CC:INFO/AIJ: ILUMEX High Efficiency Lighting

Annex I

UNIFORM REPORTING FORMAT: ACTIVITIES IMPLEMENTED JOINTLY

UNDER THE PILOT PHASE

A) Description of project

1) Title of project: ILUMEX High Efficiency Lighting Project

2) Participants/actors

Please fill in one table for each participant/actor. For individuals fill in as from item "Function within activity".

Item	Pease fill in if applicable
Name of organization^(a):	Secretaria de Hacienda y Credito Publico
Name of organization (English):	Ministry of Finance and Public Credit
Department:	International Finance
Acronym:	SHCP
Acronym (English):
Function within activity:	Mexican government contact for finance of the project
Street:	PO Box 03100
Post code:
City:	Mexico DF
Country:	Mexico
Telephone:	525 228 1770
Fax:	525 228 1684
E-mail:
WWW-URL:
Contact person (for this activity):
Surname:	Vasquez
First name, middle name:	Carlos
Job title:	Director General of International Finance
Direct tel:
Direct fax:
Direct E-mail:

^(a) Organization includes: institutions, ministries, companies, non-governmental organizations, etc., involved in the activity, i.e. research institutes associated with the project, auditors, government agency closely following the activity.

Item	Pease fill in if applicable
Name of organization^(a):
Name of organization (English):	Norwegian Ministry of Foreign Affairs
Department:	Resource Department
Acronym:
Acronym (English):
Function within activity:	Norwegian government contact
Street:	P.O. Box 8114
Post code:	DEP, N-0032
City:	Oslo
Country:	Norway
Telephone:	47 22 24 36 00
Fax:	47 22 24 36 80/81
E-mail:
WWW-URL:
Contact person (for this activity):
Surname:	Leiro
First name, middle name:	Jostein
Job title:	Head of Division
Direct tel:
Direct fax:
Direct E-mail:

Item	Pease fill in if applicable
Name of organization^(a):	Banco Nacional de Obras y Servicios Publicos
Name of organization (English):	National Bank of Public Works and Sevices
Department:	Organismos Financieros Internacionales (International Financial Organizations)
Acronym:	BANOBRAS
Acronym (English):	BANOBRAS
Function within activity:	Grant recipient and manager of grant funds
Street:	Tecoyotitla 100, 3er Piso
Post code:	Col. Florida 01030
City:	Mexico D.F.
Country:	Mexico
Telephone:	525 723 6127
Fax:	525 723 6155
E-mail:
WWW-URL:
Contact person (for this activity):
Surname:	Diaz Aguilera
First name, middle name:	Ismael
Job title:	Head of International Financial Organizations Department
Direct tel:
Direct fax:
Direct E-mail:

Item	Pease fill in if applicable
Name of organization^(a):	Comision Federal de Electricidad
Name of organization (English):	Federal Electricity Commission
Department:	Subdirectorate for Evaluation and Coordinating Unit for the ILUMEX Project (Subgerencia de Evaluacion y La Unidad Coordinadora del Proyecto ILUMEX)
Acronym:	C.F.E.
Acronym (English):	C.F.E.
Function within activity:	Project implementor and grant beneficiary
Street:	Rio Atoyac 97, 5o Piso, sala 507
Post code:	Col Cuauhtemoc 06598
City:	Mexico D.F.
Country:	Mexico
Telephone:	525 229 44 00
Fax:
E-mail:
WWW-URL:
Contact person (for this activity):
Surname:	Vargas Nieto
First name, middle name:	Enrique
Job title:	Subdirector for Evaluation and Head of the Coordinating Unit for the ILUMEX Project
Direct tel:	525 514 6569
Direct fax:	525 207 0296
Direct E-mail:	cvargas@cfe.gov.mx

Item	Please fill in if applicable
Name of the national authority:	Instituto Nacional de Ecología (INE)-Secretaria de Medio Ambiente, Recursos Naturales y Pesca (SEMARNAP)
Name of the national authority (English):	National Institute of Ecology (INE)-Ministry of Environment, Natural Resources and Fisheries (SEMARNAP)
Department:	Unidad de Cooperación y Convenios Internacionas (Unit for International Cooperation and Conventions)
Acronym:	UCCI
Acronym (English):	UCCI
Function within activity:	AIJ focal point in Mexican government
Street:	Av. Revolución 1425, Delegación Álvaro Obregó, Torre Ejecutiva, Nivel 31
Post Code:	01040
City:	México, D. F.
Country:	México
Telephone:	(525)624-3546/43, 624-36-45
Fax:	(525)624-35-93
E-mail:	jmtzcorreo@servidor.unam.mx
WWW-URL:	http://serpiente.dgsca.unam.mx/cca/indexprog.html
Contact Person (for this activity):	----------------------------------------------------------------
Surname:	Gay
First name, middle name	Carlos
Job Title:	Coordinador de la Unidad de Cooperación y Convenios Internacionales
Direct Tel:	(525)624-35-46/43
Direct fax:	(525)624-35-93
Direct E-mail:	jmtzcorreo@servidor.unam.mx / cgay@ servidor.unam.mx

