Validation Report Report for: PT. Wirajaya Packindo Validation of CDM project for Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo LRQA Reference Date Work carried out by Work verified by LRQA Reference: ENQ/2607/11/IRE MSBSF43847 : ENQ/2607/11/IRE Version 02.14 : 04/12/2012 : Ankush Jain Cholid Bafagih Hikmat Wijaya M. Nursyam : Ketan Deshmukh Brahim Abdullah Michiaki Chiba Date: 04/12/2012 Page 1 of 92 Revision 0.9, 07 November 2012 Contents 1 Executive Summary ............................................................................................ 3 2 Introduction ......................................................................................................... 5 3 4 2.1 Objective ................................................................................................................ 6 2.2 Scope...................................................................................................................... 6 2.3 GHG Project Description ....................................................................................... 6 Methodology........................................................................................................ 6 3.1 Review of documents ............................................................................................ 6 3.2 Site Visit and Follow-up interviews ...................................................................... 7 3.3 Resolution of clarification and corrective action requests................................. 8 3.4 Internal quality control .......................................................................................... 8 Validation protocol and conclusions ................................................................ 8 4.1 Approval ................................................................................................................. 9 4.2 Participation requirements.................................................................................... 9 4.3 Project design document ...................................................................................... 9 4.4 Project description .............................................................................................. 10 4.5 Baseline and monitoring methodology .............................................................. 10 4.6 Additionality of a project activity........................................................................ 12 4.7 Monitoring Plan.................................................................................................... 13 4.8 Local stakeholder consultation .......................................................................... 13 4.9 Environmental impacts ....................................................................................... 13 4.10 Summary of Changes .......................................................................................... 13 5 Comments by parties, stakeholders and NGOs ............................................. 14 6 Validation Opinion ............................................................................................ 15 7 Appendices........................................................................................................ 16 7.1 Appendix A: Letter of approval for the project by the host and investing country DNA .................................................................................................................... 16 7.2 Appendix B: List of documents reviewed .......................................................... 16 7.3 Appendix C: List of persons interviewed........................................................... 18 7.4 Appendix D: How due account has been taken to the public input made to the validation requirements .................................................................................................. 19 7.5 Appendix E: Certificate of Appointment ............................................................ 20 7.6 Appendix F: Validation Protocol and findings log............................................. 21 No distribution without permission from the client or responsible organisational unit Limited distribution Unrestricted distribution LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date: 04/12/ 2012 Page 2 of 92 Revision 0.9, 07 November 2012 1 Executive Summary Lloyd’s Register Quality Assurance Limited has been contracted by PT. Wirajaya Packindo representing the project participants (PP), to undertake validation of the proposed project activity “Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo”. The validation has been performed through a process of document review based on the project design document, Version 1 dated 20/10/2011 initially submitted for validation and the subsequent revisions, follow-up interviews with the stakeholders, resolution of outstanding issues and issuance of the validation report. The project activity is recovery of waste heat in the existing gas turbine system to generate steam. The project activity involves installation of a waste heat recovery boiler which utilises the waste heat and natural gas as supplementary fuel to generate steam. The steam otherwise would have been generated from the existing coal based boilers. The project activity reduces the GHG emissions from recovery of waste heat and using lower GHG natural gas as fossil fuel. The fulfilment of the requirements as set forth in Article 12 of the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC), the modalities and procedures for a CDM (CDM M&P) and relevant decisions of the Conference of the Parties, serving as meeting of the Parties to the Kyoto Protocol (COP/MOP) and the Executive Board of the CDM (CDM-EB) have been evaluated and conformance to the validation requirements were confirmed based on the given information. A risk based approach was taken to conduct the validation and corrective action requests (CARs) and clarifications (CLs) were raised for relevant actions by the PP. The validation team has found through the validation process 4 CARs and 6 CLs. The PP has taken actions and submitted to LRQA the revised PDD and supporting evidence. The validation team is of the opinion that the proposed project activity as described in the project design document Version 5.5 dated 04/12/2012 meets all the relevant UNFCCC requirements for the CDM, as well as the host country’s national requirements and if implemented as designed, is likely to achieve the emission reductions and contribute to the sustainable development of the host country. LRQA therefore requests the registration of “Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo” to the CDM Executive Board as a CDM project activity. Lloyd’s Register Quality Assurance Ltd Hiramford Middlemarch Office Village Siskin Drive Coventry CV3 4FJ United Kingdom LRQA Reference: ENQ/2607/11/IRE Registered office: Lloyd’s Register 71 Fenchurch Street London EC3M 4BS United Kingdom Date: 04/12/2012 Page 3 of 92 Lloyd's Register Quality Assurance Ltd, its affiliates and subsidiaries and their respective officers, employees or agents are, individually and collectively, referred to in this clause as the ‘Lloyd's Register Group’. The Lloyd's Register Group assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document or howsoever provided, unless that person has signed a contract with the relevant Lloyd's Register Group entity for the provision of this information or advice and in that case any responsibility or liability is exclusively on the terms and conditions set out in that contract. MSBSF43847 Revision 0.9, 07 November 2012 Abbreviations AE BE CARs CDM CDM-EB CDM M&P CDM PS CDM VVM CDM VVS CERs CLs COP/MOP DEHSt DNA DOE EF EIA EPC ERPA FAR GHG GSP IPCC IRR ISO KP kW / kWh LE LoA LR LRQA MW / MWh NCV NGO NPV ODA PDD PE PP tCO2e UNFCCC Applicant entity Baseline emissions Corrective action requests Clean development mechanism Executive board of clean development mechanism Modalities and procedures for a clean development mechanism CDM Project Standard CDM Validation and Verification Manual CDM Validation and Verification Standard Certified emission reductions Clarification requests Conference of the Parties serving as meeting of the Parties to the Kyoto Protocol German Emission Trading Authority Designated national authority Designated operational entity Emission factor Environmental impacts assessment Engineering, Procurement and Construction Emissions reduction purchase agreement Forward action requests Greenhouse gas Global stakeholders’ consultation process Intergovernmental panel on climate change Internal rate of return International Standards Organisation Kyoto Protocol of the United Nations Framework Convention on Climate Change Kilowatt / Kilowatt hour Leakage emissions Letter of approval Lloyd’s Register Lloyd’s Register Quality Assurance Limited Mega watt / Mega watt hour Net calorific value Non governmental organization Net Present Value Official development aid Project design document Project emissions Project participant Tonnes of carbon dioxide equivalent United Nations Framework Convention on Climate Change LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 4 of 92 Revision 0.9, 07 November 2012 2 Introduction The project participant (PP) represented by PT. Wirajaya Packindo has contracted with Lloyd’s Register Quality Assurance Limited (LRQA) to undertake validation of the proposed project activity “Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo”. This report summarise the findings of the validation process that has been conducted on the validation requirements of the CDM. The validation has been undertaken by the team formed of the qualified personnel of LRQA as follows: Ankush Jain LRQA India Cholid Bafagih LRQA Indonesia Hikmat Wijaya M. Nursyam Ketan Deshmukh Brahim Abdullah Michiaki Chiba LRQA Indonesia External expert LRQA Ltd. External expert LRQA Ltd. Team Leader, CDM Lead Validator Team member, CDM Validator, Host country expert Trainee Sector expert Technical reviewer Sector expert to technical reviewer Decision maker Personnel being engaged in a CDM project validation are qualified based on the established procedures of LRQA to assure the resource requirements satisfy all the requirements of competence criteria for an AE/DOE under CDM (CDM-Accreditation Standard for Operational Entities Version 04.0). LRQA is designated as an operational entity and holds the full responsibility of decision-making regarding the validation, in line with the accreditation requirements of the CDM-EB. The certificate of appointment of the team personnel is attached to this report. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 5 of 92 Revision 0.9, 07 November 2012 2.1 Objective Validation is the process of an independent third party evaluation of a project activity on the basis of the PDD, against the requirements of the CDM as set out in Article 12 of the Kyoto Protocol, the CDM M&P, subsequent decisions made by the COP/MOP and CDM-EB, and other rules applicable to the proposed project activity including the host country’s legislation and its specific requirements for sustainable development. The validation follows the requirements of the current version of the CDM validation and verification standard (CDM VVS) and the CDM Project Standard (CDM PS) to ensure the quality and consistency of the validation work and the report. 2.2 Scope The scope of validation is an independent and objective review of the project design. Review of the PDD is conducted against the requirements of the Kyoto Protocol, the CDM M&P and relevant decisions of the COP/MOP and the CDM-EB. LRQA follows a risk-based approach in the validation focusing on the identification of significant risks for project implementation and generation of CERs. Validation is not meant to provide any consulting towards the PP, however, the corrective actions requests (CARs) and clarifications (CLs) might provide input for improvement of the project design. A validation conclusion shall become final subject to the decision maker’s review by LRQA Ltd. 2.3 GHG Project Description The Project activity is recovery of waste heat from the existing turbine of capacity 12MW (15MW under International Standards Organisation (ISO) conditions) to produce steam. The project activity involves installation of a new waste heat recovery boiler. The waste heat recovery boiler will also use natural gas as supplementary fuel to produce steam required for the manufacturing process of paper. Prior to the project activity the steam demand was met through the existing coal fired boilers. The existing coal fired boilers will be used as stand by for meeting steam demand in emergency situations. The project activity reduces the GHG emissions from the recovery and utilisation of waste heat and use of lower GHG fossil fuel. The estimated GHG emission reductions are 56,427 tCO2e per annum. The emission reduction has been estimated based on the designed efficiency, emission factor based on IPCC and average annual working days. 3 Methodology 3.1 Review of documents The validation is performed primarily based on the review of the project design document (PDD) and the other supporting documentation. The PDD Version 1 dated 20/10/2011 was initially reviewed. LRQA requested the PP to present supporting information and documents relating to the project design and such additional information and documents were also reviewed by LRQA. Through the process of the validation, the PDD and the supporting documents of the same were evaluated to confirm the actions taken by the PP to the CARs and CLs issued by LRQA. The documents reviewed by LRQA are listed in Appendix B. LRQA reviewed the final version of the PDD version 5.5 dated 04/12/2012 to confirm that all changes agreed had been incorporated. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 6 of 92 Revision 0.9, 07 November 2012 3.2 Site Visit and Follow-up interviews A site visit and follow-up interviews with the stakeholders were conducted as detailed in the schedule as below: Date Location/ Address Tangerang, Banten, Indonesia Party Interviewed PT. Wirajaya Packindo Subjects Covered 13/12/2011 Tangerang, Banten, Indonesia Local stakeholders Ankush Jain Cholid Bafagih Hikmat Wijaya M. Nursyam 14/12/2011 Local Environment Protection Bureau, Tangerang PGN Office, Jakarta, Indonesia BPLHD 1. Invitation letters issued to local stakeholders 2. Representation by stakeholders in stakeholders’ consultation meeting 3. Minutes of meeting – comments, action taken 4. Employment generation due to the project activity 5. Discussion on land ownership and transaction procedures 6. Views on the project activity 7. Any other issues of stakeholders’ 8. Interview local stakeholders 1. EIA 2. Other statutory requirements 3. Clearances required 4. Views on project activity Gas supplier 1. General overview about the project 2. Gas pricing and supply scenario Ankush Jain Cholid Bafagih Himkat Wijaya M. Nursyam Tangerang, Banten, Indonesia PPs Consultant 1. Discussion on project and timelines 2. Closing meeting Ankush Jain Cholid Bafagih Himkat Wijaya M. Nursyam 13/12/2011 14/12/2011 14/12/2011 1. Project description, boundary and technology 2. Applied project technology and industrial good practices. 3. Monitoring plan. 4. Record keeping 5. Emergency preparedness 6. Data collection and archiving 7. Training and internal audits 8. Legal requirements 9. Environmental impacts of the project activity 10. Local stakeholders consultation Team Members on Site Ankush Jain Cholid Bafagih Himkat Wijaya M. Nursyam Ankush Jain Cholid Bafagih Himkat Wijaya M. Nursyam A full list of persons interviewed is shown in Appendix C. For details of all the findings of the desk review and site visit, please refer to the Validation Protocol and Findings in Appendix F. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 7 of 92 Revision 0.9, 07 November 2012 3.3 Resolution of clarification and corrective action requests LRQA applies the risk based approach aimed at focusing on high risk issues to the validation results while not omitting any part of the mandatory processes. Findings identified in the process are indicated under the titles corrective action requests (CARs) and clarification requests (CLs) and forward action requests (FARs). CARs and CLs require the PP to take relevant actions. Criteria for judging items as CAR or CL are as follows: Corrective action request (CAR): • the project participants have made mistakes that will influence the ability of the project activity to achieve real, measurable additional emission reductions • the CDM requirements have not been met, or • there is a risk that emission reductions cannot be monitored or calculated. Clarification request (CL): • information is insufficient or not sufficiently clear to determine whether the applicable CDM requirements have been met. FARs are to be raised to highlight issues related to project implementation that require review during the first verification of the project activity. FARs do not relate to CDM requirements for registration. CARs and CLs are to be resolved or closed out if the PP modifies the project design, rectifies the PDD or provides adequate additional explanations or evidence that satisfies the concerns. If this is not completed, the project activity cannot be recommended for registration to the CDM Executive Board. For details of the nature of the issues raised, the nature of the responses provided, the means of validation of such responses and the resulting changes in the PDD or supporting annexes please refer to the Validation Protocol and Findings in appendix F. 3.4 Internal quality control A technical review by a qualified person independent from the validation team and a review by an authorized decision maker were conducted before the submission of the validation report to the PP and before requesting the registration of the project activity. 4 Validation protocol and conclusions This section provides an overview of the validation activities undertaken by LRQA in order to arrive at the final validation conclusions and opinion. It includes general conclusions based on the Clean Development Mechanism Validation and Verification Standard (CDM VVS) version 03.0. Further details in relation to each element of the protocol and each finding are shown in the Validation Protocol and Findings – Appendix F. The protocol is structured based on the main validation requirements as follows: • Approval by the Parties involved • Participation requirements • Project design document • Project description • Baseline and monitoring methodology o Applicability of the selected methodology o Project boundary o Baseline identification LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 8 of 92 Revision 0.9, 07 November 2012 Algorithms and/or formula used to determine emission reductions Additionality of a project activity o Prior consideration of the CDM o Identification of alternatives o Investment analysis o Barrier analysis o Common practice analysis • Monitoring plan • Local stakeholder consultation • Environmental impacts. o • 4.1 Approval A CDM project shall be approved by the Parties involved. The host Party of the proposed project is Indonesia. Indonesia ratified the Kyoto Protocol on 28/07/2004. The Designated National Authority (DNA) is National Committee on Clean Development Mechanism. The information of the DNA has been confirmed by the validation team against the relevant information on the UNFCCC CDM website (http://cdm.unfccc.int/DNA/index.html). A letter from approval from the host country, reference number B074/KNMPB/032012 has been received. This letter of approval confirms the contribution of the project activity “Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo” to the sustainable development of Indonesia. The Annex I Party is Germany. Germany ratified the Kyoto Protocol on 31/07/2002. The DNA is German Emission Trading Authority (DEHSt). The information of the DNA has been confirmed by the validation team against the relevant information on the UNFCCC CDM website (http://cdm.unfccc.int/DNA/index.html). A letter from approval from the Annex I Party dated: 01/08/2012, reference number E1.6-18410-0403/100 has been received. For details relating to this section, please refer to the Validation Protocol in Appendix F. 4.2 Participation requirements PT. Wirajaya Packindo is a private entity having its registered office in Indonesia. KfW is a private entity having its registered office in Germany. The contact details of the PPs are correctly provided in Annex 1 of the PDD. Participation in the project activity of the PPs has been ٛ authorized, as confirmed in the LoAs issued by the Parties concerned. The team confirmed that no entities other than the ٛ authorized entities are indicated as project participants in the PDD. For details relating to this section, please refer to the Validation Protocol in Appendix F. 4.3 Project design document The PDD was checked and confirmed as complete against the Guidelines for completing the project design document form for small-scale CDM project, Version 01. A valid form of the F-CDM-SSC-PDD is used that is the current form under CDM VVS LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 9 of 92 Revision 0.9, 07 November 2012 track as available on the UNFCCC-CDM website. For details relating to this section, please refer to the Validation Protocol in Appendix F. 4.4 Project description The Project activity is recovery of waste heat from the existing gas turbine to generate steam in a recycled-paper production factory owned by PT Wirajaya Packindo in Indonesia. The project activity involves installation of a new waste heat recovery boiler which utilises waste heat from the gas turbine and natural gas as supplementary fuel. The steam required for the paper manufacturing process in the existing line and planned new production line would have been generated from the existing coal fired boilers. In the project scenario, the existing coal fired boilers will be kept as stand by for emergencies. The project activity will reduce GHG emissions by utilisation of waste heat and use of natural gas as fuel. The details on the location of the project activity was confirmed as Karawaci SubDistrict, Regency of Tangerang, Desa Koang Jaya, Banten Province, Indonesia as given in the section A.4.1 of the PDD. The geographic coordinates of the project activity were confirmed as Latitude 106° 37’18.80’’ East and Longitude 6°12’14.03’’ South. LRQA confirms that the project description included in the PDD is accurate and complete. This description provides the reader with a clear understanding of the precise nature of the project activity and the technical aspects of its implementation. The project description was validated by document review including PDD and supporting project documentation, official information of the host country and sector information as publicly available, interview, and the on site visit. Sustainable development The host Party’s DNA confirmed the contribution of the project activity to the sustainable development of the host Party. Small scale CDM criteria The project activity recovers and utilises waste heat from the existing gas turbine. The project activity, therefore, is characterised as ‘Type III’ activity. Validation team confirms from the review of PDD and its supporting documents, sectoral expertise and on site visit that emission reductions from the project activity will not cross 60,000 tCO2e/annum every year throughout the crediting period. Validation team confirms from the interview of the PP that it does not intend to change the project design. For details relating to this section, please refer to the Validation Protocol in Appendix F. 4.5 Baseline and monitoring methodology Applicability of the selected methodology to the project activity The project activity applied the approved baseline and monitoring methodologies: AMS-III.Q. “Waste energy recovery (gas/heat/pressure) projects”, Version 4.0. This version of the methodology is valid from 29/04/2011 and currently having an “active” status. