CC:INFO/AIJ: REPORT

Uniform Reporting Format:

Activities Implemented Jointly Under the Pilot Phase

A. Description of project

1) Title of project: Viljandi,, Boiler conversion at Ltd ESRO, Viljandi

2) Participants/actors:

Item	Financier/Reporter	Estonian co-reporter
Name of organisation(a):	Statens energimyndighet	Eesti Vabariigi Keskkonnaministeerium
Name of organisation (English):	Swedish National Energy Administration ^(*	Ministry of the Environment of the Republic of Estonia
Department:	Secretariat for Climate Policy and International Co-operation	International Relations Department
Acronym:	STEM	EKM
Acronym (English):	STEM	MoE
Function within activity:	Assigned by the Swedish Government for implementation including financing arrangements.	Estonian Climate responsible Organisation
Street:	Kungsgatan 43	Toompuiestee 24
Post code:	BOX 310, S-631 04	10149
City:	Eskilstuna	Tallinn
Country:	Sweden	Estonia
Telephone:	+46 16 544 20 00	+372 62 62 800
Fax:	+46 16 544 22 64	+372 62 62 801
E-mail:	klas.tennberg@stem.se	min@ekm.envir.ee
WWW-URL:	http://www.stem.se	http://www.envir.ee
Contact person (for this activity):	-------------------------------------	-------------------------------------
Surname:	Knutsson	Kratovits
First name, middle name:	Gudrun	Andres
Job title:	Head of Section, Climate Investment Programme	Counsellor
Direct tel:	+46 16 544 20 72	+372 62 62 841
Direct fax:	+46 16 544 22 64	+372 62 62 845
Direct E-mail:	gudrun.knutsson@stem.se	andres@ekm.envir.ee

^(* From 1 January, 1998, the new Swedish National Energy Administration has taken over the responsibility for the Programme for an Environmentally Adapted Energy System in the Baltic region and Eastern Europe (EAES Programme) from NUTEK (Swedish National Board for Industrial and Technical Development).

	Borrower
Name of organisation(a):	AS ESRO
Name of organisation (English):	Ltd ESRO
Department:
Acronym:
Acronym (English):
Function within activity:	Project owner
Street:	Puidu 11
Post code:	71020
City:	Viljandi
Country:	ESTONIA
Telephone:	+372 43 37 792
Fax:	+372 44 37 783
E-mail:	esro@vil.ee
WWW-URL:
Contact person (for this activity):	-------------------------------------
Surname:	Saar
First name, middle name:	Jaan
Job title:	director
Direct tel:	+372 43 37 783
Direct fax:
Direct E-mail:

Item	Please fill in if applicable	Please fill in if applicable
Name of organization(a):	Sihtasutus Regionaalsed Energiakeskused	ÅF International
Name of organization (English):	Regional Energy Centres in Estonia	ÅF International
Department:	Võru office	AF - International Malmö
Acronym:	SA REK	ÅFI
Acronym (English):	REC	AFI
Function within activity:	Local reporter	Technical support
Street:	Liiva 12C	Stensjögatan 3
Post code:	65602, Võru P.O., BOX 43	S-217 65
City:	Võru	MALMÖ
Country:	ESTONIA	SWEDEN
Telephone:	+372 78 282 30	+46-40-37 50 00
Fax:	+372 78 282 31	+46-40-13 03 69
E-mail:
WWW-URL:	http://www.af.se/ens/english/rec	http://www.af.se
Contact person (for this activity):	-------------------------------------	------------------------------------
Surname:	Potter	Lindgren
First name, middle name:	Elmu	Ulf
Job title:	Consultant	project leader
Direct tel:	+372 78 282 30	+46-40-37 50 97
Direct fax:	+372 78 282 31	+46-40-13 03 69
Direct E-mail:	elmu@regen.werro.ee	Ulf.lindgren@mlm.pdn.af.se

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

3) Activity:

Item	Please fill in if applicable
General description:	Viljandi, a beautiful hansa town, more than 700 years old, with 22000 inhabitants is situated in the middle of Estonia. The town consists of areas built at different times and the newest one is Männimäe. There are several boiler plants and district heating networks in Viljandi. One of the boiler plants in Männimäe area is owned privately by AS ESRO. This plant has five different types of steam boilers: one DKVR 4-13, two DE 25-14 and two DKVR 10-13 boilers working on heavy oil. One of the DKVR 10-13 boilers has been converted to wood chips firing.
Type of project:a)	Fuel switching to biofuels
Location (exact, e.g. city, region, state):	Viljandi Town Männimäe Estonia
Activity starting date:	20. November 1994 (Letter of Intent)
In operation from:	September 1995
Expected activity ending date:	31. March 2005
Stage of activity:b)	Completed
Lifetime of activity if different from ending date:c)	Expected technical lifetime is 15 years which means that the plant is expected to be in operation until 2011.
Technical data:d)	An existing oil-fired DKVR 10-13 boiler has been converted to biofuels firing through installation of an integrated movable inclined grate in the boiler. Furthermore, automatic fuel storage and flue gas cleaning are included in the project. Boiler output: 6 MW Pre-furnace: Integrated in the boiler Flue gas cleaning: Multicyclone <300 mg/Nm3 Fuel type: Wood chips, sawdust, bark, 35-55%RH Previous fuel : Mazut ( high-sulphur content heavy fuel oil) Estimated heat production from the wood fuel boiler: 30 000 MWh/year Total production of the boiler plant: 48 000 MWh/year

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.