Item	Pease fill in if applicable
Name of organization^(a):	El Banco Mundial
Name of organization (English):	The World Bank
Department:	Sector Leadership Group; Latin America and the Caribbean
Acronym:
Acronym (English):
Function within activity:	Project Manager
Street:	1818 H Street N. W.
Post code:	20433
City:	Washington DC
Country:	USA
Telephone:	202 477 1234
Fax:
E-mail:
WWW-URL:
Contact person (for this activity):
Surname:	Cosenza
First name, middle name:	Luis
Job title:	Principal Power Engineer
Direct tel:	201 458 2806
Direct fax:	202 676 1821
Direct E-mail:	lconsenza@worldbank.org

Item	Pease fill in if applicable
Name of organization^(a):
Name of organization (English):	International Institute for Energy Conservation
Department:
Acronym:	IIEC
Acronym (English):
Function within activity:	Consultant for feasibility study on energy savings and emissions benefits
Street:	750 First St. N.E., Suite 940
Post code:	20002
City:	Washington D.C.
Country:	USA
Telephone:	202 842 3388
Fax:
E-mail:
WWW-URL:
Contact person (for this activity):
Surname:	Strum
First name, middle name:	Russell
Job title:	President
Direct tel:	202 842 3388
Direct fax:	202 842 1565
Direct E-mail:	rsturm@iiec.org

Item	Please fill in if applicable
Name of organization^(a):	Universidad Nacional Autonoma de Mexico
Name of Organization (English)	National Autonomous University of Mexico
Department:	Programa Universitaria de Energia (University Energy Program)
Acronym:	UNAM-PUE
Acronym (English):	UNAM-UEP
Function within activity:	Preparation of estimates of emissions benefits
Street:	Circuito Exterior, Cd. Universitaria
Post code:	P.O. Box 70-172
City:	Mexico DF, 04510
Country:	Mexico
Telephone:	525-550-0931
Fax:
E-mail:
WWW-URL:
Contact person (for this activity):
Surname:	Quntanilla
First name, middle name:	Juan
Job title:	Deputy Director, UEP
Direct tel:	525-622-8533
Direct fax:	525-622-8532
Direct E-mail:	juaquin@servidor.unam.mx

3) Activity:

Item	Please fill in if applicable
General description:	See below.
Type of project ^a)	Energy efficiency/demand side management
Location (exact e.g.: city, region, state):	Guadalajara and Monterrey, Mexico
Activity starting date:	May 19, 1994: Agreement signed between the governments of Norway and Mexico; May 1995: Sale of high efficiency compact fluorescent light bulbs (CFLs) began
Expected Activity ending date:	December 1997: Last sales of the initial 1.7 million light bulbs will occur. (See project description below.)
Stage of project ^b) :	In progress
Lifetime of activity if different from ending date ^c)	The emissions impact of the activity will continue until early 2006, based on a 33 month phase-in for the bulb sales and an assumed eight year life of each bulb. CFE will submit the results of a final participant survey in September 1998 and continue to collect payments for bulbs sold on credit until December 1999. Monitoring and reporting to the UNFCCC Secretariat regarding emissions reductions will continue through 2005. Additional CFLs purchased with money from the sales of the first 1.7 million bulbs will be sold during May 1998.
Technical data ^d)	See Appendix A for a list of selected reports related to the project; Appendix B for details on the estimation of emissions benefits; and Appendix C for detailed financial cost/benefit data.

^a) For example, using intergovernmental Panel on Climate Change (IPCC) classification: energy efficiency, renewable energy, fuel switching, forest preservation, restoration or reforestation, afforestation, fugitive gas capture, industrial processes, solvents, agriculture, waste disposal or bunker fuels.

^b) Circle the appropriate option

^c) Methodological work will be required to define lifetime of activities

^d) Methodological work will be required to determine for each type of activity what the minimum data requirements are.

GENERAL PROJECT DESCRIPTION (ILUMEX)

Background: At the time of the project appraisal in 1992, demand for electricity in Mexico was expected to grow by more than 5% per year. Such growth would result in the need to add 14,000 MW of capacity over the following 10 years, with investments of $3 billion per year. Mexico's installed generating capacity is 80% thermal and emits an estimated 57 million tons of carbon dioxide per year as well as emissions of other pollutants such as sulfur dioxide and nitrogen oxide.

