial viability of project (14.81% project IRR in case of a CER price of 16 per tCO2e). Sensitivity analysis A sensitivity analysis has been carried out for parameters contributing to more than 20% to revenues or costs to check the robustness of the financial analysis. Reasonable variations of the project cost, annual operation & maintenance costs, annual electricity generation, and levelized electricity tariff were checked by calculating the variation necessary to reach the benchmark and then discussing the likelihood for that to happen.
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DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT Decrease in capital cost: The project IRR touches the benchmark if the project cost decreases by 15.68%. However a 15.68% decrease in the project cost is considered unrealistic as the project cost considered for investment analysis is based on the DPR of October 2007 /3/, which is already lower than the revised project cost provided in revised DPR dated May 2010 /24/ and revised techno economic clearance received from CREDA on 18 March 2011 /25/ and also considering increase price trend of manpower cost /54//29/, cement and steel /57/ and whole sale price of manufactured products and all commodities goods /56/. Hence it is DNVs opinion that a decrease of 15.68% in capital cost is not practical. Increase in levelized electricity tariff: With an increase of 16.86% in levelized electricity tariff the project IRR touches the benchmark. However the levelized electricity tariff of 2.71 INR/kWh for 35 years was based on the value considered in detailed project report of October 2007 /3/ and same was the basis for the approval from CREDA (nodal agency). DNV confirms that the cost estimates considered in detailed project report of October 2007 /3/, used for levelized electricity tariff calculation is prepared based on the Guidance for preparation of estimates for the river valley projects issued by Central Water Commission and Indian Standard IS: 4877 Guide for preparation of estimate for river valley projects. Hence it is DNVs opinion that an increase of 16.86% in levelized electricity tariff is not practical. Increase in electricity generation: With an increase in electricity generation by 17.9% (at 53.62% PLF) the project IRR touches the benchmark. This is an unlikely scenario considering the fact that the plant load factor provided in the detailed project report is based on the hydrological data of 14 years (1994-95 to 2007-08). Further, the electricity output from the project activity has also been verified from the revised techno economic clearance received from CREDA on 18 March 2011 /25/. DNV has also checked the plant load factor of 45.48% considered in DPR is already on higher than the PLF prescribed by Ministry of New and Renewable Energy Sources (45%) from small scale hydro projects /55/ or average PLF value considered by CSERC (40%) in its tariff order /12/. DNV confirms from the electricity generation vary for different years for period from 1995-2008, but on the average; it is unlikely to increase in electricity generation by 17.9%. Hence it is DNVs opinion that the PLF of 45.48% considered by the project participant for the IRR calculations is deemed reasonable. Decrease in O&M cost: The project IRR touches the benchmark if the O and M cost decreases by 84.7%. However a 84.7% decrease in the O and M cost is considered unrealistic considering increase price trend of manpower cost /54//29/, cement and steel /57/ and whole sale price of manufactured products and all commodities goods /56/.
4.7 Monitoring
The selected monitoring plan is in line with the monitoring methodology AMS-I.D, version 16 /39/ and the following parameters are measured as per the requirement of the methodology adopted for the project activity: Quantity of net electricity generated from hydropower plant and supplied to the NEWNE grid of India Page 32
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT Quantity of fossil fuel consumed in diesel generator.
Baseline emissions: baseline emission is being calculated as the product of the net electricity supplied to the NEWNE grid by the project activity and the combined margin emission factor of the NEWNE grid of India. The combined margin emission factor of the NEWNE grid of India is fixed ex-ante for the entire renewable crediting period. Project emissions: emissions due to usage of diesel (during emergency requirements of power house) will be accounted as project emissions. Leakage: no sources of emissions were identified. The electricity generating equipment is not transferred from any other activity. Monitoring of sustainable development indicators is not required by the Indian DNA. There are no environmental impacts due to the project activity. It is DNVs opinion, that the project participant is able to implement the monitoring plan.
4.7.1 Parameters determined ex-ante

The following parameters have been determined by ex-ante basis by M/s Shalivahana Green Energy Limited: As per the applied methodology, AMS-I.D, version 16 /39/, the baseline emission is the product of electricity supplied to the NEWNE grid by the renewable generating unit multiplied by combined margin emission factor of NEWNE grid emission factor. At the time of webhosting of PDD for global stakeholder consultation process the latest database for calculation of combined margin emission factor was CEA database version 05, which was is based on Tool to calculate the emission factor for an electricity system (Version 1.1) /40/. Though this version is expired now and as per CDM procedure request for registration needs to be made based on the latest version of tool. However DNV has accepted the use of CEA data base version 05, which was is based on Tool to calculate the emission factor for an electricity system (Version 1.1) /40/ for the following reasons: a) CEA database version 05 was the latest version of database available at the time of webhosting of PDD for global stakeholder consultation process. b) Use of CEA database version 05 is conservative for emission reduction calculation as the combined margin emission factor for the NEWNE grid of India value provided in CEA database version 05 (Tool to calculate the emission factor for an electricity system Version 1.1) is 0.840 tCO2/MWh which got updated to 0.895 tCO2/MWh in CEA database version 06 (calculated in line with the requirement of Tool to calculate the emission factor for an electricity system Version 02). Hence in accordance with the Tool to calculate the emission factor for an electricity system (Version 1.1) /40/. An electricity baseline emission factor has been calculated as a combined margin emission coefficient, consisting of the combination of a simple operating margin (OM) emission coefficient and a build margin (BM) emission coefficient. Both, the OM and BM emission Page 33
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT coefficient will be fixed based on ex-ante for the entire first renewable crediting period of 7 years. The grid emission factor for the project activity has been calculated to be 0.840 tCO2/MWh, considering a weightage of WOM = 0.5 and WBM = 0.5, as stipulated in the Tool to calculate the emission factor for an electricity system/40/. The CM emission factor value has been sourced from data by the Central Electricity Authority (CEA) of the Ministry of Power, Government of India /48/. CEA has published a database of carbon dioxide emission factors for the power sector in India based on detailed authentic information obtained from all operating power stations in the country /48/. This CO2 baseline database provides information about the OM and BM factors of both the regional electricity grids in India. DNV confirms that the database is an official publication of the Government of India for the purpose of CDM baselines. The emission factors for coal and lignite were based on the values provided in Indias Initial National Communication under the UNFCCC (Ministry of Environment & Forests, 2004) /50/. The emission factor for coal is supported by the results of an analysis of approximately 120 coal samples collected from different Indian coal fields. For all other fuels, default emission factors were derived from the IPCC 2006 Guidelines /51/. The OM sourced from the CEA database is calculated ex-ante using the simple OM approach based on the generation weighted average emissions per electricity unit over a three year period of 2006-07, 2007-08 and 2008-09 /48/. BM is calculated ex ante based on the 20% most recent capacity additions in integrated northern, eastern, western north-eastern grid of India based on net generation for the year 2008-09/48/. The operating margin has been determined to be 1.005 tCO2e/MWh and the build margin to be 0.6752 tCO2e/MWh /48/. DNV confirms that the database version 5 used to calculate the combined margin emission factor was the latest database available at the time of webhosting of PDD. The combined margin emission factor for the NEWNE grid of India is fixed ex-ante at 0.840 tCO2/MWh for the entire renewable crediting period /48/. The net calorific value of diesel has been sourced from IPCC 2006 (default value at the upper limit of the uncertainty at a 95% confidence interval) and the value applied is 43.3 TJ/Gg /51/. The emission factor for diesel has been sourced from IPCC 2006 (default value at the upper limit of the uncertainty at a 95% confidence interval) and the value applied is 74.8 tCO2/TJ /51/. The density of diesel has been sourced from official website of IOCL (local value has been applied) and the value applied is 0.860 kg/litre /58/. Gross Electricity generation: the gross electricity generated by the project activity will be monitored continuously and recorded on hourly basis in plant log books by project proponent. The gross electricity generated by the project activity will be measured through 0.2 accuracy class energy meter and meters will be calibrated on annual basis following national standards. This parameter will not be used for emission reduction calculation; however project proponent will monitor this parameter to review the overall plant performance. Page 34
4.7.2 Parameters monitored ex-post
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT Electricity exported to the grid: the electricity exported to the grid by the project activity will be monitored continuously and recorded on monthly basis through Joint meter reading carried out jointly by the representatives of project proponent and state electricity board representatives. The electricity exported to the grid by the project activity will be measured through 0.2 accuracy class bidirectional energy meters and these meters will be calibrated as per provision of power purchase agreement or at least annually. Electricity imported from the grid: the electricity imported from the grid by the project activity will be monitored continuously and recorded on monthly basis through Joint meter reading carried out jointly by the representatives of project proponent and state electricity board representatives. The electricity imported to the grid by the project activity will be measured through 0.2 accuracy class bidirectional energy meters and these meters will be calibrated as per provision of power purchase agreement or at least annually. Net electricity exported to the grid: The net electricity exported to the grid will be calculated as a difference of electricity exported/imported to/from the NEWNE grid as mentioned in the joint meter reading records. The net electricity generation figures will be cross checked against the sales invoices raised to state electricity board by project proponent.
Quantity of diesel consumed in diesel generator: the quantity of diesel will be measured through level gauge and recorded on monthly basis. The diesel consumption data can be cross checked against the issue records from the stores and stock balance prepared on monthly basis. The monitoring plan is in accordance with the monitoring methodology and will give opportunity for real measurements of achieved emission reductions. DNV confirm that the project participant has the capacity to implement the monitoring plan.
4.7.3 Management system and quality assurance

The responsibility of overall project management lies with M/s Shalivahana Green Energy Limited. Details of data to be collected, frequency of data recording and data recording format are described in the PDD. All the data collected, as per the monitoring plan, shall be verified by CDM team and subsequently will be approved by Director (SGEL). Internal audits shall be conducted at regular interval. All data will be kept for two years after the end of the last crediting period. Detailed monitoring procedures, including responsibilities for project management, procedures for QA/QC of monitoring reports and calibration, have been developed in the PDD. DNV concludes that monitoring plan is feasible for the project activity design and project proponent shall be able to implement the monitoring plan.
4.8 Algorithms and/or formulae used to determine emission reductions

The calculations are well documented in line with the monitoring methodology AMSI.D version 16 /39/ adopted for the project activity. All aspects related to the direct and Page 35
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT indirect GHG emissions as relevant to the project activity have been addressed and are presented in a transparent manner. Baseline emission (BEy): The baseline emissions has been estimated based on net electricity supplied by the hydro power plant that replaces fossil fuel based electricity generation in the NEWNE grid of India. The combined margin emission coefficient for the NEWNE grid of India has been determined to be 0.840 tCO2e/MWh /48/ and is fixed ex ante for the entire renewable crediting period of 7 years. Project emission (PEy): the project activity is equipped with diesel generator to meet the emergency requirements of the power house; hence emissions due to usage of diesel will be accounted as project emissions. The project proponent will monitor the amount of diesel consumed throughout the crediting period on monthly basis, whereas the NCV, emission factor and density of diesel has been fixed ex ante. Leakage: no sources of emissions were identified. The electricity generating equipment is not transferred from any other activity. ERy = BEy PEy Based on the calculations and results presented in the sections above the implementation of the project activity will result in an average ex-ante estimation of emission reduction conservatively calculated to be 22 957 tCO2e per year for the entire renewable crediting period. All assumptions and data used by the project participants are listed in the PDD and/or supporting documents, including their references and sources. All documentation used by the project participants as the basis for assumptions and source of data is correctly quoted and interpreted in the PDD. All values used in the PDD are considered reasonable in the context of the proposed CDM project activity. The baseline methodology has been applied correctly to calculate project emissions, baseline emissions, leakage and emission reductions. All estimates of the baseline, project and leakage emissions can be replicated using the data and parameter values provided in the PDD.
4.9 Environmental impacts

As per the Ministry of Environment and Forests (MoEF), India Environment Impact Notification dated 1 December 2009 /59/, hhydroelectric power projects below 25 MW capacity have been exempted from EIA and thus environmental impact assessment is not required for the project activity. The project is not likely to create any adverse environmental effects. The project complies with environmental regulations in India and the project proponent have received all the necessary approval and clearances required for the project activity /15/, /29/-/33/, /35/ and /36/.
4.10 Comments by local stakeholders

