PP of CDM-Toan 1

Economic Analysis a Wind Power project in Vietnam Economic Analysis of aofWind Power project in Vietnam under Clean Development Mechanism under Clean Development Mechanism Examination Committee: Prof Ram M Shrestha (Chairman) Prof Sivanappan Kumar Dr Sunil Malla Trinh Quang Toan (101636) Energy Field of Study, AIT – 16 February 2006 Outline 1.1.Introduction Introduction 2 Literature Literature Review Review 3 Methodology Methodology 4.Work Work Plan Plan and andResearch Research Budget Budget Introduction 1.1 Background 1.2 Problem Statement 1.3 Objectives Background Economy of Vietnam has achieved remarkable, economic growth is projected to increase from 6-8% annual during period 2000-2020 Electricity of Vietnam (EVN) suggests that electricity consumption could rise from the 25.8 TWh in 2001 to between 142 TWh and 201 TWh in 2020, an average of 9.4% to 11.2% a year Both renewable and nuclear energy so far are considered as alternatives Although the potential of renewable energy in Vietnam is very high, wind power is still considered infeasible projects due to both intensive capital and high technology requirements Statement of Problems Electricity demand increase annual growth rate of 6-8 percent during the period 2000 –2020 GHG emission will increase significantly in the future Development of renewable energy must be based on the objectives of economy, society Government can provide financial assistance for renewable energy projects based on average income of rural and mountainous households Barriers for development High investment cost => high production cost Advanced technology Lack of capital Measures for development Removal of subsidy for fossil fuels Renewable portfolio standard Clean development mechanism Objectives Economic analysis of wind power in Vietnam to identify projects suitable for CDM Analyze financial viability of wind power projects at different CER prices under CDM Literature Review 2.1 General literature on wind energy 2.2 Wind power project analysis with CDM 2.3 Current status of wind energy application for generation in Vietnam electricity 2.4 Clean Development Mechanism (CDM) 2.1 General literature on wind energy Wind power is today a mature technology There are more than 75,000 wind turbines installed world wide corresponding to about 50,000 MW accumulated capac ity 80% of the total global capacity was implemented in only five (5) countries: Germany, Spain, USA, Denmark and India 10 2.2 Wind power project analysis with CDM The Clean Development Mechanism (CDM) may stimulate considerable investments by industrialized countries in wind power and other renewable energy technologies reducing greenhouse gas (GHG) emissions in developing countries Emission reductions may also be traded in the emerging global carbon offsets market Wind power may become a major source of renewable in developing countries The income earned by selling GHG emission reductions will increase the total income to an investor from a project and will improve the competitiveness of wind power against conventional power generators in an increasingly competitive market CDM will accelerate the penetration of wind power in the developing world will strongly depend upon the balance of the win d energy costs and the GHG offsets price compared to the capital c osts of electricity generation alternatives 11 2.3 Current status of wind energy application for electricity generation in Vietnam Wind power generator-turbine was studied and applied in Vietnam since early 80th years The organizations involved in this program were : Institute of Energy, Ministry of Transport, Engineering Institute of Ministry of Defense, Renewable energy Research Centers of Hanoi and Ho Chi Minh City Universities One wind turbine with capacity of 30 MW sponsored by Japan has been installed in Hai Thinh commune, Hai Hau district, Nam Dinh province Wind power project in Khanh Hoa : Total installed capacity is 20 MW Wind power project in Quy Nhon : total installed capacity is of 30 MW Wind power project in Bach Long Vi Youth Island district : Capacity of 800 kW 12 2.4 Clean Development Mechanism (CDM)(1) (CDM) was mechanisms established by the Kyoto Protocol in 1997 to meet the Climate Convention objective of stabilizing greenhouse gas (GHG) concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system The CDM has two objectives: - To assist non-Annex I parties in achieving sustainable development and in contributing to the ultimate objective of the Cli mate Convention, - To assist Annex I parties with commitments under the Protocol in reducing greenhouse gas emissions to comply with their reducti on targets 13 2.4 Clean Development Mechanism (CDM)(2) The CDM would stimulate international investment and provide the essential resources for cleaner economic growth in developing countries The CDM provides opportunity to Annex I countries, including their private sector companies to reduce emissions in developing co untries and then count these reductions towards their reduction co mmitments * Certified emission reductions (CERs) * Administration * Participation * Project eligibility * Additionality * Sustainable development * Other criteria 14 Methodology Data requirements Methodology for objective Methodology for objective 15 Data requirements Potential sites for wind power in Vietnam Technology characteristics Energy profile Equipment, installation and O&M costs Interest rate Service life of projects CER rates 16 3.1 Methodology for objective Calculation of NPV and IRR A N NPV(i) = n ∑ Where: (1 + i ) n n =0  NPV(i) = Net present value calculate at i,  An = Net cash flow at end of period n,  i = MARR (cost of capital)  n = Service life of the project Check two types of the result that is NPV and RE production cost  If RE production cost is greater than Avoided cost  NPV Break even CER rate Input data Calculation of emission reduction Check financial viability at difference CER rate CER rate >break even CER No Project maybe developed when CER rate rises Yes Project is consider as CDM able 21 Work Plan and Research Budget Work Workplan plan Research Research Budget Budget 22 Work plan Activities Jan 2006 Feb 2006 Mar 2006 Apr 2006 May 2006 Proposal preparation Data collection Reading documents Progress report Research improvement Final report preparation Final Defense 23 Budget Estimation Item Cost (Baht) Traveling (return air fare + airport tax + re-entry) 8,000 Data collection: - Domestic institutions - International institutions - Internet + email 6,000 Photocopy 1,000 Communication (telephone, fax etc…) 2000 Printing 1,000 CD/Diskettes/Film 2,000 Total 20,000 24 Thank you for your Attention 25 ... TWh in 20 01 to between 14 2 TWh and 2 01 TWh in 2020, an average of 9.4% to 11 .2% a year Both renewable and nuclear energy so far are considered as alternatives Although the potential of renewable... upon the balance of the win d energy costs and the GHG offsets price compared to the capital c osts of electricity generation alternatives 11 2.3 Current status of wind energy application for electricity... And, i * (1 + i ) n CRF = (1 + i ) n − 18 Methodology for objective Input data Calculation of NPV,IRR Calculation of RE production cost NPV