validation and verification manual 2010/30r-validation report.pdf · onecarbon international b.v....

Validation

Report

HIDROMASCA S.A. DE C.V. VALIDATION OF THE CDM PROGRAMME OF ACTIVI-

TIES: MASCA SMALL HYDRO PROGRAMME

REPORT NO. 1261437

25 March 2010

TÜV SÜD Industrie Service GmbH

Carbon Management Service Westendstr. 199 - 80686 Munich – GERMANY

Validation of the CDM Project: ”Masca Small Hydro Programme”

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Report No. Date of first issue Revision No. Date of this revision Certificate No.

1261437 15-02-2010 3 25-03-2010 - Subject: Validation of a CDM Project Accredited TÜV SÜD Unit: TÜV SÜD Industrie Service GmbH Certification Body “climate and energy” Westendstr. 199 80686 Munich Germany

TÜV SÜD Contract Partner: TÜV SÜD Industrie Service GmbH Carbon Management Service Westendstr. 199 80686 Munich Germany

Project Participant (client):

OneCarbon International B.V. Graadt van Roggenweg 328-334, P.O. Box 19127 Building D/ Regus Utrecht 3501 DC / The Netherlands Project Participant: Hidromasca S.A. de C.V. Ave. Circunvalación, Bo. Paz Barahona ACEYCO San Pedro Sula Honduras

Project Site(s):

Municipality of Arizona, Atlantida department, Hondu-ras. South East of Aldea Suyapa de Lean GPS co-ordinates of the on site visit for Matarras I Project (CPA): Latitude: 15.540639 Longitude: -87.388917

Project Title: Masca Small Hydro Programme Applied Methodology / Version: AMS-I.D, Version 13 Scope(s): 1

Technical Area: 1.1 First PoA-DD Version: Date of issuance: 07/11/2008 Version No.: 01 First CPA-DD Version: Date of issuance: 07/11/2008 Version No.: 01 First specific CPA-DD version: Date of issuance: 07/11/2008 Version No.: 01 Starting Date of GSP 16-12-2008

Final PoA-DD version: Date of issuance: 11/03/2010 Version No.: 5 Final CPA-DD version: Date of issuance: 11/03/2010 Version No.: 5 Final specific CPA-DD version: Date of issuance: 10/03/2010 Version No.: 5

Estimated Annual Emission Reduction: 4,395 tCO2e (as shown in specific CPA-DD) Assessment Team Leader: Javier Castro Further Assessment Team Members: Eric Tolcach Lester Saldías

Veto Person CB Reviewer: Thomas Kleiser

Summary of the Validation Opinion:

The review of the project design documentation and the subsequent follow-up interviews have provided TÜV SÜD with sufficient evidence to determine the fulfilment of all stated criteria. In our opinion, the project meets all relevant UNFCCC requirements for the CDM. Hence TÜV SÜD will recommend the project for registration by the CDM Executive Board in case letters of approval of all Parties involved will be available before the expiring date of the applied methodology(ies) or the applied methodology version respectively.

The review of the project design documentation and the subsequent follow-up interviews have not provided TÜV SÜD with sufficient evidence to determine the fulfilment of all stated criteria. Hence TÜV SÜD will not recommend the project for registration by the CDM Executive Board and will in-form the project participants and the CDM Executive Board on this decision.


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Abbreviations

ACM Approved Consolidated Methodology

AM Approved Methodology

AMS Approved Methodology Small scale

BM Build Margin

CAR Corrective Action Request

CDM Clean Development Mechanism

CDM EB CDM Executive Board

CER Certified Emission Reduction

CM Combined Margin

CMP Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol

CR / CL

CPA

CPA-DD

Clarification Request

CDM Programme Activity under PoA

CDM Programme Activity Design Document

DNA Designated National Authority

DOE Designated Operational Entity

EF Emission Factor

EIA / EA

ENEE

Environmental Impact Assessment / Environmental Assessment

National Company of Electric Energy

ER Emission Reduction

FAR Forward Action Request

GHG GreenHouse Gas(es)

IPCC

IRL

Intergovernmental Panel on Climate Change

Information Reference List

IRR Internal Rate of Return

KP Kyoto Protocol

MP Monitoring Plan

NGO Non Governmental Organisation

OM Operational Margin

PDD

PoA

PoA-DD

Project Design Document

Programme of Activities

Programme of Activities Design Document

PP Project Participant


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PPA Power Purchase Agreement

TÜV SÜD TÜV SÜD Industrie Service GmbH

UNFCCC United Nations Framework Convention on Climate Change

VVM Validation and Verification Manual


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Table of Contents Page

1 INTRODUCTION ...................................................................................................... 5

1.1 Objective .................................................................................................................. 5

1.2 Scope ....................................................................................................................... 5

2 METHODOLOGY ..................................................................................................... 7

2.1 Appointment of the Assessment Team ..................................................................... 8

2.2 Review of Documents ............................................................................................... 9

2.3 Follow-up Interviews ................................................................................................. 9

2.4 Further cross-check ................................................................................................ 11

2.5 Resolution of Clarification and Corrective Action Requests ..................................... 11

2.6 Internal Quality Control ........................................................................................... 11

3 SUMMARY ............................................................................................................. 12

3.1 Approval ................................................................................................................. 12

3.2 Participation ............................................................................................................ 12

3.3 Project design document ........................................................................................ 12

3.4 Project description .................................................................................................. 13

3.5 Criteria for Inclusion of CDM Programme Activities ................................................. 14

3.6 Baseline and monitoring methodology .................................................................... 14

3.7 Additionality ............................................................................................................ 17

3.8 Monitoring plan ....................................................................................................... 22

3.9 Sustainable development ........................................................................................ 22

3.10 Local stakeholder consultation ................................................................................ 23

3.11 Environmental impacts ........................................................................................... 23

4 COMMENTS BY PARTIES, STAKEHOLDERS AND NGOS .................................. 24

5 VALIDATION OPINION .......................................................................................... 25

Annex 1: Validation Protocol

Annex 2: Information Reference List


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1 INTRODUCTION

1.1 Objective

The validation objective is an independent assessment by a Third Party (Designated Operational Entity = DOE) of a proposed Programme of Activities against all defined criteria set for the registra-tion under the Clean Development Mechanism (CDM). Validation is part of the CDM project cycle and will finally result in a conclusion by the executing DOE whether a Programme of Activities is valid and should be submitted for registration to the CDM Executive Board (CDM-EB). The ultimate decision on the registration of a proposed Programme of Activities rests at the CDM-EB and the Par-ties involved.

The Programme of Activities discussed by this validation report has been submitted under the pro-ject title:

”Masca Small Hydro Programme” The validation of the programme has also considered the completed CPA-DD for the specific CPA with the title “Matarras I Hydroelectric Project” submitted together with the generic CPA-DD.

1.2 Scope

The scope of any assessment is defined by the underlying legislation, regulation and guidance given by relevant entities or authorities. In the case of CDM project activities the scope is set by:

The Kyoto Protocol, in particular § 12 and modalities and procedures for the CDM

Decision 2/CMP1 and Decision 3/CMP.1 (Marrakech Accords)

Further COP/MOP decisions with reference to the CDM (e.g. decisions 4 – 8/CMP.1)

Decisions and specific guidance by the EB published under http://cdm.unfccc.int

Guidelines for Completing the Project Design Document (CDM-PDD), and the Proposed New Baseline and Monitoring Methodology (CDM-NM)

Baselines and monitoring methodologies (including GHG inventories)

Management systems and auditing methods

Environmental issues relevant to the sectoral scope applied for

Applicable environmental and social impacts and aspects of CDM project activity

Sector specific technologies and their applications

Current technical and operational knowledge of the specific sectoral scope and informa-tion on best practice

The validation is not meant to provide any consulting towards the project participant (PP). However, stated requests for clarifications, corrective actions and/or forwards actions may provide input for improvement of the project design.

Once TÜV SÜD receives a first POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD version, it is made publicly available at the UNFCCC webpage and at TÜV SÜD‟s webpage for starting a 30 day global stakeholder consultation process (GSP). In case of any request a POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD might be revised (under certain conditions the GSP could be

http://cdm.unfccc.int/


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repeated) and the final POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD will form the ba-sis for the final evaluation as presented in this report. Information on the first and the final POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD version is presented in page 2.

The only purpose of a validation is its use during the registration process as part of the CDM project cycle. Hence, TÜV SÜD cannot be held liable by any party for decisions made or not made based on the validation opinion, which will go beyond that purpose.


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2 METHODOLOGY

The project assessment applies standard auditing techniques to assess the correctness of the in-formation provided by the project participants. The assessment is based on the “Clean Development Mechanism Validation and Verification Manual” version 01.1. The work starts with appointment of team covering the technical scope(s), sectoral scope(s) and relevant host country experience for evaluating the CDM project activity. Once the project is made available for the stakeholder consulta-tion process, members of the team carry out the desk review of the POA-DD, generic CPA-DD and Matarras I CPA-DD, follow-up actions, resolution of issues identified and finally preparation of the validation report. The prepared validation report and other supporting documents then undergo an internal quality control by the CB “climate and energy” before submission to the CDM-EB.

In order to ensure transparency, assumptions are clear and explicitly stated; the background mate-rial is clearly referenced. TÜV SÜD developed a methodology-specific protocol customised for the Programme of Activities and respective CPA. The protocol shows, in a transparent manner, criteria (requirements), the discussion of each criterion by the assessment team and the results from vali-dating the identified criteria. The validation protocol serves the following purposes:

It organises, details and clarifies the requirements a CDM project is expected to meet;

It ensures a transparent validation process where the validator will document how a particular re-quirement has been validated and the result of the validation and any adjustment made to the pro-ject design.

The validation protocol consists of three tables. The different columns in these tables are described in the figure below.

The completed validation protocol is enclosed in Annex 1 to this report.

Validation Protocol Table 1: Conformity of Programme of Activities and PDD

Checklist Topic / Question

Reference Comments POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD in GSP

Final PDD

The checklist is organised in sections following the arrangement of the applied POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD version. Each section is then further sub-divided. The lowest level constitutes a checklist question /

Gives reference to documents where the answer to the checklist question or item is found in case the comment refers to documents other than the PDD.

The section is used to elaborate and discuss the checklist question and/or the conformance to the question. It is further used to explain the conclusions reached. In some cases sub-checklist are applied indicating yes/no decisions on the compliance with the stated criterion. Any Request has to be substantiated within this column

Conclusions are presented based on the assessment of the first POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD version. This is either acceptable based on evidence provided (), or a Corrective Action Request (CAR) due to non-compliance with the checklist question (See below). Clarification Request (CR) is used when the validation team has identified a need for further clarification. Forward action request to highlight issues related to project implementation that require

Conclusions are presented in the same manner based on the assessment of the final POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD version and further documents including assumptions presented in the documentation.


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criterion. review during the first verification.

Validation Protocol Table 2: Resolution of Corrective Action and Clarification Requests

Clarifications and cor-rective action requests

Ref. to table 1 Summary of project owner response

Validation team conclusion

If the conclusions from table 1 are either a Corrective Action, a Clarification or a Forward action Request, these should be listed in this section.

Reference to the checklist question number in Table 1 where the issue is explained.

The responses given by the client or other project participants during the communications with the validation team should be summarised in this section.

This section should summarise the discussion on and revision to project documentation together with the validation team’s responses and final conclusions. The conclusions should be reflected in Table 1, under “Final PDD”.

In case of a denial of the Programme of Activities more detailed information on this decision will be presented in table 3.

Validation Protocol Table 3: Unresolved Corrective Action and Clarification Requests

Clarifications and corrective action requests

Id. of CAR/CR 1

Explanation of the Conclusion for Denial

If the final conclusions from table 2 results in a denial the referenced request should be listed in this section.

Identifier of the Request.

This section should present a detail explanation, why the project is finally considered not to be in compliance with a criterion with a clear reference to the requirement which is not complied with.

2.1 Appointment of the Assessment Team

According to the technical scopes and experiences in the sectoral or national business environment TÜV SÜD has composed a project team in accordance with the appointment rules of the TÜV SÜD certification body “climate and energy”. The composition of an assessment team has to be approved by the Certification Body (CB) ensuring that the required skills are covered by the team. The CB TÜV SÜD operates four qualification levels for team members that are assigned by formal appoint-ment rules:

Assessment Team Leader (ATL)

Greenhouse Gas Auditor (GHG-A)

Greenhouse Gas Auditor Trainee (T)

Experts (E)

It is required that the sectoral scope linked to the methodology has to be covered by the assessment team.


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Name Qualification Coverage of technical area

Coverage of sec-toral scope

Host country experience

Javier Castro ATL

Lester Saldías GHG-A

Eric Tolcach GHG-A

Javier Castro is head of the International GHG Training and Knowledge Management “Climate and Energy” at TÜV SÜD Industrie Service GmbH. He has an academic background in chemical engi-neering and energy systems. In his position he participates as project manager the validation, verifi-cation and certifications processes for GHG mitigation projects. He has received extensive training in the CDM and JI validation processes, and participated in many validation and verification CDM projects. Furthermore, he already participated as assessment team leader in other PoA validations and hydro power project activities. He has also experience in on-site audits for validation and verifi-cations of CDM projects in the host country, Honduras. Lester Saldías is an Environmental Engineer working as a Freelance Auditor in Chile. He is an au-ditor for integrated management systems (ISO 9001/ISO 14001/OHSAS 18001). He has received intensive training in the CDM validation process and now is working as GHG auditor on the verifica-tion and validation of several CDM projects on Latin America. Eric Tolcach is biologist and is working as GHG auditor at TÜV SÜD Industrie Service GmbH in Munich offices. He was involved in several CDM projects activities and received extensive training on all aspects of the Validation and Verification Process. Previously, he was working as auditor and consultant in ISO systems and developing environmental, health and safety audits and providing consultancy in merger and acquisition projects.

2.2 Review of Documents

A first version of the POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD was submitted to the DOE in December 2008. The first POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD version submitted by the PP and additional background documents related to the project design and baseline were reviewed to verify the correctness, credibility and interpretation of the presented in-formation, furthermore a cross check between information provided and information from other sources (e.g.: Information of public services, as the environmental Ministry or Public Services Super-intendence webpage, between others ) have been done as initial step of the validation process. A complete list of all documents and proofs reviewed is attached as annex 2 to this report.

2.3 Follow-up Interviews

A 4 days on site audit, starting on February 03rd , 2009 and ending on February 06th, 2009 was car-ried out by TÜV SÜD performing interviews, telephone conferences and physical site inspection with project stakeholders to confirm relevant information and to resolve issues identified in the first document review. The table below provides a list of all persons interviewed in this context.

Name Organisation/Title (When Available)

Ole Meier Hann OneCarbon Consultant Gabriel Villars ECAE Personnel


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Adolfo Pagoada Municipality Consultant Juan Padilla Local Resident Edward Aguilar Local Church‟s Participant

Leticia Raning Board of Trustee´s Secretary

Magdalena B. Star Surmounting Foundation

Mercedes Martinez Star Surmounting Foundation

Martino Maldonado Star Surmounting Foundation

Daisi Padilla Star Surmounting Foundation

John Cerda Board Chief Efrain Argueto Star Surmounting Foundation

Andres Morales Board Participant Antun Lusela Board of Trustee´s Participant José Enrique Local Resident Roberto Pacheco Local Resident Marco Bonilla Local Resident Marco Sambrano Local Resident Leonardo Rodriguez Local Board‟s secretary

Oralio Bonilla Board of Trustee´s Participant Melida Naldonado Local Board President Antonio Henriquez Local Resident. Saturnino Movoli Local Board N02 President Alcides Boanergeleon CEB director Emma Moreno Star Surmounting Foundation

Hernan Euceda Local Resident Nardas Recinos Teacher Rafael Garcia Water Board President Jorge Humbert Local Resident José Arita Municipality‟s Regent

Ruben Martinez Local Resident Antonio Arita Municipality‟s Treasurer

Francisco Arita Local Resident Julio Garcia Regent Victor Romero Local Resident Ernesto Lora Local Resident Regino Reyes Board of Trustee´s Participant Alfonso Arita Trader Pedro R. Local Residents Committee Samuel Valle Local Resident


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Daniel Escalante Local Resident Geovanni Cruz General Manager E.C.A.E. Alejandra Lopez Business Administrative Banpais

Ramon Fuentes Business Manager Banpais

Jorge Moraza Chief in Renewable Projects ENEE

Xiomara Pinto AHPPER Director Valerio Gutierrez Environmental Sub-Minister Mirza Castro PNCC Coordinator Olga Aleman CDM Energy Unit Eduardo Membreno OC Representant

2.4 Further cross-check

During the validation process, the team makes reference to available information related to similar projects or technologies as the CDM project activity. The documentation has also been reviewed against the approved methodology applied to confirm the appropriateness of formulae and correct-ness of calculations.

2.5 Resolution of Clarification and Corrective Action Requests

The objective of this phase of the validation is to resolve the requests for corrective actions and clarifications and any other outstanding issues which needed to be clarified for TÜV SÜD`s conclu-sion on the project design. The CARs and CRs raised by TÜV SÜD were resolved during communi-cation between the client and TÜV SÜD. To guarantee the transparency of the validation process, the concerns raised and responses that have been given are documented in more detail in the vali-dation protocol in annex 1.

The final POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD version that was submitted in March 2010 serves as the basis for the final assessment presented herewith. Changes are not con-sidered to be significant with respect to the qualification of the project as a CDM project based on the two main objectives of the CDM, i.e. to achieve a reduction of anthropogenic GHG emissions and to contribute to a sustainable development.

2.6 Internal Quality Control

As final step of a validation the final documentation including the validation report and the protocol have to undergo an internal quality control by the CB “climate and energy”, i.e. each report has to be finally approved either by the head of the CB or the deputy. In case one of these two persons is part of the assessment team approval can only be given by the other one.

After confirmation of the PP the validation opinion and relevant documents are submitted to the EB through the UNFCCC web-platform.


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3 SUMMARY

The assessment work and the main results are described below in accordance with the VVM report-ing requirements. The reference documents indicated in this section and Annex 1 are stated in An-nex 2.

3.1 Approval

The project participants are Hidromasca S.A. de C.V., and Onecarbon International B.V.. Hidromas-ca is placed in Honduras. The host Party (Honduras) meet the requirements to participate in the CDM.

The DNA of Honduras has issued a LoA (IRL 12) on June 22nd, 2009 authorizing Hidromasca S.A. de C.V. as a project participant.

Also, The DNA of Netherland has issued a LoA (IRL 13) on June 09nd, 2009 authorizing Onecarbon International B.V. as a project participant. OneCarbon International VB.V. is a registered company in the Netherlands, supported by an extract of the Dutch Chamber of Commerce. TÜV SÜD received these letters from the project participants directly and considers the provided letters as authentic. The same was validated crosschecking the letter with other approvals issued by the honduran DNA and with the information presented on the DNA‟s webpage: http://www.serna.gob.hn/MDL.htm.

Furthermore, after checking the provided LoA‟s, TÜV SÜD confirms that both letters refer to the pre-cise proposed CDM Programme of Activities title in line with the title in the POA-DD, generic CPA-DD and Matarras I CPA-DD “Masca Small Hydro Programme”.

Also, the letters of approval indicate that the participating Party is a Party to the Kyoto Protocol, and that the participation in the Masca Small Hydro Programme is voluntary. The Honduran LoA also confirms that the proposed CDM Programme of Activities contributes to the sustainable develop-ment of Honduras (host country). Based on the information given in these letters, TÜV SÜD consid-ers the approval as unconditional with respect to these items.

Both LoA‟s have been issued by the respective Party‟s DNA, Secretaría de Recursos Naturales (SERNA) 100 Mts. al Sur del Estadio Nacional, Tegucigalpa,Honduras. C.A. and Ministry of Housing, Spatial Planning and the Environment, P. O. Box 30945, Internal Postal Code 670, 2500 GX The Hague, The Netherlands. TÜV SÜD considers the requirements of the VVM (§§ 45-48) to be complied with.

It is necessary to note that both related LoA do not specify a version number of the POA-DD, ge-neric CPA-DD or MATARRAS I CPA-DD or validation report.

3.2 Participation

The participants of the Programme of Activities have been approved by the corresponding Parties, which is confirmed by the issued LoAs.

The means of validation were equivalent to those described in section 3.1 in regard to the approval process of the project activity.