The local stakeholders were invited through a notice pasted at village Panchayat Office notice board /30/. The local stakeholder meeting for the project activity was conducted at the Grampanchayat of Chevdhara Village, Korba District of Chhattisgarh on 22nd May 2009 /19/. The local villagers and farmers were invited to comment on the project activity. Detailed minute of meeting, along with list of attendees with their signature and photographs have been verified by DNV /19/. A detailed description of stakeholder
Page 36

consultation has been provided in section E of PDD. The project has also received the no objection certificate (NOC) from local village panchayat /34/. DNV consider that the media used for stakeholder consultation process, timing of stakeholder consultation process and maintaining detailed minute of meeting, along with list of attendees with their signature is applicable methods for stakeholder consultation on the project and are acceptable. The questions raised during the stakeholder consultation show that the proposed project received support from the local people. DNV considers the local stakeholder consultation carried out adequately.
4.11 Comments by Parties, stakeholders and NGOs

The PDD, version 01 dated 08 July 2010, was made publicly available on the CDM website* and Parties, stakeholders and NGOs were through the CDM website invited to provide comments during a 30 days period from 02 February 2011 to 03 March 2011. One comment was received and is given (in unedited form) in the below text box. Comment by: Accredited NGO Party Stakeholder Inserted by: Nancy Johan Subject: CDM consideration, investment decision date, PLF, benchmark, input parameters for investment analysis, barrier analysis, emission reduction calculation and monitoring provisions. Comment: 1. Chronology of events does not speak about the status of project activity and LOI of E&M date not provided in the PDD except C.1.1 starting date of the project activity, DOE has check. 2. When is the board meeting and date of investment decision? It is not explicitly mentioned in the PDD. 3. Why barrier analysis is not discussed in the PDD. If there is no barrier, then it should be mentioned in the PDD. 4. How benchmark is calculated and how IRR is calculated is not discussed at all in the PDD. 5. PLF should be based on EB48 Annex 11guideline which says The plant load factor provided to banks and/or equity financiers while applying the project activity for project financing, or to the government while applying the project activity for implementation approval; (b) The plant load factor determined by a third party contracted by the project participants (e.g. an engineering company); But PDD doesnt demonstrate how PLF has been arrived at. 6. Whether PLF includes machine shutdown, machine availability. Whether grid availability is accounted for in the calculation of gross generation. To my surprise, critical parameter like PLF is missing from the PDD. How DOE has allowed this. 7. Emission reduction calculation should be based on EB 50 Annex 14 Tool for emission factor for the electricity system.
*
http://cdm.unfccc.int/Projects/Validation/DB/3KG9KUJ97H011ZJHLOZZ4YHC7OWV12/view.html
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DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT 8. The main meter and check meter technical parameters like accuracy level, make, etc. needs to be mentioned in the PDD.
Project proponent Response 1: Details of implementation status of the project activity and chronology of events including letter of intent issued for electro-mechanical equipments has been included in revised PDD. Relevant supporting documents for the same have been furnished to DOE for validation. DNV Response 1: Detailed chronology of events has been included in revised PDD version 02 dated 02 September 2011. Evidence pertaining to the chronology has been reviewed by DNV. Project proponent Response 2: The investment decision for the project activity was taken on board of directors meeting held on 24 November 2008. The detailed project report of October 2007 was the basis for decision to invest in the project activity. The detailed project report of October 2007 recommended the project activity to be financially attractive considering cash inflow from the CDM. The copy of board resolution and detailed project report has been furnished to DOE for validation. DNV Response 2: Prior to the starting date, the DPR for the project activity was prepared in October 2007 by Hydrotech Consultant (Independent consultant) which recommended the project activity as economically viable with CDM benefits /3/. On 14 December 2007, CREDA provided the techno economic clearance based on the DPR prepared in October 2007 by Hydrotech Consultant (Independent consultant) /4/. Based on the recommendation of DPR the Board and Directors of M/s Shalivahana Green Energy Limited considered the CDM benefits for the project activity to overcome the financial difficulties and approved the project in its meeting held on 24 November 2008 /16/. The minutes of meeting of the board of directors dated 24 November 2008 has been evidenced by DNV during the site visit for the project activity /16/. Project proponent Response 3: As per Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities, the PP has demonstrated the barriers in the revised PDD, PP has chosen the Investment Barrier and same has been demonstrated in the Revised PDD. Evidence pertaining to the financial analysis has been submitted to DoE for validation. DNV Response 3: The additionality of the project activity has been demonstrated as per the Attachment A to Appendix B of simplified modalities and procedures for small-scale CDM project activities /41/. As per Attachment A to Appendix B of simplified modalities and procedures for small-scale CDM project activities project participants shall provide an explanation to show that the project activity would not have occurred anyway due to at Page 38
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT least one of the barriers Hence in line with the requirement of tool project proponent has demonstrated the additionality of the project considering Investment barrier a detailed description of investment barrier faced by the project activity has been demonstrated in section 4.6 of the report. Project proponent Response 4: Project proponent has chosen the Prime lending rate published by RBI, applicable at the time of Investment decision as benchmark for the project and relevant link to the same has been provided in the revised PDD and the input parameters and assumptions including sources for project IRR analysis are incorporated in the revised PDD and the copies of relevant documents are furnished to DOE for validation. DNV Response 4: The project activity is electricity generation based on hydro resource which could be developed by an entity other than project participant. The benchmark should thus be based on publicly available data sources. The financial indicator applied for the project activity is project IRR and the benchmark used for the project activity is average prime lending rate of 12.5% (average value of the range of 12.25% to 12.75%) quoted by RBI (The Reserve Bank of India) for the financial year 2007-08 /23/ (applicable at the time of investment decision). It is DNVs opinion that the selected benchmark is appropriate as this value has been sourced directly from the RBI website, which is reliable and has been verified from the website of Reserve Bank of India /23/. It is DNVs opinion that the selected benchmark is appropriate as this value has been sourced directly from the RBI report, which is reliable and has been verified from the website of Reserve Bank of India /23/. DNV has further cross checked the 5 year historical average prime lending rates indicated by RBI (10.25% - 12.75%) prior to the investment decision and has confirmed that the chosen value is reasonable /23/. Project proponent Response 5: PLF has been considered from DPR, where in the PLF was estimated by third party engineering consultant based on Hydrology & Power studies, Grid availability. Further the considered PLF has been approved /accepted by the Nodal agency (CREDA) and funding bank. Copies of these documents are provided to DOE. DNV Response 5: The plant load factor considered for the investment analysis was based on the detailed project report of October 2007 /3/. On 14 December 2007 project proponent received the techno-economic clearance and approval of detailed project report from CREDA /4/. DNV has checked the revised DPR prepared by independent consultant (Hydrotech Consultant) of May 2010 /24/ and confirms that there is no change in electricity generation estimates in revised DPR, due to change in unit size and number of units. DNV has further cross checked the gross electricity generation figures provided in revised techno economic clearance received from CREDA on 18 March 2011 /25/ and confirms that there is no change in electricity generation estimates in revised DPR /24/, due to change in unit size and number of units. Since the DPRs were prepared by independent third party and same was approved by CREDA, the PLF considered for the project activity meets the requirement of EB 48 Annex 11 Para 3 (b) Page 39
DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT plant load factor determined by a third party (engineering company) contracted by the project participant /44/. Project proponent Response 6: The PLF considered in detailed project report is calculated considering 95% machine availability, 95% grid availability, and hydrological data considering 75% dependable year. DNV Response 6: DNV has verified the power study calculation provided in the detailed project report and confirms that the annual electricity generation has been calculated considering 95% machine availability, 95% grid availability, and hydrological data considering 75% dependable year. Project proponent Response 7: The emission reductions are calculated based on the CEA database version 05, which was based on Tool to calculate the emission factor for an electricity system (Version 1.1). Project proponent has used this version CEA database version 05 (based Tool to calculate the emission factor for an electricity system Version 1.1) as this was the latest data available at the time of webhosting of PDD and the CEA database version 06 which is based on Tool to calculate emission factor for an electricity system version 2 was published only in march 2011, which is after the date of PDD webhosting. DNV Response 7: At the time of webhosting of PDD for global stakeholder consultation process the latest database for calculation of combined margin emission factor was CEA database version 05, which was is based on Tool to calculate the emission factor for an electricity system (Version 1.1) /40/. Though this version is expired now and as per CDM procedure request for registration needs to be made based on the latest version of tool. However DNV has accepted the use of CEA data base version 05, which was is based on Tool to calculate the emission factor for an electricity system (Version 1.1) /40/ as CEA database version 05 was the latest version of database available at the time of webhosting of PDD for global stakeholder consultation process. CEA database version 06, which is based on Tool to calculate the emission factor for an electricity system (Version 02) was published only in March 2011 and is after the date of webhosting of PDD for global stakeholder consultation process. Use of CEA database version 05 is conservative for emission reduction calculation as the combined margin emission factor for the NEWNE grid of India value provided in CEA database version 05 (Tool to calculate the emission factor for an electricity system Version 1.1) is 0.840 tCO2/MWh which got updated to 0.895 tCO2/MWh in CEA database version 06 (calculated in line with the requirement of Tool to calculate the emission factor for an electricity system Version 02).
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DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT Project proponent Response 8: The provision of main and check meters, accuracy class of meters, details regarding data monitoring, recording and archiving procedures has been included in revised PDD. DNV Response 8: A detailed description of monitoring procedures details regarding data monitoring, recording and archiving procedures has been included in section B.7.1 of the revised PDD version 02. Main and check meter provisions, accuracy class of energy meters, calibration and monitoring procedures and now addressed in revised PDD. - o0o -
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DET NORSKE VERITAS
APPENDIX A
CDM VALIDATION PROTOCOL
DET NORSKE VERITAS
Table 1
Mandatory requirements for Clean Development Mechanism (CDM) project activities

Requirement Reference Conclusion
About Parties 1. The project shall assist Parties included in Annex I in achieving compliance with part of their emission reduction commitment under Art. 3.
Kyoto Protocol Art.12.2
2. The project shall assist non-Annex I Parties in contributing to the ultimate objective of the UNFCCC. 3. The project shall have the written approval of voluntary participation from the designated national authority of each Party involved. 4. The project shall assist non-Annex I Parties in achieving sustainable development and shall have obtained confirmation by the host country thereof. 5. In case public funding from Parties included in Annex I is used for the project activity, these Parties shall provide an affirmation that such funding does not result in a diversion of official development assistance and is separate from and is not counted towards the financial obligations of these Parties. 6. Parties participating in the CDM shall designate a national authority for the CDM. 7. The host Party and the participating Annex I Party shall be a Party to the Kyoto Protocol. 8. The participating Annex I Partys assigned amount shall have been calculated and recorded.
Kyoto Protocol Art.12.2. Kyoto Protocol Art. 12.5a, CDM Modalities and Procedures 40a Kyoto Protocol Art. 12.2, CDM Modalities and Procedures 40a Decision 17/CP.7, CDM Modalities and Procedures Appendix B, 2 CDM Modalities and Procedures 29 CDM Modalities 30/31a CDM Modalities and Procedures 31b
Not applicable The project is developed as unilateral project. CAR 1 OK CAR 1 OK CAR 1 OK OK
OK OK The project is developed as unilateral project. The project