The average price for electricity in Mexico is below long run marginal costs. Significant cross subsidies exist among residential consumers with medium to large consumers subsidizing smaller users. The Federal Electricity Commission of Mexico (CFE) is committed to eliminating these subsidies and had, at the time of the project appraisal, the aim of raising the average price to equal long run marginal costs by 1997.

Project Description: The AIJ component of the project will replace approximately 200,000 ordinary, incandescent light bulbs with compact fluorescent light bulbs (CFLs) in the Mexican cities of Monterrey and Guadalajara. This represents approximately 11.8% of the project total of 1.7 million replaced bulbs. These CFLs require 25% of the energy of ordinary light bulbs to produce similar or better quality lighting, resulting in less electricity generation and fewer fossil fuel emissions. They last up to 10,000 hours, or thirteen times longer than ordinary bulbs.

The AIJ component of the project is funded with $3 million USD from the Department of Natural Resources and Environmental Affairs of the Government of Norway. Non-AIJ related financing of the project includes a grant of $10 million USD from the GEF, and an additional $10 million USD is contributed by the CFE for total project funding of $23 million. Norway's contribution will pay for 200,000 CFLs, or approximately 12% of the project emissions benefits. Funding will be placed in trust funds set up with the Banco Nacional de Obras y Servicios Publicos (BANOBRAS), with money to be used exclusively for the project.

The CFE, through its implementing units in the two cities, is administering the project by purchasing the CFLs and selling them at 37% of cost (including project overhead and administration) to their customers at existing customer service centers and at large companies. If necessary, other methods, such as door to door sales, will be used. Customers may buy the bulbs on credit terms of up to 2 years. Customer payments for the bulbs will be returned to the trust fund set up at BANOBRAS and used to subsidize additional light bulb sales. It is anticipated that, in addition to the 1.7 million bulbs within the initial project scope, several hundred thousand additional bulbs will be purchased by CFE and sold to customers as a result.

The project is on schedule in terms of number of bulbs sold. As of the end of 1996, 1.13 million bulbs, or 66% of the total goal of 1.7 million had been sold.

4.) Costs (to the extent possible):

Item	1994	1995	1996	1997	Total
Total cost of the project (thousands of US$)	682	5,629	10,467	6,221	23,000
AIJ component (thousands of US$ )		762	1,469	769	3,000
US$ per avioded ton of CO₂ equivalent:					See below

Describe briefly how costs are determined:

The CFE produces detailed cost reports categorized by equipment, services, administration, technical/coordination for both the central and local offices, and acquisition of CFLs. Approximately 75% of the AIJ and total project budget are used for purchase of the bulbs. The other cost categories cover the marketing, sales, administration, monitoring and evaluation efforts.

Several approaches were used to evaluate the cost per ton of CO₂ emissions avoided. Since most of the money was disbursed in 1994-95, no discount factors are applied. Likewise, no discount factors are applied to the quantity of carbon emissions avoided. The cost per ton of CO₂ equivalent is estimated for the project lifetime rather than on an annual basis. The total number of estimated tons of carbon dioxide equivalent reductions, from both CO₂ and methane, over the lifetime of the project is 727,130. The amount attributed to the AIJ component is 11.8%, or 85,801 tons of CO₂ equivalent.

Costs attributable to avoided emissions can be defined in various ways, such as:

(1) Total project costs of $23 million; or $31.63/metric ton of CO₂.equivalent.

(2) The money contributed by Norway and the GEF, $13 million, or $17.88/ton of CO₂ equivalent. CFE's motive in making a $10 million contribution to the project was primarily to delay building new generating capacity and to avoid generation of electricity that it sells at a loss, so that portion of expenses should not be attributed to the cost of reducing greenhouse gas emissions.

Financial benefits, based on an average use of four hours per day for six years for 1.7 million CFLs, are estimated as:

(1) Avoided costs of energy generation of $44.4 million; -$61.06/ton of CO₂ equivalent.

(2) Avoided net loss (for CFE) of not selling subsidized electricity of $15.88 million;

-$21.84/ton of CO₂ equivalent.

(3) Net benefits to consumers of $16.78 million (avoided cost of electricity to consumers of $26.85 million minus net costs to consumers of acquiring the CFLs); -$23.08/ton of CO₂ equivalent.

If the value of the avoided electricity generation is considered, the cost per ton of CO₂ equivalent becomes negative, regardless of which measure of costs of is used (that is,. (1) and (2) above). Likewise, the value of the avoided net loss to CFE of not selling subsidized electricity as well as the net financial benefit of avoided electricity consumption to consumers are both greater than the combined contribution of Norway and the GEF to the project.