3.3 Project design document

The POA-DD, generic CPA-DD and Matarras I CPA-DD are compliant with relevant form and guid-ance as provided by UNFCCC.

The most recent version of the POA-DD, generic CPA-DD and Matarras I CPA-DD form was used.


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TÜV SÜD considers that the guidelines for the completion of the POA-DD, generic CPA-DD AND Matarras I CPA-DD in their most recent version have been followed. Relevant information has pro-vided by the participants in the applying POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD sections. Completeness was assessed through the checklist included to Annex 1 of this report.

3.4 Project description

The following description of the project as per POA-DD, generic CPA-DD and Matarras I CPA-DD could be verified during the on-site audit: The Masca Small Hydro Programme has as objective the developing of a series of small hydroelec-tric projects in Honduras. Through the coordinating entity Hidromasca a group of Honduran entre-preneurs joined forces to carry on the development and implementation of marginal hydro projects with the objective to contribute to the promotion of renewable energies in Honduras in general and to a decentralization of its generation park. United in a larger entity under the Programme, small hy-dro developers anticipate the advantages in jointly overcoming the hurdles and uncertainties faced by small renewable project developers in Honduras. The programme and its coordinating entity thereby aim to contribute to the reduction of the country‟s heavy dependence on fossil fuels to gen-erate electricity. The objective of the Masca Small Hydro Programme is to develop a platform for overcoming institu-tional, financial and structural hurdles for the construction of a series of small hydro projects in Hon-duras. Additionaly, the following description of the specif Matarras I CPA-DD was verified: Matarras I is a small run-of-river hydro power plant with an installed capacity of 1.15 MW connecting to the national Honduran electricity grid. The Matarras I Hydroelectric Project uses water from the river Matarras in order to generate electric-ity. Pelton Turbines will be used in order to provide the generated electricty of 1,15 MW to the na-tional grid. The PoA has an expected operational lifetime 28 years and each CPA will have a renewable credit-ing period of 7 years. This was validated during the onsite audit through interviews with stakeholders, and relevant personnel, besides the feasibility study presented and technical proposal of the main provider. The information presented in the POA-DD, generic CPA-DD and Matarras I CPA-DD on the techni-cal design is consistent with the actual planning and implementation of the Programme of Activities as confirmed by:

review of data and information (see annex 2), cross check the same with other sources if available (e.g.: Information of public services, as webpage of National Centre of Energy, Na-tional Company of electric energy (ENEE), or information provided by the National Secretary of Natural Resources and Environment (SERNAE), between others ).

An on-site visit has been performed and relevant stakeholder and personnel with knowledge of the project were interviewed.

Finally information related to similar projects or technologies as the CDM Programme of Ac-tivities have been used (based on information from UNFCCC website) to confirm the accu-racy and completeness of the project description.

In light of the above, TÜV SÜD confirms that the project description as included to the POA-DD, ge-neric CPA-DD and Matarras I CPA-DD is sufficiently accurate and complete in order to comply with the requirements of the CDM.


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3.5 Criteria for Inclusion of CDM Programme Activities The PoA-DD established clear eligibility criteria for inclusion of each CPA under the PoA, requiring for each CPA the fulfilment of the following characteristics:

Be a run-of-river hydro power plant, as characterised by the World Commission of Dams 2000:“Dams that create a hydraulic head in the river to divert some portion of the river flows. They have no storage reservoir or limited daily poundage.”

The plant shall be a newly built plant and must not involve retrofitting or modifying of an exist-ing facility for renewable energy generation. A CPA may though involve the addition of re-newable energy generation units at an existing renewable power generation facility, the added capacity of the units added by the project should be lower than 15 MW and should be physically distinct from the existing units.

No energy generating equipment is transferred from another activity and no existing equip-ment is transferred to another activity.

Have an installed capacity of ≤ 15MW, Connection to the national Honduran electricity grid. Contractually cede its rights to claim and own emission reductions under the Clean Devel-

opment Mechanism of the UNFCCC to the coordinating entity of the present PoA. The CPA implementer must not have seriously considered grid connected electricity genera-

tion with a different technology as an alternative to the project. This shall be supported by a written statement of the respective CPA implementer.

It is important to notice that all the permits and licences should be presented by the PP in order to validate a project; in any case where not all of them would be available at the time of validation, Forward Action Request (see Annex 1) is included in order to review this criterion in the Verification Process. TÜV-SÜD considers that each applicability criteria was included in a conservative way and can be implemented without any further conditions.

3.6 Baseline and monitoring methodology

3.6.1 Applicability of the selected methodology

Compliance with each applicability condition as listed in the chosen baseline and monitoring metho-dology AMS-I.D Version 13 has been demonstrated. The assessment was carried out for each applicability criteria and included among others the com-pliance check of the local project setting with the applicability conditions in regard to baseline setting and eligible project measures. The project activity is a small hydroelectric power plant, wich will supply electricity to the national grid. This assessment also included the review of secondary sources which sustain that applicability conditions are complied with. The Methodology specific protocol included to the Annex 1 documents the assessment process, in-cluding the steps taken. The results on the compliance check as well as the relevant evidence are explicitly presented in annex 1. TÜV SÜD confirms that the chosen baseline and monitoring methodology is applicable to the project activity. Emission sources which are not addressed by the applied methodology and which are expected to contribute more than 1% of the overall expected average annual emissions reduction have not been identified.


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3.6.2 Project boundary

The project boundary was assessed in the context of physical site inspection, interviews and based on the secondary evidence received on the design of the project. The boundary of the programme, in accordance with the selected methodology, corresponds to the complete Honduran territory considering the national grid. This is also considered on the elegibility criteria of the Programme of activities, and should be a characteristic of any CPA entering to this Programme of Activities. The most relevant documentation assessed in order to confirm the project boundary are following:

“Feasibility study for Matarras I Hydroelectric Project” (CPA real case).(IRL 08) Water Contract for Matarras I Project Decree 187-2006 by the senate (IRL 25) Contract between Esteban Portillo and ECAE regarding the selling of the land for the

Matarras I Hydroelectric Project. (IRL 27) The same have been validated during the validation process using standard audit techniques, furhter details of any observation are transparently presented in the annex 1. Hence TÜV SÜD confirms that the identified boundary and the selected sources and gases as do-cumented in the POA-DD, generic CPA-DD and Matarras I CPA-DD are justified for the project ac-tivity.

3.6.3 Baseline identification

In the POA-DD, generic CPA-DD And Matarras I CPA-DD the following baseline scenario has been defined:

The business-as-usual scenario set by the Honduran government is the continuance of the current practice of grid electricity generation, with a large portion of fossil fuel based on thermoelectric plants producing greenhouse gases. During the on-site visit to the Matarras I sector it was verified that within the site no equipment was installed for electricity generation. The access to the project site nowadays is really difficult, as the improvement of the road and the final entrance are not constructed yet. As no project is already constructed on the site (confirmed with UTM coordinates), it can be confirmed that when the project will be implemented it will replace energy of the existing grid that otherwise will be generated by a mix of other sources (fossil fuel) power plants. The information presented in the POA-DD, generic CPA-DD And Matarras I CPA-DD has been vali-dated by at least three different stages: first document review of all the data, further confirmation based on the on-site visit, in which personnel from ENEE (Empresa Nacional de Energía Eléctrica, national grid company) was interviewed and a final step by cross checking the information with simi-lar relevant projects and/or technologies. The sources referenced in the POA-DD, GENERIC CPA-DD AND MATARRAS I CPA-DD have been quoted correctly. The information was cross-checked based on verifiable and credible sources, such as:

“El Heraldo” Newspaper, updated 19-02-2009, entitled “Government privileges carbon based companies” (IRL 74)

Decree No. 267-98 (IRL 73) Executive Decree N°70 (IRL 09)

Problemática de la energía eléctrica: impacto fiscal y de mercado en Honduras, Resumen Ejecutivo, FIDE, Tegucigalpa, septiembre de 2005. (The problems of electrical energy: fiscal impact and effects on the Honduran market, Executive Summary, FIDE, Tegucigalpa, Sep-tember 2005) (IRL 72)


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TÜV SÜD has determined that no reasonable alternative scenario has been excluded. Based on the validated assumptions on calculations TÜV SÜD considers that the identified baseline scenario is reasonable. TÜV SÜD confirms that all relevant CDM requirements, including relevant and sectoral policies and circumstances, have been identified correctly taken into account in the definition of the baseline scenario. A verifiable description of the baseline scenario has been included to the PDD. In regard to item 86 of VVM, TÜV SÜD confirms that:

1. All the assumptions and data used by the project participants are listed in the PDD, including their references and sources;

2. All documentation used is relevant for establishing the baseline scenario and correctly quoted and interpreted in the PDD;

3. Assumptions and data used in the identification of the baseline scenario are justified appro-priately, supported by evidence and can be deemed reasonable;

4. Relevant national and sectoral policies and circumstances are considered and listed in the PDD;

5. The approved baseline methodology has been correctly applied to identify the most rea-sonable baseline scenario and the identified baseline scenario reasonably represents what would occur in the absence of the proposed CDM project activity.

3.6.4 Algorithm and/or formulae used to determine emission reductions

3.6.4.1 Baseline Emissions

TÜV SÜD has assessed the calculations of project emissions, baseline emissions and leakage and emission reductions. Corresponding calculations were carried out based on calculation spread-sheets. The parameters and equations presented in the POA-DD, generic CPA-DD and Matarras I CPA-DD and further documentation have been compared with the information and requirements presented in the methodology and respective tools.

The equation comparison has been made explicitly following all the formulae presented in the calcu-lation files. According to methodology AMS-I.D, Version 13, the baseline is the MWh produced by the renewable generating unit multiplied by an emission factor (measured in tonnes CO2/MWh) calculated in a transparent and conservative manner as a combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM), according to the procedures prescribed in the „Tool to calculate the emission factor for an electricity system‟ Version 01.1, as approved in EB 35. It is important to notice that the Build and the Operating Margin were calculated using the ex-ante option, so no ex- post update will be necesary during the crediting period. The EF will be updated for the second cerditing period. The EF of each CPA will depend on the time of inclusion Also, the Operating Margin was calculated using the Simple Method, as less than 50% of the electricity generated in the grid is considered to be renewable energy (See table 1 and IRL 42). The assumptions and data used to determine the emission reductions are listed in the POA-DD, ge-neric CPA-DD, and on a specific way on the MATARRAS I CPA-DD and all the sources have been checked and confirmed.


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Based on the information reviewed it can be confirmed that the sources used are correctly quoted and interpreted in the PDD. The value presented in the POA-DD for emission factor (0.6293 tCO2/MWh) calculated with the lat-est information available at the time of start of validation,is considered to be reasonable based on the documentation and calculations reviewed, submitted directly from the electric authority in Hondu-ras (ENEE), further references and the result of the interviews undertaken during the validation process. The baseline methodology has been correctly applied following its requirements. The estimation of the baseline emissions can be confirmed as the same has been replicated by the validation audit team using the information provided. Detailed information on the verification of the parameters used in the equations can be found in An-nex 1 of this report.

3.6.5 Project emissions

For most renewable energy project activities, including run-of-river hydro, project emissions are considered to be zero; PEy = 0. The project emissions were considered neglictible based on a thorough review of the feasibility study and related documents, where no project emissions are associated to the project activity.

3.6.6 Leakage

No leakage has been considered for emission reduction calculations as the equipment bought will be new. This is a criteria for eligibility of the CPA‟s, so it can be assured that no leakage will be pro-duced due to the PoA.

3.6.7 Emission Reductions

Considering all observations made above, the calculation of the baseline emissions; project emis-sions and the emission reductions (i.e.: ERy = BEy – PEy), respectively, can be considered as cor-rect.

3.7 Additionality The additionality of the project has been presented on a CPA level. The project participant decided to use the additionality tool in order to prove this. The POA-DD specified clearly that in order to demonstrate additionality the CPA should chose between Barrier analysis or investment analysis or both, according to the “Tool for the demonstration and assessment of additionality” versión 05.2. The approach used in the POA-DD and the CPA-D, has been assessed first based on a document review, where following relevant documents have been reviewed:

http://cdm.unfccc.int/Projects/projsearch.html (search of small scale projects on Honduras).

Executive Decree N°70 (IRL 09) Problemática de la energía eléctrica: impacto fiscal y de mercado en Honduras, Resumen

Ejecutivo, FIDE, Tegucigalpa, septiembre de 2005. (The problems of electrical energy: fiscal impact and effects on the Honduran market, Executive Summary, FIDE, Tegucigalpa, Sep-tember 2005) (IRL 72)

“El Heraldo” Newspaper clip where the changes in the electric tariff can be noticed. (IRL 79)

http://cdm.unfccc.int/Projects/projsearch.html


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On site the additionality has been discussed principally with Ole Meier Hann (One Carbon Consul-tant), Geovanni Cruz, (General Manager E.C.A.E.) and Ramon Fuentes (Business Manager Ban-pais). Furthermore some documents have been reviewed on-site (for details see annex 2).

Finally the data, rationales, assumptions, justifications and documentation provided have been checked using local knowledge and sectoral and financial expertise, the same has been cross checked by:

Official links to the documents provided regarding the statistics presented by the ENEE (IRL 23, 75, 76, 77 and 78)

Feasibility study for “Matarras I Hydroelectric Project”. (IRL 08)

Based on this validation steps we can confirm that the documentation assessed is appropriate for this project.

3.7.1 Prior consideration of the clean development mechanism

The starting date of the Programme of Activities is determined by the date of the sign of the contract between the consultant and the PP in order to carry on a CDM process (IRL 93). This is considered as the first real action of project implementation. In order to confirm the prior consideration of CDM the second director‟s meeting was submitted to the audit team and on this document it can be clear-ly demonstrated that the CDM alternative was considered.

The starting date of the CPA is determined by the purchase contract turbine, which was asked to Gugler Water Turbines GmbH (IRL 94). This is considered as the first real action of project imple-mentation.

The starting date of the PoA has been determined to be 20/02/2008, the second directors meeting document demostrated the CDM considreation at this point, therefore the project complies with the requirements. Additionally, a notification to the DNA was submitted on 26/11/2008 (IRL 70).The starting date of the CPA presented has been determined to be 16/03/2010 which is after 02 August 2008, and also after the GSP, therefore the project complies with the requirements.

Additionally in order to confirm that the PPs have taken real actions to continue the POA as CDM, following timeline has been reviewed against the respective documents presented in the table be-low:

Activity/Document Date Auditor conclusion

Second director‟s meeting of Hidroeléctrica Peña Blanca S.A. de C.V., ECAE S.A. de C.V. and Hidromasca S.A. de C.V.

15-01-2006 Document checked and consis-tent (IRL 63).

Hidromasca officially requests a PPA with ENEE for Masca project

27-09-2006 Document checked and consis-tent (IRL 49).

Matarras Operation Contract 25-01-2007 Ok, consistent with the time line (IRL 87).

Water Contract for Matarras I 01/03/2007 OK, consistent with the timeline.(IRL 25)


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Project Decree 187-2006

Contract for commercialization of Carbon credits contract be-tween One Carbon B.V. and Hidromasca S.A. de C.V.

20-02-2008 Consistent with the time line (IRL 64).

GSP for the project 16-12-2008 Consistent with timeline.

Contract No. 043-2007 be-tween Hidromasca and ENEE for electric energy selling.

09-02-2009 Consistent with the time line. (IRL 20)

Purchase contract of the Matar-ras I turbine.

16-03-2010 Starting date of the CPA. (IRL 94)

Beside those documents, several other documents were provided and evidenced. Section B5 of the PDD presents a detailed information.

The Peña Blanca project is the earliest CPA that seeks to be part of the programm (starting date is March 2008). A notification referring to this CPA has been presented to the UNFCCC Secretariat on January 27, 2010 (IRL97). The inclusion will take place once the PoA is registered.

3.7.2 Investment analysis

The CPA used the investment analysis in order to provide the assessment to demonstrate addition-ality. It is important to notice that for future CPA‟s, the PP should chose between this alternative and the Barrier Analysis (or both). Since the only alternative to the implementation of the CPA Matarras I Hydroelectric Project under this PoA is their implementation without CDM revenues, an investment comparison analysis is not appropriate. Hence the PP chose Option III benchmark analysis. The benchmark was calculated based on the Capital Asset Pricing Model (CAPM), which deter-mines the expected return on equity of the investement. On the PoA-DD it is clearly established that PP‟s can choose between two approaches: the standard CAPM, on which the equity risk premium is found through the difference between the return on the applicable market return and the risk free rate, and the second approach considering the base premium and the country equity risk premium. During the CPA validation of investment analysis, both approaches were calculated, showing that the approach base premium plus country equity risk premium is the most conservative one. The formula implemented was contrasted with the source Equity Risk Premiums (ERP): Determinants, Estimation and Implications - A post-crisis Update, (IRL 7) in order to corroborate its credibility. Each parameter of the formulae presented (i.e.: Risk free Rate, ß, ERP and CRP) was crosschecked with their respective source, which can be seen on sub-step 2.b table 3 of the CPA-DD. As each value has a valid link in order to cross-check the source, the information is considered credible and reli-able, and the defined benchmarks applicable for the programme. Additionally in order to cross check the correctness of the 2 approaches, the audit team check several already registered projects in Honduras. If the approach used in the registered project (1066) would be used for this project the benchmark would be around 34% in Lempiras (Honduras currency: http://www.bch.hn/esteco/monetaria/tasamax.pdf) if we discount the country risk in order to take in account the currency risk the benchmark using this approach would be around 23% which is still higher than the one used in the CPA. Hence the benchmark use is considered conservative.

All the studies and regulations were checked carefully and found correct. All the variables were con-firmed through physical evidence (Feasibility Report and official documentation and valid links).


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Further assumptions presented in the financial analysis have been also reviewed and were found appropriate based on:

The Total investment of the project, equity value, installed capacity, yearly electricity genera-tion, Yearly O&M costs, loan payback and interest rates, and the project lifetime used were contrasted with the ““Feasibility study for Matarras I Hydroelectric Project”.”(IRL 8.). Specific sections within these values can be found on table 4 of the CPA-DD.

The Electricity Tariff was obtained from the PPA signed between ENEE (National energy au-thority) and ECAE S.A. de C.V. This is a legal document approved by the national authority and the value ($0,1007 USD/KWh) can be considered real,

Damodaran 2008: Equity Risk Premiums (ERP): Determinants, Estimation and Implications: http://www.stern.nyu.edu/~adamodar/pdfiles/ papers/ERPfull.pdf ( IRL 7).

The VAT was extracted from an study form the World Bank organization and the international finance corporation which is publicly available on http://www.doingbusiness.org/ExploreTopics/PayingTaxes/. Please note that Honduras should be selected in the economy list in order to view the detailed info.

The Plant load factor was calculated based on the information provided in the “Feasibility study for Matarras I Hydroelectric Project”( IRL 8.).

The financial calculation has been completely checked, all the calculation files were checked and no mistakes have been found. Hence it can be confirmed that the calculations are correct.

3.7.3 Barrier analysis

As explained in section 3.6, the project participants have used the barrier analysis in order to strengthen the additionality analysis of the Programme of Activities in their PoA-DD. It‟s important to notice that as per paragraph 73 of the 47th EB meeting report additionality should be demonstrated either at the PoA level or at CPA level. Hence, project participants chose to demonstrate the addi-tionality at a CPA level. Nevertheless, in order to strengthen the discussion, PP chose to also com-ment additionality considering barriers. In order to be consequent with the analysis presented in the PDD, those barriers will also be discussed here. The presented barriers are:

1. Institutional Barriers

2. Market Barriers

The assessment team checked first if the barrier has a clear impact on the financial returns which can be expressed with reasonable certainty in monetary terms. None of them are related to financial terms.

The Institutional barrier has been assessed against information such as:

HONDURAS Power Sector Issues and Options for the Energy Sector. World Bank July 2007. (IRL 19)

Problemática de la energía eléctrica: impacto fiscal y de mercado en Honduras, Resumen Ejecutivo, FIDE, Tegucigalpa, septiembre de 2005. (The problems of electrical energy: fiscal impact and effects on the Honduran market, Executive Summary, FIDE, Tegucigalpa, Sep-tember 2005) (IRL 72).

http://cdm.unfccc.int/Projects/projsearch.html (search of small scale projects on Honduras, as is discussed that the small scale projects in Honduras are under validation ar already vali-dated as CDM process).

