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PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 1

CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD)

Version 03 - in effect as of: 28 July 2006

CONTENTS A. General description of project activity B. Application of a baseline and monitoring methodology C. Duration of the project activity / crediting period D. Environmental impacts E. Stakeholders’ comments

Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information

Annex 4: Monitoring information

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 3 • Own the project site • Owner of the Certified Emission Reductions (CER’s) • Sell the CER’s • Project investor The proposed project activity will produce a real and measurable contribution to the sustainable development of Bosnia and Herzegovina in many different aspects: Infrastructure The proposed project activity will produce renewable energy at a production price that is totally independent from the worldwide fossil fuels market fluctuations and risks. Having an operative, affordable, reliable and financially stable national energy production matrix is essential for any industrial development of a country. Based on a reliable national energy generation matrix, stable supply and affordable energy prices, companies get more confidence and security with regards to their investments, especially in the productive or energy intensive sectors. This leads to the creation of more business opportunities and to increased GDP. Despite the government’s initiative of exploitation and usage of the coal as the primary energy, it is important to start consolidating a more diversified portfolio of energy power plants, including the renewable energies.

Economic Typically renewable energy projects have high initial investment costs and comparatively low operating costs. Once the barrier of such a high initial investment was overcome, the production costs over the project lifetime are virtually stable and predictable, providing energy price stability, increased security of energy supply (as independent from complex world market mechanisms, syndicates and wars for fossil fuels) and above all: sustainable energy.

Climate Change The Project Activity will reduce the national Greenhouse Gas emissions occurring from electricity generation by displacing fossil fuel based electricity generation. As the Project Activity consists in the generation of electric energy by the mechanical transformation of the kinetic energy of a moving air flux, there are no significant emissions associated to the Project Activity. Technology and knowhow transfer All the components used for the development of the wind farm will be “state of the art” technology imported from a European Manufacturer. Not only the wind turbines will be most modern, also the WF control systems and the (remote) monitoring of the entire WF facility are most modern and developed especially for the purpose of wind energy projects.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 4 Transfer of knowledge and capacity building will take place as part of the Project Activity. Extra efforts and expenses will be undertaken to train new staff and technicians and to hire international experts for the capacity building as well as the O&M activities during operation of the WF. No conflicting land uses have been identified during the environmental and social impact assessment of the site. A.3. Project participants:

Name of Party involved (*) ((host) indicates a host Party))

Private and/or public entity(ies) project participants (*) (as applicable)

Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No)

Bosnia & Herzegovina JP “Elektroprivreda Hrvatske Zajednice Herceg Bosne” d.d. Mostar (JP EPHZHB)

No

(*) In accordance with the CDM modalities and procedures, at the time of making the CDM-PDD public at the stage of validation, a Party involved may or may not have provided its approval. At the time of requesting registration, the approval by the Party (ies) involved is required.

As mentioned before, EPHZHB is the only Project Participant. Details on the contact information of the Project Participant are mentioned in the Annex I. A.4. Technical description of the project activity: A.4.1. Location of the project activity: A.4.1.1. Host Party(ies): Bosnia and Herzegovina A.4.1.2. Region/State/Province etc.: Federation of Bosnia and Herzegovina/ Herzeg-Bosnian county /Tomislavgrad A.4.1.3. City/Town/Community etc.: Tomislavgrad/Mrkodol A.4.1.4. Details of physical location, including information allowing the unique identification of this project activity (maximum one page):

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 5 Mrkodol is a village in the municipality of Tomislavgrad, Bosnia and Herzegovina located in south-western part of Bosnia and Herzegovina. Mrkodol is 56 miles (91 km) west of Sarajevo and 31 miles (49 km) north-west of Mostar. The location for construction of the wind park Mesihovina is in the south-west part of BiH, 55 km north-west of Mostar, 91 km west of Sarajevo and 60 km east of Split. The planned wind farm Mesihovina is located in the greater Midena plateau. Midena is a large plateau at 1000 m a.s.l. and is located between Buško Lake and Duvno Field oriented north-west – south-east. The Midena mountain is the south-east part of the Dinara tectonic unit. The following picture shows the location of Mesihovina in BiH.

Figure 1: Location of Mesihovina (Tomislavgrad) in Bosnia and Herzegovina

Project Location


Figure 2: Location of the Mesihovina Wind Farm in BiH (Google Earth View) The approximate location of the centre of the wind farm is 43°37'00.99"N and 17°14'15.53"E (Google Earth Coordinates). Mesihovina wind farm construction and use to generate electric is bounded by the border points, which are given in the following table: Table 1: Border points for concession division

S. No. (m)

X (m)

1 6,436,515.98 4,833,271.35

2 6,437,053.38 4,832,368.18

3 6,437,109.18 4,832,293.80


S. No. Y (m) X (m)

4 6,437,610.45 4,832,422,.42

5 6,437,723.54 4,832,251.52

6 6,438,013.47 4,831,543.19

7 6,439,195.35 4,830,174.95

8 6,439,287.01 4,829,551.43

9 6,439,175.74 4,828,588.60

10 6,439,697.56 4,828,043.90

11 6,439,369.77 4,827,887.49

12 6,437,497.83 4,828,954.91

13 6,437,983.55 4,830,106.92

14 6,436,928.54 4,831,798.75

15 6,436,444.72 4,832,675.68


Figure 3: Project Site Location


Figure 4: View of the Project Location (location of wind turbines indicated)

Table 2: The coordinates of the turbine locations

Wind turbine location Y-location [m] X-location [m] Altitude[m NN]

1 6,436,601 4,832,528 1027

2 6,436,785 4,832,271 998

3 6,437,040 4,832,037 1023

4 6,437,282 4,831,846 999

5 6,437,495 4,831,677 1046

6 6,437,701 4,831,475 1046

7 6,437,909 4,831,264 1098

8 6,438,101 4,831,064 1085


Wind turbine location Y-location [m] X-location [m] Altitude[m NN]

9 6,438,302 4,830,854 1085

10 6,438,476 4,830,573 1086

11 6,438,572 4,830,323 1063

12 6,438,742 4,830,032 1064

13 6,438,937 4,829,634 1063

14 6,439,029 4,829,338 1067

15 6,437,569 4,828,920 1136

16 6,437,829 4,828,776 1152

17 6,438,077 4,828,636 1146

18 6,438,346 4,828,495 1134

19 6,438,626 4,828,349 1134

20 6,438,903 4,828,208 1157

21 6,439,163 4,828,133 1154

22 6,439,434 4,827,939 1176

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

Scope: 1 Sectoral scope: Energy Industries – Renewable Sources Project Activity: Grid connected electricity generation by renewable sources.

A.4.3. Technology to be employed by the project activity: As mentioned in section A.2, the prevailing scenario without the implementation of the project activity, will be the addition of new thermal power plants. The proposed project activity will contribute to expand the green energy generation in Bosnia and Herzegovina, and will be first of its kind. No previous wind energy equipment has been installed in the country, so all the technology must be imported. Also there is no project specific knowledge or technical skills among the working force of Bosnia and Herzegovina, consequently high expenses in training courses for the local operation and maintenance of the facility will be expected.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 11 The baseline scenario will be the continuation of the “business as usual”. This means that without the project activity, no major changes will take place in the trend that the expansion of the electric sector in Bosnia and Herzegovina will be based mainly on coal power plants1. Technical components and specifications Exemplary: Enercon E82 2.0 MW turbine with 78 Meters rotor diameter – 22 numbers. The supplier however has not been finalised yet.

Figure 5: Wind turbine E-82 Each wind turbine will have its own transformer (0.69/x kV) installed in tower with E-module as depicted in the following figure 5.

1 Indikativni_plan_proizvodnje_2011-2020


Figure 6: Transformer and E-module setting The wind farm will have the following elements: • Wind turbines of around 2 MW each. The supplier of the turbines has not been selected yet but typical

wind turbine models from well-known international suppliers will be used. One such turbine is explained below.

• Towers, upon which the wind turbines will be installed, with the appropriate ground construction, wiring, power electronics, etc.

• Transformers (low to medium voltage) which are installed in the interior of the tower base of each turbine with the aim of raising the produced low voltage to medium voltage level.

• Underground electricity transmission lines connecting the wind turbines with each other and with the Control Building.

• Control Building which will shelter the electronic system for monitoring and controlling the wind turbines as well as other facilities.

• Electrical connection of the wind farm with the National Grid, through overhead transmission lines departing from the Control Building.

Exemplary Enercon E-82 turbine characteristics with rated capacity of 2000 kW are shown in the following table: Table 2: Enercon E-82 turbine characteristics with rated capacity of 2,000 kW Rated power : 2,000 kW

Rotor diameter : 82 m

Hub height : 78 m

Wind zone (DiBt) : WZ III

Wind class (IEC) : IEC/NVN IIA

Turbine concept : Gearless, variable speed, single blade adjustment

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 13 Rotor

Type : Upwind rotor with active pitch control

Rotational direction : Clockwise

No. of blades : 3

Swept area : 5,281 m²

Blade material : GRP (epoxy resin); integrated lightning protection

Rotational speed : variable, 6 - 18 rpm

Pitch control : ENERCON single blade pitch system, one independent pitch system per rotor blade with allocated emergency supply

Drive train with generator

Hub : Rigid

Main bearing : Double-row tapered / cylindrical roller bearings

Generator : ENERCON direct-drive annular generator

Grid feeding : ENERCON inverter

Brake systems : 3 independent pitch control systems with emergency power supply, rotor brake, rotor lock

Yaw control : Active via adjustment gears, load-dependent damping

Cut-out wind speed : 28 - 34 m/s (with ENERCON storm control)

Remote monitoring : ENERCON SCADA Each Enercon turbine has a modem link to a Control Center which will send information on possible errors during operation and any fail function through a remote controlled SCADA system. The information will be sent automatically to specific Enercon software for users' support which sends alerts to the nearest maintenance team to be activated. These teams are equipped with pen tops (huge, portable computers with the link to the service center). Through this system the maintenance and service team can promptly react. For turbines of other suppliers in principle the same general conditions apply.