A-1
9. The participating Annex I Party shall have in place a national system for
CDM Validation Protocol Report No. 2011-0606, rev. 03
CDM Modalities and Procedures 31b
DET NORSKE VERITAS
Requirement estimating GHG emissions and a national registry in accordance with Kyoto Protocol Article 5 and 7. About additionality 10. Reduction in GHG emissions shall be additional to any that would occur in the absence of the project activity, i.e. a CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity. About forecast emission reductions and environmental impacts 11. The emission reductions shall be real, measurable and give long-term benefits related to the mitigation of climate change. About small-scale project activities (if applicable) 12. The proposed project activity shall meet the eligibility criteria for small scale CDM project activities set out in 6 (c) of the Marrakech Accords and shall not be a debundled component of a larger project activity. 13. The proposed project activity shall confirm to one of the project categories defined for small scale CDM project activities and use the simplified baseline and monitoring methodology for that project category. 14. If required by the host country, an analysis of the environmental impacts of the project activity is carried out and documented. About stakeholder involvement 15. Comments by local stakeholders shall be invited, a summary of these provided and how due account was taken of any comments received. 16. Parties, stakeholders and UNFCCC accredited NGOs shall have been invited to comment on the validation requirements for minimum 30 days, and the project design document and comments have been made publicly available.
Reference
Conclusion is developed as unilateral project.
Kyoto Protocol Art. 12.5c, CDM Modalities and Procedures 43
CL 3 CL 4 CL 5 CAR 8 OK OK
Kyoto Protocol Art. 12.5b
Simplified Modalities and Procedures for Small Scale CDM Project Activities 12a,c Simplified Modalities and Procedures for Small Scale CDM Project Activities 22e Simplified Modalities and Procedures for Small Scale CDM Project Activities 22c CDM Modalities and Procedures 37b CDM Modalities and Procedures 40
OK
OK
OK
OK OK
A-2
DET NORSKE VERITAS
Requirement Other 17. The baseline and monitoring methodology shall be previously approved by the CDM Executive Board. 18. A baseline shall be established on a project-specific basis, in a transparent manner and taking into account relevant national and/or sectoral policies and circumstances. 19. The baseline methodology shall exclude to earn CERs for decreases in activity levels outside the project activity or due to force majeure. 20. Provisions for monitoring, verification and reporting shall be in accordance with the modalities described in the Marrakech Accords and relevant decisions of the COP/MOP.
Reference CDM Modalities and Procedures 37e CDM Modalities and Procedures 45c,d
Conclusion OK OK
CDM Modalities and Procedures 47 CDM Modalities and Procedures 37f
OK OK
A-3
DET NORSKE VERITAS
Table 2
Requirements checklist
Checklist Question Ref MoV Assessment by DNV Draft Concl. Final Concl.
A General description of project activity A.1 Title of the project activity (VVM Para 55-57)
A.1.1 Does section A.1 of the PDD include a clearly identifiable project title, version number of the PDD and date of the PDD? Is the PDD is in accordance with the applicable requirements for completing PDDs?
/1/
DR
A.1.2
/1/
DR
Clearly identifiable title of the project activity Version number of the PDD is included Date of the PDD is included. Yes
OK
OK
A.2 Description of the project activity (VVM Para 58-64 and VVM Para 135 and 136 (a) & (c) for small-scale project activities, as applicable)
A.2.1 How was the design of the project assessed?
/1/
DR/I
What type is the project? Project in existing facility or utilizing existing equipment(s) Project is either a large scale project or a small scale project with emission reductions exceeding 15 000 tCO2e per year. In this case, a site visit must be performed. Project is a bundled small scale project, with each project in the bundle with emission reductions not exceeding 15,000 tCO2e per year. In such case the number of physical site visits may be based on sampling, if the sampling size is appropriately justified through statistical analysis.
OK
A-4
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
The project is an individual small scale project activity with emission reductions not exceeding 15 000 tCO2e per year. In this case, DOE may not conduct a physical site visit as appropriate. Greenfield project How was the design of the project assessed? Physical site inspection Reviewing available designs and feasibility studies The proposed project activity is installation of two diversion type small hydro power units with an aggregated capacity of 7 MW (2 x 3.5). The project is run-of-the-River hydro power project located at Jatashankari River in Korba district of Chhattisgarh in India. The project activity will use two synchronous generators each coupled to two horizontal Francis turbines. The gross power generated per year is estimated to be 27.93 MUs at a plant load factor of 45.55%. The project activity will be connected to the Chhattisgarh state electricity grid, which forms a part of the north east west north eastern regional grid of India. The power will be generated at 6.6 kV and will be stepped up to 33 kV through an 11 MVA transformer. The entire power will be evacuated to the existing 33/11 kV Katghora substation of SEB, which is located at about 23 km from the
Draft Concl.
Final Concl.
A-5
DET NORSKE VERITAS
Checklist Question
Ref
MoV
plant.
Assessment by DNV On 14 March 2011, DNV performed interviews with project stakeholder to confirm selected information and to resolve issues identified in the document review. At that time, the civil construction for the project activity was just begun, and hence the interview was carried out at the project proponents office.
The technical specification of the turbine & generator set need to be provided for verification. At the time of commencement of validation, the civil construction of the project activity was going on. In line with VVM version 1.2, Para 58 implementation schedule of the project activity needs to be included in the PDD. Not applicable since the project activity is not a bundled small scale project.
Draft Concl.
Final Concl.
CL 1
A.2.2
If a greenfield project, describe the physical implementation of the project when the validation was commenced.
/1/
DR/I
CAR 2
OK
A.2.3
A.2.4
If physical site visits were performed based on sampling (only applicable for bundled small scale projects, each with emission reductions not exceeding 15 000 tCO2e per year), justify the sampling through a statistical analysis: Is the description of the proposed CDM project activity as contained in the PDD sufficiently covers all relevant elements, is accurate and that it provides the reader with a clear understanding of the nature of the proposed CDM project activity?
/1/
DR
OK
/1/
DR/I
The proposed project activity is installation of two diversion type small hydro power units with an aggregated capacity of 7 MW (2 x 3.5). The project is run-of-the-River hydro power project located at Jatashankari River in Korba district of Chhattisgarh in India. The project activity will use two synchronous generators each coupled to two horizontal Francis turbines. The gross power generated per year is
OK
A-6
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
estimated to be 27.93 MUs at a plant load factor of 45.55%. The project activity will be connected to the Chhattisgarh state electricity grid, which forms a part of the north east west north eastern regional grid of India. The power will be generated at 6.6 kV and will be stepped up to 33 kV through an 11 MVA transformer. The entire power will be evacuated to the existing 33/11 kV Katghora substation of SEB, which is located at about 23 km from the plant. However the technical specification of the turbine & generator set need to be provided for verification. The proposed CDM project activity is installation of a new 7 MW hydro based power plant supplying power to the NEWNE regional grid of India. Yes, the project design does reflect good engineering practices as the project utilizes equipments and design that are standard and available in the India and is widely used for power generation in host country. Yes. The technology used for the project is available in the host country.
Draft Concl.
Final Concl.
CL 1
A.2.5
Does the project activity involve alteration of existing installations? If so, have the differences between pre-project and post-project activity been clearly described in the PDD? Does the project design engineering reflect current good practices?
/1/
DR/I
OK
A.2.6
/1/
DR/I
OK
A.2.7
A.2.8
Would the technology result in a significantly better performance than any commonly used technologies in the host country? Is any transfer of technology from any AnnexI Party involved? Does the project qualify as a small scale CDM project activity as defined in paragraph 6(c) of decision 17/CP.7 on the modalities and procedures for the CDM?
/1/
DR/I
OK
/1/
DR/I
Yes, the project qualifies as a small scale CDM project activity, since the installed capacity of 7 MW of the project activity and is in line with the
OK
A-7
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
simplified modalities and procedures for smallscale CDM project activities respectively. However, technical specification of the turbine & generator set need to be provided for verification. The project activity is not a debundled component of a larger project activity since there is no registered CDM project activity or request to register another CDM project by project participant in the last two years and within 1 km radius from the project activity.
Draft Concl.
Final Concl.
CL 1 OK
A.2.9
Is the small scale project activity a debundled component of a larger project activity in accordance with the rules defined in appendix C of the simplified modalities and procedures for small-scale CDM project activities?
/1/
DR
A.3
A.3.1
Participation requirements (VVM Para 51-54, 125127)

Do all participating Parties fulfil the participation requirements as follows: Yes, India is the host Party in the project activity and the project participant is Shalivahana Green Energy Limited. No Annex I country is identified yet for the project activity. India (host) County X Country Y Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No DR Letter of Approval from DNA of India need to be /1/ provided for verification. India (host) County X Country Y Yes No Yes No Yes No Yes No Yes No Yes No Yes No NA NA
/1/
DR
OK
A.3.2
a) Party has ratified the Kyoto Protocol b) Party has designated a Designated National Authority c) The assigned amount has been determined Do the letters of approval meet the following requirements?
CAR 1 CAR 1
OK OK
a) LoA confirms that Party has ratified the Kyoto Protocol b) LoA confirms that participation is voluntary c) The LoA confirms that the project contributes to the sustainable development of the host country? d) The LoA refers to the precise project activity title in the PDD
Yes
No
Yes
No
Yes
No
A-8
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
Draft Concl.
Final Concl.
A.3.3
e) The LoA is unconditional with respect to (a) to (d) above Yes No Yes No Yes No f) The LoA is issued by the respective Partys DNA Yes No Yes No Yes No g) The LoA was received directly by the DNA or the PP DNA PP DNA PP DNA PP h) In case of doubt regarding the authenticity of the letter of approval, describe how it was verified that the letter of Letter of Approval approval is authentic from DNA of India need to be provided for verification. Have all private/public project participants been authorized DR Letter of Approval from DNA of India need to be /1/ by an involved Party? provided for verification.
CAR 1
OK
A.4 Technical description of the project activity (VVM Para 58-64)

A.4.1 Is the projects location clearly defined?
/1/
DR
The proposed project activity will be located at Jatashankari River near village Chevdhara of Korba District, in Chhattisgarh State. The geographical coordinates of the project activity are: Latitude: 22 33 49 N and Longitude: 82 22 44 E Thegeo-coordinates of both (weir house and power house) as mentioned in the grid permission letter of CSEB need to be covered in PDD. No public funding from an Annex I Party is involved in the project and the validation did not reveal any information that indicates that the project can be seen as a diversion of official development assistance (ODA) funding towards India.
OK
CAR 3
A.5
A.5.1
Public funding of the project activity

In case public funding from Parties included in Annex I is used for the project activity, have these Parties provided an affirmation that such funding does not result in a diversion of official development assistance and is separate from and is not counted towards the financial obligations of these Parties?
/1/
DR
OK
A-9
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
Draft Concl.
Final Concl.
B Application of a baseline and monitoring methodology B.1 Methodology applied (VVM Para 65-76 and VVM Para 136 (b) for small-scale project activities, as applicable)
B.1.1 Does the project apply an approved methodology and the correct and valid version thereof?
/1/
DR
B.1.2
B.1.3
If applicable, has any specific guidance provided by the CDM EB in respect to the applied methodology been considered? If the project applies a small-scale methodology, does the project also comply with the general guidelines to SSC CDM methodologies, which provides guidelines on equipment capacity, equipment performance/lifetime, baseline identification for type-II/III Greenfield project activities, sampling and other monitoring-related issues?
/1/ /1/
DR
DR
The project correctly applies the approved baseline methodology Grid connected renewable electricity generation type I. D, Version 16 as per Appendix-B of simplified modalities and procedures for small scale CDM projects. Yes, the project activity comply all relevant guidelines provided by the CDM EB in respect with the applied methodology. Yes, the project complies with the relevant requirements of the general guidelines to SSC CDM methodologies. However, technical specification of the turbine & generator set need to be provided for verification.
OK
OK
OK CL 1
B.2
Applicability of methodology (and tools) (VVM Para 65-76) Insert a row for each applicability criteria of the applied methodology (and tools) /1/
DR The project activity is installation new grid connected small hydro power units with an aggregated capacity of 7 MW (23.5 MW) supplying power to the NEWNE regional grid of India. The project is located at located at Jatashankari River in Korba district of Chhattisgarh in India and will utilize existing hydro resource for power generation. OK
B.2.1
How was it validated that project complies with the following applicability criteria: insert applicability criteria? This category comprises renewable energy generation units, such as photovoltaic, hydro, tidal/wave, wind, geothermal and renewable biomass that supply electricity to a national or a regional grid. Project activities that displace electricity from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired generating unit shall apply AMS-I.F?
A-10
DET NORSKE VERITAS
Checklist Question
How was it validated that project complies with the following applicability criteria: insert applicability criteria? This methodology is applicable to project activities that (a) install a new power plant at a site where there was no renewable energy power plant operating prior to the implementation of the project activity (Greenfield plant); (b) involve a capacity addition; (c) involve a retrofit of (an) existing plant(s); or (d) involve a replacement of (an) existing plant(s). B.2.3 How was it validated that project complies with the following applicability criteria: insert applicability criteria? Hydro power plants with reservoirs that satisfy at least one of the following conditions are eligible to apply this methodology: The project activity is implemented in an existing reservoir with no change in the volume of reservoir; The project activity is implemented in an existing reservoir, where the volume of reservoir is increased and the power density of the project activity, as per definitions given in the Project Emissions section, is greater than 4 W/m2; The project activity results in new reservoirs and the power density of the power plant, as per definitions given in the Project Emissions section, is greater than 4 W/m2. B.2.4 How was it validated that project complies with the following applicability criteria: insert applicability criteria? In the case of biomass power plants, no other biomass types than renewable biomass is to be used in the project plant. B.2.2
Ref /1/
MoV
DR
Assessment by DNV
This applicability criterion is not discussed in the webhosted PDD. In line with VVM Para 71 project proponent needs to include all applicability criteria in PDD and justification on how requirement of each applicability criteria are met needs to be provided in PDD.
Draft Concl.
CAR 4
Final Concl.
OK
/1/
DR
This applicability criterion is not discussed in the CAR 4 webhosted PDD. In line with VVM Para 71 project proponent needs to include all applicability criteria in PDD and justification on how requirement of each applicability criteria are met needs to be provided in PDD.
OK
/1/
DR
How was it validated that project complies with the following applicability criteria: If the new unit has both renewable and non-renewable components (e.g., a wind/diesel unit), the eligibility limit of 15 MW for a smallCDM Validation Protocol Report No. 2011-0606, rev. 03
B.2.5
/1/
DR
This applicability criterion is not discussed in the webhosted PDD. In line with VVM Para 71 project proponent needs to include all applicability criteria in PDD and justification on how requirement of each applicability criteria are met needs to be provided in PDD. The project activity is installation of new grid connected 7 MW run of river hydro power project and does not have any non-renewable component, hence this applicability criteria is not
CAR 4
OK
OK
A-11
DET NORSKE VERITAS
Checklist Question
scale CDM project activity applies only to the renewable component. If the new unit co-fires fossil fuel, the capacity of the entire unit shall not exceed the limit of 15 MW. B.2.6 How was it validated that project complies with the following applicability criteria: Combined heat and power (co-generation) systems are not eligible under this category. How was it validated that project complies with the following applicability criteria: In the case of project activities that involve the addition of renewable energy generation units at an existing renewable power generation facility, the added capacity of the units added by the project should be lower than 15 MW and should be physically distinct from the existing units. How was it validated that project complies with the following applicability criteria: In the case of project activities that involve the addition of renewable energy generation units at an existing renewable power generation facility, the added capacity of the units added by the project should be lower than 15 MW and should be physically distinct from the existing units. B.2.9 Is the selected baseline on of the baseline(s) described in the methodology and this hence confirms the applicability of the methodology? B.2.8 B.2.7
Ref
MoV
Assessment by DNV
applicable for the project.
Draft Concl.
Final Concl.
/1/
DR
The project activity is installation of new grid connected 7 MW run of river hydro power project, hence this applicability criteria is not applicable for the project. The project activity is installation of new grid connected 7 MW run of river hydro power project and does not involve addition of renewable energy generation units at an existing renewable power generation facility, hence this applicability criteria is not applicable for the project. The project activity is installation of new grid connected 7 MW run of river hydro power project, hence this applicability criteria is not applicable for the project.
OK
/1/
DR
OK
/1/
DR
OK
/1/
DR
Yes the selected baseline corresponds to the baseline emissions are the product of electrical energy baseline EGBL, y expressed in kWh of electricity produced by the renewable generating unit multiplied by an emission factor as prescribed in the applied methodology. BEy = EGBL,y * EFCO2,grid,y
OK
A-12
DET NORSKE VERITAS
Checklist Question B.3