The supplement to the Ley Marco del Sub-Sector Eléctrico on the new tariffs of ENEE (IRL 80).

http://www.doingbusiness.org/ExploreTopics/PayingTaxes/

http://cdm.unfccc.int/Projects/projsearch.html


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The result of this assessment shows clearly that the barrier presented in the POA-DD can be con-sidered real.

This barrier does prevent the Programme of Activities and would not prevent at least the baseline of the project; this can be confirmed based on the documentation review, interviews and local and sec-toral expertise of the assessment team. As explained in section 3.6, the documentation reviewed (with online links that validate their originality) permits to conclude this statement.

The Market Barriers have been assessed against information such as:

The PPA‟s and contracts of all the projects mentioned on section A.4.3 table 3 (IRL 33,35, 39, 40, 41, 65, 66, 67,68 )

The report of the accounting superior court regarding the direct contract of 250 MW of elec-tric energy (IRL 81)

“Feasibility study for Matarras I Hydroelectric Project”. (IRL 08)

The result of this assessment shows clearly that the barrier presented in the POA-DD can be con-sidered real.

This barrier does prevent the Programme of Activities and would not prevent at least the baseline of the project; this can be confirmed based on the documentation review, interviews and local and sec-torial expertise of the assessment team. As explained in section 3.6, the documentation reviewed (with online links that validate their originality) permits to conclude this statement.

Taken into account the description of the validation of the barrier presented above, the assessment team can confirm with reasonable certainty that the barrier and credible and correctly presented to demonstrate the additionality of the project.

3.7.4 Common practice analysis

The region for the common practice analysis has been defined as the country of Honduras and the Honduran grid. The project activity´s technology can be found in different countries, where different situations can appear. As a result, the region is defined by taking into account similar technologies as well as similar industry types. The assessment team has reviewed the approach presented in the PDD and can confirm that rele-vant parameters such as location, infrastructure, economical situation, and development have been taken into account in order to define the region to be used for the common practice. The situation in Honduras is applicable for all the projects in the boundary of the PoA. Therefore, the presented re-gion can be considered appropriate for the common practice analysis.

The assessment team has reviewed official sources such as the website of the UNFCCC in order to confirm all the sources presented:

La Esperanza Project: http://cdm.unfccc.int/Projects/DB/DNV- CUK1098894708.4/view

Cuyamapa Project: http://cdm.unfccc.int/Projects/DB/DNV-CUK1110827392.89/view

Cuyamel Project: http://cdm.unfccc.int/Projects/DB/DNV-CUK1129732575.13/view

La Gloria Project: http://cdm.unfccc.int/Projects/DB/DNV- CUK1133535155.06/view

Cortecito and San Carlos Project: http://cdm.unfccc.int/Projects/DB/DNV-CUK1114669200.15/view

Cececapa Project: http://cdm.unfccc.int/Projects/DB/DNV- CUK1134654191.67/view

Yojoa project: http://cdm.unfccc.int/Projects/DB/DNV-CUK1134654439.91/view

http://cdm.unfccc.int/Projects/DB/DNV-CUK1110827392.89/view





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Zacapa Project: http://cdm.unfccc.int/Projects/DB/DNV-CUK1136564669.08/view

This information confirms that the list of similar projects presented in the PDD is complete. Addition-ally, the team further verified the information based on interviews.

All similar projects, which are not CDM projects, have been checked through reviewing all available documentation (See annex 2). Furthermore, the essential distinctions between these projects and the CDM project in question have been confirmed using the PDD‟s of each project named on the common practice analysis, and listed with their directions above.

Therefore, it can be confirmed that the proposed CDM activity is not a common practice in the de-fined region.

3.7.5 Identifications of alternatives

The output of the project is the Generation of Electricity.

As it was explained on section 3.6, the PP‟s decided to apply the Financial and/or

Barrier Analysis as described in the additionality tool. Using official documents (see section 3.6.2), the PP demonstrated that the prevailing practice on Honduras is the use of fossil fuels and that the project have to face important and critical barriers in order to be implemented. The few projects that comprises small scale hydro projects are under CDM processes but are not part of the Masca PoA.

3.8 Monitoring plan The monitoring plan presented in the POA-DD, generic CPA-DD and Matarras I CPA-DD complies with the requirement of the methodology. The assessment team has checked all the parameters presented in the monitoring plan against the requirements of the methodology; no deviations rele-vant for the Programme of Activities have been found in the plan. The procedures have been revised by the assessment team through document review and inter-views with the relevant personnel; this information together with a physical inspection allows the as-sessment team to confirm that the proposed monitoring plan is feasible within the project design. The main parameter to be monitored has been discussed with the PPs especially regarding the lo-cation of the meters, the data management and in general the quality assurance and quality control procedures to be implemented in the context of the project. In order to do so, monitoring of the elec-tricity generation will be performed through an Electricity meter installed in line. Calibration will be performed following manufacturer‟s specifications, but at least every 3 years as required by the lat-est small scale guidance applicable at the time of finalization of this report. All the instruments in-volved in monitoring will send the information to a data logger device that will be communicated with a server that will receive all the information. The documented monitoring data would be saved at the end of each month; and a regular summary would be made and reported to the appointed supervising official periodically. All the data would be saved for at least 2 years after the end of the crediting period. Hence it is expected that he PPs will be able to implement the monitoring plan and the emission reductions achieved can be reported ex-post and verified.

3.9 Sustainable development The LoA of the Host country clearly presents a statement that the project contributes to the sustain-able development of the host Party (IRL 12).



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3.10 Local stakeholder consultation

The stakeholder process is performed on a CPA level. The relevant local stakeholders have been invited in a transparent manner through invitation letters and newspaper callings . The evidence of the invitation letters are presented on IRL 82. The assessment team has reviewed the documenta-tion in order to validate the inclusion of relevant stakeholders and using the local expertise can con-firm that the communication method used to invite the stakeholders is considered appropriate. The summary of comments presented in the CPA-DD AND MATARRAS I CPA-DD has been cross-checked with the documentation of the stakeholder consultation (IRL 83, 84, 85)), and interviews with the community and authorities. The information is considered complete.

The relevant comments presented by the local stakeholders have been taken due account by the PP‟s, the same has been cross-checked with the information obtained during the interviews.

Hence the local stakeholder consultation has been adequately performed according to the CDM re-quirements.

3.11 Environmental impacts

The environmental analysis is performed on a CPA level. The project participants undertook an analysis of environmental impacts. SERNA (Secretaria de Recursos Naturales y Ambiente), the Department of Natural Resources and Environment of Honduras, has granted ECAE an environmental license to build and operate the Matarras I project. This environmental License was submitted to the audit team for validation purposes. Moreover, the mitigation measures adopted by this entity were also submitted to the audit team. The assessment team made a document review of the information presented. The IRL 24 (Environmental License No. 96-2008 granted to the Matarras I project), confirms the correctness of the approach used by the PPs. Hence the PPs followed the requirements of the host country regarding the environmental impacts.


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4 COMMENTS BY PARTIES, STAKEHOLDERS AND NGOS

TÜV SÜD published the project documents on UNFCCC website by installing a link to TÜV SÜD‟s own website and invited comments by Parties, stakeholders and non-governmental organisations during a period of 30 days, from 16/12/2008 to 14/01/2009.

The following table presents all key information on this process:

webpage:

http://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/QLPECOPSXV6XH8YWC32E7APNLZWU6M/view.html

Starting date of the global stakeholder consultation process:

2008-12-16

Comment submitted by:

None

Issues raised:

-

Response by TÜV SÜD:

-

http://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/QLPECOPSXV6XH8YWC32E7APNLZWU6M/view.html


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5 VALIDATION OPINION

TÜV SÜD has performed a validation of the following proposed CDM Programme of Activities:

Masca Small Hydro Programme

Standard auditing techniques have been used for the validation of the project. Methodology-specific protocol including PoA requirements customised for the project has been prepared to carry out the audit and present the outcome in a transparent and comprehensive manner.

The review of the project design documentation, the subsequent follow-up interviews and the further cross check of references have provided TÜV SÜD with sufficient evidence to determine the fulfil-ment of stated criteria in the protocol. In our opinion, the project meets all relevant UNFCCC re-quirements for the CDM. Hence TÜV SÜD will recommend the project for registration by the CDM Executive Board.

An analysis as provided by the applied methodology demonstrates that the proposed Programme of Activities is not a likely baseline scenario. Emission reductions attributable to the project are hence additional to any that would occur in the absence of the project activity. Given that the project is im-plemented as designed, the project is likely to achieve the estimated amount of emission reductions as specified within the final POA-DD, generic CPA-DD and Matarras I CPA-DD version.

The validation is based on the information made available to us and the engagement conditions de-tailed in this report. The validation has been performed following the VVM requirements. The only purpose of this report is its use during the registration process as part of the CDM project cycle. Hence, TÜV SÜD cannot be held liable by any party for decisions made or not made based on the validation opinion, which will go beyond that purpose.

Munich, 25/03/2010

___________________________________

Munich, 25/03/2010

___________________________________

Certification Body “climate and energy” TÜV SÜD Industrie Service GmbH

Assessment Team Leader


Annex 1: Validation Protocol

Validation Protocol Project Title: Masca Small Hydro Programme Date of Completion: 25/03/2010 Number of Pages: 74

Table 1 is applicable to AMS I.D. 13 Page A-1

CHECKLIST TOPIC / QUESTION Ref. COMMENTS PPD in GSP

Final PDD

A. General description of small-scale project activity

A.1. Title of the small-scale project activity

A.1.1. Does the used project title clearly en-able to identify the unique CDM activity?

90, 91, 92.

Yes, the project title infers the project activity and the name of the project for the PoA. The PoA name is: Masca Small Hydro Pro-gramme and the name of CPA real case presented is Matarras I. Clarification Request No.1. The Project Title does not permit to infer the project activity.

CR1

A.1.2. Are there any indication concerning the revision number and the date of the revision?

90, 91, 92.

No, there is no information of the revision or the date on anyone of the three checked design documents Corrective Action Request No.1. The date and the revision of the three design documents should be included.

CAR1

A.1.3. Is this consistent with the time line of the project‟s history?

90, 91, 92.

´See CAR above. See CAR

Above

A.2. Description of the small-scale project activity

A.2.1. Is the description delivering a transpar-ent overview of the project activities?

90, 91, 92, 8

The PoA-DD is clearly described in this section. The project con-sists in a Programme of Activities which considers small run of river hydroelectric power plants. The Generic CPA-DD is described shortly, expecting that each CPA unit completes the information. The information regarding the CPA-DD real case is not consid-ered to be complete.

CR2 CAR2




Final PDD

Clarification Request No.2. For each CPA, the description has to include the river used to electricity generation, the type of turbines used and the distances between water intakes, powerhouse and discharges. Corrective Action Request No.2.

On the Matarras I CPA-DD, on section A.2 is indicated that the installed capacity is 1 MW. However, on section A.4.6 is indicated that the installed capacity is 1.2 MW. Project proponent should correct this sentence and indicates the real installed capacity. See Clarification Request 3.

A.2.2. What proofs are available demonstrat-ing that the project description is in compli-ance with the actual situation or planning?

90, 91, 92., 8

Clarification Request No.3. Regarding the documentation to prove the actual situation and planning, project proponent should show evidence, physically or with the manufacturer´s specifications, regarding the installed capacity and other features of the technology to be employed. Clarification Request No.4. For Matarras I CPA-DD, project proponent should submit a pro-ject layout to the audit team, in order to evidence the description of the project.

CR3

CR4

A.2.3. Is the information provided by these proofs consistent with the information pro-vided by the PDD?

90, 91, 92, 9

Yes, the information is consistent. During the on site audit, inter-views with the ENEE and the banks were carried out. Moreover, meetings with relevant stakeholders were held in order to evi-dence the current status of the project and the market. However, some additional info is needed.

CR5




Final PDD

Clarification Request No.5. The Management entity (ME) should assure and evidence that the inclusion of the renewable law (Decree 70/2007) doesn‟t allow by itself the implementation of small renewable hydro power plants?

A.2.4. Is all information presented consistent with details provided by further chapters of the PDD?

90, 91, 92, 8

See CAR2 SEE CAR 1

A.2.5. Does the description of the technology to be applied provide sufficient and transpar-ent input to evaluate its impact on the green-house gas balance?

90, 91, 92, 9

No, please see Clarification Request No.3

OPEN

A.2.6. Is the brief explanation how the project will reduce greenhouse gas emission trans-parent and suitable?

90, 91, 92.

Yes, it is clear how the project will reduce GHG emissions from fossil fuel-fired power plants.

A.3. Project participants

A.3.1. Is the form required for the indication of project participants correctly applied?

90, 91, 92.

Yes, the form is correctly applied.

A.3.2. Is the participation of the listed entities or Parties confirmed by each one of them?

90, 91, 92 12, 13, 16

Corrective Action Request No.3. The ME should submit to the DOE the Letters of Approval from Hondura‟s and the Netherlands‟s DNA. Clarification Request No.6. A confirmation from Hydromasca is needed in order to evidence

CAR3 CR6

CR7




Final PDD

the voluntary action of this Management Entity. Clarification Request No.7. The PoA participation of Empresa Centroamericana de Energia S.A. de C.V. (ECAE) should be submitted.

A.3.3. Is all information on participants / Par-ties provided in consistency with details pro-vided by further chapters of the PDD (in par-ticular annex 1)?

90, 91, 92.

Yes, this chapter and annex 1 are consistent.

A.4. Technical description of the small-scale project activity

A.4.1. Location of the small-scale project activity

A.4.1.1. Does the information provided on the location of the project activity allow for a clear identification of the site(s)?

90, 91, 92, 8

Yes, information in the PDD allows identifying the project by its GPS coordinates. During the on site audit, coordinates were taken with a GPS. Coordinates of the on site visit for Matarras I Project: 15° 32‟ 26.3” N 87° 23‟ 20.1” W Coordinates from the CPA-DD: 15° 32‟ 21.0” N 87° 23‟ 18.8” W Hence, the coordinates are considered to be correct. Neverthe-less see comment below. Corrective Action Request No.4. Not only the Powerhouse coordinates but the water intake‟s co-

CAR4

CAR5




Final PDD

ordinates should be part of the CPA-DD. This information has to be included on the generic CPA-DD for all the next CPAs. Corrective Action Request No.5. The figure 2 on Matarras I CPA-DD and its description should be translated to English.

A.4.1.2. How is it ensured and/or demon-strated, that the project proponents can im-plement the project at this site (ownership, li-censes, contracts etc.)?

90, 91, 92, 27.

Clarification Request No.8. Project proponent should submit the ownerships certificates or assessment contracts that evidence the legal implementation of the project on the site.

CR8

A.4.2. Type and category(ies) and technology/measure of the small-scale project activity

A.4.2.1. To which type(s) does the project activity belong to? Is the type correctly identi-fied and indicated?

90, 91, 92.

Type I: Renewable energy projects Yes, the type is correctly identified within the PDD.

A.4.2.2. To which category (ies) does the project activity belong to? Is the category cor-rectly identified and indicated?

90, 91, 92.

Category I.D: Grid connected renewable electricity generation. Yes, the category is correctly identified within the PDD.

A.4.2.3. Does the technical design of the project activity reflect current good practices?

90, 91, 92, 8

Clarification Request No.9. In the Matarras I spread sheet the plant factor is 0.69. Please clar-ify from where this load factor is taken and whether if could be considered conservative or not. Clarification Request No.10. It is not clear if the PoA will consider projects that involve modify-

CR9

CR10




Final PDD

ing of existing power units, replacement or scrapping. The ME should clarify this issue.

A.4.2.4. Does the implementation of the project activity require any technology transfer from Annex-I-countries to the host country (ies)?

90, 91, 92, 8

Please refer to Clarification Request No.3 CR

A.4.2.5. Is the technology implemented by the project activity environmentally safe?

90, 91, 92, 8

Yes, since the power generator works with renewable energy.

A.4.2.6. Is the information provided in com-pliance with actual situation or planning?

90, 91, 92, 8

Yes, as the project will use the water from the Matarras River to generate electricity, which will be later sold to the national Hondu-ran grid.

A.4.2.7. Does the project use state of the art technology and / or does the technology result in a significantly better performance than any commonly used technologies in the host country?

90, 91, 92, 8

Please refer to Clarification Request No.3 OPEN

A.4.2.8. Is the project technology likely to be substituted by other or more efficient tech-nologies within the project period?

90, 91, 92, 8

Please refer to Clarification Request No.3 OPEN

A.4.2.9. Does the project require extensive initial training and maintenance efforts in order to be carried out as scheduled during the pro-ject period?

90, 91, 92, 8

Yes. Please see clarification on the next section. OPEN

A.4.2.10. Is information available on the de-mand and requirements for training and main-tenance?

90, 91, 92, 8

Clarification Request No.11. 1. Please provide information and evidence (lists of participa-

tion, records, etc.) of the training program that will be fol-

CR11

FAR1




Final PDD

lowed up. 2. Please provide information regarding the maintenance

program. Forward Action Request No. 1

Project Proponent shall provide, on the initial verification audit, the training schedule for the personnel involved on the CDM Monitor-ing Process.

A.4.2.11. Is a schedule available for the im-plementation of the project and are there any risks for delays?

90, 91, 92, 8, 61

Clarification Request No.12. Project Proponent should provide a project schedule with the time-line of the whole project activity (In case of CPA), and with expected time for inclusion of CPA. (In case of PoA)

CR12

A.4.3. Estimated amount of emission reductions over the chosen crediting period

A.4.3.1. Is the form required for the indica-tion of projected emission reductions correctly applied?

90, 91, 92, 8

Yes, the correct form is applied.

A.4.3.2. Are the figures provided consistent with other data presented in the PDD?

90, 91, 92, 8

Yes, the figures are consistent.

A.4.3.3. Are the figures consistent with the small-scale criteria for the used Type?

90, 91, 92, 8

Yes since the installed capacity do not exceed 15 MW. As part of the PoA eligibility criteria, a CPA shall, between others: 1. Be a run-off-river hydro power plant,

2. Have an installed capacity of ≤ 15MW.

A.4.4. Public funding of the small-scale project activity




Final PDD

A.4.4.1. Is the information provided on pub-lic funding provided in compliance with the ac-tual situation or planning as available by the project participants?

90, 91, 92, 8

Yes. As it was evidenced during the on site audit, the project needs the external funding of the project through loans.

A.4.4.2. Is all information provided consis-tent with the details given in remaining chap-ters of the PDD (in particular annex 2)?

90, 91, 92, 8

There is no public founding for this project.

A.4.5. Confirmation that the small-scale project activity is not a debundled component of a large scale project activity

A.4.5.1. Is there a registered small-scale CDM project activity or an application to regis-ter another small-scale CDM project activity: with the following characteristics:

90, 91, 92, 8

Debundling checklist Yes / No the same project participants? Yes In the same project category and technol-ogy/measure?

Yes

Registered within previous two years? Or in registration process?

Yes

Whose boundary is within 1 km of the pro-ject boundary of the small scale project ac-tivity under consideration?

Yes

A.4.5.2. If the answer to all the above ques-tion is „Yes‟ then does the total size of the small scale project activity combined with pre-viously registered small scale CDM project ac-tivity exceeds the limits of small scale CDM project activities?

90, 91, 92, 8

No. According to the information on section A.4.6, of Matarras I CPA-DD, the installed capacity of the project Matarras I ) does not exceed the limit of 15 MW.

B. Application of a baseline and monitoring methodology

B.1. Title and reference of the approved baseline and monitoring methodology applied to the small-scale project activity

B.1.1.1. Are reference number, version number, 90, Yes, it is clearly and correctly indicated. CAR6




Final PDD

and title of the baseline and monitoring methodology clearly indicated?

91, 92, 8

Corrective Action Request No.6. The applicability of the used Tools should be discussed on this section.

B.1.1.2. Is the applied version the most recent one and / or is this version still applica-ble?

90, 91, 92, 8

Yes, at the moment of the GSP the applicable version is 13.

B.2. Justification of the choice of the project category

B.2.1. Is the applied methodology considered the most appropriate one?

90, 91, 92, 8

Yes, please see comments below.