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 10 of 92 Revision 0.9, 07 November 2012 LRQA confirms unambiguously that the selected methodology is applicable to this project activity. The project applicability was confirmed against each condition in the approved methodology selected. Appendix F includes the list of each applicability condition, the steps taken to validate each one and the conclusions about its applicability to the proposed project activity. For details relating to this section, please refer to the Validation Protocol in Appendix F. Project boundary The project boundary has been validated through documentation review on the overall design document, EIA report, quotation and contract with equipment supplier, interview and field survey that included the waste heat recovery system, gas turbine generator, and paper mill where steam will be used. This information was substantiated via cross check with the information obtained from the public sources by the validation team. Through the processes taken, the validation team confirmed that the identified project boundary, the selected sources and the gases were justified for the project activity and they meet the requirements of the approved methodology. Baseline identification The baseline scenario identified in the PDD has been assessed against the requirements in the approved methodology AMS-III.Q. “Waste energy recovery (gas/heat/pressure) projects”, Version 4.0. LRQA can confirm that the procedure included in this methodology to identify the most reasonable baseline scenario, has been correctly applied. The steps taken to assess the baseline identification are described in the Validation protocol in Appendix F. LRQA confirms that: - - All the assumptions and data used by the project participants are listed in the PDD, including their references and sources; All documentation used is relevant for establishing the baseline scenario and correctly quoted and interpreted in the PDD; Assumptions and data used in the identification of the baseline scenario are justified appropriately, supported by evidence and can be deemed reasonable; Relevant national and/or sectoral policies and circumstances are considered and listed in the PDD; The approved baseline methodology has been correctly applied to identify the most reasonable baseline scenario and the identified baseline scenario reasonably represents what would occur in the absence of the proposed CDM project activity. Algorithms and/or formula used to determine emission reductions LRQA has confirmed that the steps taken and the equations applied to calculate project emissions and baseline emissions and emission reductions comply with the requirements of the approved methodology AMS IIIQ version 4.0. The steps taken to assess the algorithms and/or formula used to determine emission reductions are described in the Validation protocol in Appendix F. LRQA confirms that: • • • All assumptions and data used by the project participants are listed in the PDD, including their references and sources; All documentation used by project participants as the basis for assumptions and source of data is correctly quoted and interpreted in the PDD; All values used in the PDD are considered reasonable in the context of the proposed CDM project activity; LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 11 of 92 Revision 0.9, 07 November 2012 • • 4.6 The baseline methodology has been applied correctly to calculate project emissions, baseline emissions, leakage and emission reductions; All estimates of the baseline emissions can be replicated using the data and parameter values provided in the PDD. Additionality of a project activity The project additionality was demonstrated by the PP using the Guidelines on the demonstration of additionality for small-scale project activities (Version 09.0). Prior consideration of CDM The start date of the project activity is 01/08/2011 based on the date of signing Engineering, Procurement and Construction (EPC) contract with PT. Indoturbine. The start date was confirmed from the review of EPC contract with PT. Indoturbine. The start date was confirmed in accordance with the Glossary of CDM terms, Version 07.0. The start date of the project activity was after 02/08/2008. Prior consideration of the project was demonstrated through notification made to the DNA of Indonesia and UNFCCC secretariat on 20/07/2011. Validation team confirmed the prior consideration through the list of notifications available at UNFCCC website, Filled prior consideration form dated: 18/07/2011, email submitted to UNFCCC dated: 20/07/2011 and confirmation email received from the Indonesian DNA dated: 25/07/2011. The steps taken to assess the prior serious consideration of the CDM are described in the Validation protocol in Appendix F. Identification of alternatives The list in the Validation Protocol – Appendix F section 6.b, shows the alternatives given in the PDD, and clearly states how LRQA has validated whether these alternatives are credible and complete. It is the opinion of LRQA that the list of alternatives provided in the PDD are credible and complete considering the technology and circumstances of the proposed Project activity as well as the investor business. Investment analysis The Investment analysis option has been used to demonstrate the additionality of the proposed project activity. LRQA confirms that the PDD provides evidence that this project activity would not be the most economically or financially attractive alternative. The PPs have shown that the project activity is additional by demonstrating that the financial returns of the proposed CDM project activity would be insufficient to justify the required investment. For assessing the additionality of this project activity LRQA has complied with the latest version of the “Guidelines on the Assessment of Investment Analysis” as provided by the CDM Executive Board and with other relevant guidance including the latest guidelines on plant load factors “Guidelines for the reporting and validation of plant load factors”. For details about the validation of the parameters used in the financial calculations and assessment of the benchmark applied, please refer to the Validation protocol in Appendix F. LRQA confirms that the underlying assumptions for the investment analysis are appropriate and that the financial calculations are correct. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 12 of 92 Revision 0.9, 07 November 2012 4.7 Monitoring Plan The PDD includes a Monitoring Plan based on the approved monitoring methodology AMS III Q version 4.0. LRQA confirms that the Monitoring Plan described in the PDD complies with the requirements in the Monitoring Methodology and that the PPs will be able to apply this Monitoring Plan following the monitoring arrangements described in it. For details about the validation of the Monitoring Plan, please refer to the Validation protocol in Appendix F. 4.8 Local stakeholder consultation The PPs invited Local Stakeholders to comment on the proposed project activity on the 5/10/2011 before the publication of the PDD on the UNFCCC website. The local stakeholder consultation meeting was held in Club House Modernland and Country Golf, Tangerang and the following persons and entities attended this meeting. - Local people Chief of village Local authorities The representatives of Local official agencies of Environment (BLHD The representatives of PT. SEML’s management and staff KfW representative LRQA confirms that the stakeholder consultation process targeted stakeholders and was appropriate for identifying stakeholders’ opinions about the project and collecting their views. For details about the steps taken to assess the adequacy of the Stakeholder consultation, please refer to the Validation protocol in Appendix F. 4.9 Environmental impacts LRQA has confirmed that the PPs have undertaken an environmental impact assessment as required by the host country. The PPs have submitted documentation to LRQA on the analysis of the environmental impacts of this project activity in line with paragraph 37 (c) of the CDM modalities and procedures. For details about the document review and determination of whether the PPs have undertaken the analysis of environmental impacts, please refer to the Validation protocol in Appendix F. 4.10 Summary of Changes Significant changes made to the original PDD published for Global Stakeholder Consultation Process are summarised below. The PDD version 1 dated 20/10/2011 was modified and several changes occurred due to the result of validation process. The PDD version 5.5 dated 04/12/2012 includes all these changes. For details about the results of the responses to CARs and CLs, discussions on revisions to project documentation and the detailed changes to the PDD coming from the validation process, please refer to the Validation Findings Log in the Validation Protocol in Appendix F. Item Description LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Value in PDD Value in PDD GSP RfR CAR/CL Page 13 of 92 Revision 0.9, 07 November 2012 Item Value in PDD Value in PDD GSP RfR CAR/CL 1. Emission factor of the coal was corrected based on CAR 02 92.80 tCO2/TJ 89.50 tCO2/TJ CAR 02 2. NPV was increased due to correction in depreciation and interest calculations. -4.03 USD -1.35 USD CL 05 3. Monitoring plan was revised NA NA CAR 03 4. PP has removed the methodology AMS.II.D based on the finding and clarification from UNFCCC (SSC_582) PP has changed the PDD from CDM-VVM track to CDM-VVS track NA NA CL 04 NA NA NA 5. 5 Description Million Million 6. PP has revised the baseline efficiency of coal boiler from the designed to most conservative value in the applied methodology 78% 100% NA 7. Based on the use of correct emission factor of coal and conservative baseline efficiency of coal boilers the ex-ante emission reduction estimate were decreased 70,593 tCO2/annum 56,427 tCO2/annum CAR 02 Comments by parties, stakeholders and NGOs In line with the requirement of the Procedures for Processing and Reporting on Validation of CDM project activities, the PDD is to be made publicly available for 30 days subject to confidentiality provisions agreed with the PP, to enable comments to be received from Parties, stakeholders, and UNFCCC accredited NGOs on the validation and registration requirements. The PDD was made publicly available in line with the requirements of the procedure for the period of 29/10/2011 to 27/11/2011 as per http://cdm.unfccc.int/Projects/Validation/DB/SY7X21Y5CMMDJDGCAL596JSNKSDP9 N/view.html No comment was received during this period. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 14 of 92 Revision 0.9, 07 November 2012 6 Validation Opinion LRQA has undertaken the validation of the proposed project activity “Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo” based on the requirements of CDM as set out in Article 12 of the Kyoto Protocol, the CDM M&P, the present annex, subsequent decisions made by the COP/MOP and CDM-EB, and the other rules applicable to the proposed project activity including the host country’s legislation and its specific requirements for sustainable development. The Project activity is recovery of waste heat from the existing gas turbine. The project activity involves installation of a new 50TPH waste heat recovery boiler. The waste heat recovery boiler recover the waste heat from the existing gas turbine of capacity 12 MW (15MW under ISO conditions) and it uses natural gas as supplementary fuel. The steam generated from the waste heat recovery boiler will replace it from the existing coal fired boilers. The project activity will reduce GHG emissions from the utilisation of waste heat and use of natural gas. To arrive at the final validation conclusions and opinion, LRQA carried out review of project documents, assessment of compliance with and application of the approved baseline and monitoring methodology as well as the approved methodological tools, field survey and physical on site assessment of the project site and interviewing the local stakeholders. Through the validation process, the validation team identified 4 CARs and 6 CLs. The PP has taken action on the raised issues and submitted to LRQA the revised PDD and other supporting evidence. The validation team is of the opinion that the proposed project activity conforms to all the relevant UNFCCC requirements for the CDM as well as the host country’s national requirements, and if implemented as designed, is likely to achieve the validated emission reductions of 56,427 tCO2 and contribute to the sustainable development of the host country. Therefore, LRQA requests the registration of “Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo” to the CDM Executive Board as a CDM project activity. Decision Maker Michiaki Chiba Climate Change Manager – Asia & Pacific 04/12/2012 LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 15 of 92 Revision 0.9, 07 November 2012 7 Appendices 7.1 Appendix A: Letter of approval for the project by the host and investing country DNA Letter of Approval from Indonesia dated 06/03/2012 Letter of Approval from Germany dated 01/08/2012 7.2 Appendix B: List of documents reviewed Category A documents (documents prepared by the PP) • PDD Version 1 dated 20/10/2011 • PDD Version 2 dated 23/02/2012 • PDD Version 3 dated 30/03/2012 • PDD Version 04.0.0 dated 29/05/2012 • PDD Version 05.0.0 dated 16/07/2012 • PDD Version 05.1.0 dated 20/07/2012 • PDD Version 05.1.1 dated 07/08/2012 • PDD Version 05.2 dated 27/09/2012 • PDD Version 5.3 dated 05/10/2012 • PDD Version 5.4 dated 29/10/2012 • PDD Version 5.5 dated 04/12/2012 • Spreadsheet for IRR calculation, Version 01 dated 20/10/2011 • Spreadsheet for IRR calculation, Version 02 dated 23/02/2012 • Spreadsheet for IRR calculation, Version 03 dated 16/07/2012 • Emission reduction spreadsheet, Version 01 dated 20/10/2011 • Emission reduction spreadsheet, Version 02 dated 29/05/2012 • Emission reduction spreadsheet, Version 03 dated 16/07/2012 • Emission reduction spreadsheet, Version 04 dated 07/08/2012 • Emission reduction spreadsheet, Version 04.1 dated 27/09/2012 • Mass and Energy balance spreadsheet dated 07/08/2012 • Overall design documents for project Installation of Heat Recovery Steam Boiler at Wirajaya Packindo • Gas turbine manufacturer’s specifications • Contract with HRSG supplier and EPC contractor between PT Wirajaya Packindo and PT. Indoturbine dated 01/09/2011 • ERPA term sheet between PT Wirajaya Packindo and KfW dated 12/08/2011 • Sustainable development criteria set by host country DNA (http://pasarkarbon.dnpi.go.id/web/index.php/komnasmpb/cat/5/kriteria-p.) • Turbine specification and lifetime from Turbomach • Letter of Designed operational life of HRSG by Mackenzie Industries Sdn Bhd • Procedure for employee recruitment by PT Wirajaya Packindo • Minutes of Meeting for CDM Stakeholder Consultation dated 05/10/2011 • Approval letter from Environmental Agency for Environmental Management and Monitoring Plan dated 08/11/2011 • Contract for new paper machine duplex by supplier in China • Contract for Coal Boiler by Shanghai Distribution co. Ltd, dated 05/06/2008 and 10/08/2008 • Business license for PT Wirajaya Packindo • Prior consideration form submitted to UNFCCC dated 18/07/2011 • Commitment fee Invoice by Caterpillar dated 01/11/2010 LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 16 of 92 Revision 0.9, 07 November 2012 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Invoice for boiler maintenance of pipe from PT. Zug Industry Indonesia dated 15/09/2011 Purchase order for boiler maintenance to Shanghai Chenguan Import and Export co. Ltd dated 27/10/2011 Invoice for gas consumption from PT Gas Negara (PGN) dated 05/10/2009 and 04/10/2011 Agreement of grace period by Catterpilar finance Offer to lease and acceptance between PT Wirajaya Packindo and PT Caterpillar Finance Indonesia dated 08/09/2011 Offer for insurance for HRSG operation by ACA Asuransi dated 19/09/2011 Spreadsheet for coal price of July 2009 to August 2011 News translation on gas price increase in 2011 by Indonesia Finance Today (14/09/2011), Liputan 6 SCTV (13/04/2011) and Kabarbisnis (07/10/2011) PGN business presentation slides News on gas export price increase from Jakarta Globe dated 15/09/2011 News on Indonesia: searching for gas supplies from Jakarta Post dated 05/09/2011 News on gas price renegotiation from Jakarta Post dated 07/09/2011 News on industrial gas price increase from Indo Finance dated 14/09/2011 News on BP Migas seeks to hike PGN gas price by 200% from Jakarta Globe dated 2 August 2011 News on Kadin protest for industrial gas price increase from Kadin Sumatera Utara website dated 29/09/2011 News on gas price increase by PGN to be reported to government from Kabarbisnis dated 07/10/2011 Purchase order for Coal Boiler to Shanghai Distribution co. Ltd, dated 07/06/2008 Spreadsheet of plant historical data 2006 IPCC Guidelines for National Greenhouse Gas Inventories Supporting data for CDM project by PT Wirajaya Packindo dated 23/07/2011 Spreadsheet data for Coal GCV Gas composition before and after project activity Gas turbine specification by Turbomach Boiler specification report, dated 22/02/2011 Spreadsheet for CER calculation dated 14/11/2011 Diagram for heat mass balance by PT Wirajaya Packindo Spreadsheet for GCV gas specification DEG Technical Audit for energy optimization services by Siemens, dated 10/07/2011 to 15/07/2011 Electric power requirement information of baseline and HRSG Gas specification of PT PGN dated 29/03/2011 Gas specification by Pertamina dated 27/03/2011 12 MW Operational capacity information Letter from PGN on gas price increase dated: 08/05/2012, Ref: 069900.S/PP.01.01/SBU1/2012 Gas turbine mechanical and electrical drawings Gas turbine manual Gas turbine O&M Manual Turbomach witness test of gas turbine dated: 05/09/2008 Gas Turbine Exhaust Silencer General Arrangement dated 15 April 2009 Email clarification from the German DNA on its requirements for approval dated: 06/11/2012 LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 17 of 92 Revision 0.9, 07 November 2012 Category B documents (other documents referenced) • Clean development mechanism validation and verification standard Version 03.0 • Guidelines for completing the simplified project design document (CDM-SSC-PDD) and the form for proposed new small scale methodologies (CDM-SSC-NM), Version 05 (14 September 2007) • Project Design Document Form (CDM-SSC-PDD) Version 03 • Indicative simplified baseline and monitoring methodologies for selected small scale CDM project activity categories AMS-III.Q “Waste energy recovery (gas/heat/pressure) projects” version 04 • Tool to calculate project or leakage CO2 emissions from fossil fuel combustion Version 2 • Tool to determine the remaining lifetime of equipment Version 1 • General guidelines to SSC CDM Methodologies Version 19.0 • Guidelines on the assessment of investment analysis Version 5 • Non-binding best practice examples to demonstrate additionality for SSC project Activities (Annex 34, EB 35) • Submission status of Prior Consideration of CDM to CDM Secretariat http://cdm.unfccc.int/Projects/PriorCDM/notifications/index_html • Indonesian DNA website: http://pasarkarbon.dnpi.go.id/web/index.php/home.html • EB Clarification SSC 579 (http://cdm.unfccc.int/methodologies/SSCmethodologies/clarifications/40482) • Bank of Indonesia website • Google website for confirmation of geo-coordinates • Project Mechanisms Act available on the website of German DNA 7.3 Appendix C: List of persons interviewed Wirajaya Packindo Budi Hartoyo H Harimas Hutama Ari Liberto Eko Prasetyo Muji Sarjono Wira Rahardjo KfW Cynthia Hendrayani Biosphere Capital Thet Lin Thu Angus McEwin Local stakeholders Mimin Priatna Wawan PT. PGN Arys Djuanda Rudiatmoko Environmental Agency of Tangerang region (BPLH) Agus Prasetyo LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 18 of 92 Revision 0.9, 07 November 2012 Arjono Risdiana Setiawan 7.4 Appendix D: How due account has been taken to the public input made to the validation requirements The PDD was made publicly available in accordance with the requirements of the Procedures for processing and reporting on validation of a CDM project activity for the period of 29/10/2011 to 27/11/2011 as per http://cdm.unfccc.int/Projects/Validation/DB/SY7X21Y5CMMDJDGCAL596JSNKSDP9 N/view.html No comment was received during this period. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 19 of 92 Revision 0.9, 07 November 2012 7.5 Appendix E: Certificate of Appointment Validation of “Installation of Waste Heat Recovery Steam Boiler at Wirajaya Packindo” We hereby certify that the following personnel have engaged in the validation process that has fully satisfied the competence requirements of the validation of the CDM project activity. Name of Person Assigned Roles Ankush Jain Cholid Bafagih Hikmat Wijaya M. Nursyam Ketan Deshmukh Brahim Abdullah Chiba Michiaki Team Leader Team Member Team Member Sector Expert Technical Reviewer Sector Expert Decision Maker Signed by Decision Maker Michiaki Chiba Climate Change Manager – Asia & Pacific 04/12/2012 LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 20 of 92 Revision 0.9, 07 November 2012 7.6 Appendix F: Validation Protocol and findings log LLOYDS REGISTER QUALITY ASSURANCE Clean Development Mechanism Validation Protocol and Findings This document has been produced by the LRQA Validation Team after the completion of the desk review and the site visit. It outlines the validated situation in relation to a number of criteria, including those defined in the Validation and Verification Standard (VVS) produced by the CDM Executive Board. The questions within this document must be completed in full and in your own words. The purpose of this protocol is to record LRQA’s opinion and LRQA’s findings. If LRQA has identified issues requiring corrective action or clarification, make a reference in the ‘Conclusion’ column, and state details in the section marked ‘Findings’. Conclusion Validated situation SECTION 1. Approval Host Country Approval 1. Has the Host country DNA provided a written approval? 2. Confirm that the letter has been issued by the Party’s DNA and is valid for the proposed CDM project activity under validation 3. Mention the means of validation employed to assess the authenticity of the Letter of Approval. Indicate the source of the LoA (for example, PP or directly from the DNA) 1 Yes No NA CAR 01 was issued as LoA was not submitted for validation. In response to the finding, the PP has submitted the LoA. The resolution is as detailed in the findings section of this protocol. Yes No NA The LoA is issued on 06/03/2012 by the National committee on CDM, which is the DNA of the host Party as per http://cdm.unfccc.int/DNA/index.html. The LoA is issued for the proposed project activity. CAR 01 OK The LoA was made available by the PP. Validation team compared the LoA from the original submitted by the DNA. Comparison with other approved projects by the DNA was also conducted to check the authenticity of the letter (included project ref 5468 and 5240). OK OK 1 For each section and question where a YES / NO / NA answer is required, explain your choice. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date: 04/12/2012 Page 21 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion OK 4. Does the written Letter of Approval confirm the following: (a) The Party is a Party to the Kyoto Protocol (including ratification)? (b) Participation is voluntary? (c) The proposed CDM project activity contributes to the sustainable development of the country? (d) It refers to the precise proposed CDM project activity title in the PDD being submitted for registration? Yes No NA The LoA confirms: (a) The host country Party ratified the KP on 28/07/2004. (b) The participation is voluntary. (c) The proposed project activity will assist the host country in achieving sustainable development. (d) LoA indicates the precise title of the proposed project activity as indicated in the PDD 5. Is the letter of approval unconditional with respect of (a) to (d) above? Yes No NA The LoA does not add any specific condition to the points stated therein OK 6. Does the LoA from the host party acknowledge the bundle activity (if applicable)? Yes OK No NA Annex I Party Approval 7. Has the Annex I country DNA provided a written approval? 8. Confirm that the letter has been issued by the Party’s DNA and is valid for the proposed CDM project activity under validation. 9. Mention the means of validation employed to assess the authenticity of the Letter of Approval. Indicate the source of the LoA (for example, PP or directly from the DNA). LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Yes No NA CAR 01 was issued as LoA from the Annex I Party has not been submitted for validation. In response to finding the PP has submitted the LoA. The resolution is as detailed in the findings section of this protocol. Yes No NA CAR 01 OK LoA was confirmed from the list of projects available at the DNA website. Ref: https://www.jicdm.dehst.de/promechg/pages/project1.aspx OK Page 22 of 92 Revision 0.9, 07 November 2012 OK Validated situation Conclusion 10. Does the written Letter of Approval confirm the following: (a) The Party is a Party to the Kyoto Protocol (including ratification)? (b) Participation is voluntary? (c) It refers to the precise proposed CDM project activity title in the PDD being submitted for registration? Yes No NA The LoA confirms: (a) The Annex-I country Party ratified the KP. (b) The participation is voluntary. (c) LoA indicates the precise title of the proposed project activity as indicated in the PDD OK 11. Is the letter of approval unconditional with respect of (a) to (c) above? Yes No NA The LoA does not add any specific condition to the points stated therein OK Yes CAR01 OK Host Country and Annex I Party Approval 12. Do any of the Letters of Approval contain additional specification of the project activity? Like: - PDD Version number? - Validation report version number? Make sure that the request for registration is made on the basis of the documents specified in any of the letters. No NA LoAs from the host party DNA and Annex I Party do not include any specification of the project activity, like specific version numbers of the PDD and validation report. The LoA from the Annex I Party’s DNA refers to the project data base wherein versions of the PDD and validation report earlier submitted are made available. The project data base of German DNA is referring to PDD Version 4.0.0 and Validation report Version 01. The current versions are PDD Version 5.5 and the validation report Version 2.14 that has accounted for issues raised during the internal review process at LRQA. Validation team reviewed the Project Mechanisms Act and the email clarification sent by the German DNA to the PP dated 06/11/2012 and confirmed that the German DNA accepts a draft validation report for the approval even though the LoA refers to the final validation report. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 23 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion SECTION 2. Participation 1 Confirm that the PPs are listed in a tabular form in section A.3 of PDD and that this information is consistent with the contact details provided in Appendix 1 of the PDD and with the contact details in the MoC. 2 Confirm that each of the PPs has been approved by at least one Party involved. 3 Confirm that no entities other than those approved as PPs are included in section A.3 of PDD. 4 Ensure that the approval of participation has been issued from the relevant DNA. If in doubt verify this with the corresponding DNA. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Host Party PP name in PDD/ A.4 PT Wirajaya Packindo Host Party PP name in PDD/ Appendix 1 PT Wirajaya Packindo Host Party PP name in MoC PT Wirajaya Packindo Annex 1 Party PP name in PDD/ A.4 KfW CL 01 was raised as name of the PP was inconsistent between section A.3 and Annex 1. In response to the finding, the PP has corrected the name of the PP, therefore, finding was closed. The resolution is as detailed in the findings section of this protocol. Annex 1 Party PP name in PDD/ Appendix 1 KfW Annex 1 Party PP name in MoC KfW CL-01 OK Yes No NA The PP, PT. Wirajaya Packindo is approved by the host Party, i.e. Indonesia, DNA. The PP, KfW is approved by the Annex-I Party, i.e. Germany, DNA. Yes No NA CAR01 OK The approval by the host country DNA and Annex I Party DNA has been issued by the correct organizations. Validation team had also confirmed the LoAs from the similar cases. LoA was also confirmed from the German DNA’s website at https://www.jicdm.dehst.de/promechg/pages/project1.aspx CAR01 OK Page 24 of 92 Revision 0.9, 07 November 2012 CAR01 OK Validated situation Conclusion SECTION 3. Modalities of communications 1 Validate the corporate identity of all the PPs and the focal point included in the MoC letter: - Validate the signatures - Validate the employment status. To validate this use any of the following options: a. Directly checking with evidence from PPs and the corresponding companies, for example, contracts, personal identity card or passport, HR records. b. Notarised documentation, e.g power of attorney for signing on behalf of the company and the other PPs. c. Written confirmation from the PP that all the personal details are valid and accurate. 2 If a written confirmation (option c) is chosen from the options above, the following issues shall be validated: - The PP sending the written confirmation and signing it shall be the one signing the contract with LRQA. - The person signing the written confirmation and the person signing the MoC (if they are different persons) are duly authorised to do so on behalf of all the PPs, that is, they have a signed authorisation from the other PPs and the identity and role of the person who has signed this authorisation has been checked. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Validation team confirmed the corporate identity of the PPs from the signed validation contract, HRSG contract and ERPA term sheet. Further, written confirmation has been submitted by the PT. Wirajaya Packindo on the corporate identity, name & employment status and specimen signatures of the signatory of MoC. OK Corporate identity, name, employment status and specimen signature were confirmed from the note by Board of Directors of KfW, ERPA and website of KfW. The written confirmation by the PP was submitted. The signature in the written confirmation was checked with other contracts of the PP made available for validation. Page 25 of 92 Revision 0.9, 07 November 2012 OK 3 Has the MoC been completed as per the latest “Procedures for MoC between the project participants and the Executive Board”? - No modifications to the template / form should be made and each document should be clearly dated - Title of the project and names of project participants and focal points should be fully consistent with those indicated in all other project documentation - Focal point scopes should be clearly and correctly indicated - Contact details and specimen signatures of focal point entities including those of project participants in Annex 1 should be correctly entered. Only one telephone, fax, email contact should be entered per authorized signatory. In cases where additional contact details are included, only the first indicated information will be taken into account and only the official business address of the proposed entity should be provided on the F-CDMMOC form. - The Statement of Agreement in Section 3 should be signed by one authorized signatory for each project participant; signatures made available in Section 3 should correspond to those indicated in the related Annex 1 document; focal point entities who are not designated as project participants should not sign Section 3. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Yes No NA OK MoC is consistent with the PDD. Validation team confirms that: 1. No modification in the template has been made. 2. Dates have been clearly mentioned in the MoC. 3. Title of the project and names of project participants and focal points are fully consistent with the PDD. The PPs, PT. Wirajaya Packindo and KfW, consistent between PDD, and the MoC. 4. Focal point scopes are clearly and correctly indicated 5. Statement of Agreement in Section 3 is signed by one authorized signatory of project participant. Page 26 of 92 Revision 0.9, 07 November 2012 Validated Situation Conclusion SECTION 4. Project design document 1. Is the project activity Small Scale or Normal Scale? 2. Has the PDD used the latest template and guidance from the CDM Executive Board available on the UNFCCC CDM Website? Check outputs from the completeness check. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Normal Scale Small Scale (cross as appropriate) Yes Bundled Small Scale No OK OK F-CDM-SSC-PDD template Version 04.1 and Guidelines for Completing the Project Design Document form for small-scale CDM project activities, version 01.0, which are the current versions for CDM VVS track available in UNFCCC CDM website, are used. Page 27 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion SECTION 5. Project description 1. Describe the process undertaken to validate that the description of the proposed CDM project activity as contained in the PDD sufficiently covers all relevant elements, is accurate, and that it provides the reader with a clear understanding of the nature of the proposed CDM project activity. The project activity is recovery of waste heat from the existing 12MW gas turbine to generate steam. The steam generated from the project activity will be used in the existing and new paper production lines. The project activity involves installation of waste heat recovery boiler of capacity 50TPH. The waste heat recovery boiler uses waste heat from the gas turbine. Additional energy for generation of steam will be supplied through natural gas. Prior to the project activity the equivalent steam would have been generated through the existing coal based boilers. In the absence of the project activity, the equivalent steam would have been generated from the existing coal based boilers. The project activity reduces the GHG emissions from the utilisation of waste heat and use of cleaner fossil fuel. CL-02 OK During the process of validation, LRQA confirmed the capacity, unique identification of project activity, estimated steam generation, technical specification and necessary clearances required/taken for the project activity. The list of documents reviewed during the course of validation is presented under Appendix B. CL 02 was raised on inconsistency in the capacity of gas turbine. In response to the finding, the PP has clarified that designed capacity was based on International Standards Organisation (ISO) test conditions whereas actual capacity was based on site conditions. Relevant section of the PDD was corrected. The resolution is detailed in the findings section of this protocol. 2. Confirm that the exact project location is provided in the PDD with Geographical coordinates, check the accuracy of them and the format of the notation (Grades, minutes, seconds or decimal indicating latitude N or S and Longitude E or W) Please include here the Geographical coordinates: LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 The PDD provides the exact project location with geographical coordinates. The project activity is located at Koang Jaya village, about 1 hour drive north west of Jakarta, the capital city of Indonesia. The geographical coordinates of the project activity are: 6°12’14.03’’ S and 106° 37’18.80’’ E The geographical coordinates of the project site were confirmed through document review, i.e. Google website, and during the site visit. Page 28 of 92 Revision 0.9, 07 November 2012 OK Conclusion Validated situation 3. Confirm that the physical site inspection reflects the description in the PDD of the proposed CDM project activity. The physical site inspection was conducted during the site visit. During the site visit, construction of the project was under progress. The process steam required for the paper mill is being generated by the existing coal fired boilers. Existing gas turbine was used to meet the electricity requirement of the paper mill. Waste heat from the gas turbine was released in the atmosphere. Therefore, team confirms the description given in the PDD to be accurate. OK 4. If the team did not undertake a physical site inspection, describe the justification as approved by the CDM Quality Manager. (VVM 01.2: 60-61) The team has visited the site from 13/12/2011 to 14/12/2011. During this period, the team visited the manufacturing facility including paper mill, gas turbine generator unit, and waste heat recovery boiler, gas supplier, official departments. OK Describe briefly the physical site inspection: Travel details and installations, facilities and buildings visited. 5. If the proposed CDM project activity involves the alteration of an existing installation or process, ensure that the project description clearly states the differences resulting from the project activity compared to the pre-project situation. 6. Potential public funding for the project from Parties in Annex I shall not be a diversion of official development assistance (ODA). Pre-project No waste heat recovery system was installed at gas turbine Steam sourced from the existing coal fired boilers. Project activity OK Recovery and utilisation of waste heat from the existing gas turbine to generate steam. Natural gas will be used as supplementary fuel of the new waste heat recovery boiler. PDD section A.4.4 confirms that there is no public funding or Official Development Assistance from Annex I countries. OK The validation team interviewed the PP and the stakeholders and confirmed that the project activity is funded by equity of the private investors and loan from the private banks. However, the debt/equity ratio of the project activity is not yet determined. 7. If the project activity is a small scale one, confirm that it is not a debundled component of a large scale project, in line with appendix C of the simplified M&P for SSC CDM project activities and the Guidelines for assessment of de-bundling for SSC project activities. PDD Section A.4.5 confirming that it is not a debundled component of a large scale project, in line with appendix C of the simplified M&P for SSC CDM project activities and the Guidelines for assessment of de-bundling for SSC project activities. Through site visit, the validation team confirmed that there was no similar project whose project boundary is within 1 Km of the project boundary of the project activity. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 29 of 92 Revision 0.9, 07 November 2012 OK Validated situation Conclusion SECTION 6. Baseline and monitoring methodology 1. Have the baseline and monitoring methodologies selected by the project participants been previously approved by the CDM Executive Board, that is, does it appear on the methodologies page of the UNFCCC website? 2. If the project activity is a Small Scale one; does it qualify within the threshold of the three possible types of small scale projects? Confirm information provided in the PDD. 3. If the project activity is a Small Scale one; which approved small scale methodology does the project apply? Confirm that the SSC methodology is applied with the general guidelines to SSC CDM methodologies. 4. Determine whether the methodology selected is applicable to the project activity including that the used version is valid. Describe steps taken to assess the relevant information contained in the PDD in the table below. Yes No NA The project activity applies the small-scale methodology, AMS-III.Q version 4.0 “Waste Energy Recovery (gas/heat/pressure) Projects”. CL-04 was raised on application of combination of methodologies AMS.III.Q and AMS.II.D. PP has removed the methodology AMS.II.D. The resolution is detailed in the findings section of this protocol. CL-04 OK The project activity recovers and utilises waste heat from the existing gas turbine. Therefore, the project activity is characterised as ‘Type III’ activity. Validation team confirms from the review of the PDD and its supporting evidence; and its sectoral expertise that the estimated annual emission reduction from the project activity is 56,427 tCO2e/annum, less than 60,000 tCO2e/year, every year throughout the crediting period. The project applies the methodology of “Waste Energy Recovery (gas/heat/pressure) Projects” AMS-III.Q, in conjunction with the general guidelines of SSC-CDM methodologies. OK The project activity applies the version 4.0 of the small-scale methodology AMS.III.Q. This version of the methodology is the most recent during the completion of this report. CL 03 was raised as applicable version of the guidelines was not referred in the PDD. PP has revised the PDD to mention the applicable version of guidelines. The resolution is detailed in the findings section of this protocol. CL-03 OK OK No. Applicability conditions in the AMS-III.Q version 4.0 Information in the PDD Steps taken to assess PDD information Conclusion 1 The category is for project activities that utilize The project will utilise waste heat generated The proposed project utilises waste heat OK LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 30 of 92 Revision 0.9, 07 November 2012 waste gas and/or waste heat at existing facilities as an energy source for: (a) Cogeneration; or (b) Generation of electricity; or (c) Direct use as process heat; or (d) Generation of heat in elemental process (e.g. steam, hot water, hot oil, hot air); or (e) Generation of mechanical energy. at the existing facility as an energy source for generation of heat in elemental process (i.e. steam) for generation of steam. Validation team confirmed the description from the review of PDD, EPC contract for waste heat recovery boiler and site visit. 