See Appendix C for more detailed estimates of the project's financial benefits.

5) Mutually agreed assessment procedures:

Describe the procedures including name of the organizations involved ^a) :

Projections of emissions reductions including technical parameters to be used, baseline estimation, and the plan for monitoring the hours of use of the bulbs. (See Section E below and Appendix B for details on the estimation of emissions benefits.)
Surveys of participants to determine participant characteristics, perceptions and satisfaction.
Market surveys administered to vendors of lamps to determine market characteristics.

Organizations involved in determining the parameters and methodologies to be used include UNAM, IIEC, CFE, the World Bank and INE. In 1997, a consultant will be hired to undertake a comprehensive project evaluation, including evaluation of the monitoring and emissions benefit estimation procedures and verification of results. Some procedures and parameter values may be revised based on the recommendations of the consultant.

^a) Please ensure that detailed contact information for all organizations mentioned is reported under section A.2 above.

B) Governmental acceptance, approval or endorsement

Bearing in mind that all activities implemented jointly under this pilot phase require prior acceptance, approval or endorsement by the Government of the Parties participating in these activities which shall be shown by:

In the case of joint reporting: the report is submitted by the designated authority of one participating Party with the concurrence of all other participating Parties as evidenced by attached letters issued by the relevant national authorities;

In the case of separate reporting: the reports are submitted separately by the designated national authority of each and every participating Party. Information will only be compiled once reports have been submitted by all participating Parties.

1) For the activity:

First report and joint reporting: please add copies of letters of endorsement by each designated national authority of Parties involved in the activity:

The letter of endorsement will be sent accordingly.

2) This report is a joint report:

This project is a joint report. The project was endorsed by the Mexican Ministry of Finance and Public Credit and the Norwegian Ministry of Foreign Affairs in an agreement signed on September 30, 1993. This report has been endorsed by the Mexican focal point for AIJ, the UCCI (Unit for International Cooperation and Conventions) within INE-SEMARNAP, and by the Norwegian Ministry of Foreign Affairs. ( Letters of endorsement are attached.)

3) General short comment by the government(s) if applicable:

The items of the report describing the project, its implementation and its effects, have been completed by the Government of Mexico. The investor specific items have been completed by the Government of Norway. The World Bank, as the implementing agency, has provided assistance and advice in the preparation of the joint report.

C. Compatibility with and supportiveness of national economic development and socio-economic and environment priorities and strategies

Describe (to the extent possible) how the activity is compatible with and supportive of national economic development and socio-economic and environment priorities and strategies

Mexico has a strong environmental policy framework and has completed a national environmental action plan. As a party to the UNFCCC, Mexico is committed to formulate programs to mitigate climate change. The ILUMEX project will contribute to reductions in local and regional pollutants such as SO₂ and NOx, which support Mexico's national pollution reduction goals, as well as greenhouse gas mitigation which supports Mexico's position under the UNFCCC. The economic benefits of the ILUMEX project include reduction in energy consumption and consumers' energy bills and a delay in costly additions to Mexico's electricity generating capacity, without loss of service. In addition, the CFE will avoid financial losses by not selling the avoided kwh, which otherwise would be sold to residential customers at a loss. The project will build institutional capacity in Mexico for technological change and energy conservation; make consumers more aware of the importance of energy savings and how to achieve them; provide a replicable model for demand side management (DSM) throughout Mexico and other countries in the developing world; and strengthen the capacity of the CFE to practice large scale DSM and energy efficiency projects on a on-going basis.

D) Benefits derived from the activities implemented jointly project

Whenever possible quantitative information should be provided. Failing that, a qualitative description should be given. If quantitative information becomes available, it could be submitted using the update(s) (if the amount of quantitative information is too large, the source could be indicated).

Item	Please fill in
Describe environmental benefits in detail:	See below.
Do quantitative data exist for evaluation of environmental benefits?	Yes; See Section E and Appendix B.
Describe social/cultural benefits in detail:	See below.
Do quantitative data exist for evaluation of social benefits?	Participant survey data may provide a basis for this evaluation.
Describe economic benefits in detail:	See below.
Do quantitative data exist for evaluation of economic benefits?	Yes; See Appendix C.

DESCRIPTION OF ENVIRONMENTAL BENEFITS

The project's greenhouse gas emissions benefits are anticipated to last more than ten years based on the 33 month phase-in period for the sale of the 1.7 million CFLs and the conservatively estimated lifetime of eight years for a CFL in use for three hours per day. Although the expected life of a CFL is 10,000 hours, the project assumes a life of only 8,760 hours, or eight years at three hours per day.