B.3.1
Ref /1/
MoV
DR
Assessment by DNV
The project boundary includes - (i) The project Installation, pooling and sub-stations connected to NEWNE grid. (ii) The spatial boundary of the project also includes transmission network for the evacuation of electricity to the NEWNE grid to which the project activity is connected. However project proponent is requested to correct the project boundary diagram provided in webhosted PDD as metering arrangement of net electricity exported to the NEWNE grid should also come under the project boundary. The project activity involves the installation of a new hydro based power plant to supply power to the NEWNE regional grid of India. As the power generated is being generated from renewable source (hydro), there are no GHG emission sources as such in the project activity. However project proponent needs to clarify that whether the project activity will also be equipped with diesel generator to meet the emergency requirements of the power house. In case project activity will be equipped with diesel generator, emissions due to diesel consumption needs to be accounted as project emissions and monitoring provision for the same need to be formalised in revised PDD. Technical specification of diesel generator also needs to be included in revised PDD and same needs to be provided for verification.
Draft Concl.
CAR 5
Final Concl.
OK
Project boundary (VVM para 78-80)

What are the projects system boundaries (components and facilities used to mitigate GHGs)? Are they clearly defined and in accordance with the methodology?
B.3.2
Which GHG sources are identified for the project? Does the identified boundary cover all possible sources linked to the project activity? Give reference to documents considered to arrive at this conclusion.
/1/
DR
CL 2
OK
A-13
DET NORSKE VERITAS
Checklist Question
B.3.3 Does the project involve other emissions sources not foreseen by the methodologies that may question the applicability of the methodology? Do these sources contribute with more than 1% of the estimated emission reductions of the project?
Ref /1/
MoV
DR
Assessment by DNV
All possible sources of project emission are identified and covered in case of project activity. However project proponent needs to clarify that whether the project activity will also be equipped with diesel generator to meet the emergency requirements of the power house. In case project activity will be equipped with diesel generator, emissions due to diesel consumption needs to be accounted as project emissions and monitoring provision for the same need to be formalised in revised PDD.
Draft Concl.
CL 2
Final Concl.
OK
B.4 Baseline scenario determination (VVM para 81-88, 105-107) Ensure that the evaluation of all alternatives provided in the PDD and required by the methodology and also possible alternatives/offshoots of alternatives are discussed. Check that all alternatives required to be considered by the methodology are included in the final PDD. If baseline alternatives required to be considered by the methodology are considered not applicable, please assess the justification for this.
B.4.1 Which baseline scenarios have been identified? Is the list of baseline scenarios complete? How have the other baseline scenarios been eliminated in order to determine the baseline? What is the baseline scenario?
/1/ /1/ /1/
DR
B.4.2
DR
B.4.3
DR
No alternative scenario analysis is done. The same is not required as per the applied version of the methodology. No alternative scenario analysis is done. The same is not required as per the applied version of the methodology. The baseline scenario is that in the absence of the project activity, equivalent amount of energy would have been generated from the existing plants or new capacity additions using the fossil
OK
OK
OK
A-14
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
fuels in the NEWNE Grid to which the project activity is connected. Yes, the baseline has been determined in accordance with the guidance of the methodology. Yes. It is considered conservative since project being connected to Chhattisgarh state grid which forms part of NEWNE grid of India; hence in the absence of the project activity, equivalent amount of energy would have been generated from the existing plants or new capacity additions using the fossil fuels in the NEWNE Grid. As suggested by methodology, combined margin approach has been selected to estimate the baseline emission factor. The CM emission factor has been chosen from official web site of Central Electricity Authority which is publicly available data. Yes. All relevant national and sectoral policies, regulations and department rules and disciplines are considered. The CM emission factor has been chosen from official web site of Central Electricity Authority which is publicly available data and reference to the Central Electricity Authority database has been provided in the PDD. The following parameters necessary for determining the baseline have been mentioned in the PDD(i)Installed capacity of the project activity, (ii) CM Emission factor of the NEWNE grid of India. The installed capacity of the project activity is 7
Draft Concl.
Final Concl.
B.4.4
Is the determination of the baseline scenario in accordance with the guidance in the methodology? Has the baseline scenario been determined conservative assumptions where possible? using
/1/ /1/
DR
OK
B.4.5
DR
OK
B.4.6
B.4.7
Does the baseline scenario sufficiently take into account relevant national and/or sectoral policies, macro-economic trends and political aspirations? Is the baseline scenario determination compatible with the available data and are all literature and sources clearly referenced?
/1/ /1/
DR
OK
DR
OK
B.4.8
Is the baseline determination adequately documented in the PDD? All assumptions and data used by the project participants are listed in the PDD and related document to be submitted for registration. The data are properly referenced.
/1/
DR
OK
A-15
DET NORSKE VERITAS
Checklist Question
All documentation is relevant as well as correctly quoted and interpreted. Assumptions and data can be deemed reasonable Relevant national and/or sectoral policies and circumstances are considered and listed in the PDD. The methodology has been correctly applied to identify what would occurred in the absence of the proposed CDM project activity
Ref
MoV
Assessment by DNV
MW. However in order to conclude on the installed capacity of the project activity, project proponent is requested to submit the purchase placed for the electro-mechanical equipments, technical specification sheet and power purchase agreement signed for the project activity.
Draft Concl.
CL 1
Final Concl.
Additionality determination (VVM Para 94-121 and VVM Para 137 for small-scale project activities, as applicable)
B.5 B.5.1 What approach/tool does the project use to assess additionality? Is this in line with the methodology? In case of small-scale CDM project activities, is Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities applied considering also the Non-binding best practice examples to demonstrate additionality for SSC project activities. Have the regulatory requirements correctly been taken into account to evaluate the project activity and the alternatives? Is sufficient evidence provided to support the relevance of the arguments made?
/1/
DR
B.5.2 B.5.3
/1/ /1/
DR DR
The project participant uses the Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities for demonstrating additionally of the project. Investment barrier has been considered in the PDD to demonstrate additionally of the project. This is in line with the applied version of then methodology AMS.I.D, Version 16. The project activity is in compliance with applicable regulatory requirements. As per the decision 17/cp.7 Para 43, a CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity. To demonstrate the additionality of the project activity project proponent has chosen Investment Barrier and other barriers as per the requirement
OK
OK OK
A-16
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
of Attachment A to Appendix B for small scale project activities. Barrier due to Investment: Benchmark selection The benchmark selected for the project activity is as per the CDM EB guidance on assessment of investment analysis version 3.1 and the same is justified as the project activity being an electricity generation project based on hydro energy, which could be developed by an entity other than the project participant, the benchmark should be based on publicly available data sources. A project-IRR benchmark, prime lending rate published by Reserve Bank of India has been considered as benchmark, which can be compared against the project-IRR, has been considered as benchmark for the project activity. However project proponent is requested to clearly mention the period for which prime lending rate has been considered as benchmark and web link of the benchmark source need to be included in revised PDD (applicable at the time of investment decision taken for the project activity), in line with CDM EB guidelines on assessment of Investment Analysis version 05. Project IRR: Input parameters The input parameters used for the investment analysis was based on the approved revised
Draft Concl.
Final Concl.
CL 3
A-17
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
detailed project report of May 2010. However project proponent needs to provide cross reference to all input parameters used in the investment analysis in line with the Guidance on assessment of investment analysis version 05 and evidence for the same need to be provided for verification.
Draft Concl.
Final Concl.
CL 3
B.5.4
What is the project additionality mainly based on (Investment analysis or barrier analysis)?
/1/
DR
The project participant uses the Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities for demonstrating additionally of the project. Investment barrier has been considered in the PDD to demonstrate additionally of the project. The start date of the project activity (1 December 2009) is after 2 August 2008 (CDM EB guidelines on prior CDM consideration). On 14 March 2009, PP has intimated UNFCCC of the intention to seek CDM status for the project activity, even before the start date of the project activity (date of first work order placed for the project activity) and got confirmation from UNFCCC on receipt of the email on 16 March 2009, which demonstrates prior consideration of CDM for the project activity. PP is also requested to include the detailed chronology of events in revised PDD. Project proponent also needs to demonstrate that CDM was seriously considered during the management approval for the project activity. .
OK
Prior consideration of CDM (VVM Para 98-103)