A.4.4. Estimated amount of emission reductions over the chosen crediting period: The crediting period of the project is 7 years for the first crediting period (01/01/2014 to 31/12/2020). An extension to a second crediting period of another 7 years is intended. The total and yearly estimated emission reductions during the first crediting period are presented in the following table:

Years Annual estimation of emission reductions in tonnes of CO2e

2014 117,731

2015 117,731

2016 117,731

2017 117,731

2018 117,731

2019 117,731

2020 117,731

Total estimated emission reductions (tons of CO2e) 824,115

Total number of years of 1st crediting period 7

Annual average over the crediting period of estimated reductions (tons of CO2e) 117,731

According to the methodology ACM0002 V.12.1, no energy losses are considered for the calculation. A.4.5. Public funding of the project activity: Mesihovina Wind Farm Project will be financed under a loan agreement with KfW and does not involve diversion of any official development assistance. This loan agreement is not counted towards the financial obligation of the concerned parties. KfW will not claim or require any compensation in the form of CER sales. SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity: The proposed project activity is in compliance with the criteria of the following methodology for large scale project activities: ACM0002: “Consolidated baseline methodology for grid-connected electricity generation from renewable sources”, version 12.1.0, EB58;

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 15 This methodology also refers to the latest approved versions of the following tools:

i. “Tool for the demonstration and assessment of additionality”, version 05.2.1, EB 39 ii. “Combined tool to identify the baseline scenario and demonstrate additionality”, version 03.0.1,

EB 60 iii. “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion”, version 02, EB

41 iv. “Tool to calculate the emission factor for an electricity system”, version 02.2.1, EB 63;

According to the ACM 0002 methodology, version 12.1.0, EB 58 “Combined tool to identify the baseline scenario and demonstrate additionality”, version 03.0, EB 60, should be used for identification of the baseline scenario only if the project activity is the retrofit or replacement of existing grid-connected renewable power plant/unit(s) at the project site. But, since the project activity is Greenfield in nature, the tool is not used. According to the ACM 0002 methodology, version 12.1.0, EB 58, only for geothermal and solar thermal projects, which use fossil fuels for electricity generation, CO2 emissions from the combustion of fossil fuels shall be accounted for as project emissions (PEFF,y). It shall be calculated as per the latest version of the “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion”. Since the project activity does not involve any of these technologies, this tool is not used. Since the project activity is a greenfield project based on wind power plants and feeds generated electricity into the national grid, it refers to the tool, “Tool to calculate the emission factor for an electricity system”, version 02.2.1, EB 63. As the project activity relies on the generation of electric energy through the mechanical conversion of the kinetic energy of the wind flux, no associated emissions are generated during the operation, and so there will be no leakage emissions considered. Summarized, the following two latest approved versions of tools apply for this project:

i. “Tool to calculate the emission factor for an electricity system”, version 02.2.1, EB 63; ii. “Tool for the demonstration and assessment of additionality”, version 05.2.1, EB 39

B.2. Justification of the choice of the methodology and why it is applicable to the project activity: The project activity is in line with approved ACM 0002 methodology, Version 12.1.0, EB 58. Specific features and applicability of the methodology are discussed below:

Applicability criteria Justification

This methodology is applicable to grid-connected renewable power generation project activities that (a) install a new power plant at a site where no renewable power plant was operated prior to the

The project activity involves the installation of new grid connected wind farm



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).

The project activity is the installation, capacity addition, retrofit or replacement of a power plant/unit of one of the following types: hydro power plant/unit (either with a run-of-river reservoir or an accumulation reservoir), wind power plant/unit, geothermal power plant/unit, solar power plant/unit, wave power plant/unit or tidal power plant/unit;

The wind farm Mesihovina will have 22 wind turbines with the capacity of about 2 MW each. The total capacity will be about 44 MW, depending on the selection, i.e. on the capacity of each turbine. The planned output will be about 130 GWh. The selection and capacity of each turbine will be known after the tender procedure for procurement of turbines.

In the case of capacity additions, retrofits or replacements: the existing plant started commercial operation prior to the start of a minimum historical reference period of five years, used for the calculation of baseline emissions and defined in the baseline emission section, and no capacity expansion or retrofit of the plant has been undertaken between the start of this minimum historical reference period and the implementation of the project activity;

The project activity is a Greenfield power plant. It does not involve any retrofit or replacement activities. Hence, this criterion is not applicable.

In case of hydro power plants, one of the following conditions must apply:

• The project activity is implemented in an existing reservoir, with no change in the volume of reservoir; or

• 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/mP

2P; or

• 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/mP

2P.

The project activity does not involve hydro power plant and hence this criterion is not applicable.

The methodology is not applicable to the following:

1. Project activities that involve switching from

The project activity does not involve any fuel switching from fossil fuel to renewable energy. Also it does not involve biomass fired power plant and hydro power plant. Hence this criterion is not



fossil fuels to renewable energy sources at the site of the project activity, since in this case the baseline may be the continued use of fossil fuels at the site;

2. Biomass fired power plants;

3. Hydro power plants that result in new reservoirs or in the increase in existing reservoirs where the power density of the power plant is less than 4 W/mP

2P.

applicable.

In the case of retrofits, replacements or capacity additions, this methodology is only applicable if the most plausible baseline scenario, as a result of the identification of baseline scenario, is “the continuation of the current situation, i.e. to use the power generation equipment that was already in use prior to the implementation of the project activity and undertaking business as usual maintenance”.

Since this project does not involve any retrofit/ replacement/ capacity addition, this criterion need not be proved

From the above justification, it can be clearly seen, that the proposed project activity is applicable under the baseline methodology ACM0002, version 12.1.0, EB 58. Applicability of the tools mentioned in the methodology is discussed below: Tool to calculate the emission factor for an electricity system, version 02.2.1, EB 63

The geographic and system boundaries for the relevant electricity grid can be clearly identified and information on the characteristics of the grid is available.

Applicable.

The geographic and system boundaries of the project connected electricity grid (the national grid of Bosnia and Herzegovina) can be clearly identified.

Tool to calculate project or leakage CO2 emissions from fossil fuel combustion, version 02, EB 41

This tool provides procedures to calculate project and/or leakage CO2 emissions from the combustion of fossil fuels. It can be used in cases where CO2 emissions from fossil fuel combustion are calculated based on the quantity of fuel combusted and its properties.

Not applicable.

Only for geothermal and solar thermal projects, which use fossil fuels for electricity generation, CO2 emissions from the combustion of fossil fuels shall be accounted for as project emissions. Since the project activity does not involve any of these technologies, this tool is not used.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 18 Combined tool to identify the baseline scenario and demonstrate additionality, version 03.0.1, EB 60

This tool provides a step-wise approach to identify the baseline scenario and simultaneously demonstrate additionality.

Not applicable.

According to the ACM 0002 methodology, the tool should be used for identification of the baseline scenario only if the project activity is the retrofit or replacement of existing grid-connected renewable power plant/unit(s) at the project site. But, since the project activity is greenfield in nature, the tool is not used.

Tool for the demonstration and assessment of additionality, version 05.2.1, EB 39

This document provides for a step-wise approach to demonstrate and assess additionality. These steps include:

• Identification of alternatives to the project activity;

• Investment analysis to determine that the proposed project activity is either: 1) not the most economically or financially attractive, or 2) not economically or financially feasible;

• Barriers analysis; and • Common practice analysis.

Applicable.

Additionality of the project has been proved by this tool. Alternatives have been identified and investment analysis has been carried out. In addition common practice analysis is used to further justify the project’s additionality.

The proposed project activity doesn’t involve switching from fossil fuels to renewable energy sources at the site of the project activity, so the baseline can be identified as described in section B.4. The geographic location and system boundary can clearly be identified. B.3. Description of the sources and gases included in the project boundary: The spatial extent of the project boundary includes the project power plant and all power plants connected physically to the electricity system2 that the CDM project power plant is connected to. It includes the spatial extent of the project activity, in which all the mechanical and electrical devices are located, along with the necessary infrastructure to deliver the generated electricity to the electric system.

2 Based on the definition for an ‘electricity system’ as per latest approved version of the ‘Tool to calculate the emission factor for an electricity system’.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 19 As the wind energy is defined as a “zero emission electricity source”, no emissions will be considered for the project activity. On the other hand, the emission sources included in the project boundaries are only those calculated for the baseline.

Source GHG Included? Justification/explanation

Bas

elin

e CO2e emissions from electricity generation in fossil fuel power plants that are displaced due to the project activity.

CO2 Yes Main emission source

CH4 No Minor emission source

N2O No Minor emission source

Proj

ect A

ctiv

ity

For geothermal power plants, fugitive emissions CH4 and CO2 from non-condensable gases contained in geothermal steam.

CO2 No N/A

CH4 No N/A

N2O No N/A

CO2 emissions from combustion of fossil fuels for electricity generation in solar thermal power plants and geothermal power plants.

CO2 No N/A

CH4 No N/A

N2O No N/A

For hydro power plants, emissions of CH4 from reservoir.

CO2 No N/A

CH4 No N/A

N2O No N/A


Figure 7: Schematic view of the project boundary The Figure 7 shows the technical and physical boundaries of the project activity, in which the transmission line is not contemplated as part of the project. B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario:

According to ACM0002 methodology, version 12.1.0, EB 58, if the project activity is the installation of a new grid-connected renewable power plant/unit, the baseline scenario is the following: “Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the “Tool to calculate the emission factor for an electricity system”. Therefore, the baseline scenario for the project activity is defined as the total emissions of GHG generated by the electricity production of the Bosnia and Herzegovina electricity grid. This is calculated from the amount of electricity generated by each power plants/units connected to the grid multiplied by the emission factor of the grid. As per guidance of the “Tool to calculate the emission factor for an electric system”, the emission factor of the electric grid is defined as the combination of the Operating Margin and the Build Margin. The Operating Margin is the number that reflects the emission factor of the actual installed capacity of the electric grid. The Build Margin is the number that reflects the emission factor of the projection of the additions in the installed capacity of the electric grid. For calculating the Build and Operating margins, it

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 21 is important to analyse the information about the electricity generation in Bosnia and Herzegovina for the past few years. As mentioned before, the electricity production in Bosnia and Herzegovina relies heavily on fossil fuels. All the information above shows that the “common use” technology for new additions to the electricity grid is the “Thermoelectric Power Plant”. The proposed Project Activity will not only benefit the country for reducing the GHG emissions, but also will contribute to create a wider culture of “low environmental impact” technologies. The calculation of the grid emission factor is provided in Chapter B.6. B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity (assessment and demonstration of additionality):