Estimated carbon dioxide (and other pollutant) emissions reductions of the project are based on a the fuel mix used at the generation facilities serving Monterrey and Guadalajara during 1995 and 1996. The estimated reduction in electricity demand resulting from the use of CFLs, was based on the average difference in watts between the CFLs and ordinary bulbs, the number of CFLs in use as a result of the project, and an average use of three hours per days.

Emissions benefits attributed to the AIJ component (11.8% of the total project) over the lifetime of the project are 85,748 metric tons carbon dioxide; 2.19 metric tons of methane (54 tons CO₂ equivalent); 1,296 metric tons of sulfur oxides (SOx); 234 metric tons of nitrogen oxides (NOx); 663 metric tons of particulates; 88 metric tons of hydrocarbons (HC); and 22 metric tons of carbon monoxide (CO).

Total project emissions benefits over the lifetime of the CFLs sold are estimated as: 726,675 metric tons carbon dioxide; 18.57 metric tons of methane (455 tons CO₂ equivalent).; 10,986 metric tons of sulfur oxides (SOx); 1,982 metric tons of nitrogen oxides (NOx); 5,363 metric tons of particulates; 746 metric tons of hydrocarbons (HC); and 188 metric tons of carbon monoxide.

Reductions of nitrogen oxide emissions, which have a greenhouse gas effect, have not been quantified as carbon equivalents. Reductions in the non-greenhouse gas pollutants will result in better air quality and benefits for human health, crops, vegetation and buildings. Water will be conserved as a result of the generation avoided, which is especially important in Monterrey where water resources are more limited.

DESCRIPTION OF SOCIAL/CULTURAL BENEFITS

The project should have an impact on raising the awareness of the general public regarding energy conservation. It is expected that the energy and electricity cost savings enjoyed by those enrolled in the project will encourage non-participants to buy CFLs.

DESCRIPTION OF ECONOMIC BENEFITS

The project will provide economic benefits to participants who will enjoy comparable or higher quality lighting at reduced costs. Economic benefits will also accrue to society at large and to CFE through postponement of 100 MW new capacity and fuel use savings. An estimated total 940 gigawatt hours (Gwh) of electricity generation, sold by CFE at a loss, will be avoided. The avoided cost of this electricity has been estimated by CFE at $44,400,000 (1993$). CFE estimated the price paid by customers for this electricity would be $26,850,000 over the same time period. (See Section A.4 and Appendix C)

E) Calculation of the contribution of activities implemented jointly projects that bring about real, measurable and long-term environmental benefits related to the mitigation of climate change that would not have occurred in the absence of such activities

1) Estimated emissions without the activity (project baseline):

Description of the baseline or reference scenario, including methodologies applied:

The baseline assumption for the project is the continued use of ordinary light bulbs by project participants. It is assumed that, over the lifetime of project benefits, the CFE would not initiate the ILUMEX project without the grant money and that ordinary light bulbs would not be replaced with CFLs by the project participants. These assumptions are reasonable given today's economic climate in Mexico and the high cost of the bulbs.

The baseline condition is the use of 1.7 million ordinary (incandescent) light bulbs, instead of CFLs. The number of kwh required by the baseline condition is calculated based on the characteristics of the incandescent bulbs that the CFLs replace (e.g. average number of watts), an average of three hours of use per day, thirty days per month and the 8,760 hour life time conservatively estimated in the project feasibility study for the CFLs.

Data on the type of bulbs replaced is collected from participants. The average number of hours of use per day is currently estimated at three hours, based on the preliminary results of metering studies of the CFLs in participants' homes. It is assumed that the CFLs and ordinary bulbs would be used for the same number of hours per day. project benefits are counted for the lifetime of the CFLs. Distribution and transmission losses for generated electricity on the CFE system of 18% are taken into account in the estimation of kwh used.

The estimation of emissions per kwh is based on the fuel mix actually used at the Manzanillo plant which serves Guadalajara (fuel oil and diesel) and the Monterrey plant (fuel oil and natural gas) in 1995 and 1996; the heat rate, or efficiency, of the plants; and the standard emissions factors by fuel type. In 1997, the current methodology for estimating emissions of carbon dioxide and other gases will be assessed by an outside consultant and possibly revised.

2) Estimated emissions with the activity:

Description of the scenario, including methodologies applied:

The emissions with the project are estimated as those resulting from the use of the 1.7 million CFLs. This is done in a manner similar to that for the estimation of emissions for the baseline scenario. The number of kwh used by the CFLs is calculated based on the technical characteristics of the bulbs (e.g. average number of watts per bulb) sold, an average of three hours of use per day and thirty days per month and the 8,760 hour life time conservatively estimated in the project feasibility study for the CFLs. Distribution and transmission losses of 18% for electricity generated on the CFE system are taken into account in the estimation of kwh used.