B.5.5 What is the evidence for serious consideration of CDM prior to the time of decision to proceed with the project activity?
/1/
DR
OK
CAR 6
A-18
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
Project proponent needs to demonstrate that CDM revenue was a decisive factor to go ahead with the project and reference to the same need to be discussed in the revised PDD. The start date of the project activity (1 December 2009) is after 2 August 2008 (CDM EB guidelines on prior CDM consideration). On 14 March 2009, PP has intimated UNFCCC of the intention to seek CDM status for the project activity, even before the start date of the project activity (date of first work order placed for the project activity) and got confirmation from UNFCCC on receipt of the email on 16 March 2009, which demonstrates prior consideration of CDM for the project activity.
Draft Concl.
Final Concl.
B.5.6
If the starting date is after 2 August 2008 and before the global stakeholder consultation, has the DNA and UNFCCC confirmed that the project participants have informed in writing of the projects intention to seek CDM status?
/1/
DR
OK
Continuous efforts to secure CDM status (only to be completed if starting date is before 2 August 2008)
B.5.7 What initiatives where taken by the project participants from the starting date of the project activity to the start of validation in parallel with the physical implementation of the project activity? When did the construction of the project activity start?
/1/
DR
B.5.8
/1/ /1/ /1/
DR
B.5.9
When was the project commissioned?
DR
B.5.10
Does the timeline of the project confirm that continuous actions in parallel with the implementation were taken to secure CDM status?
DR
The start date of the project activity is 1 December 2009. Even before the start date of the project activity proponent intimated UNFCCC secretariat. Hence this is not required for the project activity. Project proponent needs to include start date of the construction of the project activity in section A.4.2 of the revised PDD. Project proponent needs to include expected date of the commissioning of the project activity in section A.4.2 of the revised PDD. The start date of the project activity is 1 December 2009. Even before the start date of the project activity proponent intimated UNFCCC
OK
CAR 7
OK
CAR 7
OK
OK
A-19
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
secretariat. Hence this is not required for the project activity.
Draft Concl.
Final Concl.
Investment analysis (VVM Para 108-114) The list of questions below must be adjusted to the parameters in the investment analysis relevant to the project under validation.
B.5.11 Does the project activity or any of the remaining alternatives generate revenues apart from CDM? Is this reflected in the PDD?
/1/
DR
B.5.12
Do any of the alternatives to the project activity involve investment? Is this reflected in the PDD?
/1/
DR
B.5.13
Is the choice of benchmark analysis, investment comparison or simple cost analysis correct?
/1/
DR
B.5.14
Is the benchmark/discount rate the latest available at the time of decision?
/1/
DR
Since the project activity is installation of a new 7 MW grid connected hydro power plant supplying power to the NEWNE regional grid of India, Project activity generates revenues apart from CDM through electricity sale to the grid. Yes the project IRR discussion provided in the PDD covers revenues generated through electricity sales. No, the alternative of grid based electricity generation does not involve any investment on the part of the project proponent. Yes this aspect has been covered in the PDD. Since the project generates revenues without CDM and the alternative of grid based electricity generation does not involve any investment on the part of the project proponent. Therefore the selected benchmark analysis approach is justified for demonstrating the additionality of the project. A project-IRR benchmark, prime lending rate published by Reserve Bank of India has been considered as benchmark, which can be compared against the project-IRR, has been considered as benchmark for the project activity. However project proponent needs to clearly mention the period for which prime lending rate CL 3
OK
OK
OK
OK
A-20
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
has been considered as benchmark and web link of the benchmark source need to be included in revised PDD (applicable at the time of investment decision taken for the project activity), in line with CDM EB guidelines on assessment of Investment Analysis version 05. Post-tax project IRR is the financial indicator chosen for benchmark analysis. Yes the Post-tax project IRR (financial indicator) chosen for benchmark analysis is in appropriate with type of benchmark applied as the benchmark applied is also post-tax only. Input parameters The input parameters used for the investment analysis was based on the approved revised detailed project report of May 2010. However project proponent needs to provide cross reference to all input parameters used in the investment analysis in line with the Guidance on assessment of investment analysis version 05 and evidence for the same need to be provided for verification.
Draft Concl.
Final Concl.
B.5.15
What is the financial indicator? Is it on equity/project basis? Before/after tax? Is the financial indicator in correspondence with the benchmark?
/1/
DR
OK
B.5.16
Are the underlying assumptions appropriate, e.g. what is considered as waste in the baseline is considered to have zero value?
/1/
DR
OK
CL 3
B.5.17
Does the income tax calculation take depreciation into account? Is the depreciation year in accordance with normal accounting practice in the host country?
/1/
DR
As per the Indian tax structure, interest on debt, depreciation can be treated as an expense for computation of profit and tax payable thereon. Therefore for the purpose of tax computation interest on debt and depreciation has considered as an expense which has been added back in the cash flow before computation of project IRR and is in line with CDM EB guidelines on assessment of investment analysis version 05.
OK
A-21
DET NORSKE VERITAS
Checklist Question
B.5.18 Is the time period of the investment analysis and operating time of the project realistic? Has salvage value been taken into account? Is working capital returned in the last year of operation?
Ref /1/
MoV
DR
Assessment by DNV
Yes, The lifetime of the project is 35 years, which could be evidenced from the tariff order published by CERC. A period of 35 years is considered for investment analysis. A 35 operational lifetime is deemed reasonable for run of river hydro power project. In line with the requirement of Guidance on Assessment of Investment Analysis version 05, PP needs to clarify why no salvage value (of remaining assets) has been considered at the last year of operation. In line with the requirement of Guidance on Assessment of Investment Analysis version 05, PP needs to clarify why margin money on working capital has not been added back in cash inflow at the last year of operation. Refer section B.5.16
Draft Concl.
Final Concl.
OK
CL 4
CL 4
B.5.19
B.5.20
When feasibility study report or similar approved by the government is used as the basis for the investment analysis: Can it be confirmed that the values used in the PDD are fully consistent with the FSR and is the period of time between finalization of the FSR and the investment decision adequate? How was the amount of output (e.g. sales of electricity) assessed? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95.
/1/
DR
OK
/1/
DR
The plant load factor provided to banks and/or equity financiers while applying the project activity for project financing, or to the government while applying the project activity for implementation approval The plant load factor determined by a third party contracted by the project participants (e.g. an engineering company) Other approach. The project activity is expected to generate 27.93
OK
A-22
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
GWh per year at a plant load factor of 45.55%. DNV confirms that the electricity generation data considered for investment analysis meets the requirement of Guidelines for the reporting and validation of plant load factors (EB 48 Annex 11) as it is from detailed project report prepared by independent technical consultant (Hydrotech consultants) and same was approved by CREDA on March 2011. Cross-check against third-party or publicly available sources (e.g. invoices or price indices) Review of feasibility reports, public announcements and annual financial reports related to the project and the project participants. The levelized electricity tariff considered for the project activity was sourced from the DPR, in DPR levelized electricity tariff is calculated based on the cost plus approach prescribed by CSERC. However project proponent needs to provide cross reference source for the levelized electricity tariff considered for the project activity. Cross-check against third-party or publicly available sources (e.g. invoices or price indices) Review of feasibility reports, public announcements, contracts and annual financial reports related to the project and the project participants. The project cost considered for the investment analysis was based on the detailed project report for the project activity, which was approved by
Draft Concl.
Final Concl.
B.5.21
How was the output price (e.g. electricity price) assessed? Were the data available and valid at the time of decision? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95.
/1/
DR
CL 5
OK
B.5.22
How were the investment costs assessed? Were the data available and valid at the time of decision? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95.
/1/
DR
CL 5
OK
A-23
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
CREDA. Project proponent needs to provide financial closure report for the project activity and copy of all purchase order (placed) and agreement signed for the project activity.
Draft Concl.
Final Concl.
B.5.23
How were the O&M costs assessed? Were the data available and valid at the time of decision? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95.
/1/
DR
B.5.24
Describe the assessment of the other input parameters. Were the data available and valid at the time of decision? Remember to include all the data sources used and list all the projects that have been used for cross-checking in accordance with VVM paragraph 95.
/1/
DR
B.5.25
Was the financial calculation spread sheet verified and found to be correct?
/1/
DR
Cross-check against third-party or publicly available sources (e.g. invoices or price indices) Review of feasibility reports, public announcements and annual financial reports related to the project and the project participants. The operation and maintenance cost considered for the investment analysis was based on the detailed project report for the project activity, which was approved by CREDA. Project proponent needs to provide the copy of operation and maintenance contract signed for the project activity. Cross-check against third-party or publicly available sources (e.g. invoices or price indices) Review of feasibility reports, public announcements and annual financial reports related to the project and the project participants The interest of term loan has been sourced from detailed project report for the project activity, which was approved by CREDA and same has been cross checked against the actual loan agreement signed between project proponent and IDBI Bank. The financial calculation spread sheet has been checked and clarification stated above has been
CL 5 FAR 1
OK
OK
CL 3 CL 4
OK
A-24
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
asked and based on the PP response final conclusion will be made.
Draft Concl.
CL 5 CAR 8
Final Concl.
B.5.26
Sensitivity analysis: Have the key parameters contributing to more than 20% of the revenue/costs during operating or implementation been identified? Has possible correlation between the parameters been considered?
/1/
DR
B.5.27 B.5.28
Sensitivity analysis: Is the range of variations is reasonable in the project context? Have the key parameters been varied to reach the benchmark and the likelihood of this to happen been justified to be small?
/1/ /1/
DR DR
Sensitivity analysis A sensitivity analysis has been carried out for the major parameters project cost, operation and maintenance costs, and generation which contribute to more than 20% of revenues or costs to check the robustness of the financial analysis. However project proponent needs to do sensitivity analysis for levelized electricity tariff also. Refer Section B.5.26 of the protocol The level of variation assumed for the sensitivity analysis has been suitably justified with relevant documents pertaining to the presented analysis and has been verified by DNV. However project proponent needs to do sensitivity analysis for levelized electricity tariff also. Not Opted for.
OK
CAR 8 CAR 8
OK OK
Barrier analysis (VVM Para 115-118)

B.5.29 Are the barriers identified complimentary to a potential investment analysis? Does the barrier have a clear impact on the financial returns so that it can be assessed in an investment analysis? Each barrier is discussed separately.
/1/
DR
OK
Common practice analysis (VVM Para 119-121)

B.5.30 What is the geographical scope of the common practice analysis? Is this justified?
/1/
DR
Not Opted for.
OK
Conclusion
B.5.31 What is the conclusion with regard to the additionality of the
/1/
DR
Conclusion on additionality of the project activity
CL 3
OK
A-25
DET NORSKE VERITAS
Checklist Question
project activity?
Ref
MoV
Assessment by DNV
calls for all the CLs and CARs mentioned in the additionality section to be addressed.
Draft Concl.
CL 4 CL 5 CAR 5 CAR 8
Final Concl.
B.6
Calculations of GHG emission reductions Data and parameters that are available at validation and that are not monitored (VVM Para 199-203)
How was the grid emission factor used for estimation of baseline emissions available at validation verified?
B.6.1
/1/
DR
B.6.2
How was the emission factor of diesel used in diesel generator, used for estimation of project emissions available
/1/
DR
Baseline emission factor for the north east west north eastern regional grid is established ex-ante based on the guidance provided in Tool to calculate the emission factor for an electricity system using a combined margin approach. The combined margin emission coefficient for the north east west north eastern regional grid of India has been determined to be 0.840 tCO2e/MWh and is fixed ex ante for the entire renewable crediting period of 7 years. The OM in the CEA database is calculated ex-ante using the simple OM approach based on the generationweighted average emissions per electricity unit over a three year period of 2006-2007, 2007-2008 and 2008-2009. BM is calculated ex ante based on the 20% most recent capacity additions in the southern grid based on net generation for the year 2008-09. The operating margin has been determined to be 1.005 tCO2e/MWh and the build margin to be 0.6752tCO2e/MWh. The calculations and assumptions have been verified and found to be correct by DNV The emission factor for diesel has been sourced from IPCC 2006 and the value applied is 74.8
OK
OK
A-26
DET NORSKE VERITAS
Checklist Question
at validation verified?
Ref
MoV
Assessment by DNV
tCO2/TJ. It has been verified by DNV that local or national values are available for emission factor of diesel. To calculate project emission due to diesel consumption in Diesel generator, density of diesel will be required, however this parameter is neither included in section 6.2 nor 7.1 of the webhosted PDD, project proponent needs to clarify the same. To calculate project emission due to diesel consumption in Diesel generator, NCV of diesel will be required, however this parameter is neither included in section 6.2 nor 7.1 of the webhosted PDD, project proponent needs to clarify the same. Baseline emissions have been estimated as the product of net electricity supplied to the NEWNE grid by the project activity and emission factor of the NEWNE regional grid, which have been estimated based on the official CEA CO2 Baseline Database for the Indian Power Sector User Guide - Version 5.0 data. Combined margin approach has been adopted and the baseline emission factor is estimated ex-ante for the project activity at the start of validation activity and fixed for entire crediting period. This is in line with the requirement of Tool to calculate the emission factor for an electricity system version 1.1. The combined margin emission coefficient for the north east west north
Draft Concl.
Final Concl.
B.6.3
How was the density of diesel used for estimation of project emission available at validation verified?
/1/
DR
CAR 9
OK
B.6.4
How was the NCV of diesel used for estimation of project emission available at validation verified?
/1/
DR
CAR 9
OK
Baseline emissions (VVM Para 89-93)