B.2.1.1. Criterion 1: This category comprises renewable energy generation units, such as photovoltaics, hydro, tidal/wave, wind, geothermal and renewable bio-mass, that supply electricity to and/or displace electricity from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired generating unit.

90, 91, 92, 8

Applicability checklist Yes / No / NA Criterion discussed in the PDD? Yes Compliance provable? Yes Compliance verified? Yes

B.2.1.2. Criterion 2: If the unit added has both renewable and non-renewable compo-nents (e.g.. a wind/diesel unit), the eligi-bility limit of 15MW for a small-scale CDM project activity applies only to the renewable component. If the unit added co-fires fossil fuel, the capacity of the

90, 91, 92, 8

Applicability checklist Yes / No / NA Criterion discussed in the PDD? NA Compliance provable? NA Compliance verified? NA




Final PDD

entire unit shall not exceed the limit of 15MW.

B.2.1.3. Criterion 3: Combined heat and power (co-generation) systems that supply electricity to and/or displace electricity from a grid are not included in this cate-gory.

90, 91, 92, 8


B.2.1.4. Criterion 4: In the case of project ac-tivities that involve the addition of re-newable energy generation units at an existing renewable power generation fa-cility, the added capacity of the units added by the project should be lower than 15 MW and should be physically distinct from the existing units.

90, 91, 92, 8


B.2.1.5. Criterion 5: Project activities that seek to retrofit or modify an existing facility for renewable energy generation are in-cluded in this category. To qualify as a small scale project, the total output of the modified or retrofitted unit shall not exceed the limit of 15 MW.

90, 91, 92, 8


B.2.1.6. If the project is under a programme of activities, have all the applicability crite-

90, 91,

Not applicable




Final PDD

ria and additional requirements been considered according to the methodol-ogy?

92, 8

B.3. Description of the project boundary

B.3.1. Does the project boundary include physi-cal, geographical site where the project ac-tivity takes place?

90, 91, 92, 8

Yes, the boundary is described in the PDD, and corresponds to the entire National Honduran grid. The real case (Matarras I Hy-dropower Project) belongs to the Honduran national grid.

B.3.2. Do the spatial and technological bounda-ries as verified on-site comply with the dis-cussion provided by / indication included to the PDD?

90, 91, 92, 8

Yes, as the Project is within Honduran territory and the real case project is feasible to connect to the national Honduran grid.

B.4. Description of baseline and its development

B.4.1. Have all technically feasible baseline sce-nario alternatives to the project activity been identified and discussed by the PDD? Why can this list be considered as being complete?

90, 91, 92, 8

Yes, the baseline scenario is discussed as per methodology I.D Clarification Request No.13. The installation and managing of several fuel oil fired power plants could not be considered as an alternative? Project proponent should clarify the feasibility of the proposed alternative. Clarification Request No.14. During the interviews with bank representatives, they indicated that CDM revenues are not necessary in order to grant a loan to a hydropower project. As this was a statement included both on the PoA-DD and on the CPA-DD, and is one of the bases of the addi-tionality discussion, project proponent should evidence in a trans-parent and solid manner that the CDM is totally necessary in or-der to proceed with the project. Without further substantiation there might be a contradiction to some information received during interviews.

CR13 CR14




Final PDD

B.4.2. Does the project identifies correctly and excludes those options not in line with regulatory or legal requirements?

90, 91, 92, 8

Yes.

B.4.3. Have applicable regulatory or legal re-quirements been identified?

90, 91, 92, 8, 9, 73

Partially:

Forward Action request No. 2

The operation Permits an licences of every CPA entering the pro-gram shall be scrutinized during the first verification process.

FAR2

B.4.4. Does the PDD identify the most likely baseline scenario in absence of the pro-ject activity?

90, 91, 92, 8

Yes

B.4.5. Is this identification supported by official and/or verifiable documents (e.g. studies, web pages, certificates, etc?

90, 91, 92, 8, 19, 23

Clarification Request No.15. Regarding table 1 of PoA-DD, an increase of nearly 40% on hy-droelectric generation has occurred between 2002 and 2007. How this increase can be explained? Is the installation of new hydroe-lectric power plants a business as usual? Clarification Request No.16. The ENEE‟s dominant role should be explained and evidenced by the project proponent. Clarification Request No.17. On section A.4.3 of PoA-DD, it is indicated that “Of the 1067 MW capacity added from 1993 to 2007 910 MW have been installed by private investors” . Project proponent should evidence where from this indication is taken.

CR15 CR16 CR17 CR18




Final PDD

Clarification Request No.18. How can the UNFCCC workshop on technology transfer declara-tions (dated on March 2000) be still applicable for the country re-ality?

B.4.6. Is the identified baseline scenario in line with regulatory or legal requirements?

90, 91, 92, 8

Yes, as all the applicable laws are fulfilled and it‟s a requirement of the PoA that all included (or to be included) CPA‟s must comply with the national regulations.

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 small-scale CDM project activity:

If the additionality tool has been used please answer B.5.1 to B.5.13

B.5.1. Has CDM been considered before the starting date of the project activity? What kind of evidences are available?

90, 91, 92, 8, 62, 63

Clarification Request No.19. Project Proponent should provide evidence (purchase orders, quotations, invoices, etc.) to justify the choice of the starting date of the project activity.

CR19

B.5.2. In case of applying step 2 / investment analysis of the additionality tool: Is the analysis method identified appropriately (step 2a)?

90, 91, 92, 8

NA

B.5.3. In case of Option I (simple cost analysis): Is it demonstrated that the activity pro-duces no economic benefits other than CDM income?

90, 91, 92, 8

NA




Final PDD

B.5.4. In case of Option II (investment compari-son analysis): Is the most suitable finan-cial indicator clearly identified (IRR, NPV, cost benefit ratio, or (levelized) unit cost)?

90, 91, 92, 8

NA

B.5.5. In case of Option III (benchmark analysis): Is the most suitable financial indicator clearly identified (IRR, NPV, cost benefit ratio, or (levelized) unit cost)?

90, 91, 92, 8

NA

B.5.6. In case of Option II or Option III: Is the calculation of financial figures for this indi-cator correctly done for all alternatives and the project activity?

90, 91, 92, 8

NA

B.5.7. In case of Option II or Option III: Is the analysis presented in a transparent man-ner including publicly available proofs for the utilized data?

90, 91, 92, 8

NA

B.5.8. In case of applying step 3 (barrier analy-sis) of the additionality tool: Is a complete list of barriers developed that prevent the different alternatives to occur?

90, 91, 92, 8

Yes, the list can be considered as complete. The presented barri-ers are: Institutional Barriers Market Barriers.

B.5.9. In case of applying step 3 (barrier analy-sis): Is transparent and documented evi-dence provided on the existence and sig-nificance of these barriers?

90, 91, 92, 8, 29, 30, 31,

Clarification Request No.20. Regarding institutional barrier: Project proponent should demon-strate and provide additional information about how the “fuel ad-justment price” works on the national electricity market. Clarification Request No.21.

CR20 CR21 CR22 CR23




Final PDD

32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 64, 65, 66, 67, 68, 81.

The mentioned PPAs (or a summary from a reliable source) should be submitted to the audit team in order to check the state-ments included for institutional barriers. Clarification Request No.22. Project proponent should clarify how prices on electricity market are calculated. It should be clearly evidenced whether if ENEE performed the calculations or a national regulation (Law, supreme decree, etc) provide the procedures for calculations. Clarification Request No.23. Regarding the Honduran Accounting Superior Court‟s investiga-tion, the information presented on these paragraphs is more ori-ented to state the benefits to invest in fossil oil fired power plants, instead to describe the real barrier that represents for hydrological projects. The barrier should be clearly defined for hydroelectric projects.

B.5.10. In case of applying step 3 (barrier analy-sis): Is it transparently shown that the execution of at least one of the alterna-tives is not prevented by the identified bar-riers?

90, 91, 92, 8

Yes, at least alternative 2 is not prevented by the identified barri-ers.

B.5.11. Have other activities in the host country / region similar to the project activity been identified and are these activities appro-priately analyzed by the PDD (step 4a)?

90, 91, 92, 8

Yes. Clarification Request No.24. Rio Blanco and Peña Blanca Projects should be part of this

CR24




Final PDD

analysis.

B.5.12. If similar activities are occurring: Is it demonstrated that in spite of these simi-larities the project activity would not be implemented without the CDM component (step 4b)? How?

90, 91, 92, 8

Yes. Almost all discussed projects are CDM projects or looking for CDM status.

B.5.13. Is it appropriately explained how the ap-proval of the project activity will help to overcome the economic and financial hur-dles or other identified barriers?

90, 91, 92, 8

Yes.

If the additionality tool has not been used please answer B.5.14 to B.5.19

B.5.14. If the starting date of the project activity is before the date of validation, is evidence available to prove that incentive from the CDM was seriously considered in the de-cision to proceed with the project activity?

90, 91, 92, 8

N.A

B.5.15. Is a complete list of barriers developed that prevents the project activity to occur?

90, 91, 92, 8

N.A.

B.5.16. Does this list include at least one of the following barriers?

90, 91, 92, 8

Barrier Discussed? Verifiable? Investment N.A. N.A. Technological N.A. N.A. Due to prevailing practice N.A. N.A.




Final PDD

Other N.A. N.A.

B.5.17. Does the discussion sufficiently take into account relevant national and/or sectoral policies?

90, 91, 92, 8

N.A.

B.5.18. Is transparent and documented evidence provided on the existence and signifi-cance of these barriers?

90, 91, 92, 8

N.A.

B.5.19. Is it appropriately explained how the ap-proval of the project activity will help to overcome the identified barriers?

90, 91, 92, 8

N.A.

B.6. Emissions reductions

B.6.1. Explanation of methodological choices

B.6.1.1. Is it explained how the procedures pro-vided in the methodology are applied by the proposed project activity?

90, 91, 92, 8

Yes

B.6.1.2. Is every selection of options offered by the methodology correctly justified and is this justification in line with the situation verified on-site?

90, 91, 92, 8

Yes. To calculate the Emission Factor, the Combined Margin was chosen, with the weighted average between Operating Margin (OM) and Build Margin (BM). To calculate the OM, option a (Sim-ple Method) was selected, as 64% of the total generation are not low cost/must run plants. The option chosen for the vintage of data is ex-ante, the same selected for the BM.

Determination of project emissions (Comment on any line answered “No”) B.6.1.3. Component 1: emissions from use of fossil

fuel 90, 91,

Project emission checklist Yes / No




Final PDD

92, 8 Component discussed in the PDD? Yes Formulae correctly applied? Yes

B.6.1.4. Are the formulae required for the determi-nation of baseline emissions correctly pre-sented, enabling a complete identification of parameters to be used and / or moni-tored?

90, 91, 92, 8

Yes, the used formulae is the correct one: BE= EGy*EFGrid,CM,y

The same formulae is used by the CPA-DD (Real case) pre-sented.

B.6.1.5. Are the formulae required for the determi-nation of leakage emissions correctly pre-sented, enabling a complete identification of parameter to be used and / or moni-tored?

90, 91, 92, 8

NA.

B.6.1.6. Are the formulae required for the determi-nation of emission reductions correctly presented?

90, 91, 92, 8

Yes, the emission reductions are equal to baseline emissions.

B.6.2. Data and parameters that are available at validation

B.6.2.1. Is the list of parameters presented in chap-ter B.6.2 considered to be complete with regard to the requirements of the applied methodology?

90, 91, 92, 8

Corrective Action Request No.7. Please include in the list of parameters of section B.6.2:

- Operating Margin - Build Margin - fuel consumption of each power source (FCi,m,y) - net energy conversion efficiency of power unit - Power unit emission factor (EFEl,m,y)

CAR7




Final PDD

- Electricity imports. This values and the QA/QC procedures, applied values, ways of monitoring, etc, should be included as part of each CPA-DD.

Comment on any line answered with “No”. Add additional parameters used for the calculation of the grid factors if necessary. B.6.2.2. Parameter Title:

Annual electricity supplied to the grid prior to retrofit (applicable only for retrofit and modification activities)

90, 91,

92, 8

Data Checklist Yes / No

Title in line with methodology? NA

Data unit correctly expressed? N.A.

Appropriate description of parameter? N.A.

Source clearly referenced? N.A.

Correct value provided? N.A.

Has this value been verified? N.A.

Choice of data correctly justified? N.A.

Measurement method correctly described? N.A.

B.6.2.3. Parameter Title: Emission factor of the grid (CM) Note: CM should be calculated as per the procedures described in the “Tool to cal-culate the emission factor for an electricity system”

90, 91,

92, 8


Title in line with methodology? Yes

Data unit correctly expressed? Yes

Appropriate description of parameter? Yes

CAR8




Final PDD

Source clearly referenced? Yes

Correct value provided? No

Has this value been verified? No

Choice of data correctly justified? Yes

Measurement method correctly described? Yes

Corrective Action Request No.8. The value expressed on this table (653.40 TCO2/MW) is incon-sistent and cannot be considered real (a very conservative as-sumption is 1.3 TCO2/MW, how can be considered 653 Tons?). The coordinating Entity should provide the adequate value.

B.6.2.4. Parameter Title: Operating margin (OM) emission factor of the grid Note: OM should be calculated as per the procedures described in the “Tool to cal-culate the emission factor for an electricity system”

90, 91,

92, 8


Title in line with methodology? No


Appropriate description? Yes



Has this value been verified? Yes

Choice of data correctly justified? No


SEE CAR7 CR25




Final PDD

Project Proponent should include this parameter. See Corrective Action Request No.7. Clarification Request No.25. As the description on the PoA-DD indicates, the operating margin is calculated based on data on fuel consumption and net electricity generation of each power plant/unit. This is the Option A of the Sim-ple OM. However, for some power plants there is no data about fuel consumption. Hence this option is not possible as the Tool indicates that “Option A should be preferred and must be used if fuel con-sumption data is available for each power plant / unit.” The Co-ordinating Entity should clarify why this option has been chosen, considering this approach.

B.6.2.5. Parameter Title: Build margin (BM) emission factor of the grid Note: BM should be calculated as per the procedures described in the “Tool to cal-culate the emission factor for an electricity system”

90, 91,

92, 8










SEE CAR7 CAR9




Final PDD

Corrective Action Request No.9. The vintage of data for BM should be documented on section E.6.1

B.6.2.6. Parameter Title: fuel consumption of each power source

90, 91,

92, 8










See Corrective Action Request No.7

See CAR7

B.6.2.7. Parameter Title: emission factor of each fuel

90, 91,

92, 8



Data unit correctly expressed? No


CAR10




Final PDD



Has this value been verified? No



Corrective Action Request No.10. The data unit should be converted from tCO2/TJ to tCO2/GJ. Corrective Action Request No.11. The tool requires that the lower limit at uncertainty 95% should be used. Project proponent should change the values accord-ingly.

B.6.2.8. Parameter Title: electricity generation of each power source

90, 91, 92, 8







See CAR7




Final PDD





B.6.2.9. Parameter Title: surface area of full reservoir level (for new hydroelectric activities only)

90, 91,

92, 8


Title in line with methodology? N.A

Data unit correctly expressed? N.A

Appropriate description of parameter? N.A

Source clearly referenced? N.A

Correct value provided? N.A

Has this value been verified? N.A

Choice of data correctly justified? N.A

Measurement method correctly described? N.A

B.6.2.10. Parameter Title: fraction of time with low costs /must run plant at the margin (for simple adjusted OM only)

90, 91,

92, 8


Title in line with methodology? N.A

Data unit correctly expressed? N.A

Appropriate description of parameter? N.A




Final PDD

Source clearly referenced? N.A

Correct value provided? N.A

Has this value been verified? N.A

Choice of data correctly justified? N.A

Measurement method correctly described? N.A

B.6.2.11. Parameter Title: electricity imports

90, 91,

92, 8











See CAR7

B.6.2.12. Parameter Title: Net Calorific Values of Used Fuel (NCV)

90, 91,

92, 8


See CAR11




Final PDD





Correct value provided? Yes





B.6.3. Ex-ante calculation of emission reductions

B.6.3.1. Is the projection based on the same pro-cedures as used for future monitoring? What kind of procedure is used?

90, 91, 92, 8

Yes, the Emission Factor will be fixed ex-ante, and all the CPA‟s will follow that value.

B.6.3.2. Are the GHG calculations documented in a complete and transparent manner?

90, 91, 92, 8, 23

The default values used for calculations taken form the IPCC tables (NCV, EF), should be used taking into account the lower limit at 95% uncertainty level. See Corrective Action Request No.11. Corrective Action Request No.12. The default values used by the calculation, as well as the fuel consumption values, should be linked with their official sources (included as a footnote, along with the date of the last access to the link)

CAR12 CR26




Final PDD

Clarification Request No.26. Values of the hydropower plants regarding generation and fuel consumption, as an example, are not matching with the official values taken from the ENEE web page (Tables 6 and 36 form the ENEE‟s Website). Project proponent should clarify where this data was taken from, and correct if necessary.

B.6.3.3. If there is more than one component of the project activity, then, are emission reduc-tion calculations provided separately for each component?

NA

B.6.3.4. Is the data provided in this section consis-tent with data as presented in other chap-ters of the PDD?

90, 91, 92, 8

Yes. See Corrective Action Request No.11, and Corrective Action Request No.12.

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

B.6.4.1. Will the project result in fewer GHG emis-sions than the baseline scenario?

90, 91, 92, 8

Yes, the project results in an average of 4395 tCO2e.

B.6.4.2. Is the form/table required for the indication of projected emission reductions correctly applied?

90, 91, 92, 8

Yes.

B.6.4.3. If the project activity involves more than one component, is separate table included for each of the component.

90, 91, 92, 8

NA

B.6.4.4. Do these values comply with small-scale criteria for every year?

90, 91,

Yes, since the installed capacity is not exceeded from 15MW. The PoA requirements include all important parameters for the




Final PDD

92, 8 construction of a small Hydro project.

B.6.4.5. Is the projection in line with the envisioned time schedule for the project‟s implementa-tion and the indicated crediting period?

90, 91, 92, 8

Yes.

B.6.4.6. Is the data provided in this section in con-sistency with data as presented in other chapters of the PDD?

90, 91, 92, 8

Yes.

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

B.7.1. Data and parameters monitored

B.7.1.1. Is the list of parameters presented in chap-ter B.7.1 considered to be complete with regard to the requirements of the applied methodology?

Yes, the required parameters are included in the Monitoring Plan. Nevertheless please see comment below.

CR

Comment on any line answered with “No” B.7.1.1.1. Parameter Title:

Electricity generated by the renewable technology

90, 91, 92, 8

Monitoring Checklist Yes / No Title in line with methodology? Yes Data unit correctly expressed? Yes Appropriate description of parameter? No Source clearly referenced? Yes Correct value provided for estimation? Yes Has this value been verified? No Measurement method correctly described? Yes Correct reference to standards? Yes Indication of accuracy provided? No QA/QC procedures described? Yes

CR27




Final PDD

QA/QC procedures appropriate? No Clarification Request No.27. Regarding Net Generation of Hydropower Plant, Project Propo-nent should clarify whether:

One or two meters will be used to calculate net generation. The procedure to discount the own consumption of the

power plant. The meter will be ENEE‟s or Project Proponent‟s Property. The generation informed by the internal meter will be

crosschecked by the electrical authority or not. This information should be part of the PDD. PPA available?

B.7.1.1.2. Amount of biomass input (if applicable) 90, 91, 92, 8

Monitoring Checklist Yes / No Title in line with methodology? NA Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Correct value provided for estimation? Has this value been verified? Measurement method correctly described? Correct reference to standards? Indication of accuracy provided? QA/QC procedures described? QA/QC procedures appropriate?




Final PDD

B.7.1.1.3. Amount of fossil fuel (if applicable) 90, 91, 92, 8

Monitoring Checklist Yes / No Title in line with methodology? NA Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Correct value provided for estimation? Has this value been verified? Measurement method correctly described? Correct reference to standards? Indication of accuracy provided? QA/QC procedures described? QA/QC procedures appropriate?

B.7.2. Description of the monitoring plan

B.7.2.1. Is the operational and management struc-ture clearly described and in compliance with the envisioned situation?

90, 91, 92, 8

No. It is not clear who will be the direct responsible of the monitor-ing by the Implementing and the Coordinating / Managing Entity. There is no reference whether if a crosscheck of the values deliv-ered by each CPA will be performed, and how the ME is assuring that the values delivered are in compliance with the expected re-sults. Corrective Action Request No.13.

