Transcript PowerPoint

Delivering a real CDM Project
The BP PRODEEM Rural Solar Project
BP is playing an active role in
addressing climate change
The Future?
‘01
‘00
‘99
‘98
‘97
‘96
Achieve 10% target
Develop methodology, verify baseline
Build global GHG ETS
Set 10% reduction target
Advocate precautionary action
Leave Global Climate Coalition
The CDM is important to BP
• Expands the scope of cost effective options for
mitigating climate change
• Compliance tool in Annex 1 countries
• Enable step change in technology and can enhance
projects in non-Annex 1 countries
The BP PRODEEM project is a
CDM case study
• Primary objective
– To bring a real CDM project to life
• Broader BP Objectives
– Bottom up, small scale
– Provide a working business example for our Business units
– Provide practical tools to our business units to engage in the CDM
• Engage business, governments, academics and NGOs
• Drive the rule making process for CDM projects
• Build CDM capacity within government institutions in Brazil,
BP and the wider business community
BP is working in partnership with
PRODEEM in Brazil
• PRODEEM is the Programme for Energy Development
of States and Municipalities
• National pilot programme
• Objective: promote supply of sustainable energy to poor
communities in unelectrified rural areas
• Community based applications:
– Community buildings (schools, health & community centres)
– Water pumping (human & animal consumption & irrigation)
– Public lighting
20 million people in rural areas
have no access to electricity
BRAZIL
20 million people in
rural areas without
access to electricity
Major population
centres supplied
by mainly Hydro
based grid
electricity
Project Implementation is underway
• 1852 schools in remote rural areas
• Standard solar package
• A total of 11,112 panels each of 120W will be installed
• Total watts installed - 1.33MW
• Benefit the lives of over
60,000 children
• Delivering electricity for:
– lighting,
– telecommunications &
– refrigeration for food
Project is contributing to
Sustainable development in Brazil
• Consulted with Brazilian Government and local stakeholders on
sustainability impacts of project
Environmental and Social Impacts:
• Providing access to modern energy to poor communities
• Avoiding local air pollution from alternative energy (small scale diesel)
• Enhancing education for children and adults (>60,000 kids)
Socio-Economic Impacts
• $US 10 million investment
• Local employment: utilising 13 local companies
• Capacity Building
– Provided training in installation and maintenance
– Entrepreneur workshops bringing together; Micro finance institutions,
Grassroots capacity building organisations and Equipment vendors
• Demonstrating application of clean technology
Project Baseline
• Grid extension too expensive
• Alternative energy source: small scale diesel generators
• Applied the proposed baseline methodology for small
scale solar CDM projects
• Standardised baseline for all schools
• Project avoids 1722 tonnes CO2e per annum
Verification & Monitoring Plan
Cost of verification & monitoring is high for remote solar projects
Initial Verification
• Strict PRODEEM technical standards
• Random sample of systems tested prior to installation
• 3rd party technical validation at commissioning
Project life monitoring
• Wide dispersion of schools presents huge challenge
– Approach must be simple and cost effective
• Discussing practical solutions with PRODEEM
– Bi-monthly school solar report?
– Local companies act on operational problems
– CER verification every 3 – 5 years
– Install metering equipment at sample (1-5%) of schools?
Financial Impact of CERs
• Potential CER volume: 1722 tonnes per annum
• Transaction cost estimates appear high:
– Submission preparation:
$ 60 – 80 K +
– Verification (if every 3 years):
$ 10 - 15 K per annum
• Market Price
– Great uncertainty
– Possible range: US$ 5 – 10 per tonne
• Potential CER Revenue: $ 9 – 17 K per annum
• Revenue reinvested in project
• More extensive financial modelling underway, however,
Current market conditions unlikely to drive investments in small
scale solar
Conclusions
• Business is eager to engage in the CDM
• CDM expands the scope of cost effective options for
mitigating climate change
• CDM has the potential to incentivise business to introduce
cleaner technologies in non-Annex 1 countries
a cautious start, but this is changing….
• Project developers, investors and market players need
greater transparency on CDM rules
• Greater simplicity may reduce disproportionate transaction
costs for small scale projects
• Business willing to contribute to rule making process
through practical examples – learning by doing
Where to find out more….
www.bp.com