B.6.5 Are the calculations documented according to the approved methodology and in a complete and transparent manner?
/1/
DR
OK
A-27
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
eastern regional grid of India has been determined to be 0.84 tCO2e/MWh and is fixed ex ante for the entire renewable crediting period of 7 years. The OM in the CEA database is calculated ex-ante using the simple OM approach based on the generation-weighted average emissions per electricity unit over a three year period of 2006-2007, 2007-2008 and 2008-2009. BM is calculated ex ante based on the 20% most recent capacity additions in the southern grid based on net generation for the year 2008-09. The operating margin has been determined to be 1.005 tCO2e/MWh and the build margin to be 0.6752 tCO2e/MWh. The calculations and assumptions have been verified and found to be correct by DNV.
Draft Concl.
Final Concl.
B.6.6
Have conservative assumptions been used when calculating the baseline emissions?
/1/
DR
B.6.7
Are uncertainties in the baseline emission estimates properly addressed?
/1/
DR
Yes, the baseline is transparent and the choice of emission factor of the current generation mix of NEWNE regional grid of India used for estimation of emission coefficient is conservative. It is clearly mentioned in the PDD that, the baseline estimation will consider an ex-ante emission factor throughout the crediting period. Hence, monitoring of OM and BM is not required Since the emission factors have been selected from authentic sources, there are no uncertainties in the baseline emission estimates. To calculate project emission due to diesel consumption in Diesel generator, density and NCV of diesel will be required; however this CAR 9
OK
OK
Project emissions (VVM Para 89-93)

B.6.8 Are the calculations documented according to the approved methodology and in a complete and transparent manner?
/1/
DR
OK
A-28
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
parameter is neither included in section 6.2 nor 7.1 of the webhosted PDD, project proponent needs to clarify the same. Refer section B.6.8 of the protocol. Refer section B.6.8 of the protocol.
Draft Concl.
Final Concl.
B.6.9 B.6.10
Have conservative assumptions been used when calculating the project emissions? Are uncertainties in the project emission estimates properly addressed?
/1/ /1/
DR DR
CAR 9 CAR 9
OK OK
Leakage (VVM Para 89-93)

B.6.11 Are the leakage calculations documented according to the approved methodology and in a complete and transparent manner?
/1/
DR
B.6.12 B.6.13
Have conservative assumptions been used when calculating the leakage emissions? Are uncertainties in the leakage emission estimates properly addressed?
/1/ /1/
DR DR
According to the simplified baseline and monitoring methodology for category I.D smallscale projects, leakage shall be considered, only if the project involves transfer of energy equipment from or to another activity. Since this is not the case in this project, no leakage needs to be considered. Not Applicable Not Applicable
OK
OK OK
Emission Reductions (VVM Para 89-93)

B.6.14 Algorithms and/or formulae used to determine emission reductions: All assumptions and data used by the project participants are listed in the PDD and related document submitted for registration. The data are properly referenced All documentation is correctly quoted and interpreted. All values used can be deemed reasonable in the context of the project activity The methodology has been correctly applied to calculate the emission reductions and this can be replicated by the
/1/
DR
Units and notation provided in the PDD are not consistent with the units and notation required by the applied version of the Methodology. To calculate project emission due to diesel consumption in Diesel generator, density and NCV of diesel will be required; however this parameter is neither included in section 6.2 nor 7.1 of the webhosted PDD. In section B.6.1 of the PDD it is stated that the project activity will not give rise to project emissions, as no fossil fuel will be combusted in
CAR 9
OK
A-29
DET NORSKE VERITAS
Checklist Question
data provided in the PDD and supporting files to be submitted for registration.
Ref
MoV
Assessment by DNV
the project activity. Project emissions are therefore zero, however under parameter fixed ex antae and parameters required to be monitored parameters required to calculate project emission due to diesel consumption in diesel generator are kept. This contradicts the statement made in section B.6.1 of the webhosted PDD. Hence project proponent needs to clarify the same.
Draft Concl.
Final Concl.
B.7
B.7.1
Monitoring plan (VVM Para 122-124) Data and parameters monitored

Do the means of monitoring described in the plan comply with the requirements of the methodology?
/1/
DR
B.7.2
Does the monitoring plan contains all necessary parameters, and are they clearly described?
/1/
DR
B.7.3
In case parameters are measured, is the measurement equipment described? Describe each relevant parameter.
/1/
DR
Yes, the monitoring plan documented in the PDD is in accordance to the applied approved baseline and monitoring methodology AMS I.D version 16. Yes the monitoring plan covers all necessary parameters required to be monitored in line with the applied methodology AMS- I.D, As per the applied methodology the parameters required to monitored are gross electricity generation, electricity exported to the grid and electricity imported from the grid and amount of diesel consumed in D.G. Set to meet emergency power demand. The net electricity exported to the grid will be calculated as a difference of electricity exported to and electricity imported from grid. The electricity import and export from grid will be measured by energy meters and will be recorded on monthly basis. The diesel consumed by the D.G. Set will be measured through level gauge and recoded on daily basis. The gross electricity generation, electricity exported and imported to/from grid will be
OK
OK
OK
A-30
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
measured by energy meters whereas the diesel consumed by the D.G. Set will be measured through level gauge. The construction for the project activity is yet to be started; however PP has committed to use standard accuracy class equipments stipulated as per Indian Standards. All the measuring equipment will be calibrated on annual basis.
Draft Concl.
Final Concl.
B.7.4
In case parameters are measured, is the measurement accuracy addressed and deemed appropriate? Describe each relevant parameter. In case parameters are measured, are the requirements for maintenance and calibration of measurement equipment described and deemed appropriate? Describe each relevant parameter. Is the monitoring frequency adequate for all monitoring parameters? Describe each parameter.
/1/
DR
OK
B.7.5
/1/
DR
OK
B.7.6
/1/
DR
B.7.7
Is the recording frequency adequate for all monitoring parameters? Describe each parameter.
/1/
DR
Yes, the monitoring frequency described in the PDD for all monitoring parameters meets the requirement of applied version of the methodology. Project proponent is requested to include measuring and recording frequency of all parameters required to be monitored in line with the requirement of applied version of the methodology.
OK
CAR 10
OK
Ability of project participants to implement monitoring plan

B.7.8 How has it been assessed that the monitoring arrangements described in the monitoring plan are feasible within the project design? Are procedures identified for day-to-day records handling (including what records to keep, storage area of records and how to process performance documentation)? Are the data management and quality assurance and quality control procedures sufficient to ensure that the emission reductions achieved by/resulting from the project can be
/1/ /1/ /1/
DR
Refer section B.7 of the Protocol
CAR 10 CAR 10 CAR 10
OK
B.7.9
DR
OK
B.7.10
DR
OK
A-31
DET NORSKE VERITAS
Checklist Question
B.7.11 reported ex post and verified? Will all monitored data required for verification and issuance be kept for two years after the end of the crediting period or the last issuance of CERs, for this project activity, whichever occurs later?
Ref /1/
MoV
DR
Assessment by DNV
Yes, All the data required for CDM project will be archived until 2 years after the crediting period to facilitate cross-checking during the crediting period.
Draft Concl.
Final Concl.
OK
Monitoring of sustainable development indicators/ environmental impacts

B.7.12 Is the monitoring of sustainable development indicators/ environmental impacts warranted by legislation in the host country? Does the monitoring plan provide for the collection and archiving of relevant data concerning environmental, social and economic impacts? Are the sustainable development indicators in line with stated national priorities in the host country?
/1/ /1/ /1/
DR
Host country does not call for monitoring the sustainable development indicators. This is not required as per the legislation and hence not applicable. Host country does not call for monitoring the sustainable development indicators for small scale project activities.
OK
B.7.13
DR
OK
B.7.14
DR
OK
C Duration of the project activity / crediting period

C.1.1 C.1.2 Start date of project activity (VVM Para 99-100, 104) How has the starting date of the project activity been determined? What are the dates of the first contracts for the project activity? When was the first construction activity?
/1/
DR
C.1.3
Is the stated expected operational lifetime of the project activity reasonable? Is the start date, the type (renewable/fixed) and the length of the crediting period clearly defined and reasonable?
/1/ /1/
DR
C.1.4
DR
The starting date of the project activity has been identified as 1 December 2009, which is the date of which is the date of civil agreement signed for the project activity. This was the first financial commitment for the project and in line with the EB guidance on start date of project activity. The lifetime of the project is 35 years, which could be evidenced from the tariff order published by CERC. A renewable crediting period of 7 years has been selected, starting from the date of registration or
OK
OK
OK
A-32
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
from 1 April 2012 whichever is later.
Draft Concl.
Final Concl.
D Environmental Impacts (VVM Para 131-133 and VVM Para 136 (d) for small-scale project activities, as applicable))
D.1.1 Are there any host country requirements for an Environmental Impact Assessment (EIA), and if yes, is an EIA approved? Does the approval contain any conditions that need monitoring? For small-scale project activities, is an assessment of the environmental impacts of the proposed CDM project activity is required by the host Party? Does the project comply with environmental legislation in the host country?
/1/
DR
As per Ministry of Environment and Forests (MoEF) notification of 2006, hydro power plant below 15 MW capacity is exempted from obtaining the environmental clearance.
OK
D.1.2
/1/
DR
Yes the project activity complies with environmental legislation in India and project proponent has received all necessary approvals. The project is not likely to create any adverse environmental or social impacts. The project is not likely to create any adverse environmental or social impacts. As per Ministry of Environment and Forests (MoEF) notification of 2006, hydro power plant below 15 MW capacity is exempted from obtaining the environmental clearance. The project is run of river hydro power project and is not likely to create any trans boundary
OK
D.1.3 D.1.4 D.1.5
Will the project create any adverse environmental effects? Have identified environmental impacts been addressed in the project design? Has an analysis of the environmental impacts of the project activity been sufficiently described?
/1/ /1/ /1/
DR DR DR
OK OK OK
D.1.6
Are trans boundary environmental impacts considered in the analysis?
/1/
DR
OK
environmental impacts E Stakeholder Comments (VVM Para 128-130)

E.1.1 Have relevant stakeholders been consulted?
/1/
DR
Yes, the project promoters have conducted stakeholders meeting at the Grampanchayat of
OK
A-33
DET NORSKE VERITAS
Checklist Question
Ref
MoV
Assessment by DNV
Chevdhara Village, Korba District of Chhattisgarh on 22 May 2009. The stakeholders were invited through a notice pasted at village Panchayat Office notice board. The notice for the meeting was circulated to the stakeholders 30 days prior (on 22 April 2009) to the meeting. The meeting was attended by several participants, including village Sarpanch and committee members. Stakeholders have been identified and the process of inviting their comments undertaken either through public announcements or direct approach to the stakeholders. The identified stakeholders include the local villagers, village panchayat, Irrigation department, fisheries department state pollution control board representatives & Ministry of Environment & Forest. A public Consultation meeting took place at project site, on 22 May 2009. The minutes of meeting, photographs, attendance sheet and public announcements or letter sent to village panchayat were evidenced by DNV during desk review meeting. There is no stakeholder consultation process required by the regulations/laws in the India for small scale run-of-the-river hydro power projects. Yes, a summary of stakeholder consultation process has been included in PDD. No negative comments have been received for the proposed project activity.
Draft Concl.
Final Concl.
E.1.2
Have appropriate media been used to invite comments by local stakeholders?
/1/
DR
OK
E.1.3
E.1.4 E.1.5
If a stakeholder consultation process is required by regulations/laws in the host country, has the stakeholder consultation process been carried out in accordance with such regulations/laws? Is a summary of the stakeholder comments received provided? Has due account been taken of any stakeholder comments received?
/1/
DR
OK
/1/ /1/
DR DR
OK OK
A-34
DET NORSKE VERITAS
Table 3
Resolution of corrective action requests and clarification requests