The additionality of the project activity is demonstrated and assessed using the “Tool for the demonstration and assessment of additionality”, version 05.2, EB 39. Prior Consideration of the CDM According to paragraph 4 of “Guidelines on the demonstration and assessment of prior consideration of the CDM”, version 04, EB 62, for project activities with a starting date on or after 2nd August 2008, the project participant must inform the Host Party Designated National Authority (DNA) and the UNFCCC secretariat in writing of the commencement of the project activity and of their intention to seek CDM status. CDM has been a major driver behind the project and has been considered from early on in the development of the project. The start date for the project has not occurred yet. The project is still under development and purchase orders have not been placed for equipment. CDM has been considered from the conception of the project. The project participants lodged prior consideration of CDM Form to the UNFCCC secretariat and the DNA of Bosnia and Herzegovina on 20th December 2011, which is before the start date of the project. In accordance with the definition stated in CDM glossary, version 5, “The starting date of a CDM project activity is the earliest date at which either the implementation or construction or real action of a project activity begins” the starting date of the project tentatively is envisaged for the third/fourth quarter of 2012, which will also be the date of disbursement of the loan. A loan agreement has been signed with KfW Germany on 23/2/2010. The agreement did not become effective since conditional documentations of the project have not been ready at that time. The loan agreement has been signed with reservation and conditions, that an ECA Guarantee needs to be in place by the Government of BiH and that the project certainly must be developed under CDM. The loan agreement had been confirmed again on 7/5/2011 after approval by KfW referring documentation of the project. However, the agreement is still on hold under reservation since no ECA Agreement was available at that time. Therefore, it can be taken into consideration that the official project starting date is still not determined at date of finalizing this version of PDD. The timeline of the project activity is summarized in the following table to prove that the CDM was seriously considered in decision-making of the project.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 22 Table 3: Timeline of the project activity

Milestone Date / Timeframe Evidence Document

Technical and financial feasibility study June 2009

VE MESIHOVINA

STUDIJA IZVODLJIVOSTI

March 2010 VE MESIHOVINA

IDEJNI PROJEKT

Board decision on the appointment of Project Manager 29th January 2010 Odluka o imenovanju Projekt

Menadžera

Approval and signing of the bank loan agreement with reservations due to missing documentations and ECA guarantee

23rd February 2010 KFW Loan Agreement

Board decision to proceed with the project 28th June 2010 Odluka o pripremi i izgradnji VE

Mesihovina

CDM Decision 23rd November 2010

Signing agreement with CDM consultant (Fichtner GmbH & Co KG) indicating CDM Decision

Stakeholder Consultation 07th March 2011

12th November 2009

26th Auguste 2009

Urban planning permit

Environmental approval

Concession Contract

Loan Agreement Effectiveness consideration, but ECA guarantee still missing, thus agreement still not fully effective

7/5/2011 Letter from KfW

Application for Letter of Endorsement (LoE) to the Bosnia and Herzegovina authorities 11th October 2011

The authorities of Bosnia and Herzegovina were informed about the intended CDM project activity and were asked for a national LoE.

Prior Consideration of the CDM Form 20th December Submission of notification of the project


Milestone Date / Timeframe Evidence Document

sent to UNFCCC 2011 activity to the UNFCCC with the intention to seek CDM status

Email reply from the UNFCCC 20th December 2011

Email to acknowledge the receipt of the prior consideration form.

Letter from KfW on final confirmation on effectiveness of loan agreement

Signing equipment supply contract with wind turbine suppliers 3rd Quarter of 2012 Contract with equipment supplier

Construction of access road 2012/2013

Construction of wind farm 2013

The objective of the proposed project activity is to generate sustainable energy through the implementation of modern equipment and “state of the art” technology in order to convert the kinetic energy of the wind into electrical energy. With this, there will be a real displacement of the harmful GHG emission produced by the combustion of fossil fuels like coal. With the “business as usual” scenario, no displacement of emissions will occur and no implementation of new technology will take place. The project activity depends upon an additional financial income stream based on CDM revenues, as it requires an intensive initial capital investment for the acquisition of the modern equipment of the wind farm. Without this financial support, the project activity cannot be implemented due to its prohibitive high investment costs. JP EPHZHB has initiated the process of designing the wind farm. They have been seriously considering the CDM activity since the very beginning of the evaluation of the project. At that point EPHZHB was aware of the following:

a. Rough and approximate course of the CDM project registration process; b. Institutional challenges attached to the implementation of a wind farm, which is the first of its

kind in Bosnia and Herzegovina; c. CDM revenues are available for the renewable energy projects, which fulfil the additionality

criteria and comply with further eligibility criteria; Hence, the prior consideration of the CDM is clearly demonstrated. Additionality Demonstration The additionality of the project activity shall be demonstrated and assessed using the latest version of the “Tool for the demonstration and assessment of additionality” agreed by the UNFCCC EB. Version 06.2.0, EB 65 Annex 21” has been applied.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 24 Applicable geographical area covers the entire host country as a default; if the technology applied in the project is not country specific, then the applicable geographical area should be extended to other countries. Project participants may provide justification that the applicable geographical area is smaller than the host country for technologies that vary considerably from location to location depending on local conditions. The applicable geographical area covers the entire country of Bosnia and Herzegovina (BiH). Measure3 (for emission reduction activities) is a broad class of greenhouse gas emission reduction activities possessing common features. Four types of measures are currently covered in the framework: (a) Fuel and feedstock switch; (b) Switch of technology with or without change of energy source (including energy efficiency

improvement as well as use of renewable energies); (c) Methane destruction; (d) Methane formation avoidance4. The project activity is implementation of wind power generation in BiH which leads to emission reduction. It can be classified under the b) “switch of technology with or without change of energy source” measure. Output5 is goods or services with comparable quality, properties, and application areas (e.g. clinker, lighting, residential cooking) The project activity output is electricity generation (MWh). Different technologies in the context of common practice are technologies that deliver the same output and differ by at least one of the following (as appropriate in the context of the measure applied in the proposed CDM project and applicable geographical area): (a) Energy source/fuel; (b) Feed stock; (c) Size of installation (power capacity):

(i) Micro (as defined in paragraph 24 of Decision 2/CMP.5 and paragraph 39 of Decision 3/CMP.6);

(ii) Small (as defined in paragraph 28 of Decision 1/CMP.2); (iii) Large;

(d) Investment climate in the date of the investment decision, inter alia: (i) Access to technology; (ii) Subsidies or other financial flows; (iii) Promotional policies; (iv) Legal regulations;

(e) Other features, inter alia:

3 The definition is taken from annex 8 of the EB 62 report 4 An example of methane formation avoidance is the use (e.g. for energy generation) of biomass that would have been left to decay in a solid waste disposal site. The measure prevents the formation of methane 5 The definition is taken from annex 8 of the EB 62 report


(i) Unit cost of output (unit costs are considered different if they differ by at least 20 %); In BiH, the usual method of electricity generation is thermal or hydro power generation. Currently no wind power plants exist in the country. Hence, the applied technology (wind power generation) is different from any other technologies that is able to deliver the same output (electricity). “Tool for the demonstration and assessment of additionality”, version 06..0., EB 65, Annex 21 provides a step-wise approach to demonstrate the additionality. These steps include:

1. Identification of alternatives to the project activity 2. Investment analysis to determine that the proposed project activity is either: 1) not the most

economically or financially attractive, or 2) not economically or financially feasible; 3. Barriers analysis; and 4. Common practice analysis.

Step 1: Identification of alternatives to the project activity consistent with current laws and regulations The project activity is the installation of new grid-connected renewable energy power plant/unit. According to page 4 of ACM 0002 methodology, version 12.1.0, EB 58, if the project activity is the installation of a new grid-connected renewable energy power plant/unit, the baseline scenario is identified as the following: Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the “Tool to calculate the emission factor for an electricity system”. This eliminates the requirement on the identification of the alternatives to the project activity. Sub-step 1a: Consistency with mandatory laws and regulations The alternatives are in accordance with the entire legal framework established in Bosnia and Herzegovina for the development of renewable energy. As per guidance of the “Tool for the demonstration and assessment of additionality”, either the Step 2: Investment analysis or Step 3: Barrier analysis can be selected for demonstrating the additionality of the proposed project activity. Due to the fact that the investment of the project is not economic to carry out the project in an appropriate economic way Step2: Investment Analysis has been chosen. Step 2: Investment analysis In the following it has been determined that the proposed project activity is not:

(a) The most economically or financially attractive; or The latest version of the "Guidelines on the assessment of investment analysis" V 05, EB62, Annex 5 has been taken into account for applying this step.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 26 To conduct the investment analysis, the following Sub-steps have been used: Sub-step 2a: Determine appropriate analysis method Determine whether to apply simple cost analysis, investment comparison analysis or benchmark analysis (Sub-step 2b). If the CDM project activity and the alternatives identified in Step 1 generate no financial or economic benefits other than CDM related income, then apply the simple cost analysis (Option I). Otherwise, use the investment comparison analysis (Option II) or the benchmark analysis (Option III). The benchmark analysis has been chosen for the reason that the investor only has the choice to invest into such a project or not invest. In accordance with the guidelines Section V, Guidance 19, the alternative to the project activity is the supply of electricity from a grid this is not to be considered an investment, thus a benchmark approach is considered appropriate. Sub-step 2b: Option III. Apply benchmark analysis The IRR has been chosen the most suitable for the project type and decision context. The default value for the expected return of equity from the “Guidelines on the Assessment of Investment Analysis” V5.0 for Bosnia and Herzegovina (Group 1:1. Energy Industries) has been taken with the value of 13.75 %, as per Appendix: Default values for the expected return on equity. Sub-step 2c: Calculation and comparison of financial indicators The following assumptions and values have been used in the investment analysis. The values derive from the conceptual design elaborated by FACULTY OF CIVIL ENGINEERING UNIVERSITY OF MOSTAR in March 2010 for the project activity or have been calculated. In the following table the sources of the values have been given as per assumption in the IRR calculation in file: “EP HZHB MWF Project IRR PDD 20-02-12” Description Unit Value REMARK

Installed Capacity MW 44 22 x ~2 MW rated capacity exemplary Enercon Turbines as per conceptual design (supplier still to be decided)

Capacity Coefficient % 31.95 Conceptual Design, Chapter 4, p.16 Operation Time hours/year 2,799 Conceptual Design, Chapter 4, p. 16, Table 2 Project lifetime years 20 Conceptual Design, Chapter 5, page 10 Total project investment Euro 69,009,120.00 Conceptual Design, Chapter 5, page 3 Project Development Euro 2,200,000.00 Conceptual Design, Chapter 5, page 1

Credit insurance costs Euro 1,300,000.00 Conceptual Design, Chapter 5, page 2 Civil works Euro 4,915,370.00 Conceptual Design, Chapter 5, page 2-3 Construction of TS, 20/110kV+110 transmission line,

Euro 4,325,000.00 Conceptual Design, Chapter 5, page 3

Internal cable network 20kV and TS0.69/20kV+civilworks


Costs of WT tower (including transport and installation)


Costs of construction financing rates Euro 1,200,000.00 Conceptual Design, Chapter 5, page 3

Estimation of other unforeseeable costs Euro 600,000.00 Conceptual Design, Chapter 5, page 3

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 27 Description Unit Value REMARK

Option 1: O&M Cost 1st and 2nd year Euro/year 1,474,898.95 Conceptual Design, Chapter 5, page 7