2 The category is also applicable to project activities that use waste pressure to generate electricity at existing facilities The Project does not involve the use of waste pressure OK 3 The recovery of waste gas/heat/pressure should be a new initiative (no waste gas/heat/pressure was recovered from the project activity source prior to the implementation of the project activity) Measures are limited to those that result in emission reductions of less than or equal to 60 kt CO2 equivalent annually Prior to the implementation of the project, no waste gas/heat/pressure was recovered from the project activity source Not relevant. Validation team confirmed from the review of PDD, EPC contract for waste heat recovery boiler, and site visit that the project activity does not involve use of waste pressure. Validation team confirmed the description from the review of EIA report, manufacturer’s specification of gas turbine, and site visit. The project activity is expected to result in emission reductions of less than 60kt of CO2 equivalent annually Validation team confirmed from the review of PDD and emission reduction spreadsheet that the emission reduction for the project has been correctly calculated as 56,427tCO2e/annum, every year during the crediting period. OK The steam produced using the waste heat is measurable Validation team confirmed from the review of PDD, site visit and its sectoral expertise that energy output from the steam produced is measurable. OK Energy generated in the project activity is entirely used within the industrial facility Validation team confirmed from the review of PDD, interview of the PP, site visit and its sectoral expertise that energy OK 4 5 (a) (b) OK The category is applicable under the following conditions: The energy produced with the recovered waste gas/heat/pressure should be measurable; Energy generated in the project activity may be used within the industrial facility or exported to LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 31 of 92 Revision 0.9, 07 November 2012 other industrial facilities (included in the project boundary); (c) Electricity generated in the project activity may be exported to the grid or used for captive purposes; (steam) produced by the project activity will be used within the paper mill. The project activity does not involve the generation of electricity. The project activity recovers heat from an on-site electricity power plant Validation team confirmed from the review of PDD, EPC contract for waste heat recovery boiler, site visit and its sectoral expertise that the project activity does not involve installation of combined cycle power plant. OK The project activity recovers waste heat from one source only and uses it for steam generation Validation team confirmed from the review of the PDD, site visit and its sectoral expertise that the project activity uses waste heat from a single source, i.e. gas turbine. OK However, the methodology is not applicable to projects where the waste gas/heat/pressure recovery project is implemented in a singlecycle power plant (e.g. gas turbine or diesel generator) where heat (energy) generated onsite is not utilizable for any other purposes onsite except to generate power. Such project activities shall consider AMS-III.AL “Conversion from single cycle to combined cycle power generation”. Projects recovering waste energy from such power plants for the purpose of generation of heat only can apply this methodology; (d) For a project activity which recovers waste gas/heat/pressure for power generation from multiple sources (e.g. kiln and single-cycle power plant), this methodology can be used in combination with AMS-III.AL provided that: (i) Within the project activity it is possible to distinguish two distinct waste energy sources such that: • Waste energy source-I (e.g. kiln) belongs to such waste heat sources which are eligible under AMS-III.Q; • Waste energy source-II (e.g. single- LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 32 of 92 Revision 0.9, 07 November 2012 cycle power unit) belongs to such waste heat sources which are eligible under AMS-III.AL; (e) (ii) It is possible, for each waste energy source, to determine the baseline according to the specific methodology referred to; (iii) It is possible to objectively allocate the electricity produced in the project activity to each waste energy source, by means of one of the following methods: • Through separate measurements of the electricity produced by utilizing waste energy from each waste energy source; or • Through separate measurements of the energy content of the waste energy carrying medium (WECM) streams used for electricity production; or • Through separate measurements of the energy content of the waste energy streams that are associated with each waste energy source and used for electricity production or for the WECM generation in a common waste heat recovery system (e.g. if steam is generated by waste heat from a kiln and waste heat from an internal combustion engine in a common waste heat recovery boiler); The emission reductions are claimed by the LRQA Reference: ENQ/2607/11/IRE MSBSF43847 The emissions reductions are claimed by the project proponent which is the generator of Date 04/12/2012 Page 33 of 92 Revision 0.9, 07 November 2012 Validation team confirmed from the interview of the PP, and site visit that OK generator of energy using waste energy; (f) (g) In cases where the energy is exported to other facilities (included in the project boundary), the following are required: (i) All historical information from the recipient plants; (ii) An official agreement exists between the owners of the project energy generation plant (henceforth referred to as generator, unless specified otherwise) and the recipient plant(s) that the emission reductions would not be claimed by the recipient plant(s) for using a zero-emission energy source; For those facilities and recipients which are included in the project boundary, that prior to implementation of the project activity (current situation) generated energy on-site (sources of energy in the baseline), the credits can be claimed for minimum of the following time periods: (i) The remaining lifetime of equipments currently being used; and (ii) Crediting period; LRQA Reference: ENQ/2607/11/IRE MSBSF43847 the energy using waste energy The energy is not exported to other facilities but is used within the same facility The remaining lifetime of the current equipment is estimated to be 17 years. Credits are only claimed for a non-renewable 10 year term. Date 04/12/2012 Page 34 of 92 Revision 0.9, 07 November 2012 emission reductions are claimed by the PP, PT. Wirajaya Packindo, generator and consumer of steam from the waste gas. Not relevant. The energy (steam) produced by the project activity is consumed within the facility. Validation team confirmed from the review of remaining lifetime from the review of local regulations. OK OK (h) The waste gas/heat/pressure utilized in the project activity would have been flared or released into the atmosphere in the absence of the project activity. This shall be proven by one of the following options: (i) By direct measurements of energy content and amount of the waste gas/heat/pressure for at least three years prior to the start of the project activity; (ii) Energy balance of relevant sections of the plant to prove that the waste gas/heat/pressure was not a source of energy before the implementation of the project activity. For the energy balance representative process parameters are required. The energy balance shall demonstrate that the waste gas/heat/pressure was not used and also provide conservative estimations of the energy content and amount of waste gas/heat/pressure released; (iii) This is demonstrated by option (ii) and (iv): This is demonstrated by option (iv): Manufacturer’s original diagram from the construction of the facility that waste heat was released in the atmosphere in absence of the project activity. Further, quantity and energy content of the waste heat was taken from the energy balance using simulation by technology supplier. Date 04/12/2012 Based on the energy balance based on simulation and technical specification and technical drawings of the gas turbine system validation team confirmed the description. Further, the energy balance, the process design at full load of 12.124MW was considered, and it gives an estimate of energy content and amount of waste heat released. Team confirmed based on the design drawing number 10932.T1.OG.001 General Layout prepared by Turbomach and Gas Stack drawing prepared by IAC Colpro. Team confirmed the quantity and energy content of waste heat from the results of simulation software by the turbine manufacturer. Team further confirmed the quantity and energy content of waste gas from the review of data sheet prepared by the WHRB manufacturer for boiler design. Suitability of input values used for mass and heat balance is provided in section 6c of the Protocol below. Energy bills (electricity, fossil fuel) to demonstrate that all the energy required for the process (e.g. based on specific energy consumption specified by the manufacturer) has been procured commercially. Project participants are required to demonstrate through the financial documents (e.g. balance sheets, profit and loss statement) that no energy was generated by waste gas/heat/pressure and sold to other LRQA Reference: ENQ/2607/11/IRE MSBSF43847 OK The waste heat utilized by the project would have been released into the atmosphere in the absence of the project activity. Page 35 of 92 Revision 0.9, 07 November 2012 facilities and/or the grid. The bills and financial statements should be audited by competent authorities; (iv) 6 Process plant manufacturer’s original specification/information, schemes and diagrams from the construction of the facility could be used as an estimate of quantity and energy content of waste gas/heat/pressure produced for rated plant capacity per unit of product produced. For the purpose of this category waste energy is defined as: a by-product gas/heat/pressure from machines and industrial processes having potential to provide usable energy, for which it can be demonstrated that it was wasted. For example gas flared or released into the atmosphere, the heat or pressure not recovered (therefore wasted). Gases that have intrinsic value in a spot market as energy carrier or chemical (e.g. natural gas, hydrogen, liquefied petroleum gas, or their substitutes) are not eligible under this category. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 The waste energy used by the project is a byproduct heat from a gas turbine and it would otherwise have been wasted. The exhaust gas/heat from the turbine has no intrinsic value in spot market. Date 04/12/2012 Page 36 of 92 Revision 0.9, 07 November 2012 Validation team confirmed from the sectoral expertise and host country expertise that there is no spot market for waste heat from the gas turbine. OK Conclusion Validated situation 5. Confirm that any specific guidance provided by the CDM Executive Board in respect to an approved methodology has been correctly applied. Two clarification related to this project were requested to CDM-EB, i.e. SSC_579 and SSC_582. OK In SSC_579, it was clarified that for integrated burners where energy output cannot be apportioned between fossil fuel and waste heat, and calculation of fWCM is practically not possible, it should be considered as 1. Emissions from consumption of supplementary fossil fuel should be considered as project emissions. This has been correctly applied for the project activity. In SSC_582, it was clarified that AMS.III.Q only was the most appropriate methodology for combination of waste heat recovery, and fossil fuel switch. This has been correctly applied for the project activity. 6. If a determination regarding the applicability of the selected methodology to the proposed CDM project activity cannot be made, request clarification of the methodology in line with the guidance provided by the CDM Executive Board. Describe the clarification request and response. Not Applicable The project activity satisfies all the applicability conditions. - 7. If the Validation Team determines that the proposed CDM project activity does not comply with the applicability conditions of the methodology, the Team may proceed by means of requesting revision to or deviation from the methodology in line with the guidance provided by the CDM Executive Board. Describe the request for revision or deviation and approval by the CDM Executive Board. Not Applicable The project activity satisfies all the applicability conditions. - LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 37 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion SECTION 6a. Project boundary 1. Does the project boundary include physical, geographical site of the industrial facility, processes, or equipment that are affected by the project activity? OK Yes No NA The description presented in the PDD includes the gas turbine generator system, waste heat recovery boiler system and paper mill where steam will be consumed. The Validation team confirmed that there is no issue related to the project boundary based on AMS.III-Q. 2. If the proposed project activity has both Afforestation/Reforestation (A/R) and non-A/R components, to avoid double counting of emission sources, LRQA shall confirm that the emissions associated with the A/R activity will be accounted for and documented by the A/R project activity. Validation team confirms from the project documentation, site visit, and its sectoral expertise that the project does not have any Afforestation/Reforestation (A/R) component. OK 3. If there are any GHG emissions occurring within the proposed CDM project activity boundary, which are not addressed by the applied methodology and which are expected to contribute more than 1% of the overall expected average annual emissions reductions as a result of the implementation of the project, LRQA shall request clarification of, revision to, or deviation from the methodology as appropriate. The validation of the project activity did not reveal any other greenhouse gas emissions occurring within the proposed project activity boundary as a result of the implementation of the proposed CDM project activity which is expected to contribute more than 1% of the overall expected average annual emission reduction, which are not addressed by the applied methodology. OK LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 38 of 92 Revision 0.9, 07 November 2012 Validated situation 4. Confirm that all sources and GHGs required by the methodology have been included within the project boundary. Describe here if any emission source that will be affected by the project activity and is not addressed by the approved methodology, has been identified. In such case request clarification of, revision to or deviation from the methodology in accordance with EB guidance. Use the table below for this purpose: As per Methodology has been included all sources and GHGs required, i.e. Project emissions include emissions due to combustion of auxiliary fuel to supplement waste gas and emissions due to consumption of electricity by the project activity. Validation team confirms the emission sources and gases from the review of applied methodology, review of project documentation, site visit and its sectoral expertise. Conclusion OK Validation team confirms that there is no emission source affected by the project activity and not addressed by the applied methodology. Gases and Sources Included In The Project Boundary PROJECT BASELINE Source Fossil fuel consumption in element process for supply of process heat (portion of the fossil fuel displaced by waste heat) Supplemental fossil fuel consumption at the project plant Gas Justification PDD CO2 Included Main emission source CH4 Excluded Excluded for simplification. This is conservative N2O Excluded Excluded for simplification. This is conservative CO2 Included Main emission source CH4 Excluded Excluded for simplification. This is conservative N2O Excluded Excluded for simplification. This is conservative LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Inc./Exc. Pdd Date 04/12/2012 Steps Taken To Assess PDD Justification Conclusion As CO2 is the main emission source, hence inclusion of this gas in project boundary is appropriate. CH4 emissions would be minor in nature. Hence it is appropriate to exclude this gas. OK N2O emissions would be minor in nature. Hence it is appropriate to exclude this gas. OK CO2 emissions from the combustion of fossil fuels shall be accounted for as project emissions. CH4 emissions would be minor in Combustion of natural gas. Hence it is appropriate to exclude this gas. N2O emissions would be minor in nature. Hence it is appropriate to exclude this gas. OK Page 39 of 92 Revision 0.9, 07 November 2012 OK OK OK Validated situation Conclusion SECTION 6b. Baseline identification 1. Determine whether the PDD provides a verifiable description of the identified baseline scenario, including a description of the technology that would be employed and/or the activities that would take place in the absence of the proposed CDM project activity. 2. Confirm that any procedure contained in the methodology to identify the most reasonable baseline scenario, has been correctly applied. The PDD describes the baseline scenario as continued release of waste gas to atmosphere and steam generation from the existing coal fired boiler. OK The Validation team has reviewed the baseline scenario and confirmed that the provided description is verifiable Yes No OK NA The applied methodology does not describe the procedure to identify the most reasonable baseline scenario. The baseline has been determined using the process prescribed in the methodology. The baseline is steam sourced from the coal boilers and continued venting of waste gas (scenario existing prior to the project activity). This is in accordance with paragraph 8of the applied methodology. Validation team confirms that identified alternatives are credible and complete. 3. Check each step in the procedure described in the PDD to identify the baseline scenario against the requirements of the methodology. (Note that if the methodology requires use of tools, that is, such as the tool for the demonstration and assessment of additionality and the combined tool to identify the baseline scenario and demonstrate additionality, the guidance in the methodology shall supersede it in the tool.) LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 The baseline was determined using the approach prescribed in paragraph 8 of the applied methodology, benchmark analysis was conducted. Page 40 of 92 Revision 0.9, 07 November 2012 OK Conclusion Validated situation 4. Based on financial expertise and local and sectoral knowledge, determine whether all scenarios that are considered by the project participants and are supplementary to those required by the methodology, are reasonable in the context of the proposed CDM project activity and that no reasonable alternative scenario has been excluded. Use the table below for this purpose: Alternative Scenario Ref. Baseline scenario considered in the PDD is reasonable in the context of the proposed CDM project activity. Description in the PDD Cross-checked with 1 Waste heat of the existing gas turbine is released to atmosphere and steam sourced from the existing coal fired boilers with higher utilisation. 2 Installation of new waste heat recovery equipment with supplementary natural gas firing. (Project activity) 5. Determine whether the baseline scenario identified is reasonable by validating the assumptions, calculations and rationales used, as described in the PDD. It shall be ensured that documents and sources referred to in the PDD are correctly quoted and interpreted. Cross check the information provided in the PDD with other verifiable and credible sources, such as local expert opinion. The table above may be used for this purpose. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Validation team cross-checked this alternative from the site visit, EIA report, sectoral and host country expertise. Validation team cross-checked this alternative from the site visit, EIA report, sectoral and host country expertise. Validation Opinion Validation team confirms from its sectoral expertise that this is a credible alternative. This alternative is in compliance with local regulations. Validation team confirms from its sectoral expertise that this is a credible alternative. This alternative is in compliance with local regulations. Validation team confirms that the baseline scenario is reasonable from the review PDD, host country regulations, and project documentation. The baseline scenario is also considered reasonable based on the host country and sectoral expertise of the team. Page 41 of 92 Revision 0.9, 07 November 2012 OK OK 6. Is the identified baseline scenario in line with regulatory or legal requirements and does it take into account relevant national and/or sectoral policies? The identified baseline scenario is in line with regulatory and legal requirements, as well as taking into account relevant national policies. OK 7. Is this identification supported by official and/or verifiable documents (for example, studies, web pages, certificates, etc)? The Validation team were able to interview official from the local environmental agency to confirm the above alternatives. OK Validated situation Conclusion SECTION 6c. Algorithms and/or formulae used to determine emission reductions 1. Compare the equations and parameters in the PDD to those in the selected approved methodology and determine if they have been correctly applied to calculate project emissions, baseline emissions, leakage, and emission reductions. Confirm that adequate justification has been provided for selection between different options. The methodology applied for emission calculation is AMS-III.Q version 4.0. Equations and parameters were compared with that in the PDD and the applied methodology & Tool. Further, adequate justification has been provided in the PDD for selecting between different options. Justification and assessment is as follows. Emission reductions As provided in the methodology, emission reduction is calculated from the equation: ERy = BEy – PEy – LEy BEy: PEy: LEy: ERy: Baseline emissions in the year y (tCO2e/y) Project emissions in the year y (tCO2e/y) Leakage emissions in the year y (tCO2e/y) Emission Reductions in the year y (tCO2e/y) Baseline Emission: The project activity recovers waste heat and produces only thermal energy. Therefore, equation (4) in the paragraph 8(c) of AMS III.Q ver 4.0 has been applied for baseline emission calculations. Further, it was confirmed during the site visit and project documentation that no mechanical energy is generated by the project activity. Therefore, the baseline emission calculation equation inline with the applied methodology is: LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 42 of 92 Revision 0.9, 07 November 2012 CAR 02 OK Validated situation BETher , y = f cap * f wcm * ∑∑ ( HG j , y + MG i,j,y,tur /η mech,tur ) * EFheat , j , y i j Where: BETher , y HG j , y Baseline emissions from displacing coal-based steam with wasteheat (WH) based steam during year y in tons of tCO2 Net quantity of heat (enthalpy) supplied to Wirajaya paper mill by the Project during the year y in TJ. This parameter is expressed as the difference in energy contents between the total steam supplied by project activity to the recipient plant and the total feed water into the boiler. The distinction of total steam from steam generated only from waste-heat is taken care of by parameter described below; f wcm EFheat , j , y LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 The enthalpy of feed water to the boiler takes into account the enthalpy of condensate returning into the boiler and any other waste heat recovery including economiser, blow down heat recovery. Within the project activity, no additional fossil fuel apart from natural gas to the project burner is added/fired to pre-heat the feed water. Fraction of total heat generated by the project activity using waste energy. The HRSG uses both waste heat and supplement natural gas th burning. This factor is 1 as per the ruling given by the 35 meeting of the SSC_WG (in response to clarification request SSC_579 http://cdm.unfccc.int/methodologies/SSCmethodologies/clarifications /40482). The CO2 emission factor of the coal boiler that would have supplied the paper mill in the absence of the project activity, expressed in tCO2/TJ Calculation of this parameter is to be done using Error! Reference source not found. described (below). Page 43 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation f cap MG i,j,y,tur η mech,tur Capping factor to exclude increased waste energy utilization in the project year y due to increased level of activity of the plant, relative to the level of activity in the base years before project start. The ratio is 1 if the waste energy generated in project year y is same or less than that generated in base years. fcap shall be estimated according to the corresponding section of ACM0012. Mechanical energy generated and supplied to the recipient j, which in the absence of the project activity would receive power from a steam turbine i, driven by steam generated in a fossil fuel boiler (TJ) The efficiency of the baseline equipment (steam turbine) that would provide mechanical power in the absence of the project activity Validation team confirmed from the site visit that the above equation has been correctly applied. Further, each of the above parameters has been appropriately justified. The net quantity of heat supplied is based on the post-expansion case where the steam demand will be 50TPH, multiplied by average operational days of plant based on historical data. The net quantity of heat supplied estimated as. Fraction of total energy generated using waste gas, fWCM, was considered as 1 based on SSC_579 (Ref: http://cdm.unfccc.int/methodologies/SSCmethodologies/clarifications/40482). No mechanical energy was used in the project activity. This was confirmed from the project documentation and site visit. Parameters, emission factor of steam boilers and capping factors are calculated based on the equations described below. CO2 emission factor for coal boilers The emission factor associated with generating steam in the baseline coal boiler is LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 44 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation calculated using the following equation: EFheat , j , y = ∑ wsi , j i EFCO 2,i , j η EP ,i , j Where: EFCO 2,i , j CO2 emission factor of coal in tCO2/TJ η EP ,i , j Efficiency of the baseline twin coal boilers. This value is taken as option (c) of the methodology i.e. 100% so as to be conservative. wsi , j Fraction of total heat that is used by the paper mill in the absence of the project activity would have been supplied by the coal boilers. This value is 100% on consideration that, in absence of project activity, all steam to be used by all paper mills, would have been generated using the existing twin coal boilers. Emission factor of coal was estimated based on the IPCC 2006 Guidelines. Emission factor of bituminous coal was used as it was the closest based on the NCV measurement data. The emission factor was sourced from table 2.2 of chapter 2: Stationary Combustion, Volume 2 Energy. Efficiency of the coal boiler system has been conservatively considered as 100% as a default value based on option (c) of the applied methodology. Further, during the site visit, it was noted that in the baseline scenario, the steam was generated only from coal boilers and there was no other source available at site. Therefore, fraction of total heat used by the paper mill in absence of project activity will be 100% from coal based boilers. Capping factor: In accordance with the applied methodology, the guidance on capping factor has been sourced from the methodology ACM0012, Version 04.0.0. This version is the latest at the time of preparation of this report. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 45 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation Method-1 cannot be used as the data for operation of full plant, both the existing and new line, is not available for last 3 years. Method-2 cannot be applied as quantity of waste heat cannot be measured at the exhaust and before the HRSG as it is integrated system. Further, the quantity of waste gas cannot be measured at the exhaust (chimney) of the HRSG system due to high turbulence and asymmetric flow. High turbulence and asymmetric flow remains for the aspect ratio and expansion ratio. Therefore, method-3 has been applied for the project activity. The fcap is the ratio of maximum energy recovered (MER) by the waste heat recovery unit to the actual energy recovered under the project activity. The calculations are: f cap = QOE , BL QOE , y Where: QOE,BL Output/intermediate energy that can be produced (TJ), to be determined on the basis of maximum energy that could be recovered from the WECM (MER), which would have been released (or WECM would have been flared or energy content of WECM would have been wasted) in the absence of CDM project activity. QOE,y Quantity of actual output/intermediate energy generated during year y (TJ) The capping factor will be determined based on the maximum energy recoverable sourced from the manufacturer’s specification. This approach is in accordance with the case 1 of applied methodology. The maximum energy that could be recovered (MER) from the waste gas is calculated by deducting energy from the fossil fuel from total energy recovered. Total energy recovered or useful energy recovered is the useful energy gained in the process to produce steam. The energy from the fossil fuel is the product of quantity of fossil fuel, its NCV, efficiency of the system, i.e. HRSG and efficiency of burner. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 46 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation Calculation of QOE,y PP has calculated Actual energy recovered based on the difference of actual energy recovered by the HRSG in generating steam to energy sourced from supplementary natural gas. The detailed calculations are as follows: QOE,y = HGj,y – (NCVNG × FCNG × ηHRSG × ηNG-Burner) Where: QWCM,BL Average quantity of WECM released (or flared or wasted) in atmosphere prior to the start of the project activity – as per manufacturer's specifications (this is data from simulations as calculated by the manufacturer). ηHRSG ηNG-Burner HGj,y Efficiency of the HRSG as specified by manufacturer. Efficiency of the Natural Gas Burner as specified by manufacturer. Net quantity of heat (total steam energy) supplied to Wirajaya paper mill by the Project during the year y in TJ. Monitored parameter as described in section B.7.1. FCNG,y Amount of natural gas consumed by the HRSG during the year y. Monitored parameter as described in section B.7.1. NCVNG Net calorific value of Natural Gas used in HRSG-burner. Monitored parameter as described in section B.7.1. Determination of QOE,BL QOE,BL is based on the designed parameters, reflects to maximum energy that could have been recovered. It is derived based on equation above. The input values for QOE,BL were validated as below: HGj,y or quantity of heat was estimated as the product of the average steam output, average working hours, and enthalpy gained during steam production. The average steam output was validated from the capacity of the waste heat LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 47 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation recovery boiler, i.e. 50 TPH. Average working hours in a year was validated to be 7656 hours from the sectoral expertise of the team. Enthalpy gained was calculated as difference in enthalpy of output steam and feed water. o The feed water will be at temperature of 105 C with enthalpy of 440.19 kJ/kg. The o process steam will be at 194 C and 13 bar (atmosphere) with enthalpy of 2791.93 kJ/kg. The quantity of heat was estimated to be about 900.24 TJ/yr. The parameter FCNG or amount of fossil fuel (natural gas) required in the waste heat recovery boiler was estimated as the different in enthalpy of waste gas after the turbine and that required for the boiler. The enthalpy of exhaust air from turbine was validated to be 558.74kJ/kg of quantity 165800Kg/hr. This was confirmed from the heat balance presented by the PP. This value was cross-verified from the data sheet used for design of waste heat recovery boiler. Enthalpy of air intake to WHRB was validated to be 875.66kJ/kg of quantity 166951kg/hr. This was confirmed from the data sheet used for design of waste heat recovery boiler. Quantity of natural gas was estimated from the heat balance as 1439kg/hr or 11028295 kg/yr. QOE,BL = HGj,BL – (NCVNG × FCNG × ηHRSG × ηNG-Burner) 6 = 900.24 – (37.59 × 11,017,295 × 81% × 99%/10 ) = 567.8 TJ/yr The net quantity of heat available, and amount of natural gas fired was estimated based on heat and mass balance, the efficiency of HRSG and burner was based on manufacturer’s specification, and NCV of natural gas was based on the specification of the gas supplier. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 48 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation Validation team confirms that the approach used for capping factor is appropriate and inline with the applied methodology. Capping factor is considered 1 for ex-ante emission reduction estimation. Validation of heat balance over gas turbine: Mass and Heat balance was done when turbine is operating at maximum instantaneous capacity using simulation software of technology supplier. Air intake to the turbine was validated to be 162417.6 Kg/hr Team confirmed the suitability of air intake from the result of simulation software Enthalpy of inlet air was validated to be 71.74 kJ/kg o Team confirmed the suitability of enthalpy air at ambient temperature of 30 C and relative humidity of 60%. Team confirmed from its host country expertise that these are standard conditions in Indonesia. Team further confirmed from its sectoral expertise that enthalpy of air has been correctly calculated. Fuel intake (natural gas) was validated to be 3382.2 kg/hr Team confirmed the suitability of fuel intake from the simulation. NCV of natural gas was validated to be 37.59 MJ/kg Team confirmed the NCV from actual measurement results of natural gas. Team further confirmed the suitability of NCV from its sectoral expertise Electricity output was validated to be 12.124MW Team confirmed the suitability of electrical energy output from the results of simulation software. Useful energy output was validated to be 46152.48 MJ/kg Team confirmed the suitability of useful energy output from the result of simulation software. Team confirmed that this is a calculated value for electrical energy output by adjusting to efficiency factors of generator, and turbine deviation from ideal system, i.e. isentropic system. Team confirmed from its sectoral expertise that 98% generator efficiency and LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 49 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation 96.50% as deviation of real turbine from ideal system is suitable. Enthalpy of exhaust gas was validated to be 558.74 kJ/kg Team confirmed the suitability of enthalpy of output energy from the result of simulation software. Team also checked and confirmed that same value was used for designing of waste heat recovery system. Quantity of exhaust gas was validated to be 165800 kg/hr Team confirmed the suitability of quantity of exhaust gas from the result of simulation software. Team also checked and confirmed that same value was used for designing of waste heat recovery system. The validation team was able to confirm that the above equations are correctly applied for the baseline emission of project activity. Project Emission: Based on the methodology, the project emissions include emissions from combustion of supplementary fuel, i.e. natural gas. The emissions from supplementary fuel are calculated using “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion” (Version 02). PP has used option B by using CO2 emission factor of the fossil fuel. The calculation for project emission is as follows: PE FC , j , y = ∑ FC i , j , x × NCVi , y × EFCO 2,i , y i Where: PEFC,j,y FCi,j,y COEFi CO2 emissions from fossil fuel combustion in process j during the year y (tCO2/yr); Quantity of fuel type i combusted in process j during the year y (mass or volume unit/yr) CO2 emission coefficient of fuel type i in year y (tCO2/mass or volume unit) ,y LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 50 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation NCVi,y EFCO2,i Net calorific value of the fuel type i in year y (GJ/mass or volume unit) Weighted average CO2 emission factor of fuel type i in year y (tCO2/GJ) ,y i Fuel types combusted in process j during the year y. In this case, Natural Gas The validation team was able to confirm that the above equation is correctly applied for the project emission of project activity. Quantity of natural gas is estimated based on energy balance and NCV of the natural gas has been sourced from the supplier invoices. These parameters will be monitored during monitoring. Specific enthalpy of flue gas before firing was estimated from the heat balance provided by the turbine equipment manufacturer. These results are based on simulation software. The results from the software shows the exhaust temperature of o 514 C having specific enthalpy of 558.74kJ/kg and exhaust gas quantity of about 165,800kg/hr. Detailed validation is provided in the heat balance section above. Specific enthalpy of flue gas after firing was confirmed from the heat balance provided by the waste heat recovery boiler manufacturer. These results were the part of boiler design for the designed output capacity of 50TPH steam. The results by the o boiler manufacturer are: temperature of 757 C with specific enthalpy of 875.66kJ/kg, and quantity of 166,951 kg/hr. The emission factor for Natural Gas has been sourced from the IPCC 2006 national greenhouse gas inventories for stationary combustion. Validation team confirms from its host country and sectoral expertise that manufacturer does not provide emission factor value. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 51 of 92 Revision 0.9, 07 November 2012 Conclusion Conclusion Validated situation Leakage: The validation confirmed from the review of EPC contract, interview and site visit that there is no equipment transferred from another activity for this project, therefore, leakage emissions are considered nil in accordance with the paragraph 15 of the applied methodology. CAR 02 was raised as use of different options prescribed by the applied methodology was not described. PP has revised the PDD describing the options used for emission reduction calculations. The resolution is detailed in the findings section of this protocol. 2. Verify the justification given in the PDD for the choice of data and parameters used in the equations to determine estimated emission reductions. If data and parameters will not be monitored throughout the crediting period and will remain fixed, assess that all data sources and assumptions are appropriate and calculations are correct, applicable to the proposed CDM project activity and will result in a conservative estimate of the emission reductions. If data and parameters will be monitored on implementation and hence become available only after validation of the project activity, confirm that the estimates provided in the PDD for these data and parameters are reasonable. List all data and parameters provided in the PDD in the tables in next column. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Data/Parameter title: EFCO2,coal Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? Comments Yes No, monitored ex-post Yes Yes Yes 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol.2 Energy. Lower value of 95% confidence interval for ‘Other bituminous coal’ was considered. Yes Yes Yes Yes Data/Parameter title: HGj,y Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Comments Yes No, monitored ex-post Yes Yes Yes Page 52 of 92 Revision 0.9, 07 November 2012 OK Conclusion Validated situation Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? Data/Parameter title: NCVNG Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 53 of 92 Revision 0.9, 07 November 2012 Total enthalpy is the difference of enthalpy of steam and feed water. Validation team confirmed that steam enthalpy was correctly determined based on the characteristics of the steam and standard steam table. Yes Yes Yes Yes Comments Yes No, monitored ex-post Yes Yes Yes Based on invoice from NG’s supplier. The NCV value was correctly converted to standard units. Yes Yes Yes Yes Conclusion Validated situation Data/Parameter title: Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? Data/Parameter title: EFCO2,NG Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 54 of 92 Revision 0.9, 07 November 2012 Comments Yes No, monitored ex-post Yes Yes Yes; Ex-ante value sourced from mass and energy balance conducted by the supplier of waste heat recovery boiler. Yes Yes Yes Yes Comments Yes No, monitored ex-post Yes Yes Yes 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol.2 Energy Yes Yes Yes Yes Conclusion Validated situation Data/Parameter title: QOE,y Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? Data/Parameter title: QOE,BL Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 55 of 92 Revision 0.9, 07 November 2012 Comments Yes No, monitored ex-post Yes Yes Yes Based on monitored useful energy (steam), quantity and NCV of natural gas used. Yes Yes Yes Yes Comments Yes Yes, fixed ex-ante Yes Yes Yes Based on design specification of HRSG using equations above. Yes Yes Yes N/A Conclusion Validated situation Data/Parameter title: η EP ,i , j Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? Data/Parameter title: wsi,j Title in line with methodology? Fixed throughout the crediting period? Data unit correctly expressed? Appropriate description of parameter? Source clearly referenced? Value provided is considered reasonable? Has this value been verified? Choice of data correctly justified? Measurement method correctly described? LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 56 of 92 Revision 0.9, 07 November 2012 Comments Yes Yes, fixed ex-ante Yes Yes Yes 100% baseline efficiency was used based on option (c) of the applied methodology. Yes Yes Yes N/A Comments Yes Yes, fixed ex-ante Yes Yes Yes Based on the manufacturing plant. No other source of steam generation other than existing coal based boilers was identified during the site visit. Yes Yes Yes NA Validated situation Conclusion 3. Confirm that all assumptions and data used by PPs are listed in the PDD including their references and sources, and that the documentation used as the basis for these assumptions and source of data is correctly quoted and interpreted in the PDD. All assumption and data used by PP have been listed in the PDD including the references and sources. The team confirmed this has been correctly quoted and interpreted. OK 4. Confirm that all estimates of the baseline emissions can be replicated using the data and parameter values provided in the PDD. All estimation of the baseline emissions are also provided in the spreadsheet format therefore can be replicated. OK LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 57 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation SECTION 7. Additionality of a project activity 1. Does the PDD clearly describe how the proposed CDM project activity is additional? Yes No The PDD clearly describes the additionality of the project; that NPV of the project is negative. OK 2. List the documents and tools provided by the CDM Executive Board used to demonstrate the additionality Guidelines on the demonstration of additionality of small-scale project activities, Version 09.0 OK Additionality for small-scale project activities Determine whether the proposed project activity is additional in accordance with CDM requirements applicable for small-scale project activities: Attachment A to Appendix B of 4/CMP 1 annex II and “non binding best practice examples to demonstrate additionality for SSC project activities” 3. Describe and assess the relevant criteria for the automatic additionality of the following cases: a) Type I project activities up to 5 MW that employ renewable energy as their primary technology, b) Type II energy efficiency project activities that aim to achieve energy savings at a scale of no more than 20 GWh per year, c) Type III project activities that aim to achieve emissions reductions at a scale of no more than 20 ktCO2e per year. Not applicable. Automatic additionality has not been used Validated situation - Conclusion SECTION 7a. Prior consideration of the clean development mechanism 1. Does the PDD clearly indicate the start date of the project activity in format: dd/mm/yyyy, and is it in line with the Glossary of CDM Terms? LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Yes No The starting date of the project is 01/08/2011 which is the date for signing of EPC contract with PT. Indoturbine. Page 58 of 92 Revision 0.9, 07 November 2012 OK Conclusion Validated situation If the PDD was published for Global Stakeholder Consultation process after the start date, check that the CDM benefits were considered necessary in the decision to undertake the project activity as a CDM project, following the below queries. 