Documented procedures to Monitoring data that includes respon-sibilities, Management, Quality Assurance, Means of Verification of data, data transferring and data trails should be submitted to the audit team. This procedure has to be indicated on PDD and

CAR13




Final PDD

should ensure that no double accounting occurs and that the status of verification can be determined anytime for each CPA.

B.7.2.2. Are responsibilities and institutional ar-rangements for data collection and archiv-ing clearly provided?

See Corrective Action Request No.13 SEE CAR 13

B.7.2.3. Does the monitoring plan provide current good monitoring practice?

90, 91, 92, 8

Please refer to Clarification Request No.11 and Corrective Action Request No.13

OPEN

B.7.2.4. If applicable: Does annex 4 provide useful information enabling a better under-standing of the envisioned monitoring pro-visions?

NA

B.8. Date of completion of the application of the baseline study and monitoring methodology an the name of the responsible person(s)/entity(ies)

B.8.1.1. Is there any indication of a date when the baseline was determined?

90, 91, 92, 8

Yes. The date of completion of baseline is 07/11/2008.

B.8.1.2. Has dd/mm/yyyy format been used to indi-cate the date.

90, 91, 92, 8

Yes, the format is correctly applied.

B.8.1.3. Is this consistent with the time line of the PDD history?

Yes. The baseline study was finished on November 2008, the DOE was contacted on December 2008 and the starting date of project activity is later to that date.

B.8.1.4. Is the information on the person(s) / entity 90, Yes. The responsible company for the application of the baseline




Final PDD

(ies) responsible for the application of the baseline and monitoring methodology pro-vided consistent with the actual situation?

91, 92, 8

and monitoring methodology is Onecarbon.

B.8.1.5. Is information provided whether this per-son / entity is also considered a project participant?

90, 91, 92, 8

Corrective Action Request No.14. Please indicate that the entity which determined the baseline is a Project Participant.

CAR14

C. Duration of the project activity / crediting period

C.1. Duration of the project activity

C.1.1. Are the project‟s starting date and operational lifetime clearly defined and reasonable? Is it the earliest date of construction, implementa-tion or real action?

90, 91, 92, 8

Please refer to Clarification Request No.19 See CR19

C.2. Choice of the crediting period and related information

C.2.1. Is the assumed crediting time clearly defined and reasonable?

Information is not consistent on the entire document. Corrective Action Request No.15. Section A.4.4 of the CPA-DD indicated that the average of every year is 3,952 ton CO2e. This is consistent with the information on section B.5.3. However, on table 6 “Emission reductions from electricity generation”, the average is 3,293 ton CO2e. Project proponent should correct this contradiction.

CAR15

C.2.2. Has dd/mm/yyyy format been used to indicate the start date of the crediting period.

, 91, No. The starting date of the crediting period on Matarras I CPA-DD is not adequately presented. Corrective Action Request No.16.

CAR16




Final PDD

Project proponent should correct the date format to indicate the starting date of the crediting period (dd/mm/yyyy).

D. Environmental impacts

D.1. If required by the host Party, documentation on the analysis of the environmental impacts of the project activity:

D.1.1. Are there any Host Party requirements for an Environmental Impact Assessment (EIA), and if yes, has an EIA been approved? If yes an-swer also D.1.2 to D.1.4

90, 91, 92, 8

There is a environmental procedure to follow in Honduras. The difference on the procedure to follow is depending on the size of the Hydropower Plant. For Matarras I project, an environmental authorization (No. 34) was issued on January 26th, 2006 (after the second directors meeting). See comment below: Clarification Request No.28. The date of issuance of the environmental authorization is more than two years old. Project proponent should clarify the reasons that delayed this project from that time until the current date. Clarification Request No.29. Project Proponent should clarify how the minimum ecological flow was determined and how this environmental indicator will be monitored. Clarification Request No.30. It is not clear why on the PoA-DD is indicated that the environ-mental analysis will be performed on a CPA level but on both ge-neric CPA-DD and Matarras I CPA-DD, there is an alternative to perform this analysis at a PoA level, without further explanation.

CR28

CR29

CR30




Final PDD

D.1.2. Has the analysis of the environmental im-pacts of the project activity been sufficiently described?

90, 91, 92, 8, 24

Yes. Nevertheless, see comments above. Open

D.1.3. Will the project create any adverse environ-mental effects?

90, 91, 92, 8

No

D.1.4. Were transboundary environmental impacts identified in the analysis?

90, 91, 92, 8

No

D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclu-sions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party

D.2.1. Have the identified environmental impacts been addressed in the project design suffi-ciently?

90, 91, 92, 8

NA

D.2.2. Does the project comply with environmental legislation in the host country?

90, 91, 92, 8

NA

E. Stakeholders’ comments

E.1. Brief description how comments by local stakeholders have been invited and compiled

E.1.1. Have relevant stakeholders been consulted? 90, 91, 92, 8, 82,

Yes. The consultation was made on a CPA level, as it‟s stated on section D.1 of the PoA-DD. On the Matarras I CPA-DD, it is indicated that the stakeholder consultation was performed on September 19th, 2008. Corrective Action Request No.17.

CAR17




Final PDD

83, 84, 85.

The coordinating entity should justify the selected choice regard-ing the stakeholder level.

E.1.2. Have appropriate media been used to invite comments by local stakeholders?

90, 91, 92, 8, 82, 83, 84, 85.

Yes. Personal invitations and publication on newsletter (Thursday 4th September 2008 in the national newspaper “El Mundo”) were used for the invitations. The project proponent submitted a com-plete report (“Matarras I II Mangungo I II GS stakeholder consulta-tion”) regarding the performed stakeholder meetings, ways of invi-tation, pictures, samples of the documents, and comments re-ceived and analyzed. This was evidenced during the audit site.

E.1.3. If a stakeholder consultation process is re-quired by regulations/laws in the host country, has the stakeholder consultation process been carried out in accordance with such regulations/laws?

90, 91, 92, 8, 82, 83, 84, 85.

N.A.

E.1.4. Is the undertaken stakeholder process that was carried out described in a complete and transparent manner?

90, 91, 92, 8

Yes. A complete summary along with a list of the invitations are parte of the Matarras I CPA-DD.

E.2. Summary of the comments received

E.2.1. Is a summary of the received stakeholder comments provided?

90, 91, 92, 8

Yes. A summary with the mains questions and answers is forming part of the Matarras I CPA-DD.




Final PDD

E.3. Report on how due account was taken of any comments received

E.3.1. Has due account been taken of any stake-holder comments received?

90, , 92, 8

Yes. As it was evidenced during the on site audit, several meeting were held with the community (Local resident‟s board, authorities and NGO‟s), on which the community representatives shown their conformance with the project. At the present date, some negotia-tions are still open, and looking for a good agreement between the parts.

F. Annexes 1 – 4

F.1. Annex 1: Contact Information

F.1.1. Is the information provided consistent with the one given under section A.3?

90, 91, 92, 8

Yes. The information presented on the PoA-DD can be consid-ered consistent.

F.1.2. Is the information on all private participants and directly involved Parties presented?

90, 91, 92, 8

Yes.

F.2. Annex 2: Information regarding public funding

F.2.1. Is the information provided on the inclusion of public funding (if any) in consistency with the actual situation presented by the project par-ticipants?

, 91, 92, 8

Yes. No public funding are involved.

F.2.2. If necessary: Is an affirmation available that any such funding from Annex-I-countries does not result in a diversion of ODA?

NA

F.3. Annex 3: Baseline information

F.3.1. If additional background information on base-line data is provided: Is this information con-

92, No. CR31




Final PDD

sistent with data presented by other sections of the PDD?

8, 23 Clarification Request No.31. On section E.6.1. it is indicated that for the project data from years 2004, 2005 and 2006 was used. However, on annex 3, data from 2005, 2006 and 2007 is available. Project proponent should clarify this apparent contradiction.

F.3.2. Is the data provided verifiable? Has sufficient evidence been provided to the validation team?

90, 91, 92, 8

Yes. Nevertheless, see Corrective Action Request No.11, Correc-tive Action Request No.12

Open

F.3.3. Does the additional information substantiate / support statements given in other sections of the PDD?

90, 91, 92, 8

Yes.

F.4. Annex 4: Monitoring information

F.4.1. If additional background information on moni-toring is provided: Is this information consis-tent with data presented in other sections of the PDD?

NA

F.4.2. Is the information provided verifiable? Has sufficient evidence been provided to the vali-dation team?

NA

F.4.3. Do the additional information and / or docu-mented procedures substantiate / support statements given in other sections of the PDD?

NA



Table 2 Specific PoA Issues

G. Specific PoA Issues

G.1. Preparation of a Programme of Activities Design Document

G.1.1. Does the PoA-DD include the Identification of the coordinating/managing entity, Host Party(ies) and PoA participants?

90, 91, 92, 8

Yes. The coordnating entity is Hidromasca.

G.1.2. Does the PoA-DD include the definition of the boundary for the PoA in terms of a geographical area within which allCDM programme activities (CPAs) included in the PoA will be implemented?

, 91, 92, 8

Yes, the boundary of the PoA is the Honduran National Grid.

G.1.3. Does the PoA-DD take into consideration the re-quirement of all applicable national and/or sectoral policies and regulations of each host country within the chosen boundary?

90, 91,

Yes, as the specified boundary belongs to one country.

G.1.4. Does the PoA-DD include the description of the pol-icy/measure or stated goal that the PoA seeks to promote?

90, 91, 92, 8

Yes, the Masca Small Hydro Programme aims at developing a series of small hydroelectric projects in Honduras.

G.1.5. Is there any Confirmation on the PoA-DD that the proposed PoA is a voluntary action by the coordinat-ing/managing entity?

90, 92, 8, 16

Yes, a confirmation is available on the PoA-DD. See Clearifica-tion Request No.6

SEE CR6

G.1.6. Does the PoA includes a Demonstration that in the absence of the CDM

(i) the proposed voluntary measure would not be implemented, or

(ii) the mandatory policy/regulation would be sys-tematically not enforced and that noncompli-ance with those equirements is widespread in the country/region, or

90, 91,

Yes. This issue is sustained on the presented barriers.



(iii) that the PoA will lead to a greater level of en-forcement of the existing mandatory policy /regulation?

G.1.7. Does the information submitted to the audit team in-clude the description of a typical CPA that will be in-cluded in the PoA covering all the implementation issues of a CPA?

90, 91, 92, 8

Yes. The Matarras I CPA Design Document has been submitted to the audit team.

G.1.8. Is the PoA-DD including a definition of eligibility cri-teria for inclusion of a project activity as a CPA un-der the PoA, which shall include criteria for demon-stration of additionality, type or any extent of infor-mation to ensure its eligibility?

90, 91, 92, 8

Yes. A CPA to be included in the present PoA shall: 1. Be a run-off-river hydro power plant, 2. Have an installed capacity of ≤ 15MW, 3. Connect to the national Honduran electricity grid. 4. Contractually cede its rights to claim and own emission reduc-tions under the Clean Development Mechanism of the UNFCCC or any voluntary scheme to the coordinating entity of the present PoA. Corrective Action Request No.18. As the EB do not support the voluntary market, these condition to be eligible as part of this PoA should be removed.

CAR18

G.1.9. Is the starting date and length of the PoA exceeding 28 years? (60 years in case of A/R)

90, 91, 92, 8

No, the length is 28 years.

G.1.10. Is there any description of operational and management arrangements established by the ME for implementation of the PoA? (Record keeping system, procedures to avoid double counting, etc) Can this description be considered as complete?

90, 91, 92, 8

Yes. Nevertheless, see Corrective Action Request No.13 SEE CAR13

G.1.11. Is there a description of a monitoring plan for a CPA in accordance with the approved monitoring

90, 91,

Yes. See Corrective Action Request No.13 SEE CAR13



methodology? Can this description be considered as complete?

92, 8

G.1.12. In case that the verification method involves samples: Does the PoA-DD include a description of the proposed statistical sampling procedure to be used by the DOEs?

90, 91, 92, 8

NA

G.1.13. In case that the ME opts for verification of each CPA or groups: is a transparent system de-fined and described in order to avoid double count-ing an that the status of verification can be deter-mined anytime for each CPA? Can this description be considered as complete?

90, 91, 92,

No, the system is not clearly defined. See Corrective Action Re-quest No.13

SEE CAR13

G.1.14. Are both stakeholder‟s process and environ-mental analysis level indicated on the PoA-DD?

90, 91, 92, 8

Yes. Nevertheless see Clarification Request No.30 SEE CR30

G.1.15. Have a complete CDM-POA-DD, a Poa ge-neric CDM-CPA-DD and a real case CDM-CPA-DD been submitted to the audit team?

90, 91, 92, 8

Yes. The three documents were submitted for document review.

Table 3 Resolution of Corrective Action and Clarification Requests

Clarifications and corrective action re-quests by validation team

Ref. to

table 1

Summary of project owner response Validation team

Conclusion

Clarification Request No.1. The Project Title does not permit to infer the project activity.

A.1.1 OC The name of the real case has been adjusted to Matar-ras I Small Hydro. OC

The name of the real case has again been adjusted; to

Ok. The correction is consid-ered correct. CR solved.



Matarras I Hydroelectric Project. Please refer also to CAR 3.

Clarification Request No.2. For each CPA, the description has to include the river used to electricity generation, the type of turbines used and the distances be-tween water intakes, powerhouse and dis-charges.

A.2.1. OC The respective information has been included in section A.4. of the Matarras I Small Hydro CPA DD. Furthermore requirement Project Proponent should include the source from where this information is obtained and clearly indicate this on the CPA DD. Also, this requirement should be included on the Generic CPA DD OC

The sources have been included in the Matarras I Hy-droelectric Project CPA DD. The requirement has been included in the Generic CPA DD.

Ok. The sources were checked individually by the audit team. CR solved.

Clarification Request No.3. Regarding the documentation to prove the actual situation and planning, project propo-nent should show evidence, physically or with the manufacturer´s specifications, regarding the installed capacity and other features of the technology to be employed.

A.2.2 OC The technical feasibility study stipulating the value of 1.15 MW for Matarras I has been submitted to the DOE. Please note that the final design of the plant might differ depending on possible adaptations during the construction phase. Regarding the planning an up-dated timeline for project implementation has been submitted.

Ok. The documentation was provided in a clear and trans-parent manner CR solved.

Clarification Request No.4. For Matarras I CPA-DD, project proponent should submit a project layout to the audit team, in order to evidence the description of the project.

A.2.2 OC The technical feasibility study has been submitted.

Ok. The documentation was provided in a clear and trans-parent manner CR solved.

Clarification Request No.5. A.2.3. OC Ok. In interviews with authori-



The Management entity (ME) should assure and evidence that the inclusion of the re-newable law (Decree 70/2007) doesn‟t allow by itself the implementation of small renew-able hydro power plants?

Section A.4.3 of the PoA DD, Sub-step 4a discusses the implementation of small hydro power plants in Hon-duras in the recent years, with Decree 70/2007 in force. Most remarkably all recent small hydro power plants in Honduras are registered or intend to register as CDM. The following phrase has been included: “It has to be noted that five of the listed projects have been commissioned with the renewable energy law (Decreto 70/2007) in full force. Therefore, it is apparent that the additional incentives for renewable electricity generation established by Decreto 70/2007 alone are not sufficient to overcome the identified barriers.”

ties in Honduras, it was clearly explained that the mentioned decree was not representing a clear incentive for renewable projects. With the inclusion of the sentence in the PoA DD, this issue is considered clearly solved.

Clarification Request No.6. A confirmation from Hydromasca is needed in order to evidence the voluntary action of this Management Entity.

A.3.2. OC A respective statement has been provided to the DOE.

Ok. The document called “Agreement Hidro-masca&ECAE_Management & commercialisation of car-bon credits 2009” was sub-mitted to the audit team. Rep-resentatives of both compa-nies are included on this document. CR solved.

Clarification Request No.7. The PoA participation of Empresa Cen-troamericana de Energia S.A. de C.V. (ECAE) should be submitted.

A.3.2. OC A respective agreement between ECAE and the coor-dinating entity Hidromasca has been provided to the DOE

Ok. The document called “Agreement Hidro-masca&ECAE_Management & commercialisation of car-bon credits 2009” was sub-mitted to the audit team. Rep-resentatives of both compa-nies are included on this document. CR solved.



Clarification Request No.8. Project proponent should submit the owner-ships certificates or assessment contracts that evidence the legal implementation of the project on the site.

A.4.1.2. OC The following documents have been provided to the DOE to evidence the legal implementation of the Matar-ras I project on the site: - contract for water rights

- property purchase agreements of the project site

Ok. The documents were properly checked and could be crosschecked with the qualitative environmental diagnosis of Matarras Pro-ject. The public instruments no. 101, 102, 291 and 292 (signed in a Notary) were provided to the audit team. CR solved.

Clarification Request No.9. In the Matarras I spread sheet the plant factor is 0.69. Please clarify from where this load factor is taken and whether if could be con-sidered conservative or not.

A.4.2.3. OC As for any electricity generation project the plant load factor is an indirect, auxiliary value that is easily calcu-lated by dividing the expected annual electricity genera-tion by the theoretical generation of the turbine at full load. In the case of the Matarras I Hydroelectric project this is 6,983 MWh / (1.15 MW * 365 days * 24 h) = 0.69. The values for annual electricity generation and installed capacity are taken from the feasibility study (section 15.1). Nevertheless, as stated above, the plant load factor is a derived value. In the Matarras I CPA DD and the spreadsheet it was only stated for the sake of com-pleteness. The value of interest is the annual electricity generation. Therefore, to avoid further confusion the plant load fac-tor has been removed from both the Matarras I CPA DD and the ER calculation spreadsheet. Furthermore Requirement:

Ok. The project complies with all the requirements. CR solved.



PP should clarify how the Plant Load Factor was vali-dated as per EB 48 annex 11. This information should be part of the PDD. OC The Plant Load Factor‟s determination is in line with EB 48 annex 11, as the data from which the load factor is derived, are from the Matarras I Feasibility Study, which was prepared by independent experts and revised and approved by an independent auditor. As per the requirements of EB 48 annex 11, the follow-ing revisions have consequently been made in the Matarras I PDD:

Table 4 “Key parameters applied in the calcula-tion of the Matarras I CPA Equity IRR” has been revised to include the Plant Load Factor

Section B.5.2 Baseline Emissions has been re-vised to include the derivation of the Plant Load Factor, with a remark on the consistency with EB 48 annex 1.

Accordingly, the corresponding sections of the Generic CPA DD and the Masca PoA DD have been revised. Furthermore, the Plant Load Factor is listed in the Fea-sibility Study Section 15.1.

Clarification Request No.10. It is not clear if the PoA will consider projects that involve modifying of existing power units, replacement or scrapping. The ME should

A.4.2.3. OC The PoA will not consider projects that involve modifi-cation or retrofit of existing power units. A respective eligibility criterion has been included in section A.4.2.2

Ok. The information is clearly presented in the revised PoA DD. CR solved.



clarify this issue.

of the PoA DD.

Clarification Request No.11. 1. Please provide information and evi-

dence (lists of participation, records, etc.) of the training program that will be followed up.

2. Please provide information regarding the maintenance program.

A.4.2.10 OC The training programme includes plant operation and maintenance training for plant operators and techni-cians, as well general principles of hydroelectric dams. The executive staff will go through training on CDM and its implications on the project. All employees will go through safety procedures training. Since the project has not yet started implementation, further information on the training and maintenance will be provided for the first periodic verification, including evidence for partici-pation.

Ok. The training specifica-tions are included on the fea-sibility studies. This issue has become FAR 1.

Clarification Request No.12. Project Proponent should provide a project schedule with the time-line of the whole pro-ject activity (In case of CPA), and with ex-pected time for inclusion of CPA. (In case of PoA)

A.4.2.11 OC An implementation timeline for Matarras I has been provided to the DOE. The timeline for the future inclusion of CPAs to the Masca PoA is not clear, and it is therefore impossible to define a timeline at this moment in time. A programme of activities is by definition a dynamic program, in which all activities of the programme is not known. This is also the case for the Masca Small Hydro PoA.

Ok. The timeline documenta-tion was provided in a clear and transparent manner CR solved.