Option 1: O&M Cost 3rd to 20th year Euro/year 1,667,689.45 Conceptual Design, Chapter 5, page 7

Option 2: O&M Cost 1st and 2nd year Euro/year 1,574,738.73 Conceptual Design, Chapter 5, page 7

Option 2: O&M Cost 3rd to 20th year Euro/year 1,767,529.23 Conceptual Design, Chapter 5, page 7

O&M General Overhaul in the 10th year of operation (5.5% of investment value)

€/10th year 3,795,501.60 Conceptual Design, Chapter 5, page 7

O&M 'one off' lump sum for land use ( 1 WT = 1,500 Euro) as compensation for all landscape modifications and nature management and all other limitations due to wind farm construction

€/1st year 33,000.00 Conceptual Design, Chapter 5, page 6 (calculated only one time in the first year)

Option 1: Average O&M costs Year 1-20 €/year 1,839,835.48 Calculated Option 2: Average O&M costs Year 1-20 €/year 1,939,675.26 Calculated Generated Electricity MWh/a 128,527.00 calculated on the basis of 1 year wind

measurements (see "WF-BiH_ER_spreadsheet_20120214-ENVIMA", sheet "EG and Electricity Cons." and Conceptual Design, Chapter 4.1.1, Table 3, p 19

Electricity redemption price (01/01/2008) = Option 1

Euro/MWh 66.83 Conceptual Design, Chapter 5, page 9

Electricity redemption price (planned beginning of April 2010) = Option 2

Euro/MWh 76.54 Conceptual Design, Chapter 5, page 9

Income Option 1 Euro/year 8,589,459.41 Calculated Income Option 2 Euro/year 9,837,456.58 Calculated

Grid Emission Factor tCO2/MWh 0.92 as per grid emission factor calculation in "Amitea Small Hydro Project, Bosnia & Herzegovina", page 22, 18/10/2011

Emission Reduction tCO2/year 117,731 calculated

CER Price Euro/CER 10.00 Conceptual Design, Chapter 5, page 10

Income from sales of CER Euro/year 1,177,307 calculated

Two options have been calculated in the investment analysis under consideration of the above listed realistic assumptions. The differences of the options are in 2 different scenarios referring the O&M costs as well as different electricity redemption prices. Option 2 has been calculated with the higher electricity redemption price. Revenue from electricity sales to the grid is the parameter with the highest impact on IRR. For reason to keep a conservative approach in the IRR calculation Option 2 with an IRR of 9.68 % without CER revenues has been chosen for further consideration, while Option 1 results in 7.51 % only. The calculated IRR of Option 2 is clearly below the selected IRR Benchmark of 13.75 %. The CDM project activity has a less favorable, means a lower IRR than the benchmark. Consequently the CDM project activity cannot be considered as financially attractive without CDM revenues.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 28 Sub-step 2d: Sensitivity analysis The following results of the sensitivity analysis of Option 2 shows the variation of the IRR referring the parameters (i) Revenues from sales of electricity, (ii) Total investment costs, and (iii) Average yearly operation and maintenance costs. The most impacting parameter is “Revenues from electricity sales” which increases the IRR at 10 % increase of revenues to 11.46 % as the highest increase in the overall sensitivity analysis. Optimistic Base Case Pessimistic

IRR ( % ) 11.46% 10.58% 9.68% 8.77% 7.83% Electricity Revenues ( Mio €/y)

10.82 10.33 9.84 9.35 8.85

10.00% 5.00% 0,00% -5.00% -10.00% Pessimistic Base Case Optimistic IRR ( % ) 8.33% 8.98% 9.68% 10.45% 11.28% Total Investment Cost (Mio € )

75.91 72.46 69.01 65.56 62.11

10.00% 5.00% 0.00% -5.00% -10.00% Pessimistic Base Case Optimistic IRR ( % ) 9.33% 9.51% 9.68% 9.86% 10.03% O&M Cost (Average Mio €/year)

2.13 2.04 1.94 1.84 1.75

10.00% 5.00% 0.00% -5.00% -10.00% Considering the IRR of Option 2 including CER Revenues, the IRR increases to 11.80%, a sufficiently remarkable increase in order to consider the project with CER revenues as much more economical viable over a lifetime of 20 years. Moreover, the following table shows that the Investment Costs decreased by 10 % has the most sensitive impact on the economics of the project with an increase of the IRR up to 13.55 %, followed by the revenues from electricity sales which let the IRR increase to 13.49% on a 10 % increase of revenues from sales of electricity. Optimistic Base Case Pessimistic IRR ( % ) 13.49% 12.65% 11.80% 10.93% 10.04% Electricity Revenues ( Mio €/y)

10.82 10.33 9.84 9.35 8.85

10.00% 5.00% 0,00% -5.00% -10.00% Pessimistic Base Case Optimistic IRR ( % ) 10.32% 11.03% 11.80% 12.63% 13.55% Total Investment Cost (Mio € )

75.91 72.46 69.01 65.56 62.11

10.00% 5.00% 0.00% -5.00% -10.00% Pessimistic Base Case Optimistic

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 29 IRR ( % ) 11.46% 11.63% 11.80% 11.96% 12.13% O&M Cost (Average Mio €/year)

2.13 2.04 1.94 1.84 1.75

10.00% 5.00% 0.00% -5.00% -10.00% Both sensitivity analyses with remarkable differences between the IRR without and IRR with consideration of revenues from the sales of CERs show clearly that the consideration of CDM for the project is necessary and justified, as the CDM revenues increases the economic viability of the project considerably by more than 2 percent points. Step 4: Common practice analysis The power sector in Bosnia & Herzegovina now consists of three vertically integrated monopolies:

1. JP “Elektroprivreda Hrvatske Zajednice Herceg Bosne” d.d Mostar (JP EPHZHB),

2. Elektroprivreda Bosne i Herzegovine (EPBiH), and

3. Elektroprivreda of the Republic of Srpska (EPRS).

The power companies are synchronized and interconnected but there is no competition among them – they are virtual monopolies within their exclusive ethnically based service territories. The service territories are relatively small, with equally small customer numbers and an absence of major industrial and commercial customers. As identified earlier, the country’s electricity infrastructure is in a poor state, with substantial investment required in the distribution system. The government has drawn up plans to restructure and privatize the power sector under the Power Sector Restructuring Action Plan, which en- visages multiple generation and (cross-entity) distribution companies with a single transmission company at state level. The original formulation of the Action Plan made no distinction between FBiH and RS territories – the intention is that the energy markets will be integrated; however there has been difficulty in reaching agreement on implementation. JP “Elektroprivreda Hrvatske Zajednice Herceg Bosne” d.d Mostar (JP EPHZHB) is the vertically integrated electricity company with a service territory in the immediate region of Federation of Bosnia and Herzegovina. It serves around 186,300 customers, approximately 170,000 of which are household customers. EPHZHB operates seven hydropower plants with a total installed capacity of 852 MW – Rama, Capljina, Jajce I, Jajce II, Mostar, Pec Mlini and Mostarsko blato. The company is divided into six departments: generation, distribution, supply, development, economic affairs, legal, employing 1,850 people in total. JP Elektroprivreda BIH (EPBIH): EPBiH is based in Sarajevo, and serves a customer base of approximately 619,000 customers, over 90 % of which are household customers. EPBiH operates two coal-fired thermal power plants (Kakanj, 578 MW and Tuzla, 779 MW) and three hydropower plants (Grabovica, Jablanica, Salakovac), with a total installed capacity of 1,831 MW. In addition, EPBiH operates six small hydropower plants, with a total installed capacity of 9.6 MW. EPBiH is divided into six departments: generation, transmission and system control, distribution, research and development, economic and financial affairs and human resources.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 30 Elektroprivreda Republike Srpske (EPRS): EPRS serves the Republika Srpska, from its base in Trebinje. EPRS has a customer base of 436,000, over 400,000 of which are household customers. EPRS operates two lignite fired thermal power plants (Gacko and Ugljevik, 300 MW each) and five hydro plants (Bocac, Trebinje and Visegrad) with a total installed capacity of 1,424 MW. EPRS operates as holding company for 11 legally independent operating companies who are fully responsible for the operation of the company but report to the Directorate of EPRS. Each of the two thermal and three hydropower stations is a separate company, as well as the five distribution districts and the transmission business. In total, EPRS employs 2,900 people. Brcko: In addition to the three main companies, there is also a small autonomous distribution grid in the town of Brcko. It has no generation assets, purchasing all the electricity from the three vertically integrated companies. It has approximately 26,000 customers, around 90 % of which are household customers. The following table shows the list of type of power plants generating electricity BiH. Table 4: Electricity generation from existing power plants in BiH

Power Plant Type

of Plant

Year of Commissioning

Installed Capacity

(MW)

Operation Capacity

(MW)

Generated Electricity (GWh/y)

Tuzla G1 TE 32 29 Tuzla G2 TE 32 29 Tuzla G3 TE 1966 100 91 Tuzla G4 TE 1971 200 182 Tuzla G5 TE 1974 200 180 Tuzla G6 TE 1978 215 198 Kakanj G1, G2, G3, G4

TE 4x32 4x29

Kakanj G5 TE 1969 110 100 Kakanj G6 TE 1977 110 100 Kakanj G7 TE 1988 230 208 Gacko TE 300 276 Ugljevik TE 300 279 Total (2009)1 8,226.62Trebinje I HE 3x60 Trebinje II HE 8 Dubrovnik (BIH+Hr.) HE 2x105 Capljina HE 2x210 Rama HE 2x80 Jablanica HE 1955 2x25+4x30 Grabovica HE 1982 2x58.5 Salakovac HE 1982 3x70 Mostar HE 3x25 Jajce I HE 2x30 Jajce II HE 3x10


Power Plant Type

of Plant

Year of Commissioning

Installed Capacity

(MW)

Operation Capacity

(MW)

Generated Electricity (GWh/y)

Bocac HE 2x55 Višegrad HE 3x105 Pec‐Mlini HE 2x15 Total (2009) 6,148.41 Una Kostela SHE 4x2.05 Krusnica SHE 2x0.23 Kanal Una SHE 1x0.14 Modrac SHE 1x1.70 Osanica SHE 2x0.65 Hrid SHE 2x0.20 Snjeznica SHE 1x0.50 Bogatici (28%) SHE 2x3.50 Total (2008)2 66.83 Source: INDIKATIVNI PLAN, RAZVOJA PROIZVODNJE 2011. – 2020. TE = Thermal Electric (Coal Power Plant) HE = Hydro Electric Power Plants SHE = Small Hydro Power Plants 1 Decision for CDM project has been made in 11/2010, for that reason latest consolidated data from 2009 had to be taken. 2 Data from 2009 of SHE are not available, for that reason the data of 2008 have been taken. The descriptions of the energy supply status and development in BiH above and the statistics in the table above show that no other power plant of similar type is supplying electricity to the BiH grid system. The project activity is in accordance with the laws and regulations of the country and there are no similar activities to the proposed project activity. Thus the project fulfils all the additionality conditions.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 32 B.6. Emission reductions:

