Chapter3

Chapter Methodology, Data Requirements and Assumptions 3.1 Methodology for Objective The methodology for objective is to run RETScreen model for gathering the economic analysis results from the projects classified by two cases: • • Waste fuelled power Land fill gas plant Then check the results that are production cost and NPV with the following criteria • • Production cost is greater than avoided cost NPV is less than zero, on the whole the project is not viable It can then be considered for implementation under CDM (Binh, 2003) 3.2 Methodology for objective Methodology for objective can be achieved by the following: (Shrestha et al., 2005) presented the baseline estimation for the emissions from open air burning of the biomass and generation of electricity by existing generation sources in the grid, which is the baseline scenario The baseline emissions (BL_GHGy ) are then calculated as: BL_GHGy = BB_CH4y + EG_CO2y where, BL_GHGy = Baseline emissions in year y BB_CH4y CH4 = emissions in year y due to open air burning of the biomass used for electricity generation EG_CO2y CO2 = emission in year y due to generation of the electricity by other sources Furthermore, for land fill gas project activities, The baseline is estimated as CO2 equivalent of methane content in the net quantity of LFG generated Net LFG generated is estimated as the difference between the quantity of LFG generated and LFG captured and destroyed in compliance with regulations or contractual requirements or to address safety and odor concerns Evaluate those eligible CDM projects to determine their CER prices be able to make the projects become viable The net financial gain derived from the sale of CERs is the difference between the project CER value and the transaction costs Three elements that influence the net impact of CERs on project profitability: value of CERs, overall transaction costs and up-front transaction costs (Jorgen F et al., 2004) 12 Project developer generally expect the total transaction cost around 10-12% of the net present value of revenue (Ecosecurities, 2002) in addition, Net CER value is calculated by using the following equation Net fianacial gain = the project CER value – the transaction costs Consequently, break-even CER price will be calculated with and without CDM transaction costs for projects identified as suitable for CDM implementation from objective The Marrakech accord stipulates two crediting period options: years twice the option of the renewal (total 21 years) or, 10 years without renewal (Jorgen F et al., 2005) Break-even CER price without CDM transaction cost: The results will be compared with break-even CER rate with transaction cost It shows impact of transaction cost on CDM project viable • NPV[(CERs per year)*(CERs value)] + NPV = Break-even CER price with CDM transaction cost: The transaction impact on break-even CER price is also analyzed by transaction costs for each project • NPV[(CERs per year)*(CERs value)] + (NPV - the transaction cost) = In a recent GHG market analysis, Natsource (2002) forecasts prices for project-based carbon emission reductions (both JI and CDM markets) to vary from US$3 to for the period 2002-2005, US$2.5 to 9.0 during 2005-2007, and US$5 to 11 from 2008-2012 respectively (Jorgen F et al., 2004) Then after calculating the break-even rate of CER for each case, classification of CDM option projects will depend on the CER market rate: • • If the break-even CER rate is less than $/tCO2 : that relavant project will be considered as CDM option from the buyer perspective If the break-even CER rate is larger than $/tCO2 but less than 11 $/tCO2 : that relavant project will be considered as CDM option from the seller perspective during year 2008-2012 3.3 Data Requirement and Assumptions • • • • The key data required by the RETScreen model for each site Technical specifications of MSW Plants MSW status data in Thailand Estimated costs of the projects 13