Clarification Request No.13. The installation and managing of several fuel oil fired power plants could not be considered as an alternative? Project proponent should clarify the feasibility of the proposed alterna-

B.4.1. OC Although for a typical Honduran entrepreneur it is far more attractive to invest in a fossil fuel fired power plant, as extensively shown in section A.4.3 of the PoA DD, it is not an alternative considered by the implemen-

Ok. The project document has been correctly updated. CR solved.



tive.

ters of CPAs under the Masca Small Hydro Program. They firmly believe in the necessity to overcome Hon-duras‟ energy crisis with renewable energy sources and therefore would not consider a fossil fuel fired power plant as an alternative. A new eligibility criterion has been included in section A.4.2.2 to safeguard that only those CPA implementers who share the stated vision may apply for inclusion. A statement of ECAE, the pro-ject owner of Matarras confirming this vision has been provided to the DOE.

Clarification Request No.14. During the interviews with bank representa-tives, they indicated that CDM revenues are not necessary in order to grant a loan to a hydropower project. As this was a statement included both on the PoA-DD and on the CPA-DD, and is one of the bases of the addi-tionality discussion, project proponent should evidence in a transparent and solid manner that the CDM is totally necessary in order to proceed with the project.Without further subs-tantiation there might be a contradiction to some information received during interviews.

B.4.1. OC Indeed there was a misperception of the evaluation of the projects by the financing bank at the time of prepar-ing the DDs. Rather than seeing CDM revenues as in-dispensable extra revenue the bank regards them only as valuable collateral that improves the bankability of the projects. Hence, the investment barrier has been removed from section A.4.3 of the PoA DD. On the other hand respective bank letters had been chosen as an additionality criterion for CPAs in section E.5.2. Apparently, there are lots of other additionality arguments, e.g. institutional and market barriers as presented in A.4.3. These arguments had deliberately not been chosen as criteria in E.5.2 since they are qualitative and would require a lengthy and costly re-evaluation every time a new CPA is added. Therefore, in order to maintain a quantitative approach for the evaluation of new CPAs the bank letter criterion has been replaced with an investment analysis. The princi-ples of the investment analysis are laid out in section E.5.1 and the respective criterion has been included to

Ok. The assessment of addi-tionality has proven to be complete and correct. The values, rationales and as-sumptions referred on the CPA-DD were double-checked by the audit team. CR solved.



section E.5.2. The generic CPA DD has been adjusted accordingly. Furthermore, the analysis has been ap-plied to the Matarras I project in the real case CPA DD. Furthermore requirement CAR The energy tariff is indicated on the CPA as 0,1007 USD/kWh, but on the calculation sheet is indicated as $0,0956. PP should correct this contradiction. OC The energy tariff of $ 0,1007 indicated in the CPA is an average of the energy tariff over 20 years. The tariff increases over the years as can be confirmed in the PPA and the calculation sheet. The above stated value of $ 0,0956 is only the tariff of the first year. But it is appropriate to apply the average tariff in the CPA DD since the IRR is calculated based on financial flows of 20 years. CAR PP should provide the source for the electricity tariff in the investment analysis. Also, Project proponent should explain and evidence the increment of 1.015 consid-ered for future years in the electricity tariff. OC The source of the electricity tariff is the PPA of Matarras I project. We apologize; the source was not clearly indi-cated in the CPA DD. This has been corrected and the PPA has been provided to the DOE.



The increment of 1.5% is the maximum inflation ad-justment factor, as explained in the Matarras I PPA. This inflation adjustment factor is applied to the electric-ity tariff to account for the annual fluctuation of the United States Inflation Index. CAR All the assumptions, rationales and variables of the in-vestment analysis calculation sheets should be trans-lated in English. OC The spreadsheets of the financial calculations most relevant to the investment analysis have been trans-lated. New, translated spreadsheets “Final Estudio Fi-nanciero Matarras I 2009_Investment Analysis_ENG” is provided to the DOE. CR The document Brealey et al 2007: Fundamentals of Corporate Finance, p.296, should be submitted to the audit team. OC The relevant pages have been scanned from this book and are provided to the DOE.

Clarification Request No.15. Regarding table 1 of PoA-DD, an increase of nearly 40% on hydroelectric generation has occurred between 2002 and 2007. How this increase can be explained? Is the installation

B.4.5. OC In the period from 2002 to 2007 a total of 13 new hydro power plants with a total installed capacity of 86 MW have been commissioned in Honduras. The largest of these projects is Nacaome with an installed capacity of

Ok. The explanation is con-sidered sufficient. CR solved.



of new hydroelectric power plants a business as usual?

30 MW. This plant is owned by the national electricity company ENEE. The remaining 12 are privately owned with a total installed capacity of 56 MW and individual installed capacities of less than 15 MW. Out of these 10 are registered CDM projects representing an installed capacity of 52.5 MW. In conclusion there are two reasons for the strong in-crease of hydroelectric generation in Honduras be-tween 2002 and 2007: 1. A large new plant built by the Honduran state whose premises are surely not comparable to the situa-tion of the privately owned projects envisioned under this PoA. 2. Additional revenues from CDM for privately owned hydro projects.

Clarification Request No.16. The ENEE‟s dominant role should be ex-plained and evidenced by the project propo-nent.

B.4.5. OC The following statement is taken from the summary of the 2007 World Bank report “Honduras: Power Sector Issues and Options” on the situation of the electricity market in Honduras: “The new market model, and the underlying assump-tions made by the reformers, proved to be too ambi-tious for Honduras, with a small power system, a tradi-tion of political clientelism, and weak institutions. First, the competitive market envisioned in the law was not implemented because the distribution networks were not unbundled and privatized, and ENEE continued operating as a vertically integrated state-owned enter-prise and a de facto single buyer, responsible for pro-curing all the new energy required to meet demand.

Ok. The documentation and asseverations were cross-checked. The information is credible and reliable. CR solved.



Second, the separation of the government roles was not effective: SERNA and the new Energy Cabinet lacked the technical support and expertise to conduct energy planning and policymaking, and ENEE contin-ued to play a major role in these activities. The new regulator, the Comisión Nacional de Energía (CNE), had a marginal role due both to a lack of political sup-port to implement the new regulations, and to its lack of resources and ENEE’s dominant role in the sector.” This nicely explains the nature and the rationale of ENEEs dominant role for the Honduran electricity sec-tor. The report was prepared by the World Bank in re-sponse to a request by the Government of Honduras to assist in the preparation of a power sector strategy for the country. It is extensively cited in section A.4.3 of the PoA DD. The same conclusions can be observed in the 2005 report “Problems of Electric Energy: Fiscal and Market Impact in Honduras” prepared by FIDE (Foun-dation for Import and Export). Both reports have been submitted to the DOE as evidence. Furthermore, the issues presented in the cite above were discussed and confirmed by ENEE officials and independent power sector experts (AHPPER) during the onsite audit. For instance the consulted ENEE offi-cial confirmed that calculation of the marginal electricity price - per law responsibility of the CNEE – is in fact performed by ENEE. Altogether, the two reports produced by renowned ex-perts of the World Bank and FIDE and the interviews



performed during the onsite audit are considered as solid evidence for ENEEs dominant role in the Hondu-ran electricity sector.

Clarification Request No.17. On section A.4.3 of PoA-DD, it is indicated that “Of the 1067 MW capacity added from 1993 to 2007 910 MW have been installed by private investors” . Project proponent should evidence where from this indication is taken.

B.4.5. OC

The information has been taken from ENEE statistics published on the ENEE website. In addition, supple-menting data was obtained from ENEE officials directly. This data has been submitted by ENEE directly to the DOE.

Ok. The information was checked. CR solved.

Clarification Request No.18. How can the UNFCCC workshop on technol-ogy transfer declarations (dated on March 2000) be still applicable for the country real-ity?

B.4.5. OC As discussed in CR14 and its response banks seem to have changed their position regarding the financing of small hydro power projects. The UNFCCC workshop results therefore seem to be outdated. The investment barrier has been removed from section A.4.3 of the PoA DD.

Ok. CR solved.

Clarification Request No.19. Project Proponent should provide evidence (purchase orders, quotations, invoices, etc.) to justify the choice of the starting date of the project activity.

B.5.1. OC

The starting date of Matarras I Small Hydro is in the future and therefore no evidence is available yet. The project entity has not incurred any major expenses so far. Furthermore Requirement Even though the date is a future date, project propo-nent should clarify why that specific date was chosen (based on an estimation? A contract with ENEE? Etc). Also, the DNA notification of the CDM project in 26/11/2008 should be provided. OC

The starting date of the Matarras I Hydroelectric Project

Ok. The DNA‟s Notification was checked by the audit team and found correct.



has now been updated to 1/2/2010. This date reflects the estimated date of the turbine order, which is a common indication for the official starting date of a hy-droelectric plant. The justification of the starting date has been included in the CPA DD. In addition, the Start of Crediting Period has been up-dated to 1/9/2011. As a result of this update, tables 1, 8, 9, 10, 11 of the Matarras I CPA DD have been ad-justed. The Matarras I ER calculation sheets have been adjusted as well. The DNA notification from 26/11/2008 has been pro-vided to the DOE.

Clarification Request No.20. Regarding institutional barrier: Project propo-nent should demonstrate and provide addi-tional information about how the “fuel adjust-ment price” works on the national electricity market.

B.5.9. OC The “fuel adjustment price” has been further elaborated in the PoA DD, section A.4.3.

Ok. The information and dis-cussion in section A.4.3 of the PoA DD is now sourced with official publications. CR solved.

Clarification Request No.21. The mentioned PPAs (or a summary from a reliable source) should be submitted to the audit team in order to check the statements included for institutional barriers.

B.5.9. OC

The PPAs have been submitted.

Ok. The information consists on official publications. CR solved.

Clarification Request No.22. Project proponent should clarify how prices on electricity market are calculated. It should be clearly evidenced whether if ENEE per-formed the calculations or a national regula-tion (Law, supreme decree, etc) provide the

B.5.9. OC Art. 18 of the "Rules of the Framework Law of the Electric Sub-Sector" (Reglamento de la ley marco del sub-sector electrico, 1997) stipulates that: "The mar-ginal short term electricity price that is referenced in article 12 of the Law (Framework Law of the Electric

Ok. The information provided by Jorge Moraza, Renewable projects Chief in ENEE, justi-fied this explanation. CR solved.



procedures for calculations.

Sub-Sector) shall be approved by the Secretariat of Natural and Environmental Resources (Secretaria de Recursos Naturales y Ambientales, SERNA), as pro-posed by CNEE based on previously prepared techni-cal studies. ..." No further guidance on the calculation of the marginal electricity price is given by legislation. In practice the calculation of the marginal price is per-formed by ENEE based on generation information and a formula exclusively available to ENEE. Since this in-formation is not publicly available it is not possible to provide evidence for the formula and underlying data. The calculation is passed on to the CNEE for its ap-proval. This was confirmed onsite by an ENEE official to the audit team. This is considered to be sufficient evidence for the mere procedure. Besides, the frequently used marginal electricity price and the fuel adjustment price, as described in the re-sponse to CR20, a broad variety of additional charges (discussed in Table 3 of the PoA DD) is used in PPAs for thermal generators. Whilst in PPAs for renewable generation apart from the 10% incentive as granted by Decree 70/2007 no additional charges apply.

Clarification Request No.23. Regarding the Honduran Accounting Superior Court‟s investigation, the information presented on these paragraphs is more oriented to state the benefits to invest in fossil oil fired power plants, instead to describe the real barrier that represents for hydrological projects. The barrier should be clearly defined for hydroelectric pro-jects.

B.5.9. OC A summary has been added to the market barrier in section A.4.3 of the PoA DD, highlighting that the EN-VASA case is discussed as an example for thermal electricity generation in Honduras in comparison with the example for renewable electricity generation pro-vided by the Matarras I project. As in section A.4.3 the additionality of the program is concerned the two ex-amples intend to underpin the argument that the pro-

Ok. All the information is reli-able and credible. CR solved.



motion of small hydro projects would not occur in the absence of additional funding through CDM. The unat-tractiveness of Matarras I compared with ENVASA is a good way to show that odds for thermal generation are way better than for renewable generation. Therefore without additional incentives it is not likely that anybody would involve in the promotion of renewable electricity generation in Honduras. Furthermore requirement On the PDD is indicated that “a large part of the newly constructed thermal plants have been contracted under emergency conditions.” Project proponent should sub-mit a table with this detailed information (and evi-denced), as part of the discussion on this section. OC A table named “Thermal plants contracted by ENEE under emergency conditions” has been included in the PoA DD, presenting thermal plants contracted under “emergency conditions”, often involved the authoriza-tion for ENEE to directly contract capacity and set pric-es and “favourable” contract conditions. Evidences are referred to in the table, including the PPAs of the vari-ous plants as well as the pertaining decrees. Furthermore Requirement Regarding the table, PP should correct /provide the following evidences:

ENERSA PPA is not part of the PPA‟s provided by the PP. PP should submit this documentation

LUFUSA III is not part of the documentation provided. There are two “Lufusa II”, but the de-cree doesn‟t correspond with this data.



Correct “Lafussa” term. ELCATEX appears twice with different date. Cla-

rify. EMCE I and II does not correspond with the

PPA provided. (just called EMCE with contract Number 09-2006)

OC

The PPA of ENERSA (Decree 44-2003) has now been submitted to the DOE.

The PPA of LUFUSSA III (Decree 4-2003) has now been provided to the DOE.

The wrong term „Lafussa‟ has been replaced by Lufussa.

ELCATEX was listed twice, reflecting the first PPA from 2004 and the second PPA from 2006. Start of operation was in 2004. The PPA from 2004 is provided to the DOE as evidence. The emergency conditions are more clearly de-scribed in the 2006 PPA, and the 2004 PPA has therefore been deleted from the list to avoid con-fusion.

The PPAs of EMCE I (Decree 132-98) and EMCE II (Decree 18-99), as referred to in Table 3, have now been provided to the DOE. The EMCE contract number 09-2006 has not been included in this analysis.

Clarification Request No.24. B.5.11 OC Ok. The correction was



Rio Blanco and Peña Blanca Projects should be part of this analysis.

The analysis comprises hydroelectric projects of the last 3 years. Rio Blanco started operations in 2004 and is therefore not included. Nevertheless, it would not change the picture as it is a registered CDM project as well. A paragraph regarding the Peña Blanca project has been included explaining its background and rela-tion to the Masca Small Hydro Program.

checked. CR solved.

Clarification Request No.25. As the description on the PoA-DD indicates, the operating margin is calculated based on data on fuel consumption and net electricity generation of each power plant/unit. This is the Option A of the Simple OM. However, for some power plants there is no data about fuel con-sumption. Hence this option is not possible as the Tool indicates that “Option A should be preferred and must be used if fuel consump-tion data is available for each power plant / unit.” The Managing Entity should clarify why this option has been chosen, considering this approach.

B.6.2.4 OC The parameter OM has been included. The option used for calculating the simple OM is not Option A, because fuel consumption data is not available for all power plants / units. Therefore, the calculation of the OM is done via Option B. For those power plants/units where electricity generation and fuel consumption are avail-able Option B1 is chosen to calculate plants emission factor. For those power plants/units where no consis-tent fuel consumption data is available Option B2 is chosen to calculate the plants emission factor.

Ok. The option used is ac-cordingly with the guidelines. CR solved.

Clarification Request No.26. Values of the hydropower plants regarding generation and fuel consumption, as an ex-ample, are not matching with the official val-ues taken from the ENEE web page (Tables 6 and 36 form the ENEE‟s Website). Project proponent should clarify where this data was taken from, and correct if necessary.

B.6.3.2 OC The official statistics published on the ENEE webpage have been applied. The data which is not published on the web page (i.e. fuel consumption) was requested from and provided by ENEE officials directly. Please also refer to response to CAR12. Furthermore Requirement Even though the sources are provided in every table inside the calculation sheets, some slight differences could be found regarding the values (as an example

Ok. The data has been re-viewed and found mainly correct. CR solved.



Cañaveral appears with an annual generation of 186.309 GWh for 2006 on the excel and on table 6 the value informed is 185.9 GWh). These differences should be explained (as it appears that the PP handles different significant figures (3) compared with the source (1)), and all the data should be revised in order to provide the exact value of their sources.

OC

All tables in the calculation sheets have been thor-oughly checked for their consistency with their sources. The following inconsistencies were found and changed: - Electricity generation Cañaveral changed from 185.9

GWh to 186.309 GWh

- Nac. de Ingenieros M.F. and Nac. de Ingenieros L.P. have been included (although it makes no difference)

- Nac. de Ingenieros has been specified to Nac de In-genieros C.E.T

- Energy bought from El Salvador changed from 0.6 to 0.8 GWh

Assumptions made in calculations based on inconsis-tencies between the sources are explained in com-ments in each cell. Furthermore, the tables of Annex 3 in the PoA DD, the generic CPA DD and the Matarras I CPA DD have been checked and modified according to the above inconsis-tencies.

Clarification Request No.27. Regarding Net Generation of Hydropower Plant, Project Proponent should clarify whether:

B.7.1.1.1 In section E.7.1 of the PoA DD and section B.6.1 of the Matarras I CPA DD and the generic CPA DD the follow-ing clarifications have been included:

Ok. The information and cor-rections were checked. CR solved.



One or two meters will be used to cal-culate net generation.

The procedure to discount the own consumption of the power plant.

The meter will be ENEE‟s or Project Proponent‟s Property.

The generation informed by the inter-nal meter will be crosschecked by the electrical authority or not.

This information should be part of the PDD.

Two meters will be used

Internal consumption of the power plant does not need to be discounted

One meter will be owned by the project propo-nent and the other one by ENEE

Generation information will be cross checked by the grid operation

Clarification Request No.28. The date of issuance of the environmental authorization is more than two years old. Pro-ject proponent should clarify the reasons that delayed this project from that time until the current date.

D.1.1 OC

The reasons for the delay in implementation of hydro projects are extensively discussed in the additionality section. Meanwhile, the environmental license has been renewed. The document has been submitted to the DOE.

Ok. The information is con-sidered official and credible.

Clarification Request No.29. Project Proponent should clarify how the minimum ecological flow was determined and how this environmental indicator will be moni-tored.

D.1.1 OC The minimum ecological flow was determined per na-tional environmental legislation by the environmental authority SERNA. Its calculation is based on the yearly average water flow in the river as measured in the pre-vious year. The fulfilment of the minimum ecological flow is subject to surveillance by SERNA. The yearly renewal of the environmental license therefore guaran-tees that the minimum ecological flow is maintained. Since the minimum ecological flow is not a monitoring parameter of AMS I.D it will not be monitored in the context of the CDM project.

Ok. During the on site audit these statements could be checked with the official envi-ronmental authority. CR solved.



Clarification Request No.30. It is not clear why on the PoA-DD is indicated that the environmental analysis will be per-formed on a CPA level but on both generic CPA-DD and Matarras I CPA-DD, there is an alternative to perform this analysis at a PoA level, without further explanation.

D.1.1 OC

The mentioned alternative is part of the CPA-DD tem-plate. To avoid confusion it has been deleted. An ex-planation that and why the environmental analysis is undertaken at the CPA level has been added.

Ok. Corrections checked. CR solved.

Clarification Request No.31. On section E.6.1. it is indicated that for the project data from years 2004, 2005 and 2006 was used. However, on annex 3, data from 2005, 2006 and 2007 is available. Project proponent should clarify this apparent con-tradiction.

F.3.1 OC The vintage of data has been corrected in section E.6.1. The correct years are 2005, 2006 and 2007.


Corrective Action Request No.1. The date and the revision of the three de-sign documents should be included.

A.1.2 OC The version history has been included to the three de-sign documents.


Corrective Action Request No.2. On the Matarras I CPA-DD, on section A.2 is indicated that the installed capacity is 1 MW. However, on section A.4.6 is indicated that the installed capacity is 1.2 MW. Project proponent should correct this sentence and indicates the real installed capacity. See Clarification Request 3.

A.2.1 OC

The installed capacity is 1 MW according to the feasibil-ity study. It has been changed throughout the entire Matarras I CPA DD. Furthermore Requirement The section A.2 indicates an Installed Capacity of 1.15 MW. The feasibility study indicates also this Installed capacity. OC

The installed capacity is 1.15 MW. The above answer

Ok. The information now is con-sistent between the sources and the CDM documents. CAR closed.



was an error.