B.6.1. Explanation of methodological choices: Equations provided by methodology ACM0002, version 12.1, EB 58 are used to calculate project emissions, baseline emissions, leakage, and emission reductions. Baseline emission (BEy)

Baseline emissions include only CO2 emissions from electricity generation in grid connected fossil fuel fired power plants that are displaced due to the project activity. All project electricity generation above baseline levels would have been generated by existing grid-connected power plants and the addition of new grid-connected power plants. The baseline emissions therefore are calculated as follows:

yCM,grid,yPJ,y EFEG BE ⋅= Where: BEy = Baseline emissions in year y (t CO2/yr) EGPJ,y = Quantity of net electricity generation that is produced and fed into the grid as a result of

the implementation of the CDM project activity in year y (MWh/yr) EFgrid,CM,y = Combined margin CO2 emission factor for grid connected power generation in year y The calculation of EGpj,y is different for (a) Greenfield renewable energy power plants, (b) retrofits and replacements of an existing renewable energy power plant and (c) capacity additions to an existing renewable energy power plant. Since the project activity is Greenfield renewable energy power plant, EGPJ,y is calculated using the following formula.

yfacility,yPJ, EGEG =

Where: EGPJ,y = Quantity of net electricity generation that is produced and fed into the grid as a result

of the implementation of the CDM project activity in year y (MWh/yr) EGfacility,y = Quantity of net electricity generation supplied by the project plant/unit to the grid in

year y (MWh/yr) Combined margin CO2 emission factor for grid connected power generation in year y is calculated using the latest version 02.2.1 of the “Tool to calculate the emission factor for an electricity system” EB 63. In accordance with the “Tool to calculate the emission factor for an electricity system, Version 02.2.1” the grid emission factor is calculated using Combined Margin (CM), comprised of an Operating Margin (OM) emission factor and a Build Margin (BM) emission factor. The Operating Margin (OM) expresses the average emission factor of the actual energy production capacity. Build Margin (BM) reflects the future trend of the electric grid expansion, in terms of emissions per generated MWh.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 33 Both emission factors, the OM and the BM are combined in different proportions to have a final Combined Margin (CM) that will reflect the real emission factor of the Bosnia and Herzegovina’s electric grid. The following procedure is adopted for estimating the grid electricity emission factor: The steps used are as follows: STEP 1. Identify the relevant electricity systems; STEP 2. Choose whether to include off-grid power plants in the project electricity system (optional); STEP 3. Select a method to determine the operating margin (OM); STEP 4. Calculate the operating margin emission factor according to the selected method; STEP 5. Calculate the build margin (BM) emission factor; STEP 6. Calculate the combined margin (CM) emissions factor. Information: There are three major electricity generation operators in BiH. Each of them has its own operational system and company policy. In addition there is national regulatory commission which also publishes yearly reports. In order to reach the necessary results for calculating the grid emission factor it is necessary to collect all data needed from each organization Not all data is published regularly and at the same time. The available data can be found on the organizations website as annual reports. The data available includes electricity production from units, installed capacity, start-up year and some additional data. However this data is not sufficient for the calculation of grid emission factor because it is incomplete and/or, since it is not published regularly. Therefore, the data taken for the calculations in this document is from the period 2007-2009, because the data available for 2010 is incomplete, and it was not possible to calculate using the period 2008-2010. The calculation method and the detailed calculation of Bosnia and Herzegovina grid emission factor is given in Annex 3. In this project activity, Grid emission factor has been calculated and fixed ex-ante. STEP 1: Identify the relevant electricity systems According to the ‘‘Tool to calculate the emission factor for an electricity system’’, a project electricity system has to be defined by the spatial extent of the power plants that are physically connected through transmission and distribution lines to the project activity and that can be dispatched without significant transmission constraints. Correspondingly, in this project activity the project electricity system include the project site and all power plants attached to the National Grid of Bosnia and Herzegovina. Electricity transferred from connected electricity systems to the project electricity system are defined as electricity imports. For the purpose of determining the operating margin emission factor, 0 tCO2/GWh emission factor has been determined for net electricity imports (EFgrid, import) from the connected electricity system of the Annex I country Croatia and from the non-Annex I country Montenegro. For Serbia an official value published by the DNA has been used.


Figure 8: Map of the power electricity system of Bosnia and Herzegovina6 STEP 2: Choose whether to include off-grid power plants in the project electricity system This step is optional. Off-grid power plants are not included in the electricity system. STEP 3: Select a method to determine the operating margin (OM) The “Tool to calculate the emission factor for an electricity system” (Version 2.2.1) mentions four options for calculating the operating margin emission factor (EFgrid,OM,y): (a) Simple OM; or (b) Simple adjusted OM; or (c) Dispatched data analysis OM; or (d) Average OM.

6 Link: http://www.derk.ba/en/ees-bih/ees-map (access 08/08/2011)

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 35 For the proposed project, option (a) simple OM has been selected. According to the methodology, the simple OM is suitable where there is not enough data to use dispatch data analysis to calculate the operating margin and low-cost/must run resources constitute less than 50% of total generation. The table below shows that the weighted average of the electricity generation of the low-cost/must run resources in Bosnia and Herzegovina during the recent five years is about 41% and therefore below 50%: Table 5: Constitution of low-cost/must run resource in Bosnia Herzegovina7

Year 2009 2008 2007 2006 2005 weighted average

(2005-2009) 42.8% 35.0% 33.5% 43.6% 48.0% 40.6%

The emission factor can be calculated using either of the two following data vintages:

• Ex ante option: If the ex ante option is chosen, the emission factor is determined once at the validation stage, thus no monitoring and recalculation of the emissions factor during the crediting period is required. For grid power plants, use a 3-year generation-weighted average, based on the most recent data available at the time of submission of the CDM-PDD to the DOE for validation. For off-grid power plants, use a single calendar year within the 5 most recent calendar years prior to the time of submission of the CDM-PDD for validation.

• Ex post option: If the ex post option is chosen, the emission factor is determined for the year in which the project activity displaces grid electricity, requiring the emissions factor to be updated annually during monitoring. If the data required calculating the emission factor for year y is usually only available later than six months after the end of year y, alternatively the emission factor of the previous year y-1 may be used. If the data is usually only available 18 months after the end of year y, the emission factor of the year preceding the previous year y-2 may be used. The same data vintage (y, y-1 or y-2) should be used throughout all crediting periods.

For the proposed project activity, ex ante data are used for calculating the OM emission factor (EFgrid, OM,y) based on data from the years 2007/2008/2009. STEP 4: Calculate the operating margin emission factor according to the selected method The simple OM emission factor is calculated as the generation-weighted average CO2 emissions per unit net electricity generation (tCO2/MWh) of all generating power plants serving the system, not including low-cost/must-run power plants/units.

7 Source: own calculation based on the Report on Activities of State Electricity Regulatory Commission (SERC) in

2006 to 2010, Link: http://www.derk.ba/en/annualreportofderk/

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 36 The simple OM may be calculated: Option A: Based on the net electricity generation and a CO2 emission factor of each power unit; or Option B: Based on the total net electricity generation of all power plants serving the system and the fuel types and total fuel consumption of the project electricity system. For the calculation, option A was chosen. Under this option, the simple OM emission factor is calculated based on the net electricity generation of each power unit and an emission factor for each power unit, as follows:

(Equation 1)

Where:

EFgrid,OMsimple,y = Simple operating margin CO2 emission factor in year y (tCO2/MWh) EGm,y = Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) EFEL,m,y = CO2 emission factor of power unit m in year y (tCO2/MWh) m = All power units serving the grid in year y except low-cost / must-run power units y = the relevant year as per the data vintage chosen in Step 3

Determination of EFEL,m,y The emission factor of each power unit m should be determined as follows:

• Option A1. If for a power unit m data on fuel consumption and electricity generation is available, the emission factor (EFEL,m,y) should be determined as follows:

(Equation 2)

Where:

EFEL,m,y = CO2 emission factor of power unit m in year y (tCO2/MWh) FCi,m,y = Amount of fossil fuel type i consumed by power unit m in year y (Mass or volume unit) NCVi,y = Net calorific value (energy content) of fossil fuel type i in year y (GJ/mass or volume unit) EFCO2,i,y = CO2 emission factor of fossil fuel type i in year y (tCO2/GJ) EGm,y = Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) m = All power units serving the grid in year y except low-cost/must-run power units i = All fossil fuel types combusted in power unit m in year y y = the relevant year as per the data vintage chosen in Step 3.


• Option A2. If for a power unit m only data on electricity generation and the fuel types used is available, the emission factor should be determined based on the CO2 emission factor of the fuel type used and the efficiency of the power unit, as follows:

(Equation 3)

Where: EFEL,m,y = CO2 emission factor of power unit m in year y (tCO2/MWh) EFCO2,m,i,y = Average CO2 emission factor of fuel type i used in power unit m in year y (tCO2/GJ) ηm,y = Average net energy conversion efficiency of power unit m in year y (ratio) m = All power units serving the grid in year y except low-cost/must-run power units y = the relevant year as per the data vintage chosen in Step 3 Where several fuel types are used in the power unit, use the fuel type with the lowest CO2 emission factor for EFCO2,m,i,y. Option A3. If for a power unit m only data on electricity generation is available, an emission factor of 0 tCO2/MWh can be assumed as a simple and conservative approach. For the proposed project activity Option A2 is chosen because the fuel consumptions of each power plant are not officially available or published. STEP 5: Calculate the build margin (BM) emission factor In terms of vintage of data, one of the following two options can be chosen: Option 1: For the first crediting period, calculate the build margin emission factor ex ante based on the most recent information available on units already built for sample group m at the time of CDM-PDD submission to the DOE for validation. For the second crediting period, the build margin emission factor should be updated based on the most recent information available on units already built at the time of submission of the request for renewal of the crediting period to the DOE. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. This option does not require monitoring the emission factor during the crediting period. Option 2: For the first crediting period, the build margin emission factor shall be updated annually, ex post, including those units built up to the year of registration of the project activity or, if information up to the year of registration is not yet available, including those units built up to the latest year for which information is available. For the second crediting period, the build margin emissions factor shall be calculated ex ante, as described in Option 1 above. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 38 For the proposed project activity, option 1 is chosen to calculate the build margin emission factor. According to the “Tool to calculate the emission for an electricity system” (Version 2.2.1) the sample group of power units m is determined by the following steps a) to f): (a) Identify the set of five power units, excluding power units registered as CDM project activities, that started to supply electricity to the grid most recently (SET5-units) and determine their annual electricity generation (AEGSET-5-units, in MWh); (b) Determine the annual electricity generation of the project electricity system, excluding power units registered as CDM project activities (AEGtotal, in MWh). Identify the set of power units, excluding power units registered as CDM project activities, that started to supply electricity to the grid most recently and that comprise 20% of AEGtotal (if 20% falls on part of the generation of a unit, the generation of that unit is fully included in the calculation) (SET≥20%) and determine their annual electricity generation (AEGSET-