2. For a project activity with a start date on or after the 02 August 2008, confirm that the PPs have informed the host party DNA and the UNFCCC secretariat in writing of their intention to seek CDM Status. PP has submitted the notification to the DNA of Indonesia and UNFCCC secretariat on 20/07/2011. Validation team confirmed the notification from the list of notifications available at UNFCCC website, copy of email sent to the DNA and acknowledgement received from the DNA, dated: 25/07/2011. The notification was made within 180 days of the start date of the project activity. OK N/A - If such a notification has not been provided by the PPs within 180 days of the project activity start date, determine that the CDM was not seriously considered in the decision to implement the project activity. For a project activity with a start date before 02 August 2008 3. Check the following requirements through document reviews to assess the PPs prior consideration of the CDM: (a) Evidence that must indicate that awareness of the CDM before the project activity start date, and that the benefits of the CDM were a decisive factor in the decision to proceed with the project. (b) Reliable evidence from project participants that must indicate that continuing and real actions were taken to secure CDM status for the project in parallel with its implementation. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 59 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation 4. Describe the process for cross-checking the evidence. The assessment of real and continuing actions should focus on real documented evidence, including an assessment of the authenticity of the evidence, that is, letters, email exchanges and other documented communications. These shall be considered as evidence only after assessing the reliability and authenticity of them, inter alia through cross-checking (for example, interviews) N/A - 5. The time gap between the documented evidence of prior CDM consideration and continuing and real actions shall be within the following period: (a) Less than two years: continuing and real actions were taken to secure CDM status for the project activity; (b) Greater than two years and less than three years: justify any positive or negative validation opinion based on the context of the evidence and information assessed; (c) Greater than three years: continuing and real actions were not taken. N/A - 6. If authentic evidence to support the serious prior consideration of the CDM as indicated above is not available, determine that the CDM was not considered in the decision to implement the project activity N/A - LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 60 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion SECTION 7b. Identification of alternatives 1. Does the PDD identify credible alternatives to the project activity, to determine the most realistic baseline scenario? Assess this list of alternatives and ensure that: (a) The list of alternatives includes as one of the options that the project activity is undertaken without being registered as a proposed CDM project activity. (b) The list contains all plausible alternatives considered to be viable means of supplying the outputs or services that are to be supplied by the proposed CDM project activity. (c) The alternatives comply with all applicable and enforced legislation. LIST OF ALTERNATIVES No Description in the PDD OK Describe why it is credible and complete 1 Release of waste gas in atmosphere and steam sourced from the existing coal boilers with higher utilisation This alternative is scenario existing prior to the project activity. Based on the host country expertise of the team it was confirmed that steam generation using existing coal fired boilers is in full compliance with host country rules. 2 Installation of waste heat recovery boilers with natural gas as supplementary fuel without being registered as CDM project activity This is a project activity without being registered as proposed CDM project activity. This is in compliance with all the legal regulations. Validation team confirms from its host country and sectoral expertise that above list contains all the plausible alternatives to the project activity. Validated situation SECTION 7c. Investment analysis LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 61 of 92 Revision 0.9, 07 November 2012 Conclusion Validated situation Conclusion 1. Verify the accuracy of financial calculations carried out for the investment analysis: (a) Conduct a thorough assessment of all parameters and assumptions used in calculating the relevant financial indicator, and determine the accuracy and suitability of these parameters. (b) Cross-check the parameters against third-party or publicly available sources, such as invoices or price indices. (c) Review feasibility reports, public announcements and annual financial reports related to the proposed CDM project activity and the project participants. All the relevant parameters are sourced from quotation, coal price invoice, gas price invoice and local taxation laws. Validation team confirmed these parameters from the documentation, host country and sectoral expertise of the team. The investment analysis has been applied for the technical lifetime of the project. Depreciation has not been accounted in cash-flow calculations. Input values sourced from quotation, invoices were available at the time of investment decision. All the investment analysis spreadsheets are in readable formats and all relevant cells are viewable and unprotected. The portion of investment costs funded by equity has been considered for calculation of equity NPV. For cash flow on real terms, PP has correctly applied default values in the Appendix of the Guideline on the assessment of investment analysis, Version 05. CL 05 was raised as input values were not adequately justified. The resolution is detailed in the findings section of this protocol. CL 05 OK 2. Assess the correctness of computations carried out and documented by the project participants NPV based on equity cash flows in real terms is USD -1.35 Million. Based on the host country expertise and from the review of investment analysis spreadsheet, validation team confirms that computation has been correctly carried out and documented. OK LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 62 of 92 Revision 0.9, 07 November 2012 Validated situation 3. Assess the sensitivity analysis by the project participants to determine under what conditions variations in the result would occur, and the likelihood of these conditions. The revised PDD presents the sensitivity over following parameters: • CAPEX • Coal Price • Amount of Coal required in the Baseline • Gas Price • Amount of Gas required in the Project Investment analysis has been reviewed to confirm parameters used for sensitivity analysis as below: Values in Million USD in table below Parameters 10.00% -3.26 Threshold Gas Price -10% 0.56 Coal Price -3.48 0.78 6.35% CAPEX -1.08 -1.62 -49.77% O&M Costs Gas quantity required Coal quantity required -1.27 -1.44 NA 0.56 -3.26 -3.48 0.78 -7.085% -7.085% 6.35% 1. Project CAPEX Estimated total capital expenditure required for the Project Activity is mostly comprised of the costs of the HRSG and its installation. This cost is now agreed and finalised, as per signed contracts with the EPC/ HRSG provider. No decrease in this cost is possible. 2. Coal price The estimated price for coal used in the investment analysis USD95.8/tonne. The coal price was confirmed based on the actual invoices of the existing coal based boiler. Change in coal price during the project operational period is influenced by inflation and need not be considered for cash flow in real terms. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 63 of 92 Revision 0.9, 07 November 2012 Conclusion OK Conclusion Validated situation 3. Amount of coal required in the Baseline For estimation of amount of coal required was based on the designed efficiency of the coal based boiler. The designed efficiency was used for estimation of both coal and natural gas requirement. Higher costs due to lower actual efficiency of the gas used in HRSG will be compensated by lower actual efficiency of coal boilers. Therefore, decrease in savings of coal is not envisaged. 4. Gas price Gas prices in Indonesia are regulated by government and not by market. Therefore, there is a lag in price change by inflation in gas prices. The gas prices are determined based on the actual gas price and expected increase envisaged at the time of investment decision. An expected increase of 30% in the actual value was considered conservative when compared to increase of 50% or above elsewhere in Indonesia. The actual increase in gas price was confirmed from the letter given by gas supplier to the PP dated: 08/05/2012, where gas price was 17% higher than that considered in the investment analysis. 5. Amount of natural gas required Amount of natural gas was based on the designed efficiency. The actual efficiency will be lower than the designed efficiency. However, increased cost of natural gas will be compensated by lower actual efficiency of the coal based boilers. Comparison of the design efficiency of investment analysis was considered appropriate. 6. O&M Cost NPV does not turn positive even if O&M cost is considered nil. Use the table below to list all the inputs to the investment analysis and to describe how each parameter has been validated: Parameter/input Capacity of steam Symbol/Unit Value ton per hour 50 LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Source EIA report Means of validation Validation team confirmed the designed capacity Page 64 of 92 Revision 0.9, 07 November 2012 Conclusion OK output Capital cost of HRSG HRSG contract agreement with PT. Indoturbine USD 3,800,000 Total investment cost USD USD/yr Source of data has been cross check from the quotation from the supplier from EPC contract of HRSG dated: 01/08/2011, and based on sectoral expertise for minor erection and commissioning cost, bank fee and statutory fee. OK Historical record The Validation Team confirmed that the O & M from the cost of quote insurance and the Sector expert confirmed that the O&M cost for HRSG and back up coal boiler 2.5 % of Capex is appropriate. Validation team confirmed the gas price from the actual receipts for September 2011 dated: 04/10/2011 available at the time of investment decision and news article on expected gas price increase. Validation team also confirmed the suitability of gas price from the actual prices available during validation from PGN communication Ref: 069900.S/PP.01.01/SBU1/2012. Validation Team confirmed the price from the PO price of coal for a period from July 2009 to August 2011. Coal price, unlike natural gas price, fluctuates on daily basis as it is market determined. The figure is conservative that has considering about 2 month of stop within one year. Operational hours were also confirmed during the site visit based on historical operational data from November 2009 to December 2010. OK 181,500 Gas price Gas receipts USD/MMBTU 6.897 Coal price Coal receipts USD/ton 95.8 Operating hours per year Assumption hours 7,656 LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 OK Calculated 4,236,500 Operating and maintenance cost from the EIA report. Further, suitability of the capacity was confirmed from the review of HRSG contract, specification of HRSG and site visit. Validation team confirmed the offer of supplier capital cost from the review of EPC contract dated: 01/08/2011, capital finance document from Caterpillar dated: 08/09/2011. Page 65 of 92 Revision 0.9, 07 November 2012 OK OK OK HRSG residual value 10% of original equipment cost US$ 380,000 Project life Turbine Manual years 17 Loan interest rate Assumption % 6 Inflation projection till 2016 for USD IMF World Economic Outlook % 1.04 Inflation on real basis Calculated % 4.96 Bank loan 2 US$ Assumption 2,118,250 Validation team confirmed it from its sectoral expertise. Validation team confirmed that the value is conservative, considering remaining life time of HRSG. Validation team also confirmed the residual value from Government Regulation on Tax No.62/2008 which states 10% of equipment cost. Validation team confirmed the remaining life time based on the lifetime prescribed by the equipment manufacturer in section 8.5.3.3 of chapter 8 ‘Risk assessment’ turbine manual dated: 23/03/2009, which states 20 years and actual operation time of 3 years confirmed from the start of Wira paper mill. Validation team confirmed the suitability of interest rate from the review of USD denominator loans from the review of section I.27 ‘Interest rate of US Dollar Loans by Group of banks’ for Indonesian financial statistics published by Bank 2 of Indonesia . Validation team confirmed the suitability of forecasted inflation rate from the review of IMF World Economic outlook database September 2011 for US. Validation team confirmed from the review of investment analysis spreadsheet that the calculation of real interest rate based on the Fisher equation has been correctly applied. Validation team confirmed the suitability of funding sourced from short term finance offered by Caterpillar dated: 08/09/2011. http://www.bi.go.id/web/en/Statistik/Statistik+Ekonomi+dan+Keuangan+Indonesia/Versi+HTML/Sektor+Moneter/Sektor+Moneter.htm# LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 66 of 92 Revision 0.9, 07 November 2012 OK OK OK OK OK OK Validated situation 4. Confirm the suitability of any benchmark applied in the investment analysis: (a) Determine whether the type of benchmark applied is suitable for the type of financial indicator presented. (b) Ensure that any risk premiums applied in determining the benchmark reflect the risks associated with the project type or activity. (c) Determine whether it is reasonable to assume that no investment would be made at a rate of return lower than the benchmark by, for example, assessing previous investment decisions by the project participants involved and determining whether the same benchmark has been applied or if there are verifiable circumstances that have led to a change in the benchmark. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 PP has calculated NPV based on equity cashflow in real terms. The default value mentioned in the Appendix is a suitable discount rate (benchmark) for expected return on equity after tax on real terms. Therefore, validation team confirms that suitability of the benchmark with the type of financial indicator. The PP has applied default value for Group 2 for Indonesia. Group 2 includes sectoral scope 4 ‘Manufacturing industries’ which is relevant as the project can be invested by the PP. Validation team confirms from the interview of the PP that no similar investment was made in waste heat recovery by the PP prior to the project activity. Date 04/12/2012 Page 67 of 92 Revision 0.9, 07 November 2012 Conclusion OK Validated situation 2. If the project participants rely on values from a Feasibility Study Report (FSR) approved by any national authority, the team is required to ensure that: (a) The FSR has been the basis of the decision to proceed with the investment in the project, that is, that the period of time between the finalization of the FSR and the investment decision is sufficiently short for the DOE to confirm that it is unlikely in the context of the underlying project activity that the input values would have materially changed. (b) The values used in the PDD and associated annexes are fully consistent with the FSR and, where inconsistencies occur, the DOE should validate the appropriateness of the values. (c) On the basis of its specific local and sectoral expertise, confirmation is provided, by cross-checking or other appropriate manner, that the input values from the FSR are valid and applicable at the time of the investment decision. Conclusion Not applicable. No FSR was prepared for this project activity. OK Use the table below to cross-check input values and describe here the results of the comparison. Comparison to similar registered project in the region: N/A since there is no similar project in the host country CDM Ref Investment cost LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Tariff O&M cost Date 04/12/2012 Capacity Output Investment cost per output Page 68 of 92 Revision 0.9, 07 November 2012 Load factor O&M relative to investment O&M per output Validated situation Conclusion N/A - SECTION 7d. Barrier analysis 1. Does the PDD demonstrate that the proposed project activity faces barriers that prevent its implementation and do not prevent at least the implementation of one of the alternatives? Provide here an overall determination of the credibility of the barrier analysis. Use the below table to list each barrier considered in the PDD and to describe how the team undertake their validation. Barriers are issues in project implementation that could prevent a potential investor from pursuing the implementation of the proposed project activity. The identified barriers are only sufficient grounds for demonstration of additionality if they would prevent potential project proponents from carrying out the proposed project activity undertaken without being registered as a CDM project activity. Type of Barrier Determination Description in the PDD Barriers are real Prevent implementation of PA Access to finance Risks related barriers Technological Due to prevailing practice LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 69 of 92 Revision 0.9, 07 November 2012 Do not prevent implementation of BL Conclusion Other First of its kind Conclusion Validated situation SECTION 7e. Common practice analysis 1. Describe how the geographical scope of the common practice analysis has been validated. Assess whether the geographical scope (for example, the defined region) of the common practice analysis is appropriate for the assessment of common practice related to the project activity’s technology or industry type. 2. Determine to what extent similar and operational projects (for example, using similar technology or practice), other than CDM project activities, have been undertaken in the defined region. 3. If similar and operational projects, other than CDM project activities, are already widely observed and commonly carried out in the defined region, assess whether there are essential distinctions between the proposed CDM project activity and the other similar activities. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Not applicable. The project is categorised as small scale project activity and hence, common practice analysis is not required. - NA - NA - Page 70 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion SECTION 8. Monitoring plan 1. Compliance of the monitoring plan with the approved methodology. Confirm that the MP contains all the necessary parameters and that they are monitored in accordance to the approve Methodology using the following table: Parameter HGj,y Monitoring Methodology description Unit: TJ/year Description: Net quantity of heat (enthalpy) supplied to the recipient plant j by the project activity during the year y Source of data: measured Value: measured data Description of measurement method: QA/QC procedures: - LRQA Reference: ENQ/2607/11/IRE MSBSF43847 PDD description Unit: TJ/hr Description: Net quantity of heat (enthalpy) provided by the project Source of Data: 1. (Enthalpy = Temperature & pressure) of steam supplied to recipient plant. 2. (Enthalpy = Temperature & pressure) of feed water. 