Corrective Action Request No.3. The ME should submit to the DOE the Letters of Approval from Honduran‟s and the Nether-lands‟s DNA.

A.3.2. OC The LoA from the Honduran and Dutch DNA have been submitted to the DOE. Furthermore Requirement The name of the project on LoA: “Matarras I Hydroelec-tric Project” and on the CPA-DD: “Matarras I Small Hy-dro” are not the same. As this is a slight difference, it is recommended that the name of the CPA should be changed to the name that appears on the LoA. OC

The name of the specific CPA has been changed to “Matarras I Hydroelectric Project”. Please also refer to CR 1.

Ok. The information is now consistent. CAR closed.

Corrective Action Request No.4. Not only the Powerhouse coordinates but the water intake‟s coordinates should be part of the CPA-DD. This information has to be included on the generic CPA-DD for all the next CPAs.

A.4.1.1 OC

Both coordinates have been included in the CPA DD of the real case and a placeholder has been included in the generic CPA-DD.

Ok. Corrections checked. CAR closed.

Corrective Action Request No.5. The figure 2 on Matarras I CPA-DD and its description should be translated to English.

A.4.1.1 OC Completed.


Corrective Action Request No.6. The applicability of the used Tools should be discussed on this section.

B.1.1.1 OC In section E.6.1 of the PoA DD a statement regarding the applied tools has been included.




Corrective Action Request No.7. Please include in the list of parameters of section B.7:

- Operating Margin - Build Margin - fuel consumption of each power

source (FCi,m,y) - net energy conversion efficiency of

power unit - Power unit emission factor (EFEl,m,y)

This values and the QA/QC procedures, ap-plied values, ways of monitoring, etc, should be included as part of each CPA-DD.

B.6.2.1 OC

The parameters have been included in section E.6.2 of the PoA DD and in section B.5.1 of the Matarras I CPA DD and the generic CPA DD. Since the ex-ante ap-proach is chosen parameters are not included in the monitoring sections. The parameter electricity imports has not been included since according to the "Tool to calculate the emission factor for an electricity system (version 01.1)" electricity imports from another country are treated as a low-cost-must-run power plant with an emission factor of 0 tCO2/MWh


Corrective Action Request No.8. The value expressed on this table (653.40 TCO2/MW) is inconsistent and cannot be considered real (a very conservative as-sumption is 1.3 TCO2/MW, how can be con-sidered 653 Tons?). The Managing Entity should provide the adequate value.

B.6.2.3 OC The correct value has been inserted.

Ok. Corrections were checked. CAR closed.

Corrective Action Request No.9. The vintage of data for BM should be docu-mented on section E.6.1

B.6.2.5. OC The vintage has been included.

Ok. The vintage for CM is specified ex ante. CAR closed.

Corrective Action Request No.10. The data unit should be converted from tCO2/TJ to tCO2/GJ.

B.6.2.7. OC The data unit has been changed to tCO2/GJ.




Corrective Action Request No.11. The tool requires that the lower limit at un-certainty 95% should be used. Project pro-ponent should change the values accord-ingly.

B.6.2.7. OC The values have been changed accordingly.


Corrective Action Request No.12. The default values used by the calculation, as well as the fuel consumption values, should be linked with their official sources (included as a footnote, along with the date of the last access to the link)

B.6.3.2 OC The source of the IPCC default values is included in the data tables in section E.6.2. The fuel consumption data has been provided directly by ENEE officials. ENEE has sent the same data directly to the DOE to grant correct-ness.

Ok. The data was checked directly. CAR closed.

Corrective Action Request No.13. A procedure to Monitoring data that includes responsibilities, Management, Quality Assur-ance, Means of Verification of data, data transferring and data trails should be submit-ted to the audit team. This procedure has to be indicated on PDD and should ensure that no double accounting occurs and that the status of verification can be determined any-time for each CPA.

B.7.2.1 OC A draft monitoring manual has been provided to the DOE. The manual and its content and procedures have been mentioned in the DDs. Furthermore Requirement No Draft Monitoring Manual is in the 4share server. Please provide. OC

The draft Monitoring Manual has now been provided to the DOE.

Ok. The draft manual was reviewed by the audit team and found correct. CAR closed.

Corrective Action Request No.14. Please indicate that the entity which deter-mined the baseline is a Project Participant.

B.8.15 OC Completed


Corrective Action Request No.15. Section A.4.4 of the CPA-DD indicated that the average of every year is 3,952 ton CO2e. This is consistent with the information on

C.2.1 OC The values have been revised for consistency.




section B.5.3. However, on table 6 “Emis-sion reductions from electricity generation”, the average is 3,293 ton CO2e. Project pro-ponent should correct this contradiction.

Corrective Action Request No.16. Project proponent should correct the date format to indicate the starting date of the crediting period (dd/mm/yyyy).

C.2.2 OC The starting date format has been corrected.


Corrective Action Request No.17. The managing entity should justify the se-lected choice regarding the stakeholder level.

E.1.1 OC The choice has been justified in section D.1 of the PoA DD.


Corrective Action Request No.18. As the EB do not support the voluntary mar-ket, these condition to be eligible as part of this PoA should be removed.

G.1.8. OC The reference to the voluntary market has been re-moved.


Forward Action Request No. 1

Project Proponent shall provide, on the ini-tial verification audit, the training schedule for the personnel involved on the CDM Monitoring Process.

A.4.2.10 OC

Okay. This should be monitored during the Initial Verification Process.

Forward Action request No. 2

The operation permits and licences of every CPA entering the program shall be scruti-nized during the first verification process.

B.4.3 OC

Okay. To be assessed during verifi-cation activities.

Further requests

Corrective Action Request No.19. The EF fixed at the PoA and CPA generic

OC Ok. The approach is consid-



shall be calculated based on the 3 years be-fore inclusion of the CPAs and not based on 3 years before 2007. Furthermore, it should be calculated for each CPA at the moment of inclusion and not fixed ex-ante for them.

Article 24 of the “Procedures for Registration of a PoA as a single CDM project activity and issuance of certi-fied emission reductions for a PoA stipulates that ”..., the latest version of the “Procedures for Renewal of a Crediting Period of a Registered CDM project activity” shall be applied, mutatis mutandis, to a PoA every seven years from the start of the crediting period” In accordance with these procedures, the ex-ante grid emission factor will be revised at the point of renewal of the crediting period of the PoA. Please also refer to the request for review for the PoA Uganda Municipal Waste Compost Programme, EB 53 (Request 3). Both, the PoA/renewal Procedures and the request for review clearly imply that ex-ante emission factors may be used by PoAs as long as they are renewed every 7 years. A respective statement has been included at the beginning of section E.6.2 of the PoA DD.

ered correct CAR closed.

Clarification Request No. 32. Further substantiate the institutional barriers considering that during the period of 1994-2007; private investment on 110MW on small hydros occurred.

OC In the time period 1994-2007, there was a private in-vestment in 110 MW, of which 55% was for biomass and 45% hydropower. Out of the 54.5 MW hydropower added to the grid in this time period, 97% are registered SSc Hydro CDM projects. Please refer to http://www.enee.hn/estadistica2007/pdf/Cuadro_3.2.pdf, http://www.enee.hn/estadistica2007/pdf/Cuadro_2.pdf and the CDM pipeline: http://cdmpipeline.org/publications/CDMpipeline.xlsx. Furthermore, please refer to CAR 23 regarding barrier

Ok, the sources are consid-ered reliable and the evidenc is correct . CR solved.

http://www.enee.hn/estadistica2007/pdf/Cuadro_3.2.pdf


http://www.enee.hn/estadistica2007/pdf/Cuadro_2.pdf

http://cdmpipeline.org/publications/CDMpipeline.xlsx



analysis in section A.4.3 of the PoA DD in general.

Clarification Request No. 33. Clarify how the promotion scheme for re-newable energies that includes tax exemp-tion and special feed-in tariffs have been considered in the investment analysis.

OC Tax exemptions and the feed-in tariff for renewable electricity have been fully accounted for in the financial spreadsheets of the Matarras I CPA. Particularly, the spreadsheets reflect a 5 year income tax exemption, VAT tax exemptions for equipment purchase and the 10% price incentive over the first 10 years of operation as stipulated in the PPA of the project with ENEE. Please also refer to CR 14.

Ok. The approach is consid-ered correct CR closed.

Corrective Action Request No.20. Include in the eligibility criteria in the PoA for inclusion CPAs, the information on the IRR calculation and the availability of permits and/or licenses as applicable.

OC

In our view, the eligibility criteria for inclusion of a pro-ject activity as CPA, as stipulated in the PoA Proce-dures (EB47, Annex 29, par. 4(g)), are represented in the PoA DD form in two sections: A.4.2.2 and E.5.2 (corresponding with sections B.2 and B.3 respectively in the CPA DD form). Section A.4.2.2 relates to general eligibility criteria that may be required to prove eligibility of a CPA under the framework of the PoA and the ap-plied baseline and monitoring methodology. Section E.5.2 relates to the criteria that have to be assessed to prove additionality of a CPA according to the approach defined either in section A.4.3 or section E.5.1. Consequently we included eligibility criteria relating to the additionality of CPAs in sections E.5.2 (PoA DD) and B.3 (CPA DD). Including the same criteria again in sections A.4.2.2/B.2 would lead to confusion since the same information would be provided twice. On the other

Ok. The approach is consid-ered correct CAR closed.



hand including additionality criteria exclusively in sec-tions A.4.2.2/B.2 would leave sections E.5.2/B.3 blank, which we don‟t think is intended by the EB. Regarding the inclusion of licenses and permits as eli-gibility criteria we consider it neither feasible nor re-quired by CDM rules. Firstly, soliciting and obtaining licenses and permits for a hydro project is a lengthy process. They are typically obtained only shortly before start of construction (i.e. starting date of a CPA) There-fore, inclusion of a CPA may well be undertaken at a point in time when licenses are not available yet. Fur-thermore, licenses and permits are not a requirement under the CDM. The DNA may implicitly demand them within the requirements for host country approval. In-deed the Letter of Approval of the Honduran DNA for this PoA is conditional on proper presentation of all relevant licenses and permits for future CPAs in due time. Nonetheless, based on the explanations above these shall not become eligibility criteria to the PoA.

Corrective Action Request No.21. The tax exception shall be mentioned in Ta-ble 4 of the PoA-DD; Further cases, than the ENVASA case, shall be mentioned in the market barrier analysis in order to clearly demonstrate this barrier; As the price incentive of marginal price men-tioned in the market barrier is directly related to investment analysis as it can be quantify in monetary terms, this cannot be applied in this barrier analysis.

OC

Table 4 of the PoA-DD is included under „Institutional Barriers‟ and is an overview of various barriers which have been identified through an extensive review of PPAs from thermal and renewable electricity projects in Honduras. Tax exemption is a market instrument and is not elaborated in Power Purchase Agreement. It is therefore not included in Table 4 of the PoADD. The ENVASA case could only be included as an exam-ple, because there was public information on the case, which is not normal practice. The investigation con-




ducted by the Honduran Accounting Superior Court (Tribunal Superior de Cuentas) disclosed information to the public on the practices of the ENEE. Fortunately, this exemplary and uniquely disclosed case could be used to underline the barriers faced by small renewable energy producers. The price incentive of marginal price mentioned on page 13 of the PoA DD is referred to in a comparison of market instruments implemented for thermal vs. renew-able energy projects. The fuel price adjustment for thermal energy generation is here compared to the marginal price incentive for renewable energy genera-tion. This comparison was included as part of proving the uneven conditions for renewable energy generation as opposed to thermal. Furthermore, please refer to CAR 23 regarding barrier analysis in section A.4.3 of the PoA DD in general.

Corrective Action Request No.22. Provide clear sources for the information presented in Table 7: Additionality argumen-tation from similar project activities in Hon-duras, in the PoA-DD

OC More specific sources to this table (now Table 9) have been added.

Ok, the sources were checked and found correct.

Corrective Action Request No.23. The requests presented below shall be fur-ther considered in the PoA-DD:

1. As the price incentive of marginal price mentioned in the market barrier is directly related to investment analy-

OC The sub-items addressed in this CAR relate to four principal areas:

(a) Issues regarding the barrier analysis in section A.4.3 in the PoA DD. (items 1. and 2.)

Ok, all the answers were re-checked and found correctly applied.



sis (as it can be quantified in mone-tary terms) and therefore this cannot be applied in this barrier analysis;

2. Provide clear sources for the informa-tion presented in Table 7: Additionality argumentation from similar project ac-tivities in Honduras, in the PoA-DD;

3. On benchmark analysis provided in the PoA-DD, it shall be clarified when the Equite IRR will be applicable and the source of the formulae presented; also further explanation shall be in-cluded on the parameters used;

4. Provide further evidences for the value of the Country Risk Premium (CRP) used as other sources (http://www.sjsu.edu/faculty/watkins/countryrisk.htm) provide a lower value than the one used;

5. It shall be considered and properly presented in the PoA-DD that the eq-uity IRR of the CPA shall be calcu-lated using a fixed excel file as calcu-lation tool which cannot be changed during the PoA crediting period;

6. Further clarify the reason for the crite-rion established to prove the preva-lence of the institutional barriers and the common practice for small run-of river hydro power when assessing the additionality of a CPA;

7. A clear criterion for leakage consid-

(b) Issues regarding the benchmark analysis in sec-tion E.5.1 (PoA DD) and section B.3 (Matarras I CPA DD). (items 3., 4. and 5.)

(c) Criterion to determine common practice for small run-of-river hydro power plants in Honduras in section E.5.2 of the PoA DD. (item 6.)

(d) Addressing of Leakage from equipment trans-ferred from other activities. (item 7.)

We will respond to the points risen area by area: (a) The barrier analysis in section A.4.3 is a residual part of the first version of the PoA DD. We later shifted to proving additionality at the CPA level. We apologize that this was not clearly indicated in the PoA DD. A re-spective introduction has been included at the begin-ning of section A.4.3. Furthermore, the common prac-tice analysis in Step 4 has been moved in its entirety to section E.5.1 where previously it was only referenced. Also, the stepwise presentation as per the additionality tool has been removed from section A.4.3 as it led to the misperception that additionality is proven on the PoA level. Nevertheless, we have kept the barrier pas-sages in the PoA DD since they illustrate the back-ground and environment of the PoA well. We have clearly marked them as surplus anecdotal information. Item 1: please see answer to CAR 21 Item 2: please see answer to CAR 22 (b) Item 3: The additionality analysis, to be proven on CPA

http://www.sjsu.edu/faculty/watkins/countryrisk.htm

http://www.sjsu.edu/faculty/watkins/countryrisk.htm



eration at CPAs needs to be included for confirming that the equipment is new and no equipment has been transferred from or to another part.

level, has been modified to enable the application of investment or barrier analysis, or both. Sections A.4.3 and E.5.1 of the PoA DD have been modified to present this choice. Guidelines for how a barrier analysis should be carried out have been included in Section E.5.1 of the PoA DD, along the lines of the “Tool for the demon-stration and assessment of additionality” (Version 5.2). The approach for the benchmark analysis; the calcula-tion of the equity IRR and the selection of the appropri-ate benchmark expected return on equity, has been expanded in order to explain the CAPM better. There are several available methods to determine the Equity Risk Premium (ERP), which is added to the Risk free rate to determine the Return on Equity (RE). The stan-dard CAPM approach for calculating the ERP requires substantial reliable, historical data, which is often un-available on emerging markets. Therefore, in the PoA DD optional methods have been developed to deter-mine the ERP. The principal methods are “Standard CAPM” and “Base premium plus country risk premium”. Since as of today no reliable data for the “Standard CAPM” approach is available for the Matarras I CPA the approach chosen is the “Base premium plus country risk premium”. Due to the common misperception regarding the differ-ence between equity and project IRR, an information box on the Project IRR of Matarras I has been included in section B.3. of the Matarras I CPA DD. This has been done to underline that Project IRRs are generally lower than Equity IRRs.

Item 4: The background and determination of the CRP



value as a parameter to an alternative ERP determina-tion, has been elaborated in section E.5.1 of the PoADD. This value has been applied for the Bench-mark Analysis of Matarras I, due to the lack of data to follow the standard CAPM approach to calculate the ERP. In the Matarras I CPA, the ERP is calculated by adding the CRP to the added risk premium of a mature market with sufficient historical data, in this case the US market. It is a scientifically approved method taken from Professor A. Damodaran at the Stern School of Busi-ness of the New York University, a worldwide renowned business school. Prof. Damodaran also provides exten-sive and updated data on his website based on third party financial analyst data (Moody‟s, Bloomberg, etc.). This data is regarded to be extremely reliable and most suitable to be deployed in the context of Prof. Damoda-ran‟s own approach to calculate the ERP. As opposed to the data obtained from Prof. Damodaran the reference provided in the comment from the DOE has no indication of the origination of the information and the date/year from which it is taken and can there-fore not be considered comparable. On the other hand, we do acknowledge for the sake of conservativeness that a comparison of the ERP ap-proaches applied for the Matarras I CPA is desirable. Since no other suitable sources for the country risk premium as used by Prof. Damodaran are available we have therefore also calculated the benchmark using the Standard CAPM approach in the Matarras I CPA DD. Because, as explained above, no specific data for Hon-duras is available we have calculated the Standard CAPM benchmark based on Mexican data. This can be regarded highly conservative as Mexico is a much more



mature and stable economy than Honduras and inves-tor expectations on returns from Mexican investments are substantially lower. The respective benchmark value is 23,27% which is notably higher than the benchmark of 19,13% chosen to demonstrate addition-ality of the Matarras I CPA. Another indicator to underpin the conservativeness of the benchmark calculated for Matarras I CPA is a benchmark used by the registered Honduran Tres Valles Cogeneration Project (Project 1066). The project applies the average bank active rate, charged by the National Bank of Honduras, as a benchmark for the project (!) IRR. The respective value for the year 2008 (http://www.bch.hn/esteco/monetaria/tasamax.pdf) would be 33,09%. In conclusion, compared to the alternative benchmarks of 33.09% and 23.27% the benchmark of 19.13 % ap-plied for the Matarras I CPA is highly conservative.

Item 5. There are several implementing entities of the various CPAs of the Masca PoA. It would be impossible to demand different independent companies to apply a fixed excel file as calculation tool for equity IRR. This is neither a requirement in the UNFCCC additionality tool, nor the guidance to investment analysis, nor the Proce-dures to the Registration of a PoA. The approach be-hind the calculation of equity IRR is set in stone, both along general financial guidelines and along the addi-tionality tool. It should therefore not be necessary to have a fixed tool/fixed excel file.

Item 6. The 70% criteria reflects the percentages of



small scale hydro projects connected to the grid, in-stalled since 1986 (time of first instalment of small scale hydros): at the time of first submission of the PDD, 70% of all small scale hydro project are CDM, the other 15% are private owned small scale hydros and 15% are state owned small scale hydros. Please refer to the CDM pipeline: http://cdmpipeline.org/publications/CDMpipeline.xlsx, and ENEE statistics http://www.enee.hn/estadistica2007/pdf/Cuadro_3.2.pdf, http://www.enee.hn/estadistica2007/pdf/Cuadro_2.pdf Section E.5.2 has been modified accordingly with more information.

(d)

Item 7. A criterion stating that energy generating equipment will not be transferred from another activity and that existing equipment will not be transferred to another activity will be included as an eligibility criteria for the inclusion of a SSC-CPA in the PoA. Changes have been made to section A.4.2.2. of the PoA DD. and section B.2 of the Matarras I PDD.

Corrective Action Request No.24. Further clarify and substantiate the value obtained in the IRR calculation.

OC:

Please refer to CAR 23 b). Ok. The approach is consid-ered correct CAR closed.

Corrective Action Request No.25. Provide further information and evidences in order to substantiate the turbine efficiency used and the plant load factor used.

OC:

Load Factor: CR 9 provides elaborate information and evidence on the Load Factor. Turbine efficiency: Section 10.6 of the Matarras I feasi-bility study substantiates that the turbine peak efficiency is 86,8%. This information from the feasibility study be-


http://cdmpipeline.org/publications/CDMpipeline.xlsx






longs to the planning phase and may have to be up-dated as the turbine is purchased and the final design of the plant is conclusively defined after the construc-tion and testing phases.

Clarification Request No. 34. Clarify how the starting date of the PoA could be at 2005 (as mentioned in PoA-DD version 04) when by that time no information on PoA was available.