≥20%, in MWh); (c) From SET5-units and SET≥20% select the set of power units that comprises the larger annual electricity generation (SETsample); Some power units of (SETsample) are older than 10 years; therefore: (d) Exclude from (SETsample) the power units which started to supply electricity to the grid more than 10 years ago. Include in that set the power units registered as CDM project activity, starting with power units that started to supply electricity to the grid most recently, until the electricity generation of the new set comprises 20% of the annual electricity generation of the project electricity system (if 20% falls on part of the generation of a unit, the generation of that unit is fully included in the calculation) to the extent is possible. Determine for the resulting set (SETsample-CDM) the annual electricity generation (AEGSET-sample-

CDM, in MWh); If the annual electricity generation of that set is comprises at least 20% of the annual electricity generation of the project electricity system (i.e. AEGSET-sample-CDM ≥ 0.2 × AEGtotal), then use the sample group SETsample-CDM to calculate the build margin. Ignore steps (e) and (f). There are no registered CDM projects in Bosnia and Herzegovina so far, so the set does not yet comprise 20%; therefore: (e) Include in the sample group (SETsample-CDM) the power units that started to supply electricity to the grid more than 10 years ago until the electricity generation of the new set comprises 20% of the annual electricity generation of the project electricity system (if 20% falls on part of the generation of a unit, the generation of that unit is fully included in the calculation); (f) The sample group of power units m used to calculate the build margin is the resulting set (SETsample-

CDM->10yrs) The build margin emissions factor is the generation-weighted average emission factor (tCO2/MWh) of all power units m during the most recent year y for which power generation data is available, calculated as follows:

(Equation 4)

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 39 Where: EFgrid,BM,y = Build margin CO2 emission factor in year y (tCO2/MWh) EGm,y = Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) EFEL,m,y = CO2 emission factor of power unit m in year y (tCO2/MWh) m = Power units included in the build margin y = Most recent historical year for which power generation data is available According to the tool the CO2 emission factor of each power unit m (EFEL,m,y) is determined as per the guidance in Step 4 (a) for the simple OM, using option A2 for y, the most recent historical year for which power generation data is available, and using for m, the power units included in the build margin. For the proposed project y = 2009, the most recent year for which power generation is available. 30 power units are included in the build margin. STEP 6: Calculate the combined margin (CM) emissions factor According to the “Tool to calculate the emission factor for an electricity system” (Version 2.2.1), the combined margin emission factor (EFgrid,CM,y ) is calculated as follows:

(Equation 5)

Where: EFgrid,BM,y = Build margin CO2 emission factor in year y (tCO2/MWh) EFgrid,OM,y = Operating margin CO2 emission factor in year y (tCO2/MWh) wOM = Weighting of operating margin emissions factor (%) wBM = Weighting of build margin emissions factor (%) The weights wOM and wBM by default are 50% for the first crediting period. However, the weighting of general CDM projects is different from wind and solar power generation CDM projects as shown in the following table.

CDM project type WOM WBM

General project 0.50 0.50

Wind and Solar power generation project 0.75 0.25

As the project activity is involves wind power generation project, WOM = 0.75 and WBM = 0.25 is selected. The Combined Margin Factors of Wind and Solar power generation CDM project is calculated accordingly.


B.6.2. Data and parameters that are available at validation: Data / Parameter: EGm,y Data unit: MWh Description: Net energy delivered to the grid by power plant / unit “m” in year “y” Source of data used: Published data of the State Electricity Regulatory Commission (SERC) and the

power operators in Bosnia & Herzegovina. Value applied: See Annex 3 for details. Justification of the choice of data or description of measurement methods and procedures actually applied :

The choice of the data satisfies the guidance in the “Tool to calculate the emission factor for an electricity system”.

Any comment: The data are from the national regulatory commission SERC and the regional power operators. The uncertainty of the data is low.

Data / Parameter: EFCO2,i,y Data unit: tCO2/GJ Description: CO2 emission factor of fossil fuel type i in year y Source of data used: Data of the power operators and 3rd party studies Value applied: See Annex 3 for details Justification of the choice of data or description of measurement methods and procedures actually applied :

The choice of the data satisfies the guidance in the “Tool to calculate the emission factor for an electricity system”. The data is used to calculate the emission of the thermal power plants.

Any comment: -

Data / Parameter: ηm,y Data unit: Description: Average net energy conversion efficiency of power unit m in year y Source of data used: Data of the power operators and 3rd party studies Value applied: See Annex 3 for details Justification of the choice of data or description of measurement methods and procedures actually applied :

The choice of the data satisfies the guidance in the “Tool to calculate the emission factor for an electricity system”. The data is used to calculate the emission of the thermal power plants.

Any comment: - Data / Parameter: EFgrid,CM,y Data unit: tCO2/MWh Description: Combined margin CO2 emission factor for the project electricity system


in year y Source of data used: Calculation – see details in section B.6.1 and Annex 3 Value applied: 0.916 Justification of the choice of data or description of measurement methods and procedures actually applied :

Data of the State Electricity Regulatory Commission (SERC), the power operators in Bosnia & Herzegovina, 3rd parties’ studies and information of the DNAs of the neighboring countries.

Any comment: This value is used for the entire crediting period. B.6.3. Ex-ante calculation of emission reductions:

Quantity of net electricity generation supplied by the project plant/unit to the grid

yfacility,yPJ, EGEG = Energy generation has been analyzed and annual energy generation for WF Mesihovina macrolocation has been estimated, based on the performed research works on Mesihovina location, for multi annual wind speed measurements (period of 16/07/2004 -15/07/2007) using specialized software. There has been also expected energy calculated using WindFarmer programme, based on the data from WasP programme. The following table shows the electricity generation from the 22 turbines. Table 6: Wind speed (V), energy density (E), annual generation (P) WF Mesihovina

Turbine no. Y X H V [m/s] E [W/m2] P [MWh]

1 6,436,601 4,832,528 1027 6,82 449 6,274

2 6,436,785 4,832,271 998 7,12 510 6,140

3 6,437,040 4,832,037 1023 6,70 424 6,181

4 6,437,282 4,831,846 999 6,95 476 6,330

5 6,437,495 4,831,677 1046 6,68 422 6,530

6 6,437,701 4,831,475 1046 7,27 575 4,683

7 6,437,909 4,831,264 1098 6,99 481 5,349

8 6,438,101 4,831,064 1085 7,42 596 5,504

9 6,438,302 4,830,854 1085 7,75 671 5,505

10 6,438,476 4,830,573 1086 7,39 579 6,310


Turbine no. Y X H V [m/s] E [W/m2] P [MWh]

11 6,438,572 4,830,323 1063 7,34 578 5,450

12 6,438,742 4,830,032 1064 7,32 557 5,764

13 6,438,937 4,829,634 1063 7,05 470 6,259

14 6,439,029 4,829,338 1067 6,94 451 6,014

15 6,437,569 4,828,920 1136 6,47 467 6,126

16 6,437,829 4,828,776 1152 6,78 467 6,442

17 6,438,077 4,828,636 1146 6,97 559 6,552

18 6,438,346 4,828,495 1134 7,16 559 5,555

19 6,438,626 4,828,349 1134 7,07 540 5,892

20 6,438,903 4,828,208 1157 6,90 489 5,593

21 6,439,163 4,828,133 1154 6,95 504 5,107

22 6,439,434 4,827,939 1176 7,27 548 4,967

Total 128,527

The total annual energy generation with all losses included is around 128,527 MWh. EGfacility,y (MWh) = 128,527 MWh Baseline emission due to avoided grid electricity (t CO2e)

Year BEy = EGPJ,y (MWh/yr) * EF grid,CM,y

(t CO2/MWh)

2014 117,731 = 128,527 * 0.916

2015 117,731 = 128,527 * 0.916

2016 117,731 = 128,527 * 0.916

2017 117,731 = 128,527 * 0.916


2018 117,731 = 128,527 * 0.916

2019 117,731 = 128,527 * 0.916

2020 117,731 = 128,527 * 0.916

Project emission due to project activities (t CO2e) The project activity will import electricity from the grid only for the usage in the office at the project site. This value will be monitored using electricity meters and during ex-post the metered value will be used for the emission reduction calculation. Fixed grid emission factor as determined in the ex-ante will be used to estimate the project emission during grid electricity consumption in the project period. As of now, the site office has not yet been established. Hence, for the ex-ante calculation, the import of electricity from the grid is assumed to be zero. Hence the project emission for the project activity is zero (ex-ante estimation).

Estimating the leakage: The leakage for the project activity is zero Estimating the emission reduction: For 6 months of the crediting period,

(Equation 6)

B.6.4 Summary of the ex-ante estimation of emission reductions:

Year

Estimation of project activity

emissions (tonnes of CO2e)

Estimation of baseline


Estimation of leakage

(tCO2e)

Estimation of overall emission

reductions (tonnes of CO2e)

2014 0 117,731 0 117,731

2015 0 117,731 0 117,731

2016 0 117,731 0 117,731

2017 0 117,731 0 117,731

2018 0 117,731 0 117,731

ERy = BEy - PEy - LEyERy = 117,731 - 0 - 0

= 117,731


Year

Estimation of project activity


Estimation of baseline


Estimation of leakage

(tCO2e)

Estimation of overall emission

reductions (tonnes of CO2e)

2019 0 117,731 0 117,731

2020 0 117,731 0 117,731

Total 0 824,115 0 824,115

B.7. Application of the monitoring methodology and description of the monitoring plan:

B.7.1 Data and parameters monitored: (Copy this table for each data and parameter)

Data / Parameter: EGfacility,y Data unit: MWh/yr Description: Quantity of net electricity supplied by the project to the grid in year y Source of data to be used:

Calculation from measurements

Value of data applied for the purpose of calculating expected emission reductions in section B.5

128,527

Description of measurement methods and procedures to be applied:

EGfacility,y = EGsupply,y - EGimport,y EGsupply,y and EGimport,y will be measured continuously and will be recorded hourly. The recorded data will be reported on a monthly basis.

QA/QC procedures to be applied:

The value will be cross checked with the records for sold electricity.