The average number of hours of use per day is currently estimated at three hours, based on the preliminary results of metering studies of the CFLs in participants' homes. The estimation of emissions per kwh is based on the fuel mix actually used at the Manzanillo plant which serves Guadalajara and the Monterrey plant in 1995 and 1996, the heat rate of the plants and the standard emissions factors by fuel type. In 1997, the current methodology for estimating emissions of carbon dioxide and other gases will be assessed by an outside consultant and possibly revised.

Metering: During 1996, data on time and amount of use has been gathered by metering light bulbs in the homes of randomly selected samples of participants in each of the two cities for a period of up to two weeks for each sample. During 1997 metering of additional households will be carried out. Results and sampling methodologies used will be verified by outside consultants to provide revised estimates of hours and time of use.

The completion and verification of the metering studies by an outside consultant may be used to re-estimate the average hours of use per day of the CFLs.

Snapback effect: In the long run, project participants who face a lower cost of electricity service may, as a consequence, burn the bulbs longer. This "snapback" effect could result in an overestimation of project benefits. In the methodology used to estimate project benefits, this effect is not taken into account. There are two reasons why this effect might be nominal or non-existent, especially in the early part of the project. Residential electricity rates are increasing by an average of 1.2% per month. This will partially offset the reduced cost of electricity service associated with the new bulbs. For those who buy the bulbs on credit (the majority of the participants on terms ranging from 6 to 24 months), the payments for the bulbs will often be greater than the electricity cost savings.

CO2 equivalent: To determine the number of tons of CO2 equivalent, emissions of methane were converted using global warming potential factor of 24.5 taken from the 1996 report of the Intergovernmental Panel on Climate Change.

Leakage: No additional emissions, outside the project boundaries, are expected to occur as a result of the project. To the extent that the project will encourage or influence the purchase or use of CFLs by non- project participants, it may be responsible for additional emissions benefits. Surveys on the monthly sales and prices of CFLs, conducted before and after the project light bulb sales, will attempt to determine if the project is responsible for CFL sales additional to those made to project participants. In any case, no additional emissions benefits would be attributed to the project as a result of these indirect emissions reductions.

The CFE will use money received from the sale of light bulbs to expand the program of subsidized CFL sales to other customers. However, none of these emissions benefits will be claimed for the project.

Other Monitoring : Monitoring will be the responsibility of the Implementing Units with supervision from the Project Coordination at CFE. A baseline sales survey prior to the project's initiation and another sales survey at the end of the project will be used to determine if the project has influenced the sales of CFLs to non-project participants.

A final project evaluation will occur six months after the project completion (that is the last sales of bulbs), which is expected in September, 1997, to survey participant satisfaction and determine if any CFLs have failed or been replaced.

Assumptions Used in Calculating Emissions Reductions: See Appendix B for assumptions used in the emissions reductions estimates.

Fill in the following tables as applicable:

Summary Table: AIJ COMPONENT BASELINE AND ESTIMATED GHG REDUCTIONS

		1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006
A)Baseline Scenario	Mwh	1,748	7,016	12,918	15,763	15,763	15,763	15,763	15,763	14,346	9,257	3,272	36
Project Scenario	Mwh	499	2,004	3,694	4,504	4,504	4,504	4,504	4,504	4,099	2,645	935	10
C)Effect (B-A) Mwh not consumed	Mwh	1,249	5,011	9,224	11,259	11,259	11,259	11,259	11,259	10,247	6,612	2,337	26
D) Mwh not generated	Mwh	1,523	6,111	11,261	13,731	13,731	13,731	13,731	13,731	12,496	8,064	2,850	31
	GHG Reduc-tions	(Metric	tons)
E) Effect of (D)	CO₂	1,176	4,721	8,700	10,608	10,608	10,608	10,608	10,608	9,654	6,230	2,202	24
	CH₄	0.03	0.12	0.22	0.27	0.27	0.27	0.27	0.27	0.25	0.16	0.06	0.00
F) Cumulative	CO₂	1,176	5,897	14,597	25,205	35,813	46,421	57,029	67,637	77,291	83,521	85,723	85,748
Effect of (D)	CH₄	0.03	0.15	0.37	0.64	0.91	1.18	1.45	1.72	1.97	2.13	2.19	2.19