OC:

The starting date was set to 2005 to reflect the time of consideration of CDM of the project developers. At this point in time they only had the options of normal CDM for each and every project. It was first in discussion with the carbon consultant OneCarbon that the project de-velopers were informed about the possibilities offered by programmatic CDM. The starting date of the Masca PoA has therefore now been corrected to reflect the date of the contracting of the carbon consultant for the development of a pro-grammatic CDM project. The starting date has conse-quently been set to the 20 February 2008, which was the date when OneCarbon was contracted. Section B.1 has been modified accordingly. In addition, more information has been included in section A1 and A2.




Table 3 Unresolved Corrective Action and Clarification Requests (in case of denials)

Clarifications and / or corrective action requests by validation team

Id. of

CAR/CR

Explanation of Conclusion for Denial

- - -


Annex 2: Information Reference List

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Validation of the CDM Project “Masca Small Hydro Programme” Information Reference List

Page 1 of 13

TÜV SÜD INDUSTRIE SERVICE GMBH

Ref

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No.

Author/Editor/

Issuer Title/Type of Document. Publication place

Issuance and/or

submission

date(dd/mm/yyyy)

Additional Information

(Relevance in CDM

Context)

TÜV SÜD

Onsite interview (03.02.2009 - 06.02.2009) carried out by TÜV SÜD: Validation Team:

Lester Saldías Kiefer GHG Auditor TÜV SÜD Industrie Service Eric Tolcach GHG Auditor TÜV SÜD Industrie Service Interviewed Persons: Ole Meier Hann One Carbon Consultant Gabriel Villars ECAE Personnel Adolfo Pagoada Municipality Consultant Juan Padilla Local Resident Edward Aguilar Local Church’s Participant Leticia Raning Board of Trustee´s Secretary Magdalena B. Star Surmounting Foundation Mercedes Martinez Star Surmounting Foundation Martino Maldonado Star Surmounting Foundation Daisi Padilla Star Surmounting Foundation John Cerda Board Chief Efrain Argueto Star Surmounting Foundation Andres Morales Board Participant Antun Lusela Board of Trustee´s Participant José Enrique Local Resident Roberto Pacheco Local Resident

06/02/2009

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submission

date(dd/mm/yyyy)


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Marco Bonilla Local Resident Marco Sambrano Local Resident Leonardo Rodriguez Local Board’s secretary Oralio Bonilla Board of Trustee´s Participant Melida Naldonado Local Board President Antonio Henriquez Local Resident. Saturnino Movoli Local Board N02 President Alcides Boanergeleon CEB director Emma Moreno Star Surmounting Foundation Hernan Euceda Local Resident Nardas Recinos Teacher Rafael Garcia Water Board President Jorge Humbert Local Resident José Arita Municipality’s Regent Ruben Martinez Local Resident Antonio Arita Municipality’s Treasurer Francisco Arita Local Resident Julio Garcia Regent Victor Romero Local Resident Ernesto Lora Local Resident Regino Reyes Board of Trustee´s Participant

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Author/Editor/


Issuance and/or

submission

date(dd/mm/yyyy)


(Relevance in CDM

Context)

Alfonso Arita Trader Pedro R. Local Residents Committee Samuel Valle Local Resident Daniel Escalante Local Resident Geovanni Cruz General Manager E.C.A.E. Alejandra Lopez Business Administrative Banpais Ramon Fuentes Business Manager Banpais Jorge Moraza Chief in Renewable Projects ENEE Xiomara Pinto AHPPER Director Valerio Gutierrez Environmental Sub-Minister Mirza Castro PNCC Coordinator Olga Aleman CDM Energy Unit Eduardo Membreno OC Representant

0. UNFCCC Webpage “Masca Small Hydro Programme” http://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/QLPECOPSXV6XH8YWC32E7APNLZWU6M/view.html

16-12-2008 PDD for GSP.

1. IPCC Guidelines for National Greenhouse Gas Inventories. 2006 2. UNFCCC Validation and Verification Manual ver 1.1, EB 51 Annex 3 04/12/2009

3. UNFCCC “Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories, Type I.D Grid connected renewable electricity generation” AMS I.D, Version 13.

EB 36

4. Official Newspaper Regulation of the Environmental Law No. 109-93 05/02/94

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No.

Author/Editor/


Issuance and/or

submission

date(dd/mm/yyyy)


(Relevance in CDM

Context)

La Gaceta.

5. One Carbon Consultants. Fuels 2003-2007 (Combustibles 2003-2007) Excel File 17/07/2009

Fuel consumption of hydroelectric power plants

6. One Carbon Consultants. Start Up Year Excel File (Año de Puesta en Servicio) 17/07/2009

7. Aswath Damodaran Equity Risk Premiums (ERP): Determinants, Estimation and Implications - A post-crisis Update

10/2007

8. ECAE “Feasibility study for Matarras I Hydroelectric Project”. 06/2009

Prepared by sectoral experts and ECAE, and audited by an independent third party (CONFIE S.A.) on July 15th, 2009.

9. Official Newspaper La Gaceta.. Honduran Renewable Law 70-2007 17/07/2009

10. Manuel Dussan on behalf of FIDE. “The Electric Energy Problem: Fiscal and Market Impact in Honduras” 09/2005

11. Official Newspaper La Gaceta. Decree 158-94 Electric Sector Regulation. 26/11/1994

12. SERNA Honduras Letter of Approval for PoA Masca Small Hydro Programe. 22/06/2009 Honduran Approval

13. Ministry of Housing, spatial planning and

Environment Letter of Approval for PoA Masca Small Hydro Programe. 09/06/2009 Netherland Approval

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No.

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Issuance and/or

submission

date(dd/mm/yyyy)


(Relevance in CDM

Context)

14.

Salomón Lopez Ayala,

Hydromasca President

Letter between Hydromasca y ENEE stating the following steps in order to implement the project. 16/01/2008

15. Ossberger “Peña Blanca Turbina Invoice” 19/03/2008

16. Hidromasca S.A. de C.V. PoA Voluntary Action Statement by Hidromasca 21/04/2009 Signed by its president,

Salomón Lopez Ayala.

17. Official Newspaper La Gaceta. Reforms to the Electric Sector Framework. Decree 131-98 20/05/1998

18. Official Newspaper La Gaceta. General Environmental Law 109-93. 05/02/1994

19. World Bank HONDURAS, Power Sector Issues and Options 10/07/2007

20. ECAE and ENEE Contract No. 043-2007 between ECAE and ENEE for electric energy selling. 09/02/2009 PPA of Matarras Project

21. OneCarbon Excel File “090710 Final Estudio Financiero Matarras I 2009” (Matarras Financial Study 2009) 17/07/2009 Investment Analysis for

Matarras I Project.

22. Hidromasca and ECAE

Agreement between Hidromasca & ECAE_for the Management and commercialization of carbon credits. 02/03/2009 ECAE is the owner of the

Matarras I project.

23. ENEE Table 6 of the statistical report of the ENEE: Available electric energy in the interconnected national system. 27/11/2009


24. SERNA Environmental License No. 96-2008 granted to the Matarras I project. 08/09/2003 25. Official Newspaper Water Contract for Matarras I Project Decree 187-2006 01/03/2007 Constitutionally, it

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No.

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Issuance and/or

submission

date(dd/mm/yyyy)


(Relevance in CDM

Context)

La Gaceta. corresponds to the Senate the approval of water contracts for hydro projects.

26. M.Sc. Carlos R. Martínez Ardón

Qualitative Environmental Diagnosis for Matarras I Project. 10/2005

The diagnosis was

performed by an expert

with inscription on the

Environmental authority: No. RI-0116-2005

27. Marcos Rojas Pinto, Public Notary

Contract between Esteban Portillo and ECAE regarding the selling of the land for the Matarras I Hydroelectric Project. 28/03/2005 Ownership of ECAE.

28. WASSERKRAFT VOLK AG Matarras_Turbine quotation 2009. 23/01/2009

29. Empresa Azucarera Yojoa and ENEE

Contract No. 018-2006 between Empresa Azucarera Yojoa and ENEE for electric energy selling 11/05/2007

30.

Empresa Compañía Azucarera

Hondureña S.A and ENEE

Contract No. 044-2004 between Empresa Azucarera Yojoa and ENEE for electric energy selling 07/12/2004

31. CENIT, S.A. de C.V.and ENEE

Contract No. 16-2004 between CENIT, S.A. de C.V. and ENEE for electric energy selling 19/03/2004

32. EECOPALSA and ENEE

Contract No. 17-2006 between EECOPALSA and ENEE for electric energy selling 10/05/2007

33. ELCATEX and ENEE Contract No. O 16-2006 between ELCATEX and ENEE for electric energy selling 11/07/2006

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No.

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Issuance and/or

submission

date(dd/mm/yyyy)


(Relevance in CDM

Context)

34. Official Newspaper La Gaceta.

Decree No. 240-93 between ELCOSA and ENEE for electric energy selling 08/01/2004

35. EMCE and ENEE Contract No. O 09-2006 between EMCE and ENEE for electric energy selling. 24/02/2006


Decree No. 216-2002 between Hidrocel and ENEE for electric energy selling of Cortecito Hydropower plant 09/09/2002


Decree No. 253-2002 between Hidrocel and ENEE for electric energy selling of San Carlos Hydropower plant 16/03/2002


Decree No. 207-2005 between Inversiones Hondureñas S.A.de C.V. and ENEE for electric energy selling of El Progreso Hydropower plant 14/11/2005


Decree No. 52-1995 between LUFUSSA and ENEE for electric energy selling of 40 MW. 18/05/1995 PPA Lufussa I


Decree No. 133-1998 between LUFUSSA and ENEE for electric energy selling of 60 MW. 18/06/1998 PPA Lufussa II



42. Humberto Dominguez Aguiluz

Public Deed No 37 regarding the constitution of Empresa Centroamericana de Energía S.A. de C.V. ECAE (Central American Energy Enterprise public limited company with variable capital)

02/03/2004 Used for evidence of Timeline PoA.

43. SERNA ande ECAE S.A. de C.V. Contract for complaince of environmental control measurements. 25/01/2006 Used for evidence of

Timeline PoA. 44. SERNA Environmental License No. 97-2008 granted to the Mangungo project. 08-09-2008

45. WASSERKRAFT VOLK AG Confirmation of Order Turbine for Mangungo Project 25/03/2009

Public

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Ref

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No.

Author/Editor/


Issuance and/or

submission

date(dd/mm/yyyy)


(Relevance in CDM

Context)

46. Official Newspaper La Gaceta. Decree 133-2006 Water Permits for Mangungo Project. 16/11/2006

47. Official Newspaper La Gaceta. Mangungo Operation contract, Decree 129-2006 12/12/2006

48. ECAE and ENEE Contract No. 44-2007 between ECAE and ENEE for electric energy selling of Mangungo Hydroelectric project. 09/02/2009 PPA.

49. Salomón Lopez Ayala Request of a PPA with ENEE by ECAE S.A. de C.V. for Mangungo project 27/09/2006 President of ECAE.

50. SERNA and ECAE S.A. de C.V. Water Use contract between SERNA and ECAE for Masca Project. 26/10/2009

51. Adriana Palma Espinal

Public Deed No 37 regarding the constitution of Sociedad Hidroeléctrica de Masca S.A. de C.V. (Hydroelectric Masca Society public limited company with variable capital)

06/02/2003

52. Salomón Lopez Ayala Request of a PPA with ENEE by Hidromasca S.A. de C.V. for Masca Project. 27/09/2006

53. SERNA Environmental authorization of Peña Blanca Hydroelectric plant No. 64-2005 29/09/2005

54. SERNA and

Hidroeléctrica Peña Blanca S.A. de C.V.

Water Use contract between SERNA and Hidroeléctrica Peña Blanca S.A. de C.V. for Peña Blanca Project. 29/07/2005

55.

Hidroeléctrica Peña Blanca S.A. de C.V.

and American Pacific Honduras S.A. de

C.V.

Power Purchase Agreement between Hidroeléctrica Peña Blanca S.A. de C.V. and American Pacific Honduras S.A. de C.V. 25/07/2008

56. Banco del País S.A. Expenditure Agreement between Banco del País S.A. and Hidroeléctrica 29/10/2008

Public

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date(dd/mm/yyyy)


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and Hidroeléctrica Peña Blanca S.A. de

C.V.

Peña Blanca S.A. de C.V.

57. Oscar Madrid Turcios Public Deed No 37 regarding the constitution of Hidroeléctrica Peña Blanca S.A. C.V. (Hydroelectric Peña Blanca public limited company with variable capital)

14/05/2002

58. Hidroeléctrica Peña Blanca S.A. de C.V.

Invoice by Power Purchase from Hidroeléctrica Peña Blanca S.A. de C.V. to Mining Company American Pacific Honduras S.A. de C.V. 01/10/2009

59. Arnoldo Palma Isaacs Request of a PPA with ENEE by Hidroeléctrica Peña Blanca S.A. de C.V. 27/09/2006

60. Ossberger GmbH + Co, Confirmation of Order Turbine for Peña Blanca Hydroelectric Project 25/03/2009

61. One Carbon Consultants.

Excel file ”Timeline PoA”, showing the milestones and evidences for the entire life cycle of the Programme. 26/10/2009

62.

Hidroeléctrica Peña Blanca S.A. de C.V., ECAE S.A. de C.V.

and Hidromasca S.A. de C.V.

Meeting Board Report of Hidroeléctrica Peña Blanca S.A. de C.V., ECAE S.A. de C.V. and Hidromasca S.A. de C.V. 20/01/2005

On this meeting was considered the CDM alternative in order to carry on with the project.

63.

Hidroeléctrica Peña Blanca S.A. de C.V., ECAE S.A. de C.V.


Meeting Board Report of Hidroeléctrica Peña Blanca S.A. de C.V., ECAE S.A. de C.V. and Hidromasca S.A. de C.V. 15/01/2006

It is considered the advances on the projects and the necessity to follow exploring the CDM alternative.

64. One Carbon B.V. and Commercialization of Carbon credits contract between One Carbon B.V. 20/02/2008

Public

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submission

date(dd/mm/yyyy)


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Hidromasca S.A. de C.V.



Decree No. 132-98 between EMCE S.A. de C.V. and ENEE for electric energy selling of 40 MW. 16/06/1998


Decree No. 18-99 between EMCE S.A. de C.V. and ENEE for electric energy selling of additional 10 MW. 24/04/1999


Decree No. 164-2003 between ENERSA and ENEE for electric energy selling of additional 200 MW. 03/01/2004



69. One Carbon B.V. Monitoring Manual Masca Small Hydro Programme v0.1 27/11/2009 Documented procedures for monitoring.

70. Salomón Lopez Ayala Notification to DNA of the intention to seek CDM validation 26/11/2008

71. Richard A, Brealey et alters Fundamentals of Corporate finance. 27/11/2009 Published by Mc Graw

Hill Irwin Companies.

72. Manuel I. Dussan

Problemática de la energía eléctrica: impacto fiscal y de mercado en Honduras, Resumen Ejecutivo, FIDE, Tegucigalpa, septiembre de 2005. (The problems of electrical energy: fiscal impact and effects on the Honduran market, Executive Summary, FIDE, Tegucigalpa, September 2005)

09/2005

Crosschecked with http://www.hondurasinfo.hn/pub/Problem%C3%A1tica%20de%20la%20energ%C3%ADa%20el%C3%A9ctrica%20Resumen%20Ejecutivo.pdf

73. Pineda, Rafael, President of

Decree No. 267-98, downloaded directly from

http://www.cne.gob.hn/NR/rdonlyres/31733914-2B0E-4DD6-B323-

9470AC238635/748/Decreto26798.pdf, accessed on 19/01/2010. 02/10/2009

http://www.hondurasinfo.hn/pub/Problem%C3%A1tica%20de%20la%20energ%C3%ADa%20el%C3%A9ctrica%20Resumen%20Ejecutivo.pdf






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date(dd/mm/yyyy)


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Honduras.

74. Rodríguez, Luis

“El Heraldo” Newspaper, updated 19-02-2009, entitled “Government

privileges carbon based companies”

http://www.elheraldo.hn/Ediciones/2009/02/20/Noticias/Gobierno-

privilegia-a-empresa-carbonera, accessed on 02/10/2009

19-02-2009

75. ENEE’s Webpage. Info Available for data energy: http://www.enee.hn/estadistica2007/capacidadinstalada.html

02/10/2009

76. ENEE’s Webpage. Info Available for data of fuel consumption: http://www.enee.hn/estadistica2007/infofinanciera.html

02/10/2009

77. ENEE’s Webpage. Info Available For fuel consumption of the plants: http://www.enee.hn/estadistica2007/pdf/Cuadro_36.pdf

02/10/2009

78. ENEE’s Webpage. Info Available For fuel consumption (year 2007) http://www.enee.hn/estadistica2007/pdf/Cuadro_34.pdf

02/10/2009

79. El Heraldo Newspaper Newspaper clip where the changes in the electric tariff can be noticed. 21/01/2009

Crosschecked with http://www.heraldohn.com/index.php/Econom%C3%ADa/Ediciones/2009/01/22/Noticias/La-Comision-de-Energia-fijara-tarifazo-electrico (Accessed 19/05/2009)


Official report from ENEE communicating the new electric tarrif for Honduran national grid. 31/01/2009

81. Honduran Accounting

Superior Court

Report No. 04/2008-DASII: Investigacion especial practicada a la evaluación del proceso de contratación directa para suministro de 250 MW de energía eléctrica. (Special investigation performed to the

11/04/2008

http://www.elheraldo.hn/Ediciones/2009/02/20/Noticias/Gobierno-privilegia-a-empresa-carbonera

http://www.elheraldo.hn/Ediciones/2009/02/20/Noticias/Gobierno-privilegia-a-empresa-carbonera

http://www.enee.hn/estadistica2007/capacidadinstalada.html

http://www.heraldohn.com/index.php/Econom%C3%ADa/Ediciones/2009/01/22/Noticias/La-Comision-de-Energia-fijara-tarifazo-electrico





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evaluation of the direct contract process for 250 MW electric energy supply).

82. E.C.A.E. S.A. de C.V. Personal Invitations to attend the meeting regarding stakeholder’s information. 05/09/2008

83. “El Mundo” Newspaper

Published announcement on the newspaper, inviting to the stakeholders meeting. 04/09/2008

84. E.C.A.E. S.A. de C.V. Scanned list of participants of the stakeholder meeting 19/09/2008 85. E.C.A.E. S.A. de C.V. Summary of comments received during the stakeholder meeting. 19/09/2008.

86. World Bank/IFC http://www.doingbusiness.org/ExploreTopics/PayingTaxes. Economical

study where can be consulted the VAT of Honduras. 27/11/2009

87. Official Newspaper La Gaceta. Matarras Operation Contract. 25/01/2007

88. One Carbon B.V 091116 Honduras CM EF 2005-2007_ER Matarras I 19/11/2009 Final calculation tool for EF.

89. One Carbon B.V 091113 Final Estudio Financiero Matarras I 2009_Investment Analysis_ENG 19/11/2009 Final calculation tool for

Investment analysis. 90. One Carbon B.V SSC-CPA-DD Masca PoA generic ver 5. 26/03/2010 Final generic CPA-DD 91. One Carbon B.V SSC-CPA-DD Matarras I WTC ver 5 26/03/2010 Final specific CPA-DD 92. One Carbon B.V SSC-PoA-DD Masca ver 5 26/03/2010 Final PoA-DD

93. One Carbon B.V. and Hidromasca S.A. de

C.V. Signed contract between One Carbon B.V. and Hidromasca S.A. de C.V. 20/02/2008 Starting date of the PoA.

94. Gugler Water Turbine’s Purchase Contract of the Matarras I project 16/03/2008 Starting date of the CPA.

http://www.doingbusiness.org/ExploreTopics/PayingTaxes

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Turbines GmbH

95. Aswath Damodaran Country Risks Premium calculations 2008. 15/03/2010

96. OneCarbon Internatinal B.V.

Extract from the Dutch Chamber of Commerce on OneCarbon International B.V. 25-03-2010

Confirmation that OneCarbon is a registered company in The Netherlads.

97. Masca S.A. de C.V. Notification of inclusion of a CDM Project activity in a Programme of activities. (EB 47 paragraph 72) 27-01-2010

98. Aswath Damodaran Total Beta Table for 2008 15/03/2010