Response by project participants Host country approval from DNA of India ref. no. 4/14/2010-CCC dated 13/04/2011 has been provided to DoE for verification. Validation conclusion The letter of Approval received from DNA of India dated 13 April 2011 has been verified by DNV. It has been cross checked by DNV from the CDM India website that the project has been approved by the DNA of India. OK Accepted. CAR 1 is closed. The construction for the project activity started on 28 August 2010 and is expected to be commissioned by December 2011. Details of project implementation have now been included in revised PDD version 02 dated 02 September 2011. Revised PDD version 02 dated 02 September 2011 has been reviewed by DNV. OK Accepted. CAR 2 is closed. The geo-coordinates details of both weir house and power house as mentioned in grid permission letter of CSEB have been incorporated in the revised PDD. Revised PDD version 02 dated 02
A-35
Corrective action and/ or clarification Reference requests to Table 2 CAR 1 Table 1 Letter of Approval from DNA of India need A.3.2 to be provided for verification. A.3.3
CAR 2 In line with VVM version 1.2, Para 58 implementation schedule of the project activity has not been included in the PDD.
A.2.2
The project implementation is advance stage & it is likely to commissioned in the month December 2011 and the same corrected in the revised PDD.
in be of is
CAR 3 The geo-coordinates of both (weir house and power house) as mentioned in the grid permission letter of CSEB have not been covered in the PDD
A.4.1
The geo-coordinates of both (weir house and power house) have been incorporated in the revised PDD
DET NORSKE VERITAS
Corrective action and/ or clarification requests
Reference to Table 2
Response by project participants
Validation conclusion September 2011 has been reviewed by DNV. OK Accepted. CAR 3 is closed. All applicability criteria provided in applied version of the methodology have now been discussed in revised PDD version 02 and evidence pertaining to the applicability conditions of the methodology has been verified by DNV. Revised PDD version 02 dated 02 September 2011 has been reviewed by DNV. OK Accepted. CAR 4 is closed. The line diagram of the project boundary provided in webhosted PDD has now been corrected in revised PDD version 02. In line with the requirement of the methodology the billing meters located at grid interface are now covered in the project boundary. Revised PDD version 02 dated 02 September 2011 has been reviewed by DNV. OK Accepted. CAR 5 is closed.
CAR 4 In line with VVM Para 71 all applicability criteria of the methodology has not been discussed in the PDD
B.2.2 B.2.4 B.2.5
All applicability criteria and justification are included in the revised PDD.
CAR 5 The project boundary diagram provided in the webhosted PDD is not in line with the requirement of the applied version of the methodology.
B.3.1
The billing meters (Main meter & Check meter) will be located at grid interface and the same is covered in the project boundary and the necessary corrections are made in the diagram of revised PDD.
A-36
DET NORSKE VERITAS
Corrective action and/ or clarification Reference requests to Table 2 CAR 6 B.5.5 In line with the requirement of Guidelines on B.5.25 the demonstration and assessment of prior B.5.29 consideration of the CDM, the PDD do not indicate the detailed chronology of events. Serious consideration of CDM during the management approval for the project activity is yet to be demonstrated using appropriate documents.
Response by project participants The detailed chorology has included in the revised PDD.
Validation conclusion
CAR 7 The PDD is missing to indicate the following information: Start date of the construction of the project activity in section A.4.2 of the revised PDD. Expected date of the commissioning of the project activity in section A.4.2 of the revised PDD.
B.5.8 B.5.9
been A detailed chronology of events, in line with the requirement of Guidelines on the demonstration and assessment of The PP wishes to submit a copy of prior consideration of the CDM has extract of minutes of meeting of the now been included in revised PDD board meeting instead of original version 02. minutes of meeting of the board Revised PDD version 02 dated 02 meeting. The original copy of Minutes September 2011 has been reviewed by DNV. of Meeting has been shown to DoE. The minutes of meeting of the board of directors held for the project activity dated 24 November 2008 has been evidenced by DNV. OK Accepted CAR 6 is closed. Start date of the constriction and The construction for the project activity expected date of commissioning of the started on 28 August 2010 and is project activity has been incorporated in expected to be commissioned by 1 December 2011. Details of project the revised PDD. Expected date of the commissioning of implementation have now been the project activity (1 December 2011) included in revised PDD version 02 dated 02 September 2011. is incorporated in the revised PDD. Revised PDD version 03 dated 28 January 2012 has been reviewed by DNV. OK Accepted. CAR 7 is closed. Sensitivity for all parameters which A sensitivity analysis has been carried contribute more than 20% to revenues out for parameters contributing to more
A-37
CAR 8 The sensitivity
analysis
has
not
been
B.5.26 B.5.27
DET NORSKE VERITAS
Corrective action and/ or clarification Reference requests to Table 2 conducted in line with the requirement of B.5.28 guidance on assessment of investment B.5.29 analysis as the tool requires ssensitivity analysis to be conducted for all parameters contributing more than 20% to revenues or costs to check the robustness of the financial analysis. Sensitivity analysis for all the parameters contributing more than 20% to revenues or costs has not been performed in line with the requirement of tool..
or costs has been performed now in than 20% to revenues or costs to check revised PDD. the robustness of the financial analysis. Reasonable variations of the project cost, annual operation & maintenance The sensitivity analysis is extended to costs, annual electricity generation, and the point at which the project IRR levelized electricity tariff were checked crosses the benchmark. The realistic by calculating the variation necessary to likelihood of that being achieved reach the benchmark and then against each case has been explained in discussing the likelihood for that to happen. A detailed description of the revised PDD. sensitivity analysis has been provided in section 4.6 of this report. OK Accepted. CAR 8 is closed.
CAR 9 To calculate project emission due to diesel consumption in Diesel generator, density of diesel will be required, however this parameter is neither included in section 6.2 nor 7.1 of the webhosted PDD, PP is needs to clarify how the project emissions will be calculated. Units and notation provided in the PDD are not consistent with the units and notation required by the applied version of the Methodology. In section B.6.1 of the PDD it is stated that the project activity will not give rise to
B.6.3 B.6.4 B.6.8 B.6.9 B.6.10 B.6.14
Project emissions due to diesel consumption in DG set are included in Project emissions and the relevant formulas & parameters are incorporated in sections B.6.2 & B.7.1 of revised PDD. Unit and notation used in the PDD has been corrected in line with the requirement of applied version of the methodology. Revised PDD has been submitted to DoE for verification.
The project activity is equipped with diesel generator to meet the emergency requirements of the power house; hence emissions due to usage of diesel will be accounted as project emissions. The project proponent will monitor the amount of diesel consumed throughout the crediting period on monthly basis or every time when the DG set is run on load, whichever is earlier. Whereas the NCV, emission factor and density of diesel has been fixed ex ante. Revised PDD has been reviewed by DNV; DNV confirms that the unit and notations used in the revised PDD are
A-38
DET NORSKE VERITAS
Corrective action and/ or clarification Reference requests to Table 2 project emissions, as no fossil fuel will be combusted in the project activity. Project emissions are therefore zero, however under parameter fixed ex antae and parameters required to be monitored parameters required to calculate project emission due to diesel consumption in diesel generator are kept. This contradicts the statement made in section B.6.1 of the webhosted PDD. Hence project proponent needs to clarify the same. CAR 10 B.7.7 Project proponent needs to further B.7.8 demonstrate the adequacy of the measuring B.7.9 and recording frequency of all parameters B.7.10 required to be monitored in line with the requirement of applied version of the methodology.
Validation conclusion consistent with applied version of the methodology (AMS-I.D version 16). OK Accepted. CAR 9 is closed.
Measuring and recording frequency of all monitoring parameters have been included in line with applied methodology in the revised PDD.
CL 1 In order to validate the correctness of technical description of the project provided in the PDD project proponent needs to submit the following: The technical specification of the turbine &
A.2.1 A.2.4 A.2.8 B.1.3 B.4.8
Copies of Electro-Mechanical Equipments Purchase order for Technical specifications of the turbine & generator are being provided to DOE for verification.
The monitoring plan has been revised now in revised PDD version 02, a detailed procedure for measuring and recording frequency of all parameters required to be monitored in line with the requirement of applied version of the methodology has now been included in revised PDD. Revised PDD version 02 dated 02 September 2011 has been reviewed by DNV. OK Accepted. CAR 10 is closed. The technical specification of the turbine & generator set has been verified by DMV. Purchase order placed to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of
A-39
DET NORSKE VERITAS
Corrective action and/ or clarification Reference requests to Table 2 generator set for verification. Purchase placed for the electro-mechanical equipments and power purchase agreement signed for the project activity.
CL 2 Project proponent needs to clarify that whether the project activity will also be equipped with diesel generator to meet the emergency requirements of the power house. In case project activity will be equipped with diesel generator, emissions due to diesel consumption needs to be accounted as project emissions and monitoring provision for the same need to be formalised in revised PDD. Technical specification of diesel generator also needs to be included in revised PDD and same needs to be provided for verification.
B.3.2 B.3.3
CL 3 The period for which prime lending rate has been considered as benchmark and web link of the benchmark source has not been
B.5.3 B.5.13 B.5.16
Copies of Purchase order for Electro- electromechanical equipments dated 22 Mechanical Equipments & PPA are April 2011 has been verified by DNV. Power purchase agreement signed being provided to DOE. between M/s Shalivahana Green Energy Limited and Chhattisgarh state power distribution company limited dated 1 September 2011 has been verified by DNV. OK Accepted. CL 1 is Closed. Project activity will be equipped with The project activity is equipped with DG set to meet emergency power diesel generator to meet the emergency requirements. Project emissions due to requirements of the power house; hence diesel consumption in DG set are emissions due to usage of diesel will be included in Project emissions and the accounted as project emissions. The relevant formulas & parameters are project proponent will monitor the incorporated in sections B.6.2 & B.7.1 amount of diesel consumed throughout the crediting period on monthly basis or of revised PDD. every time when the DG set is run on Capacity of DG set has been included in load, whichever is earlier. Whereas the the revised PDD. A copy of purchase NCV, emission factor and density of diesel has been fixed ex ante. order is being provided to DOE. Technical specification of the DG set has been verified by DNV. OK Accepted. CL 2 is Closed. A web link for the Benchmark value The benchmark selected for the project considered from RBI Web site is activity is as per the CDM EB guidance provided in the revised PDD & Excel on assessment of investment analysis. The project activity is electricity spread sheet.
A-40
DET NORSKE VERITAS
Corrective action and/ or clarification Reference requests to Table 2 included in revised PDD (applicable at the B.5.19 time of investment decision taken for the B.5.25 project activity), in line with CDM EB B.5.29 guidelines on assessment of Investment Analysis version 05. Cross reference to all input parameters used in the investment analysis in line with the Guidance on assessment of investment analysis version 05 and evidence for the same have not been provided for verification.
Validation conclusion generation based on hydro resource which could be developed by an entity other than project participant. The benchmark should thus be based on publicly available data sources. The financial indicator applied for the project activity is project IRR and the benchmark used for the project activity is average prime lending rate of 12.5% (average value of the range of 12.25% to 12.75%) quoted by RBI (The Reserve Bank of India) for the financial year 2007-08 (applicable at the time of investment decision). It is DNVs opinion that the selected benchmark is appropriate as this value has been sourced directly from the RBI website, which is reliable and has been verified from the website of Reserve Bank of India. It is DNVs opinion that the selected benchmark is appropriate as this value has been sourced directly from the RBI report, which is reliable and has been verified from the website of Reserve Bank of India. DNV has further cross checked the 5 year historical average prime lending rates indicated by RBI (10.25% - 12.75%) prior to the investment decision and has confirmed that the chosen value is
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Included source for input parameters used for IRR analysis in the revised PDD and copies of the documentary evidences are provided to DOE for validation.
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Validation conclusion reasonable. The input parameters used in the financial analysis of the project activity have been sourced from the detailed project report prepared by independent technical consultant (Hydrotech Consultants) in October 2007. On 14 December 2007 project proponent received the techno-economic clearance and approval of detailed project report from CREDA. On 24 November 2008, project proponent took the decision to invest in the project activity considering recommendation of the DPR and signed the civil construction agreement on 1 December 2009 (start date for the project activity). Subsequently project proponent had deliberate discussions with equipment suppliers and project consultants and based on which DPR was revised in May 2010. The revised DPR was prepared considering installation of two sets of 3500 kW rated capacity Horizontal Pelton turbine against the initial design of 2333 kW rated Horizontal Pelton turbine for optimum utilisation of turbines as well as convenience of plant operations. The project proponent submitted the revised DPR to CREDA and received a revised
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Validation conclusion techno economic clearance on 18 March 2011 considering revised DPR. Based on revised DPR on 22 April 2011 project proponent placed a purchase order to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipments. DNV has crosschecked that there is no increase in electricity output due to change in unit size of the plant. As there is gap between the detailed project report preparation (October 2007) and project start date (1 December 2009) DNV has compared the project cost considered in the detailed project report of October 2007 and cost provided in revised DPR of May 2010 and confirms that the actual project cost has gone up in revised DPR. Hence use of input values as provided in detailed project report (October 2007) for investment analysis is more conservative. In line with the requirement of VVM Para 111, DNV has a detailed assessment of input parameters (considering both values as provided in detailed project report of October 2007 and revised detailed project report of May 2010) used for investment analysis are provided in
A-43
DET NORSKE VERITAS
Validation conclusion section 4.6 of this report. OK Accepted. CL 3 is Closed. Project proponent has revised the project IRR calculation and a salvage of 10% of the equipment cost has been considered in investment analysis and same has been added back in last year cash flow this is in line with the guidance provided by Central electricity regulatory commission tariff regulations 2009. Project proponent has revised the project IRR calculation and working capital has now been added in cash flow of last year of operation. Revised project IRR spread sheet has been verified by DNV and was found to be correct. OK Accepted. CL 4 is Closed. DNV confirms that the levelized electricity tariff considered for investment analysis was sourced from the detailed project report of October 2007. DNV has also checked that though in revised DPR of May 2010, the project cost has gone up. However as per the conditions set for revision of DPR by
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CL 4 In line with the requirement of Guidance on Assessment of Investment Analysis version05, PP needs to clarify why no salvage value (of remaining assets) has been considered at the last year of operation. In line with the requirement of Guidance on Assessment of Investment Analysis version 05, PP needs to clarify why margin money on working capital has not been added back in cash inflow at the last year of operation.
B.5.18 B.5.25 B.5.29
The IRR analysis has been revised by taking the salvage value at the last year of operation.
The IRR calculations have been revised and working capital has been added back in cash inflow at the last year of operation. A soft copy to IRR calculations has been provided to DOE for validation.
CL 5 In order to validate the investment analysis calculation project proponent needs to clarify the following with required supporting documents : Levelized Electricity Tariff adopted for the project activity. Project cost along with financial closure report for the project activity
B.5.21 B.5.22 B.5.23 B.5.25 B.5.29
In the state of Chhattisgarh the electricity tariff dont provide the electricity tariff and it needs to be calculated based on the CSERC Tariff order for small hydro projects, the PP has computed the levelized electricity tariff based on the norms specified in the CSERC Order dated 28 February 2007. Copies of work sheets & CSERC
DET NORSKE VERITAS
Corrective action and/ or clarification Reference requests to Table 2 and copy of all purchase order (placed) and agreement signed for the project activity. Operation and maintenance cost along with the contract signed for the project activity.
Order are being provided to DOE for CREDA, project proponent cannot revise the levelized electricity tariff for validation. the project, even though the project cost Copies of Term loan sanction letter and has gone up. Hence in levelized tariff purchase orders for plant major considered in revised DPR is the same equipments are being provided to DOE as provided in the detailed project report of October 2007. for validation. The levelized electricity tariff is calculated based on two component : Since PP has prior experience in c) Fixed cost (major component) Renewable power projects, the d) Variable cost (minor company will appoint experienced component) senior person to take care of plant and Fixed Cost: this contributes to 95% skilled persons who worked in similar 97% of the levelized electricity tariff power projects to operate the plant and is calculated based on interest on efficiently. The relevant documents will loan, operation and maintenance be provided to DOE at the time of first expense, other administrative expenses, periodic verification. depreciation, expected return on equity and annual electricity generation. After commissioning of the project the project proponent will start paying interest on quarterly basis and the loan component will reduce on quarterly basis which will result in decrease in the interest paid on loan after each quarter and by the end of 10 year of operation the loan component will become zero, the interest on term loan component will also become zero. Hence though there is increase in annual O & M and other
A-45
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Validation conclusion administrative expense, the other component of fixed cost will either decrease or remain constant (e.g. depreciation, return on equity and electricity generation). This will result in net decrease in fixed cost on annual basis and there will be a significant decrease in fixed cost once the term loan is totally repaid and the interest on term loan becomes zero. Variable Cost: this contributes to 3% 5% of the levelized electricity tariff and this component covers spare cost (1% of project cost), O & M expenses (for 1 month) and receivable (for 2 months). Based on the these parameter the working capital is calculated and the variable cost is calculated based on the working capital required each year, interest paid against working capital and annual electricity generation. Based on the above mentioned assumptions the levelized cost in DPR is calculated as: a) For first INR/kWh 5 years: 3.21
b) For first 10 years: 3.08 INR/kWh