Summary table: TOTAL PROJECT BASELINE AND ESTIMATED GHG REDUCTIONS

		1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006
A)Baseline Scenario	Mwh	14,814	59,454	109,558	133,585	133,585	133,585	133,585	133,585	121,576	78,451	27,728	306
Project Scenario	Mwh	4,233	16,987	31,302	38,167	38,167	38,167	38,167	38,167	34,736	22,415	7,922	87
C)Effect (B-A) Mwh not consumed	Mwh	10,581	42,467	78,256	95,418	95,418	95,418	95,418	95,418	86,840	56,037	19,806	218
D) Mwh not generated	Mwh	12,904	51,789	95,433	116,362	116,362	116,362	116,362	116,362	105,902	68,337	24,153	266
	GHG Reduc-tions	(Metric	tons)
E) Effect of (D)	CO₂	9,969	40,011	73,729	89,898	89,898	89,898	89,898	89,898	81,816	52,795	18,661	206
	CH₄	0.25	1.02	1.88	2.30	2.30	2.30	2.30	2.30	2.09	1.35	0.48	0.01
F) Cumulative	CO₂	9,969	49,980	123,709	213,607	303,505	393,403	483,301	573,199	655,015	707,810	726,471	726,675
Effect of (D)	CH₄	0.25	1.27	3.15	5.45	7.75	10.05	12.35	14.65	16.74	18.09	18.56	18.57

Summary Table: ACTUAL EMISSIONS REDUCTIONS FROM THE AIJ COMPONENT

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

A)Baseline Scenario

Mwh

1,748

7,016

Project

Scenario

Mwh

499

2,004

C)Effect (B-A) Mwh not consumed

Mwh

1,249

5,011

D) Mwh not generated

Mwh

1,523

6,111

Reductions in

GHG

(Metric

tons)

E) Effect of (D)

CO₂

1,176

4,721

CH₄

0.03 (0.7)

0.12 (3.0)

F) Cumulative

CO₂

1,176

5,897

Effect of (D)

CH₄

0.03 (0.7)

0.15 (3.7)

Summary Table: TOTAL PROJECT ACTUAL EMISSION REDUCTIONS:

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

A)Baseline Scenario

Mwh

14,814

59,454

Project

Scenario

Mwh

4,233

16,987

C)Effect (B-A) Mwh not consumed

Mwh

10,581

42,467

D) Mwh not generated

Mwh

12,904

51,789

Reductions in

GHG

(Metric

tons)

E) Effect of (D)

CO₂

9,969

40,010

CH₄

0.25 (6.1)

1.02 (25.0)

F) Cumulative

CO₂

9,969

49,979

Effect of (D)

CH₄

0.25 (6.1)

1.27 (31.1)

F) Bearing in mind that the financing activities of activities implemented jointly shall be additional to the financial obligations of Parties included in Annex II to the Convention within the framework of the financial mechanism as well as to current official development assistance flows, please indicate

Category of funding (For each source one line)	Amount (US dollars)
Government of Norway	$3,000,000
Federal Electricity Commission of Mexico (CFE)	$10,000,000
Global Environmental Facility (GEF)	$10,000,000

The Norwegian cofinancing was provided in addition to the Norwegian contribution to the GEF in 1993. The availability of extra Norwegian cofinancing served to expand the project scope beyond what would have been undertaken in the absence of this funding. Specifically, the Norwegian resources resulted in an increase in the number of bulb replacements by approximately 200,000 bulbs. The purpose of the Norwegian grant is to facilitate a demonstration project and the Norwegian government is not seeking emissions credits from its investment in this project.

G) Contribution to capacity building, transfer of environmentally sound technologies and know-how to other Parties, particularly developing country Parties, to enable them to implement the provisions of the Convention. In this process, the developed country Parties shall support the development and enhancement of endogenous capacities and technologies of developing country Parties.

Describe briefly the transfer of environmentally sound technology and know-how including where appropriate the type of technology, terms, education, capacity building etc.

The project will enhance the capacity of the CFE to implement large scale DSM projects, including additional high efficiency light bulb distribution projects in other parts of Mexico. Valuable experience will be gained from the successful marketing operations of the ILUMEX project as well as from the monitoring of emissions benefits and the participant and market surveys.

H. Additional comments, if any, including any practical experience gained or technical difficulties, effects, impacts or other obstacles encountered

All relevant issues have already been addressed.

Fill in as appropriate:

Any practical experience gained:

Technical difficulties:

Negative impacts or effects encountered:

Whenever possible, quantitative information should be provided. Failing that. a qualitative description should be given. If quantitative information becomes available, it could be submitted using the update(s). (If the amount of quantitative information is too large, the source could be indicated.)

Other obstacles encountered:

Other:

APPENDIX A

SELECTED REPORTS AND STUDIES RELATED TO THE ILUMEX PROJECT

Feasibility Study and Program Menu for the ILUMEX project. Prepared by the International Institute for Energy Conservation. December 1992.