3. Quantity of steam. Value of Data: 900.24 Brief description of measurements methods and procedures to be applied: Standard thermometer used for temperature measurement. To be measured continuously and aggregated into average hourly measurements. Standard pressure gauges used for pressure measurement. To be measured continuously and aggregated into average Date 04/12/2012 Validated situation The unit and description of parameter are not as according to the methodology, however the parameter title is not according to the methodology, as mentioned in Section 5.c of this validation protocol. Further, source of data and value are by measurement and not specified in the methodology. Description of measurement method and QA/QC procedure are also not specified in the methodology thus the PDD description is considered appropriate. Page 71 of 92 Revision 0.9, 07 November 2012 Conclusion OK hourly measurements. Flow meter used for quantity of steam. To be measured continuously and aggregated into total hourly measurements. QA/QC procedures to be applied: Measuring equipment shall be calibrated annually in accordance with industry standards or manufacturer’s instructions. During the time of calibration and maintenance, alternative equipment shall be used for monitoring. Data unit: GJ per mass or volume unit Description: Weighted average net calorific value of fuel type i in year y NCVNG Source of data: The following data sources may be used if the relevant conditiions apply: a) Values provided by the fuel supplier in invoices; b) Measurements by the project participants; c) Regional or national default values; d) IPCC default values at the upper limit of the uncertainty at a 95% LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Unit: MJ/kg Description: Net calorific value of Natural Gas used in HRSG-burner Source of Data: Natural gas supplier's invoice, periodic NG sampling sheet from supplier. Value of Data: 37.5905 Brief description of measurements methods and procedures to be applied: Natural gas specification sheets to be requested regularly from PGN (National Gas Supplier) – recorded as and when PGN Date 04/12/2012 The unit and description of parameter are according to the methodology. Further, source of data, value, description of measurement method and QA/QC procedure are not specified in the methodology thus the PDD description is considered appropriate. The validation team confirmed IPCC data shall be used for the NCV of natural gas. Page 72 of 92 Revision 0.9, 07 November 2012 OK confiende inverval as provided in Table 1.2 of chapter 1 of Vol. 2 (Energy) of the 2006 IPCC Guidelines on National GHG Inventories Measurement procedure (if any): For a) and b): Measurements should be undertaken in line with national or international fuel standards Monitoring frequency: For a) and b): The NCV should be obtained for each fuel delivery, from which weighted average annual values should be calculated For c): Review appropriateness of the values annually; For d): Any future revision of the IPCC Guidelines should be taken into account provides specification sheets. Gas invoice GCV value to be recorded monthly or as and when the invoice is billed. QA/QC procedures to be applied: Verify within the uncertainty range of the IPCC default values as provided in Table 1.2, Vol. 2 of the 2006 IPCC Guidelines. If the values fall below this range collect additional information from the testing laboratory to justify the outcome or conduct additional measurements. The laboratories should have ISO17025 accreditation or justify that they can comply with similar quality standards. QA/QC procedures: Verify if the values under a), b) and c) are within the uncertainty range of the IPCC default values as provided in Table 1.2, Vol. 2 of the 2006 IPCC Guidelines. If the values fall below this range collect additional information from the testing laboratory to LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 73 of 92 Revision 0.9, 07 November 2012 justify the outcome or conduct additional measurements. The laboratories in a), b) or c) should have ISO17025 accreditation or justify that they can comply with similar quality standards Data unit: Mass or volume unit per year Description: Quantity of natural gas combusted in the process, in year y (natural gas generator) Source of data: Onsite measurements Measurement procedure (if any): Use either mass or volume meters. In cases where fuel is supplied from small daily tanks, rulers can be used to determine mass or volume of the fuel consumed, with the following conditions: The ruler gauge must be part of the daily tank and calibrated at least once a year and have a book of control for recording the measurements (on a daily basis or per shift); • Accessories such as transducers, sonar and LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Unit: kg/hour Description: Amount of natural gas consumed by the HRSG Source of Data: HRSG natural gas burner Value if data : 1440 Description Measurement method and procedures: Standard flow meter to be used. Monitoring Frequency: continuously and aggregated into total hourly measurements. QA/QC Procedure: Cross checked with invoices of NG. Measuring equipment shall be calibrated annually in accordance with industry standards or manufacturer’s instructions. During the time of calibration and maintenance, alternative equipment shall be used for monitoring. Date 04/12/2012 Data unit and description are described correctly. The data source, measurement procedures, monitoring frequency and QA/QC procedures are described in the PDD and confirmed satisfying the requirements of the monitoring methodology OK The validation team confirmed during site visit interviews that a flow meter shall be installed at the output of the natural gas. The reading will be taken every hourly. The calibration frequency is considered to be appropriate based on local and sectoral expertise. Page 74 of 92 Revision 0.9, 07 November 2012 piezoelectronic devices are accepted if they are properly calibrated with the ruler gauge and receiving a reasonable maintenance; • In case of daily tanks with pre-heaters for heavy oil, the calibration will be made with the system at typical operational conditions. Monitoring frequency: Continuously QA/QC procedures: The consistency of metered fuel consumption quantities should be cross-checked by an annual energy balance that is based on purchased quantities and stock changes. Where the purchased fuel invoices can be identified specifically for the CDM project, the metered fuel consumption quantities should also be crosschecked with available purchase invoices from the financial records. Data unit: tCO2/GJ EFCO2,NG Description: Weighted average CO2 emission factor of fuel type i in year y LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Unit: kg/TJ Description: Emissions factor of natural gas Source of Data : IPCC default values at the upper limit of the uncertainty at a Date 04/12/2012 Data unit and description are described correctly. The data source, measurement procedures, and monitoring frequency are described in the PDD and confirmed satisfying the requirements of the monitoring methodology. Page 75 of 92 Revision 0.9, 07 November 2012 OK Source of data: The following data sources may be used if the relevant conditiions apply: a) Values provided by the fuel supplier in invoices; b) Measurements by the project participants; c) Regional or national default values; d) IPCC default values at the upper limit of the uncertainty at a 95% confiende inverval as provided in Table 1.4 of chapter 1 of Vol. 2 (Energy) of the 2006 IPCC Guidelines on National GHG Inventories Measurement procedure (if any): For a) and b): Measurements should be undertaken in line with national or international fuel standards Monitoring frequency: For a) and b): The NCV should be obtained for each fuel delivery, from which weighted average annual values should be calculated For c): Review appropriateness of the values annually; For d): Any future revision of the IPCC Guidelines should be taken into account LRQA Reference: ENQ/2607/11/IRE MSBSF43847 95% confidence interval as provided in table 1.4 of Chapter1 of Vol. 2 (Energy) of the 2006 IPCC Guidelines on National GHG Inventories The validation team confirmed IPCC data shall be used for the CO2 emission factor of natural gas. Description of measurement methods and procedures: Applicable where option B is used. For a): If the fuel supplier does provide the NCV value and the CO2 emission factor on the invoice and these two values are based on measurements for this specific fuel, this CO2 factor should be used. If another source for the CO2 emission factor is used or no CO2 emission factor is provided, Options b), c) or d) should be used. Monitoring frequency: Any future revision of the IPCC guideline will be taken into account Date 04/12/2012 Page 76 of 92 Revision 0.9, 07 November 2012 QA/QC procedures: Applicable where option B is used. For a): If the fuel supplier does provide the NCV value and the CO2 emission factor on the invoice and these two values are based on measurements for this specific fuel, this CO2 factor should be used. If another source for the CO2 emission factor is used or no CO2 emission factor is provided, Options b), c) or d) should be used. Data unit: tCO2/GJ Description: Weighted average CO2 emission factor of fuel type i in year y EFCO2,Coal Source of data: The following data sources may be used if the relevant conditiions apply: a) Values provided by the fuel supplier in invoices; b) Measurements by the project participants; c) Regional or national default values; d) IPCC default values at the upper limit of the uncertainty at a 95% confiende inverval as provided in Table 1.4 of chapter 1 of Vol. 2 (Energy) LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Unit: kg/TJ Description: Emissions factor of coal Source of Data : IPCC default values at the upper limit of the uncertainty at a 95% confidence interval as provided in table 1.4 of Chapter1 of Vol. 2 (Energy) of the 2006 IPCC Guidelines on National GHG Inventories Description of measurement methods and procedures: The IPCC default values at the upper limit of the uncertainty at a 95% confidence interval as provided in table 1.4 of Date 04/12/2012 Data unit and description are described correctly. The data source, measurement procedures, and monitoring frequency are described in the PDD and confirmed satisfying the requirements of the monitoring methodology. The validation team confirmed IPCC data shall be used for the CO2 emission factor of coal. CAR 05 was raised as the parameter was fixed ex-ante whereas applied methodology requires monitoring. The resolution is detailed in the findings section of this protocol. Page 77 of 92 Revision 0.9, 07 November 2012 CAR-05 OK of the 2006 IPCC Guidelines on National GHG Inventories Measurement procedure (if any): For a) and b): Measurements should be undertaken in line with national or international fuel standards Chapter1 of Vol. 2 (Energy) of the 2006 IPCC Guidelines on National GHG Inventories Monitoring frequency: Any future revision of the IPCC guideline will be taken into account Monitoring frequency: For a) and b): The NCV should be obtained for each fuel delivery, from which weighted average annual values should be calculated For c): Review appropriateness of the values annually; For d): Any future revision of the IPCC Guidelines should be taken into account QA/QC procedures: Applicable where option B is used. For a): If the fuel supplier does provide the NCV value and the CO2 emission factor on the invoice and these two values are based on measurements for this specific fuel, this CO2 factor should be used. If another source for the CO2 emission factor is used or no CO2 emission factor is provided, LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 78 of 92 Revision 0.9, 07 November 2012 Options b), c) or d) should be used. Data unit: TJ Description: Quantity of actual output/intermediate energy generated during year y Source of data: From standard data books QOE,y Measurement procedure (if any): Directly measure the actual output/ intermediate energy produced by the project activity Monitoring frequency: Measured daily, aggregated annually QA/QC procedures: Not Applicable LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Unit: TJ Description: Quantity of actual output/intermediate energy generated during year y Source of Data : Plant records Description of measurement methods and procedures: Based on the measurement of HGj,y, FCNG, and NCVNG. Monitoring frequency: To be measured continuously and aggregated into yearly values. QA/QC procedures : Measuring equipment shall be calibrated annually in accordance with national standards or manufacturer’s instructions. During the time of calibration and maintenance, alternative equipment shall be used for monitoring. Date 04/12/2012 Data unit and description are described correctly as per methodology ACM00012. PP had selected method 3. As the output of energy generate from steam in MWh, PP also monitored the actual generated electricity from turbine in MWh instead of TJ. The data source, measurement procedures, and monitoring frequency are described in the PDD and confirmed satisfying the requirements of the monitoring methodology. The validation team confirmed IPCC data shall be used for the CO2 emission factor of coal. Page 79 of 92 Revision 0.9, 07 November 2012 OK 2. Implementation of the plan: confirm that the monitoring arrangements described in the monitoring plan are feasible within the project design. Described the steps undertaken to assess this. The monitoring plan describes the objective, organisational structure, roles and responsibility, the monitoring instruments, data monitoring procedures and the management system. On site review and field interview were conducted and it confirmed that the monitoring is planned in a reasonable manner and considered feasible to be implemented by the PP. CAR 04 is raised as accuracy, frequency of monitoring and data archiving procedure was not described. In response to the finding, the PP has revised the PDD including the accuracy, monitoring frequency and data archiving procedure. The resolution is detailed in the findings section of this protocol. CAR 04 OK 3. Implementation of the Plan: confirm that the means of implementation of the MP, including the data management and quality assurance and quality control procedures, are sufficient to ensure that the emission reductions achieved by / resulting from the proposed CDM project activity can be reported ex post and verified The monitoring plan includes the internal quality control and assurance process, data control system and regular calibration of the monitoring instruments as appropriate that will ensure reliable monitoring and reporting of the ERs. OK LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 80 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion SECTION 9. Local stakeholder consultation - Determine whether comments by local stakeholders that can reasonably be considered relevant for the proposed CDM project activity, have been invited. Stakeholder consultation was conducted on 05/10/2011 at the Club House Modernland and Country Golf, Tangerang. No negative comment was received through the local stakeholders’ consultation processes. In the stakeholders’ meeting, discussion was made on the project’s potential impact to the local environment, potential adverse effects and the expected benefits to the local community. Justification by the PP was presented during the meeting and it is described in the PDD. OK - Confirm that the summary of the comments received as provided in the PDD is complete. Summary of comments as stated in the PDD were confirmed during the site visit to identify that there was no any objections or negative comments received from the stakeholders which required the project owner to take specific action. This was conducted through interview with representative of local stakeholders. Initially, the evidence of stake holder meeting was not provided by PP for review. Hence CL 07 was issued. Subsequently PP provided the evidence which confirmed the meeting as describe in the PDD. The resolution is detailed in the findings section of this protocol. CL 07 OK - Confirm that the project participants have taken due account of any comments received and have described this process in the PDD. The local stakeholders who participated in the consultation meeting included: 1. Local people 2. Chief of village 3. Local government of the nearby sub districts 4. The representatives of Local environmental agency (BLHD) 5. The representatives of PT. Wirajaya Pakindo management and staff 6. The representatives of KfW No comment was received that requires further action to the PP, but to continue the implementation of EIA OK LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 81 of 92 Revision 0.9, 07 November 2012 Validated situation Conclusion SECTION 10. Environmental Impacts 1. Is an EIA required by the environmental legislation of the host country? Describe the legislation applicable. According to the legislation, PP is required to develop an Environmental Impact Analysis (AMDAL) document. It is also stipulated in Government Regulation No. 41/1999 on Air Pollution Control, that PP is required to measure and monitor certain pollution parameters which include: sulphur dioxide (SO2), carbon monoxide (CO), nitrogen dioxide (NO2), total suspended particulates (TSP), ammonia (NH3) and hydrogen sulphide (H2S). OK 2. Confirm whether the project participants have undertaken an analysis of environmental impacts and, if required by the host Party, an environmental impact assessment. The PP has submitted an AMDAL report and a revision of that AMDAL report due to the decision to use coal boilers that was not stated in the original AMDAL. The document is called Addition to Environmental Management Plan and Environmental Monitoring Plan (RPL/RKL tambahan) for the Construction of Coal Boilers. Initially the AMDAL as well as the required monitoring report document has not provided to be reviewed. Hence CL 07 was issued. Subsequently PP provided the AMDAL and monitoring report that confirmed the PDD has accurately quoted the environmental impact associated with the plant and the project. The resolution is detailed in the findings section of this protocol. CL 07 OK 3. Confirm that environmental impacts considered significant by the PPs or the Host country are described in the PDD, including mitigation measures. There is not any significant environmental impacts due to the project activity, thus it is not described in the PDD OK LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 82 of 92 Revision 0.9, 07 November 2012 Findings3 1. Grade / Ref: 2. Date: 3. Status: CAR 01 13/01/2012 4. Requirement: Paragraph 38, 45 and 50 of CDM-VVSM, Version 03.0 5. Nature of the Issue Raised: Letter of approval from host Party and Annex I Party DNA has not been provided for validation. Closed 6. Nature of responses provided by the project participants: LoA from the host Party DNA dated: 06/03/2012 and Annex I Party DNA dated: 01/08/2012 has been submitted. 7. Assessment of such responses: PP has presented LoAs of the host Party and Annex I Party to the validation team. The title of the project, the name of the PPs and the name of the Party mentioned in the LoAs match exactly with that in the revised PDD. LoAs meet the requirement of written approval, stating that the Party is the Party to the Kyoto Protocol, voluntary participation, and host country LoA’s confirmation on contribution of the project towards sustainable development. 8. References to resulting changes in the PDD or supporting annexes: Not Applicable 1. Grade / Ref: 2. Date: 3. Status: CAR 02 13/01/2012 Closed 4. Requirement: Paragraph 96 and 97 of CDM-VVS, Version 03.0 5. Nature of the Issue Raised: PP to justify from different options prescribed by the applied methodology for calculation of fcap and fWCM which of the option has been applied and how it will be monitored. Efficiency of coal boilers is mentioned as 100% whereas the same section also refers the efficiency as 78%. PP to clarify Notation in the PDD was inconsistent with the applied methodology. 3 Explanation of the Findings Log structure: 1. Grading and Sequential Number of the finding 6. Details of PP’s response LRQA Reference: ENQ/2607/11/IRE MSBSF43847 2. Date of Original Finding 3. New, Open, Closed 7. Evaluation from the Validation team Date 04/12/2012 4. Requirement (VVM, PDD-CDM, etc) 5. Reference to Protocol 8. List of changes made as a result of the finding Page 83 of 92 Revision 0.9, 07 November 2012 PP to clarify the appropriateness of emission factor used for coal 6. Nature of responses provided by the project participants: 1. fcap : Method -3 of ACM0012 has now been used. 2. fWCM : PP has seek clarification made for a project under the same situation (SSC 579, SSC-WG (35)). SSC-579 allows fwcm to be set as 1 with condition that the supplementary natural gas burning is considered as project emission. Accordingly, further calculation of fwcm has now been removed from the PDD. 3. Coal Boiler Efficiency : The different references of coal boiler efficiency in earlier PDD was due to the variation of how efficiency is defined in the earlier methodology (AMS-IIIQ and AMS-IID). However, with clarification made by SSC-WG in SSC_579, the PP decided to adopt only AMS-IIIQ, and remove all references to AMS-IID from the PDD, including AMS-IID’s specific boiler efficiency. In the revised PDD, there is only 1 reference to boiler efficiency for emission reduction calculation. As per paragraph 8 of AMS-III.Q., the PP now adopts the most conservative baseline efficiency value of 100% (option iii under calculation of "efficiency of the element process") 4. Notations in the PDD are now consistent with the applied methodology. 5. The emission factor for coal is corrected and now referring to ‘Other bituminous coal’. GCV of the coal is 6180Kcal/Kg which is about 5871 Kcal/Kg of NCV (NCV will be about 95% of GCV), closer to ‘other bituminous coal’. The emission factor is now used as lower value of 95% confidence interval for ‘Other bituminous coal’ sourced from IPCC 2006 guidelines for stationary combustion. 