Any comment: All measured data will be stored electronically for the duration of the project activity plus two additional years.

Data / Parameter: EGsupply,y Data unit: MWh/yr Description: Quantity of electricity supplied by the project to the grid in year y Source of data to be used:

Data measured and recorded from the electricity meters installed at the point of common coupling; that means in the project boundary


128,527

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 45 Description of measurement methods and procedures to be applied:

Continuously measured by meters installed and will be recorded daily. The recorded data will be reported on a monthly basis.


Meters with accuracy class of 0.2 S (the maximum error is ±0.2%) will be installed at the power plant substation to monitor the electricity exported to the grid. The meters will be properly calibrated according to the national standard. The measurement results will be cross checked with invoices for the sold electricity to the grid. All energy loses within the boundaries of the project, will not be accounted as emission reductions.

Any comment: All data will be stored electronically for the duration of the project activity plus two additional years.

Data / Parameter: EGimport,y Data unit: MWh/yr Description: Quantity of import electricity by the project activity from the grid in year y Source of data to be used:

Data measured and recorded from the electricity meters installed at the power Station


0 (ex-ante)

Description of measurement methods and procedures to be applied:

Continuously measured by meters installed and will be recorded daily. The recorded data will be reported on a monthly basis.


Metres with accuracy class of 0.2 S (the maximum error is ±0.2%) will be installed at the power plant substation to monitor the electricity imported from the grid. The meters will be properly calibrated according to the national standard. The measurement results will be cross checked with invoices for the sold electricity to the grid.

Any comment: All data will be stored electronically for the duration of the project activity plus two additional years.

B.7.2. Description of the monitoring plan:

As established in the methodology, the only variable that needs to be verified and monitored during the crediting period is the total amount of net electricity delivered to the electric grid, since the calculations of the emission factor are performed in a ex-ante basis, it is not necessary to update any other variable during the crediting period. Emission Reductions: Also, the emission reductions of the project will be accounted as the net electricity delivered to the grid, multiplied by the emission factor of the Bosnia and Herzegovina’s Electric Grid. In order to monitor the

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 46 total emission reductions a simplified calculation model will be used, for which following information will be included:

Month : The consecutive month in which the measurement is being taken.

Item : Description of the measurement, e.g. “January Measurement”

Bill No. : The number of the bill issued to the client that covers that measurement.

Net Electricity Generation Sales (GWh)

: Is the total amount of electricity expressed in GWh that is being measured in the meter at the PCC.

EFy exante : Is the emission Factor for the Electric Grid. It is a constant value for the entire project. It will not be updated during fixed crediting period.

ER (CO2) : Is the total amount of Emissions Reductions achieved with the project activity. It is made by multiplying the Net Electricity Sales and the EFy ex-ante. Is expressed in tons of CO2

Difference : In case that there are differences between what is being measured and what is being paid by the clients (verified with the sales receipts), it should be reported here.

Verified by : The name of the person who is reporting the data.

Signature: : The signature or personal ID of the person who is reporting the data.

Comments : Any relevant information about the production, maintenance, etc.

This table will be presented as a summary of all the electricity generated during the lifetime of the project activity and also as a record of all the emission reductions generated by the presence of the wind farm. The installed meters and the calibration frequency will comply with the national requirements. Correctness of monitored data will be assured. B.8. Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies): The baseline calculation and monitoring methodology application was performed by Fichtner GmbH & Co. KG during February 2012, at Stuttgart Germany: Address : Sarweystraße 3, 70191 Stuttgart, Germany Phone : +49 (0)711 89 95 - 0 Fax : +49 (0)711 8995 - 459 Website : www.fichtner.de Email : [email protected]

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 47 SECTION C. Duration of the project activity / crediting period C.1. Duration of the project activity: C.1.1. Starting date of the project activity: The project starting date tentatively is envisaged for the third/fourth quarter of 2012, date in which the disbursement of loan from KfW will be approved C.1.2. Expected operational lifetime of the project activity: The proposed project activity has an estimated lifetime of 20 years. C.2. Choice of the crediting period and related information: C.2.1. Renewable crediting period: C.2.1.1. Starting date of the first crediting period: 01/01/2014 or the date of registration, whichever occurs later C.2.1.2. Length of the first crediting period: 7 years C.2.2. Fixed crediting period: C.2.2.1. Starting date: NA C.2.2.2. Length: NA SECTION D. Environmental impacts D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: According to national legislation requirements, the Environmental Impact Assessment (EIA) and the Public Consultation and Disclosure process form a part of the project licensing procedures in BiH. The EIA is undertaken as a part of the urban permitting procedure, as specified in the Law on Environmental Protection (Official Gazette of FBiH no. 33/03, 38/09), and has two stages: prior EIA and full EIS.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 48 In accordance with the Federal “Rulebook for the industrial plants and installations which require environmental impact assessment and installations which can be built and put in operation only when the environmental license is obtained”, the construction and operation of wind farms above 2 MW or with more than 4 turbines is not classified as an activity of high environmental hazard. It rests with the competent authority (the Federal Ministry of Environment and Tourism), upon examination of the prior EIA, to decide whether a full EIS is necessary. For the project activity, a prior EIA was submitted to the competent authority in March 2009. On 22/07/2009, the competent authority organised a public hearing in Tomislavgrad, where the prior EIA was presented to the concerned public. The records of this hearing are incorporated in the “Decision on issuing the environmental permit”. The prior EIA, enriched with the results of the public hearing and the provisions on monitoring and mitigation endorsed by the competent authority are issued as the full EIA. It was concluded that WF Mesihovina does not have a negative effect on the environment. Subsequently on November 12, 2010 JP EP HZHB obtained the environmental permit for WF Mesihovina with the validity period of 5 years. Impact assessment and mitigation as identified in the EIA are summarised below: Impacts during construction Flora and Fauna No areas of special protection status have been identified in the vicinity of the proposed project development. The proposed project locations are mainly rocky areas with limited vegetation where no endemic species were found. However, the removal of vegetation will be limited and soil surfaces will be reinstated after the completion of works. Any surface receiving vegetation will be replanted with endemic species of the area. With regard to large mammals, the area’s fauna will not be affected during construction as well. Impacts on terrestrial animals relate only to temporary displacement, caused by the presence of workers and machines, as well as by the generation of noise, vibrations and detonations, exhaust gases and dust during civil engineering works. Such impacts are temporary in nature and are reversible, i.e., mammals will revisit the area when construction ends. Geomorphology Limited impacts to the geomorphology of the area are expected during civil engineering works, associated mostly with the construction of the wind turbine foundations, as well with the implementation of improvements of road and electricity network infrastructure. These impacts are limited, as the size of the interventions does not cause alteration of the area’s general geomorphology. The required earthworks will be limited, as current morphology is relatively smooth, and will be concentrated on the necessary interventions to install the turbines in place. The same applies to infrastructure works. Atmospheric Quality Fugitive dust emissions may be generated due to earthworks, in particular, during the site clearance and excavations and due to movement of the machinery at the construction site. Similar impacts will be

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 49 generated during the construction of access roads. During the transportation and installation of the wind turbines, dust emissions will be generated by heavy machinery movement and increased traffic on surrounding roads. Low level atmospheric pollution may also be caused due to exhaust fumes from vehicles moving inside and outside the worksite. In any case, those impacts with local character are of limited duration and have no permanent consequences on the atmospheric quality of the area. Provisions will be made to implement good working practices in order to reduce the dust emissions, i.e., sprinkling of the soil, especially, if earthworks take place during summer period, and by covering the trucks when transferring excavation or construction materials. As far as exhaust fumes are concerned, these will be reduced by the use of well-maintained vehicles and machinery. Additionally, the effective planning of construction works will allow control of the vehicles circulation, resulting in reduction of exhaust fumes. In any case, the impact to atmospheric quality due to the construction works will be temporary and fully reversible once construction ends. Ground and surface water During the wind farm construction, adverse impacts on water bodies may be caused by inadequate management of liquid wastes produced by the personnel working onsite. As surface waters are not present in the area of interest, adverse effects may be caused to groundwater due to uncontrolled discharge of untreated waste water from sanitary facilities or construction processes. More significant issues are related to potential spills of oil, hydraulic fluids, oil derivatives and fuel. The issue requires particular attention due to high permeability of the soils. Such impacts will be minimised by applying good practice measures to the worksite. Especially vehicle maintenance (change of oils, etc.) on the construction site will not be permitted while any oily waste will be collected and managed according to the applicable legislation. Measures will also be taken to ensure that adequate sanitary facilities are provided to the personnel working on site. Landscape Some visual impacts are expected on the landscape during construction phase, due to the development of the worksite. Such impacts will be limited and mostly related to the presence of the machinery and their operation on site. Aesthetic impacts during the construction of the wind farm will be temporary, lasting as long as the construction works and restricted to communities in short distance from settlements. Any change to the landscape due to the construction works, such as excavations, we will be reinstated to the greatest possible extend after construction works are completed. This will include removal of any remaining debris or excavation material and replanting of vegetation. Noise During construction, a relative increase of the current noise levels will take place, due to construction works and vehicles circulation. More specifically, noise will be emitted by the operation of the machinery for earth moving works and for the installation of the wind turbines. Noise will also result during the transportation of the turbine parts on site by trucks.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 50 Noise impacts will generally be temporary in nature and fully reversible once construction ends. In addition, as the closest settlements in the worst case are at least a few hundred metres away, noise at the worksite will not be particularly noticeable. However, measures will be taken to further reduce nuisance from noise: • Heavy vehicle movements will be planned in collaboration with the local traffic police, particularly

with regard to passing through local settlements. • Heavy vehicle movements through schools, hospitals or other sensitive areas will be avoided