Executive Summary of the ILUMEX Project and Technical Annex prepared by the CFE. August 1993.

Global Environmental Facility Project Document, United Mexican States and Banco Nacional de Obras y Servicios Publicos High Efficiency Lighting Project. March 1994

Reports on baseline marketing surveys to determine characteristics of residential market for high efficiency light bulbs. Results of surveys of compact fluorescent light bulb vendors in Guadalajara (December 1994) and Monterrey (March 1995). Prepared for the CFE.

Report on surveys of participants one year after the beginning of the project. The surveys were conducted to collect data on the participants' use of the bulbs and determine their perceptions of the program. Monterrey (February 1996) and Guadalajara (April 1996). Prepared for the CFE.

Report on the technical performance of the compact bulbs. Prepared for the CFE, June 1996.

Results of metering of light bulbs in participants' homes to estimate the number of hours per day and time of day used. Metering was conducted in Monterrey in July and August 1996 and in Guadalajara in September 1996. Prepared for the CFE.

Report to the Second Meeting of the Conference of the Parties to the United Nations Framework Convention on Climate Change on a Mexico High Efficiency Lighting Project. Submitted by the governments of Norway and Mexico. October 18, 1996

APPENDIX B:

DATA AND METHODOLOGY USED TO ESTIMATE EMISSIONS BENEFITS

The emissions reductions of the project are estimated as follows:

1. The kilowatt hours of electricity not generated as a result of the replacement of 1.7 million incandescent bulbs with CFLs are estimated. This is based on the following parameter values:

Number and type of bulbs installed by month

An average bulb use of three hours per day (based on preliminary results of on-site metering of bulb use in participants' homes.) and 30 days per month.

A bulb lifetime of 8,760 hours (12.4% less than the technical specifications of the compact fluorescent lights (CFLs)).

An average savings of 50 watts per bulb (the difference between the average incandescent bulb wattage and the average wattage of the CFLs used as replacements).

Transmission and other losses of 18% on the CFE system.

2. The kilowatt hours not generated are converted to emissions saved using:

Standard emissions factors for each fuel type, expressed in tons per Tera Joule (see below).

Fuel mix actually used at the Monterrey and Manzanillo plants in 1995 and 1996.

The heat rate, or efficiency, of the plants.

Actual emissions reductions achieved and projections of future environmental benefits may be re-estimated again, following a project evaluation to be carried out this year including an assessment of monitoring and emissions estimation procedures.

EMISSIONS FACTORS (Tons/Tera-Joule)

FUEL:	CO₂	CH₄	SOx	NOx	CO	HC	Parti- culates
Diesel	74.07	0.00003	0.672	0.068	0.015	0.147	0.44
Fuel Oil	77.37	0.0007	1.41	0.201	0.015	0.0936	0.682
Natural Gas	56.1	0.0059	.00876	0.188	0.032	0.00774	0.0259

Average Plant Efficiency: Monterrey: 28.61%; Manzanillo 38.01%

PROJECT FINANCIAL EVALUATION
(All monetary values are expressed in millions of 1993 US dollars)
PROJECT OVERVIEW
Number of Households	1'116'851
Total number of CFLs	1'767'000
Avoided capacity (MW)	100
Avoided Energy (GWh/year)	169
CFE
Project Costs	22.97
Lost Income from Unsold Energy	28.52
Total Costs	51.49
Value of Avoided capacity	53.98
Value of Avoided Electricity Generation	44.4
Revenues from Sale of CFLs	12.3
Total Benefits	110.67
Net Benefits	59.19
Benefits/Costs	2.15
CONSUMERS
Cost of Acquiring CFLs	12.9
Benefits from Energy Savings	26.85
Benefits from not Buying Incandescent Bulbs	2.82
Total Benefits	29.68
Net Benefits	16.77
Benefits/Costs	2.3
NOTE: These calculations were made by the IIEC, assuming an average use of the CFLs of 4 hours per day and an average bulb life of 6 years. Elsewhere in the project report, these assumptions have been modified to an average use of 3 hours per day and a lifetime of 8 years. When monitoring activities are completed and the estimate of hours of usage per day is verified, the financial evaluation of the project will be re-calculated. It should be noted that the total kilowatt hours saved remains the same regardless of the average number of hours per day of use.
These estimates still represent a reasonable approximation of project financial benefits. Discount rates used were 12% for CFE and 18% for the customer perspective. The long term marginal cost of electricity generation is assumed to be US$.062/kwh. Average wattage saved per bulb is estimated at 50.4.

NEGOTIATIONS

FOCUS

PROCESS

KEY STEPS