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DET NORSKE VERITAS
Validation conclusion c) For first 15 years: 2.84 INR/kWh d) For first 20 years: 2.75 INR/kWh e) For first 25 years: 2.72 INR/kWh f) For first 30 years: 2.71 INR/kWh g) For all 35 INR/kWh years: 2.71
DNV confirms that the cost estimates used for levelized electricity tariff calculation is prepared based on the Guidance for preparation of estimates for the river valley projects issued by Central Water Commission and Indian Standard IS: 4877 Guide for preparation of estimate for river valley projects. DNV consider the use of levelized electricity tariff of 2.71 INR/kWh as provided in approved DPRs is reasonable as the techno economic clearance from CREDA (nodal agency) was provided only based on the levelized electricity tariff as provided in
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Validation conclusion the revised DPR. DNV has cross checked the levelized electricity tariff considered in detailed project report of October 2007 and revised detailed project report of May 2010 from the power purchase agreement signed with Chhattisgarh state power distribution company limited dated 01 January 2011 and confirms that the levelized electricity tariff of 2.71 INR/kWh is calculated based on norms specified in the CSERC order on determination of tariff and related dispensation for procurement of power from small hydel power projects dated 28 February 2007. DNV has checked that the PPA is applicable for 20 years from the date of commissioning of the project and need to be renewed the PPA thereafter and any revision in levelized electricity after 20 year of operation after 20 year of operation is difficult to predict at this point of time. However DNV has checked that for the project activity even if project proponent able to receive a levelized electricity tariff of 2.75 INR/kWh (levelized tariff for 20 years as per DPR), even after the 20 year of operation till 35 year of operation the
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DET NORSKE VERITAS
Validation conclusion IRR will remain lower than the benchmark applied for the project The formal price of the electricity tariff will only be fixed once the project is commissioned and will be fixed only based on the provisions of the CSERC order on determination of tariff and related dispensation for procurement of power from small hydel power projects dated 28 February 2007. DNV has further checked that even after considering no escalation in operation and maintenance cost and other administrative cost the IRR for the project activity (11.62%) is below than the benchmark applied (12.5%) for the project activity. Civil construction agreement signed between M/s Shalivahana Green Energy Limited and M/s Yeshaswi Infrastructures Limited for the project activity dated 1 December 2009 has been verified by DNV. Work order released to M/s Balaji hydro Mech Experts to carry out detailed designing of hydro mechanical gates and equipments dated 8 November 2010 has been verified by DNV.
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DET NORSKE VERITAS
Validation conclusion Work order released to Sri Harshita Construction for fabrication and erection of penstock dated 25 November 2010 has been verified by DNV. Purchase order placed to Sri Harshita Construction for fabrication, supply and erection of gates and allied items dated 18 February 2011 has been verified by DNV. Purchase order placed to M/s Jyoti limited for design, manufacture, supply, erection, testing and commissioning of electromechanical equipments dated 22 April 2011 has been verified by DNV. Term loan agreement signed for project activity between IDBI bank and SGEL dated 22 January 2010 has been verified by DNV. OK Accepted. CL 5 is Closed.
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DET NORSKE VERITAS
Table 4
Forward action requests

Reference to Table 2 B.5.23 Response by project participants Since PP has prior experience in Renewable power projects, the company will appoint experienced senior person to take care of plant and skilled persons who worked in similar power projects to operate the plant efficiently. The relevant documents will be provided to DOE at the time of first periodic verification.
Forward action request

FAR 1
In order to assess the ability of project proponent to ensure continuous and safe operation of plant project proponent needs to provide operation and maintenance contract signed for the project activity.
- o0o -
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DET NORSKE VERITAS
APPENDIX B
CURRICULA VITAE OF THE VALIDATION TEAM MEMBERS
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Gaurav Srivastava
CDM Validator/Verifier, DNV Bangalore, India holds a Masters Degree in Energy Systems. His educational qualification covers the fields of sustainable development, power plant technology, renewable energy technology, performance of thermal & electrical utilities and project financing. He has completed ISO 14001:2004 - Environmental Management System Auditor / Lead Auditor Program, certified by IRCA. He has experience of around 4 years in validation and verification of numerous CDM projects in DNV, both in India & abroad. His qualification, training and experience in CDM demonstrate his sufficient sectoral competence in energy generation from renewable energy sources.
Shilpa Swarnim
Shilpa Swarnim holds a Masters degree in Science with major in Biotechnology. She has been previously associated with Indian Institute of Science, Bangalore as Research Assistant. She has also worked as Lecturer in Bangalore University affiliated college and her subjects of interest were Environmental Science and Climate change. With total experience of approximately 6 years into Research and Academics her topic of research centres around issues related to Forestry, Environment, Climate change impact on forest ecosystems, studying the climate impact modelling for future predictions of climatic and vegetation dynamics. She has completed ISO 14001:2004 - Environmental Management System Auditor / Lead Auditor Program, certified by IRCA along with DNV Training Programme on Corporate GHG Inventory. Currently working in DNV Climate Change Services AS Bangalore unit, as Project manager, she is involved in the Validation and Verification of CDM projects pertaining to various sectors.
Nitin Kapoor
Nitin Kapoor holds a Bachelor in Chemical Engineering and is also a qualified Chartered Financial Analyst (CFA) He has an overall experience of 15 years and 6 months as on date. Prior to joining DNV he had experience of 10 years and 5 months in Oil & Gas as well as manufacturing sector (food) with leading MNC's like ITC, Coca Cola and Enron Oil and Gas. During his stint in industry his responsibilities included carrying out energy audits and to identify potential areas of improvement. His experience includes analysis of specific consumptions (primarily on energy, raw materials and utilities) of processes based on historical data, carrying out material balances (heat and mass), analysis of equipment performance and identification and measurement of energy saving opportunities. He has also been responsible for the operations of the complete Crude Distillation Unit in the refinery, complete platform operations in Oil and Gas sector as well as for the utilities like steam, AHU while in Maintenance at ITC. He also has been in charge of the ETP operations in Coca Cola
DET NORSKE VERITAS
and ITC as well as Water and Sewage treatment plants while working offshore. He has been responsible for EMS and QMS at ITC and Coca Cola.
Govindarajulu Murali
Holds a Bachelors Degree in Chemical Engineering and has done a Short term diploma course in Management having an overall experience of around eleven years. Prior to joining DNV having around seven years experience in Chemical process industry covering production, energy efficiency improvement and equipment design erection and commissioning. His experience also covers the fields of environmental management and resource conservation including identification of alternative fuels. He has also been actively involved in implementation of Management Systems such as ISO 140001 and OHSAS 18001 standards in chemical process industry for more than three years. He has experience of around 4 years in validation and verification of numerous CDM projects in DNV, both in India & abroad. His qualification, industrial experience and experience in CDM demonstrate his sufficient sectoral competence in energy generation from renewable energy sources.

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VALIDATION REPORT

7 MW HYDEL BASED POWER UNIT ON RIVER JATASHANKARI, CHHATTISGARH IN INDIA

REPORT NO. 2011-0606

DET NORSKE VERITAS

DET NORSKE VERITAS

DNV CLIMATE CHANGE SERVICES AS

DNV Climate Change and Environmental Services

M/s Shalivahana Green Energy Limited

Indexing terms Key words

7 MW Hydel Based Power Unit on River Jatashankari, Chhattisgarh in India

Work carried out by:

Gaurav Srivastava, Shilpa Swarnim, Nitin Kapoor

Head Office: Veritasvn. 1, N-1322 HVIK, Norway

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

1 EXECUTIVE SUMMARY VALIDATION OPINION

Gaurav Srivastava CDM Validator DNV Bangalore, India

Ole A. Flagstad Approver DNV Climate Change Services AS

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

3.1 Desk review of the project design documentation

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

3.1.1 Documentation provided by the project participants

/2/ /3/ /4/ /5/

/14/ /15/ /16/

/29/ /30/ /31/ /32/ /33/ /34/ /35/ /36/

3.1.2 Letters of approval

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/44/ /45/ /46/ /47/

/56/ /57/ /58/

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3.2 Follow-up interviews with project stakeholders

3.3 Resolution of outstanding issues

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

Figure 1: Validation protocol tables

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

3.4 Internal quality control

3.5 Validation team

Last Name Srivastava Swarnim Kapoor Govindarajulu

First Name Gaurav Shilpa Nitin Murali

Country India India India India

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

4.1 Participation requirements

4.2 Project design

4.3 Application of selected baseline and monitoring methodology

4.4 Project boundary

4.5 Baseline identification

DET NORSKE VERITAS Report No: 2011-0606, rev. 03 VALIDATION REPORT

4.6.2 Investment analysis

Net electricity generation in GWh

O & M cost (% of project cost)

Annual escalation in O & M cost (in %)

General and administrative expense in million INR

2.1 million INR

Annual escalation in general and administrative expenses (in %)

Levelized electricity tariff (in INR/kWh)

2.71 INR/kWh for 35 years

Royalty from 6th year onwards in INR/kWh

Equity in Million INR

Terms of loan Interest rate

Loan tenure (excluding moratorium period)