altogether. • Noise-generating operations at the worksite will be avoided during rest hours. Infrastructure Positive impacts are expected on the area’s networks. In particular, road and electricity infrastructure will have to be improved to accommodate for the project needs. As described above, parts of the existing road network will be reconstructed to accommodate heavy vehicles. In the same direction, electricity infrastructure in the area will be improved to accommodate the electricity produced from the wind farms. Socio-economic impacts Limited impacts are anticipated during construction due to the change of the land use in the proposed site from forest land to wind energy exploitation. However, since no noticeable use of the land at the proposed site is currently taking place, such impacts are insignificant. From an economic point of view, positive impacts are expected, as new job opportunities will be created during construction. It is likely that local working personnel will be employed to carry out part of the construction works, in particular those that do not require specialisation. This will result in reducing unemployment rates and support the local economy. Impacts during operation Flora and Fauna The operation of the wind turbines has negligible impact to flora and fauna in general, with the exception of bird and bat populations. Once installed, the wind turbines will cause negligible nuisance to vertebrates and large mammals residing in the area, using it as hunting ground or crossing it for migration purposes. Geomorphology No impacts are anticipated on the land’s geomorphology, during the operation of the wind farm. Atmospheric Quality No impacts are anticipated on atmospheric quality, as no air emissions will be generated during the operation of the wind farm.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 51 Ground and surface water No impacts are anticipated on ground or surface waters, as the operation of the wind farm does not result in the production of liquid waste. In case that maintenance of the wind turbines requires the use of lubricants or oils, any oil or oil derivatives waste generated on site, will be appropriately managed and disposed of. Landscape Generally, wind turbines are dominant structures that are visible from a distance due to their size. Wind farms create a “technological” landscape that may not appeal to many people, although this is a highly subjective issue. A detailed analysis of the impacts of the wind farm operation has been provided with respect to visual intrusion and shadow flickering and the way these may affect neighbouring communities. The computer models that have been developed showed that the impacts are negligible. Noise Computer modelling has demonstrated that noise emissions are maintained within the limits set by legislation, while noise actually reaching neighbouring population is at particularly low level, i.e. everyday noise in an office environment. As a result, no particular mitigation measures for noise control are foreseen, other than the selection of modern wind turbine equipment that incorporates the latest technological developments on noise emissions control. Infrastructure The contemporary wind turbines’ blades are made totally from synthetic materials that have minimum impacts on electromagnetic radiation transmission. In addition, electromagnetic wave emissions during operation of wind turbines are particularly weak, confined in small distance around the nacelle and not affecting the surrounding area at all. Socio-economic impacts Significant positive impacts are anticipated from the operation of the proposed wind farm from an economic point of view. These are related to the generation of electricity, the stabilisation of the electricity network and the provision of electricity to more people. The proposed project will increase electricity production, resulting in better response to increasing demand, in reinforcement of economic and technological advance and in general improvement in the quality of life in the area. Impacts during decommissioning No significant environmental impacts are anticipated following the project’s operation seizure, due to its nature and the construction materials used. Decommissioning will require removing the wind turbines from place and processing the waste materials. Waste management will be performed as per applicable legislation. In addition, it should be noted that wind turbines are expected to have a useful life of 20 years, which may be prolonged if they are properly maintained.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 52 Conclusion The location satisfies a range of selection criteria, including environmental, technical and economic ones. The selected location is cited within forest land – although vegetation is limited – away from protected areas or areas of specific ecological interest. The impacts to natural environment from construction and operation of the wind farm are therefore limited. The existing impacts are mainly associated with the effect that the wind farm operation will have on birds and bats population residing in the area or using the area as part of their migration routes. With respect to birds, international experience and scientific references lead to the fact that any potential impacts will be limited. The project owner will undertake to verify that through an impact monitoring and assessment programme which will record, assess and report to the Authorities bird collision incidents. With respect to bats, the lack of baseline information prevents the assessment of the risk. However, the project owner is committed to examine the use of methods to scare bats away from the turbines, as suggested by international literature. Visual impacts, as well as impacts related to shadow flickering and noise emissions have been assessed on the basis of computer models and taking into account the proximity with neighbouring communities and were found to be negligible. D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: No significant impacts are to be absorbed. SECTION E. Stakeholders’ comments E.1. Brief description how comments by local stakeholders have been invited and compiled: The representatives of the EP HZHB consulted various stakeholders for discussing the project. The officials were informed earlier and a mutually convenient venue and time of meeting was fixed. The following is the list of stakeholders met by EP HZHB: • Museum of Bosnia and Herzegovina • WWF Mediterranean Programme • Hunting association Vran Tomislavgrad • Hunting association Jarebica • Hunting association Cincar Livno • Municipality Tomislavgrad • Water Utility Tomislavgrad • Municipality Livno

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 53 The list of persons consulted has been given in the EIA. The summary of the comments received are given in section E.2. Apart from the above, a public hearing was also arranged by EP HZHB, regarding the foreseen construction of Wind Farm Mesihovina, on the day 22/07/2009, in the atrium of Hotel Tomislavgrad in Tomislavgrad. Public dispute was attended by 18 participants. A protocol has been developed on the mentioned public dispute. E.2. Summary of the comments received: The summary of comments received in general from various stakeholders is as follows: • To take care of the various birds population and design accordingly the wind farm. • If the wind farm was located within the hunting grounds • If animal movement will be affected due to wind farm • If water supply to nearby settlements will be affected The participants of the public hearing had no objections on construction of Wind Farm Mesihovina, and their questions referred mostly to the technical aspects of the project. It was suggested however, that in case of discovering an archaeological site, the abolition of construction works should take place immediately, and acquaintance of competent institutions in due initiated. The benefit to the local community is furthermore agreed and documented by the signed Agreement of Mutual Cooperation with the Municipality of Tomislavgrad regulating the right to use land for the wind farm Mesihovina (3rd September 2009). E.3. Report on how due account was taken of any comments received: Following is the report on how due account was taken for the comments received from various stakeholders: Comment 1: Mr. Kotrošan, Curator for vertebrates, ornithologist, National Museum of BiH proposed to use data that are related to birds’ population in these sites from a number of separates from the National Museum of BiH library. How Due account was taken: The National Museum library will be visited and separates related to birds’ population which were registered at the sites proposed for the wind turbine construction will be obtained and will be considered for design and location of wind turbines. Comment 2: Hunting Association, Jerebica, Mostar opinioned that for wind turbines construction it would probably be necessary to construct roads, since area is inaccessible, and by doing that, access for poachers would be easier as well. That would significantly endanger all wildlife at this location. It is necessary to restrict the use of those roads only for the purposes of wind park, and to place signs on the road that are notifying that wild animals could be crossing it. How due account was taken:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM – Executive Board page 54 The selected location is not within the hunting ground. However, as per the above comment, due account will be taken to minimize the access road usage only for the purpose of wind park and appropriate road signs will be provided notifying that the wild animals would be crossing it. Also, the venerable opinion of the ornithologist, Mr. Dražen Kotrošen was taken in consideration. His suggestion, a narrow approach to the impact assessment of Wind Farm upon birds and bats generally, has been considered. Comment 3: If water wells to nearby settlements are located within the wind farm area? How due account was taken: One of the village water wells is located in surrounding the proposed wind farm location. However, that the well is not under wind park zone of influence.


Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: JP “Elektroprivreda Hrvatske Zajednice Herceg Bosne” d.d. Mostar Street/P.O.Box: Ulica Mile Budaka 106a Building: City: Mostar State/Region: Bosnia and Herzegovina/Federation of Bosnia and Herzegovina/ Herzegovina-

Neretvian county Postcode/ZIP: 88 000 Country: Telephone: +387 36 335 724 FAX: +387 36 335 767 E-Mail: [email protected] URL: http://www.ephzhb.ba/ Represented by: Title: PIU Director Salutation: Mr. Last name: Jelčić Middle name: First name: Ivan Department: Project Implementation Unit (PIU) Mobile: +387 63 346 999 Direct FAX: +387 36 335 767 Direct tel: +387 36 335 724 Personal e-mail: [email protected]


Annex 2

INFORMATION REGARDING PUBLIC FUNDING No public funding is involved in the Project Activity.


Annex 3

BASELINE INFORMATION The detailed calculations and input assumptions of the parameter EFgrid, CM according to the “Tool to calculate the emission factor for an electricity system”, Version 2.2.1 are available in a separate excel sheet to the DOE.

Title Mesihovina Wind Farm

Methodology

Capacity 2 MWNo. of units 22 nos

Turbine Annual Electricity Generation (MWh)

1 6,274 2 6,140 3 6,181 4 6,330 5 6,530 6 4,683 7 5,349 8 5,504 9 5,505

10 6,310 11 5,450 12 5,764 13 6,259 14 6,014 15 6,126 16 6,442 17 6,552 18 5,555 19 5,892 20 5,593 21 5,107 22 4,967

Total 128,527 MWh

Electricity Consumption

Project Activity electricity consumption

0 kWh/day

No. of operating days 365 days/year

Annual electricity consumption 0 MWh/year

Grid Emission Factor 0.9160 t CO2/MWh

ACM 0002: "Consolidated baseline methodology for grid-connected electricity generation from renewable sources”, version 12.1.0


Methodology

Formula 6 ‐ ACM 0002, Version 12.1.0, EB 58

Calculation of Baseline Emission

BEy = EGBL,y x EF grid,CM,y

YearBaseline emission for grid

electricity (t CO2/year) =Net electricity generated

by the project (MWh/year)

xCO2 emission factor for displaced electricity (t

CO2/MWh)2014 117,731 = 128,527 X 0.91602015 117,731 = 128,527 X 0.91602016 117,731 = 128,527 X 0.91602017 117,731 = 128,527 X 0.91602018 117,731 = 128,527 X 0.91602019 117,731 = 128,527 X 0.91602020 117,731 = 128,527 X 0.9160Total 824,115 = 899,689 X 0.9160

Average 82,412 89,969


yCM,grid,yPJ,y EFEG BE ⋅=


Methodology


PEFF,y = 0The project activity does not involve combustion of fossil fuel, hence


yHP,yGP,yFF,y PEPEPEPE ++=

PEGP,y = 0

PEHP,y = 0

Emissions due to grid import are calculated as follows:

PEy = EGPE,y x EF grid,CM,y

Project activity does not involve geothermal power plant, hence

Project activity does not involve hydropower plants, hence

Year Project emission (tCO2e/year) =Electricity consumption

in the project (MWh/year)

xCO2 emission factor for displaced electricity (t

CO2/MWh)2014 0 = 0 X 0.91602015 0 = 0 X 0.91602016 0 = 0 X 0.91602017 0 = 0 X 0.91602018 0 = 0 X 0.91602019 0 = 0 X 0.91602020 0 = 0 X 0.9160Total 0 = 0 X 0.9160

Average 0 0


Methodology

Ley = 0

No leakage emissions are considered. The main emissions potentially giving rise to leakage in the context of electric sector projects are emissions arising due to activities such as power plant construction and upstream emissions from fossil fuel use (e.g., extraction,

processing and transport). These emissions sources are neglected.



Methodology

Table of calculation for ER for the 1st crediting period

BEy - PEy = ERy

- =

2014 117,731 - 0 = 117,7312015 117,731 - 0 = 117,7312016 117,731 - 0 = 117,7312017 117,731 - 0 = 117,7312018 117,731 - 0 = 117,7312019 117,731 - 0 = 117,7312020 117,731 - 0 = 117,731Total 824,115 0 = 824,115

82,412


YearBaseline Emission

(tCO2e/year)

Total Project

emission(tCO2e/year)

Estimated emission reduction

(tCO2e/year)



Annex 4

MONITORING INFORMATION Details are furnished in section B.7.2

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