7. Assessment of such responses: In response to the finding, the PP has revised the PDD. The revised PDD now presents and justifies the calculation procedure for fcap and fWCM. The parameter fcap has been calculated using method 3 prescribed in the methodology ACM0012, Version 04.0.0. Validation team confirms from its sectoral expertise that historical data and product specific waste gas data cannot be determined, therefore, method 3 is suitable to the project activity. The monitoring plan was correctly revised to include the monitoring of QOE,y method 3 for fcap and project emissions from natural gas combustion. Further, PP has used fWCM as 1 based on the clarification SSC_579 and included emissions from combustion of natural gas as project emissions. PP has now used baseline efficiency for coal based boiler as 100% from the list of options given in the applied methodology. Validation team confirms that using 100% efficiency is conservative for emission reduction calculation. PP has correctly revised the applied PDD and now consistent with the applied methodology. Emission factor of coal has been correctly applied. Therefore, finding was closed. 8. References to resulting changes in the PDD or supporting annexes: Section B.6, B.7 1. Grade / Ref: CAR 03 4. Requirement: 5. Nature of the Issue Raised: The monitoring plan in the PDD does not include: 1. Accuracy of the measurement method LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 2. Date: 3. Status: 13/01/2012 Closed Guidelines for completing the PDD for small scale project activities, Version 01.0 Page 84 of 92 Revision 0.9, 07 November 2012 2. Monitoring and recording frequency 3. Data archiving procedure 6. Nature of responses provided by the project participants: At this stage, the PP has not yet finalized it’s instrumentation procurement, thus full specification is not available. The PP is committed to procure meters meeting the accuracy standards of industry or national standards. The standards have now been mentioned in the PDD. Monitoring frequency" has now been specified in the row, " Brief description of measurement methods and procedures to be applied:" {The monitoring parameters table in the PDD is in accordance with the SSC_PDD guidelines, which does not specifically isolate "Monitoring Frequency" as an entry field} incorporate how to summarise the continuous data to generate the emission calculation. Data archiving procedure Changes has been made in the PDD to this effect. 7. Assessment of such responses: The validation team confirmed standard used for meter has been described in the PDD. The frequency as well as how to summarised on the continuous data to generate the emission calculation have been described. The data archiving has been stated in the PDD. 8. References to resulting changes in the PDD or supporting annexes: Section B.6.2 and B.7.1 1. Grade / Ref: 2. Date: CAR 04 13/01/2012 4. Requirement: Para 131 and 132(a) of CDM-VVS, Version 03.0 5. Nature of the Issue Raised: Though the applied methodology AMS.II.D, Version 12 requires monitoring of: 1. Specification of the equipment replaced 2. Metering the energy use of the facility 3. Calculation of energy savings using the metered energy in above However, monitoring plan does not include these parameters 3. Status: Closed PP to clarify why following parameters are fixed ex-ante whereas the applied methodology does not mention: 1. Rated efficiency of HRSG 2. HRSG rated steam output Though applied methodology AMS.III.Q, Version 04 requires monitoring of emission factor for coal, however, it has been fixed ex-ante in section B.6.2 of the PDD. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 85 of 92 Revision 0.9, 07 November 2012 PP to clarify how monitoring plan is in accordance with the applied methodology. 6. Nature of responses provided by the project participants: 1. Metering requirement of AMS-IID. AMS-II.D is no longer applied to this PDD following clarification made under SSC_579 in SSC-WG 35. (see CAR02) 2. HRSG’s rated efficiency & steam output. These two parameters (HRSG’s rated efficiency and rated steam output) were relevant for the calculation of fwcm, but due to clarification in SSC_579, fwcm is now set as 1 and thus these parameters has now been removed from the PDD as ex-ante values. Furthermore we also remove the rated efficiency of coal boiler from ex-ante value, as this is no longer deemed relevant for emission reduction calculation. 3. The monitoring of emission factor of coal Despite the specification in the methodology (IIIQ), the emission factor of coal has been set as a fix value parameter using conservative IPCC value, and thus revisiting is only relevant during credit period change, which is not applicable as this project choose for fixed 10 years credit period 4. Additional correction from PP: emission factor of natural gas. In addition to the above, the current version of PDD now includes “Emission factor of Natural Gas” as a monitored parameter in accordance to the “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion 5. General comments on compliance to monitoring methodology The current version of PDD has now been updated toward compliance to methodology IIIQ taking into consideration the clarification of SSC_579, which deemed many previously specified monitored parameter irrelevant. Both efficiency of coal boilers fixed ex-ante, as well as w_s fixed ex-ante has been tabulated in section B6.2. Emission factor of coal is now a monitored parameter. Changes have been made appropriately in the PDD. 7. Assessment of such responses: In response to the finding, the PP has revised the PDD. The revised PDD has removed the reference to AMS.II.D and relevant parameters to be monitored. The PDD also removes the parameters rated efficiency, and rated output which is not required by the applied methodology. Further, the PDD now include the parameter emission factor of coal as parameter to be monitored. Validation team confirms that the changes in the PDD are in accordance with the applied methodology, and monitoring plan is now in accordance with the applied methodology 8. References to resulting changes in the PDD or supporting annexes: Section B.7 1. Grade / Ref: CL 01 4. Requirement: 5. Nature of the Issue Raised: LRQA Reference: ENQ/2607/11/IRE MSBSF43847 2. Date: Date 04/12/2012 13/01/2012 Paragraph 45 of CDM-VVS, Version 03.0 Page 86 of 92 Revision 0.9, 07 November 2012 3. Status: Closed Name of the Project Participant from Annex I Party, i.e. Germany, is inconsistent in the PDD. 6. Nature of responses provided by the project participants: Changes made accordingly in the PDD. All terms regarding "Project Participant" has now been made consistent as "KfW" (with small f in the middle) throughout the document. 7. Assessment of such responses: The PDD has using the correct and consistent name KfW. Validation team also confirmed the name of the PP from the ERPA term sheet dated:12/08/2011. 8. References to resulting changes in the PDD or supporting annexes: Section A.3 1. Grade / Ref: 2. Date: 3. Status: CL 02 13/01/2012 Closed 4. Requirement: Paragraph 64 of CDM-VVS, Version 03.0 5. Nature of the Issue Raised: Section A.2 of the PDD describes the capacity of the gas turbine as 15MW and the same section refers to capacity of gas turbine as 12MW. PP to clarify. 6. Nature of responses provided by the project participants: The specified 15MW capacity of the turbine is the rated capacity of the gas turbine when tested under ISO testing conditions (at temperature of 15C, 60% relative humidity and 1 atmosphere pressure). However, actual conditions in Indonesia are different and the actual turbine output works out to be 12.124MW. To avoid confusion the PDD has been corrected. 7. Assessment of such responses: In response to the finding, the PDD was corrected to include the justification on actual generation capacity and name plate capacity. Validation team confirmed the capacity of the turbine from its sectoral expertise. 8. References to resulting changes in the PDD or supporting annexes: Section A.2 1. Grade / Ref: 2. Date: CL 03 13/01/2012 4. Requirement: Paragraph 71 of CDM-VVS, Version 03.0 5. Nature of the Issue Raised: Why most recent version of the Guideline on the assessment of investment analysis is not referred in the PDD. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 87 of 92 Revision 0.9, 07 November 2012 3. Status: Closed 6. Nature of responses provided by the project participants: Changes has made in the PDD accordingly. There is no additional material effect relevant to this project associated with the version change. 7. Assessment of such responses: PDD has been revised and now using the latest version of Investment guideline of version 05. 8. References to resulting changes in the PDD or supporting annexes: Section B.5 1. Grade / Ref: 2. Date: 3. Status: CL 04 13/01/2012 Closed 4. Requirement: Paragraph 150 and 151 of CDM-VVS, Version 03.0 5. Nature of the Issue Raised: Though the second sub-component, fuel switching and energy efficiency due to use of natural gas fired boilers, is primarily fossil fuel switching as confirmed from the emission reduction calculations. PP to clarify why AMS.III.B will not be applied for this component. The limit used for demonstration of small-scale limits for category II and III is not in accordance with the General Guidance on small-scale methodologies. 6. Nature of responses provided by the project participants: AMS-II.D is no longer applied to the Project after ruling of the SSC_WG_35 response to clarification request SSC_579: http://cdm.unfccc.int/methodologies/SSCmethodologies/clarifications/40482 Project emission is now estimated within context of AMS-IIIQ, and resulting emission reduction stays within the small scale limit of type III methodology by adopting highest possible baseline boiler efficiency. All references to Type II limit has now been removed from the PDD. 7. Assessment of such responses: Validation team confirms that the PP has correctly applied the methodology AMS.III.Q for the project activity. Further, the limit for small-scale projects has been correctly revised. 8. References to resulting changes in the PDD or supporting annexes: Section B.2, B.6, B.7 and emission reduction spreadsheet. 1. Grade / Ref: 4. Requirement: CL 05 LRQA Reference: ENQ/2607/11/IRE MSBSF43847 2. Date: Date 04/12/2012 3. Status: 13/01/2012 Closed Paragraph 117 of the CDM-VVS, Version 03.0 and Guidelines of the assessment of investment analysis, Version 05 Page 88 of 92 Revision 0.9, 07 November 2012 5. Nature of the Issue Raised: PP to clarify the appropriateness of input values used in investment analysis: 1. How future or expected increase in gas price is considered appropriate for cash-flows on real basis. 2. How interest rate applied in the investment analysis is appropriate for cash-flows on real basis. 3. Why EPC and other cost is not depreciated. 4. How insurance cost is considered appropriate. 5. Though actual efficiency of the coal boilers based on historic data shows it about 60%, however, investment analysis spreadsheet presents designed efficiency. PP to clarify how considering designed efficiency for coal boilers will be conservative in investment analysis. 6. Though total project costs includes EPC, PP to justify how additional head of EPC and other cost of USD 437,000is considered appropriate. 7. In accordance with Guidance 17 of Guidelines on the assessment of investment analysis, Version 05 default debt/equity ratio has been used in the investment analysis. However, the same guidance requires long term debt/equity financing structure needs to used and only absence of that value default values are used. PP to justify how considering default debt/equity ratio is considered conservative in investment analysis. 6. Nature of responses provided by the project participants: 1. The expected gas price increase adopted in the financial analysis is a one-time step increase occurred only in the first year of project operation, and the same rate is assumed constant throughout the analysis year. PP underline that the gas price neither constitute an annual unit-price escalation nor incorporate inflation or subsequent annual inflation. At the time of decision being made to switch from coal to natural gas, financially prudent investor would have taken into consideration the potential step-increase of gas price, particularly in consideration where; (a) other region has within recent months experienced steep increase; (b) the contextual gas demand-supply situation at the project’s vicinity and (c) future gas supply plan from PGN which intend to blend more expensive LNG from Eastern part of Indonesia, into the existing (non-LNG based) natural gas supply sources. The justification of magnitude of first year step-increase is elaborated in the PDD, and constitute best estimate of gas price closer to the time the project entered into commissioning. PP also referring to all recently increase of gas price more than 36 % to determine the conservative figure using 30 %. 2. 5 years average data has now been provided. The IMF World Economic Outlook database (http://goo.gl/5RwgN)(SD_096) provides 5 years GDP Deflator data. Changes have been made appropriately in the financial model spreadsheet as well as the PDD. 3. Depreciation of EPC now has been applied for 16 years. Changes have been made appropriately in the PDD and financial excel sheet. This is for a Category 3 (Kelompok 3) machine that can last for 16 years. Law of Indonesia No. 36, 2008, Page 18 (SD_090) is the appropriate supporting document for this depreciation value applied. 4. PP consider that insurance costs as a real cost and incurred as consequence to the Project. The construction and transportation insurance are capital investment costs associated with the risks of constructing and transporting the HRSG. Given the baseline coal boilers are already installed and will be relegated from a main equipment into a back-up device, it’s insurance cost becomes additional costs to the project’s insurance. In addition to this, there is also on-going operational insurance associated with the risks of operating and maintaining the HRSG system itself. Given that LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 89 of 92 Revision 0.9, 07 November 2012 the HRSG (at US$3.8m) is substantially more expensive than the coal boiler (of ~$US800k), the risk & insurance fee associated with the HRSG is clearly higher demanding additional insurance premium. 5. In reviewing this information, it must consider the historical context of the paper mills which are taking the steam supply from the baseline coal boilers. Whereas the coal boilers has been designed to supply steam demand of Paper Mill 1 and Paper Mill 2, Paper Mill 2 was still at construction stage by the time the project entered into validation. Paper Mill 2 is not expected to enter commercial operation until April 2012. Consequently, the provided historical efficiency value of 60% for the coal boiler were obtained using operational data which was based on load level well below it’s 50tonnes per hour capacity. On average, the current operation of Paper Mill 1 requires only 29tonnes per hour of steam. At this utilization rate, the boiler can not reach it’s optimum heat exchange efficiency, and hence the 60% historical efficiency is observed. Without the project, the commencement of Paper Mill 2 will increase the steam demand to the full capacity of these boilers, and as such these boilers would be able to achieve efficiency closer to it’s manufacturer specifications. Conservativeness of assumption: The use of manufacturer specification for calculating coal usage (associated with cost saving) is considered as best fit in the context that same approach (manufacturer based information) is also taken to calculate the gas usage (project costs). Loss of efficiency can occur on both equipment (which either increases saving or increases project costs), and thus in absence of better information, manufacturer specifications are considered the best available information at the time of decision making. 6. The “EPC and other costs” refer to additional commissioning costs outside those that are covered by the EPC contractor. This includes: PP’s staff costs associated with project supervisory (expert staff cost) and management; statutory/ admin costs, bank fees and legal fees. These costs are the usual additional costs associated with developing & managing such project, and can-not be avoided despite the turn-key nature of the project. These costs are approximately 10% of the total investment cost, non-recoverable and strongly associated with the project development. As such, it is considered as an inseparable part of the overall project costs. 7. Paragraph 17 of the “Guidelines on the Assessment of Investment Analysis v5” is an appropriate guidance in situation where the company's internal benchmark is used for the expected return on equity. For the project similar investment was made by the PP to compare the benchmark value. The benchmark value used on the default value described in the investment analysis guidelines. LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 90 of 92 Revision 0.9, 07 November 2012 7. Assessment of such responses: 1. Validation team confirmed from the interview of the gas supplier and its host country expertise that in Indonesia gas prices are regulated by government and usually there is lag in gas price from the inflation. Validation team also confirmed from the interview of gas supplier that gas price was increase in other provinces and was known at the time of investment decision. Therefore, including an expected increase in gas price based on awareness of the PP through local news is appropriate for the project activity. Further, validation team also confirmed from the gas increase from the communication made to the PP by the gas supplier dated: 08/05/2012. 4 2. Interest rate has correctly calculated in real terms by adjusting to inflation in accordance with Fisher equation . 3. Depreciation of the EPC has been correctly calculated in accordance with the host country rules. 4. Validation team confirms that justification provided by the PP for insurance cost is acceptable. Validation team also confirmed the appropriateness of insurance cost from its host country and sectoral expertise. 5. The efficiency used has been appropriately justified. 6. Validation team confirms this cost from its sectoral expertise. 7. Validation team confirms the justification provided by the PP is appropriate. 8. References to resulting changes in the PDD or supporting annexes: Section B.5 and investment analysis spreadsheet 1. Grade / Ref: CL 06 4. Requirement: 5. Nature of the Issue Raised: 2. Date: 3. Status: 13/01/2012 Closed Guidelines for completing the PDD for small scale project activities, Version 01.0 Following are editorial corrections needs to be incorporated in the PDD: 1. The technical description of the project activity was not described in section A.4.2. 2. Though the starting date of the crediting period was considered from 01/07/2012. PP to clarify why emission reduction for the year 2012 was considered from the full year. 3. Section C.1.1 of the PDD does not specify how the start date was determined. 4. Section C.2.2.1 of the PDD does not specify how crediting period will be started if date of registration is after the date mentioned in this section. 5. Though the project is a small scale project activity, PP to clarify why reference of Tool for demonstration and assessment of additionality is referred in the PDD. 6. The units of the NCV of natural gas is inconsistent with emission reduction spreadsheet 6. Nature of responses provided by the project participants: PP has revised the PDD accordingly. Technical description has been moved into section A.4.2. In the estimated amount of emission reduction, we no longer 4 http://en.wikipedia.org/wiki/Fisher_equation LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 91 of 92 Revision 0.9, 07 November 2012 specify the year, and instead refer to Year 1 to Year 10. Thus, we consider the first year to start with the commencement date of credit period for a full year duration. PP have now specify in Section C.1.1, that the starting date represents the date of which the EPC contract is signed. PP also have now rectify this and specify that the start date of credit period is the specified date or the date of registration, whichever the later. PP have now removed all references to the Tool for demonstration and Assessment of Additionally in the PDD, and instead complies with Attachment A of Appendix B (Version 08, EB63/Annex 24) by demonstrating that the existing installation (coal boilers) is a financially more viable alternative relative to the project activity (HRSG) and continuation of the coal boiler operation would have led to a much higher emission. The PDD is revised to correctly present the units of NCV consistent with the emission reduction spreadsheet. 7. Assessment of such responses: • The technical description of the project activity has been described in section A.4.2 of revised PDD. • The PDD has been revised using general term instead state specific term of year. • The revised PDD has specifies that the start date was determined from EPC contract signed with PT. Indoturbine. • Section C.2.2.1 of the revised PDD has specified that the crediting period will start on 06/12/2012 or the date of registration whichever is later. The revised PDD has removed the reference of Tool for demonstration and assessment of additionality and replace with Attachment A of Appendix B (Version 08, EB63/Annex 24) by demonstrating that the existing installation (coal boilers) is a financially more viable alternative relative to the project activity (HRSG) and continuation of the coal boiler operation would have led to a much higher emission. Unit of NCV of natural gas in the PDD is now consistent with emission reduction spreadsheet. 8. References to resulting changes in the PDD or supporting annexes: Section A.4.2, B.6.4 and C LRQA Reference: ENQ/2607/11/IRE MSBSF43847 Date 04/12/2012 Page 92 of 92 Revision 0.9, 07 November 2012