Methodological work will be required to define lifetime of activities.
Methodological work will be required to determine for each type of activity what the minimum data requirements are.

The lifetime criteria has been arranged in different groups depending on type of implemented activities. This classification assumes a level of operation and maintenance which is normal in western countries.

Lifetime of activity

Heat production plants (bio fuel)

25 years	New installation of all main equipment parts (fuel handling system, firing equipment and boiler) and modernisation of secondary equipment.
15 years	Conversion of existing boiler but new installation fuel handling system and firing equipment. Modernisation of secondary equipment.
10 years	Limited installation of new equipment (only one part of the three main parts, normally the firing equipment). Modernisation of other equipment.

Heat distribution systems and sub-stations

25 years	Pre-fabricated pipes and installations using certified contractors and supervisor according to EN norms and applicable district heating practise
15 years	Pre-fabricated pipes and installations without using certified contractors and supervisor
10 years	Modernisation of existing pipes.

Energy efficiency in buildings

25 years

Additional insulation roofs walls etc. with Scandinavian technology.

New installed heating systems.

15 years

Renovation and balancing of heating systems including thermostat valves.

10 years

Weather stripping windows, doors etc.

* if a combination of measures is done a reasonable lifetime for the project have to be calculated.

4) Cost (to the extent possible):

To the investment costs are referred the cost of the investment proper and the accumulated interest during the grace period, generally 2 years.

The AIJ/JI cost items are the costs for:

Technical assistance, a technical and administrative support from consultants, during the period from definition of the project till commissioning. These costs are paid by STEM.
Follow-up, an annual technical and economic follow-up by consultants, hired by STEM, of the operating results of the plant with the objective to improve on its techno-economic sustainability and its climate effect. The cost indicated is an average cost per project.
Reporting costs – i e costs in connection with the annual reporting of the project’s climate effects to UNFCCC. The cost indicated is an average cost per project.
Administration –Costs for seminars, handbooks, education (capacity building) and average costs of STEM staff per project.
Difference in interest rates. STEM applies for its loans generally an interest rate corresponding to 6-month STIBOR (Stockholm InterBank Rate, in April 1999 3,0 %). Assuming a normal lending rate of 7 % means that this loan is associated with a cost of 4 % in relation to normal lending rate.

Investment/instalment = the borrower’s possible own financing of the investment, followed by the borrower’s repayment of the loan.

All costs in USD

Country		Viljandi/ESRO	1995	1996	1997	1998	1999
			0	1	2	3	4
	Investment	1. Loan/debt to STEM	622875	671750	579875	502500	425175
		2. Added costs	0	48875	15250	0	0
		3.Technical assistance	61250	0	0	0	0
	AIJ/JI	4. Follow up	0	10250	10625	2750	2834
A. Sweden	costs	5. Reporting costs	0	0	1063	2500	930
		6. Administration	66250	0	0	0	0
		7. Difference in interest	4%	26870	23195	20100	17007
		8.Accum. costs for AIJ/JI	127500	164620	199503	224853	245623
		9.Total costs	750375	836370	779378	727353	670799
	Investment	1. Investment/Instalment	0	0	107125	77375	77325
2. Estonia	AIJ/JI	2. Reporting costs	0	0	0	0	0
	costs	3. Other costs	0	0	0	0	0
		4. Accum. costs for AIJ/JI	0	0	0	0	0
		5. Total costs	0	0	107125	184500	261825
1 USD=	8	SEK	0

5) Mutually agreed assessment procedures:

Describe the procedures, including name of organisations involveda):

Ministry of the Environment of Estonia is a central Estonian authority responsible on reporting of JI projects. This authority assigns a local institution, which is involved in to the evaluation of the climate effects of this project and takes the main responsibility to continue measuring, results collecting for JI-reporting.

a) Please ensure that detailed contact information for all organisations 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 Governments of the Parties participating in these activities, which shall be shown as follows:

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

(b) 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 received from all participating Parties.

1) For the activity:

* Subsequent reports:

Third report. First report was submitted 1997.

2) This report is a joint report:

Yes, Endorsement letter was submitted 1997.

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

cf. Annex II, section B

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

The project meets the following objectives in the Estonian Energy Law, Estonian National Environmental Strategy, Estonian National Environmental Action Plan, Act on Sustainable Development and the Long-term Development Plan for the Estonian Fuel and Energy Sector:

- efficient and sustainable use of energy resources;

- to increase the share of renewable energy sources in the primary energy demand from present 8% to 13% to the year 2010;

- to reduce the environmental damage arising from fuel and energy production, transport, conversion and distribution;

- to create the reliable energy conservation system stimulating the implementation of energy conservation measures by consumers;

- creation and usage of energy efficient technologies, fuel/energy consuming and diagnostic equipment;

- stimulation of environmental awareness and environmentally friendly consumption patterns;

- to attract foreign investments for projects which ensure better use natural resources as well as environmental improvement;

- to develop co-operation between Baltic, Nordic and Central European countries

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:	Annual emissions reduction: Projected: 1999 10252 ton CO2 11233 ton CO2 163,6 ton SO2 179,2 ton SO2 13,3 ton NOx 14,5 ton NOx Improved silviculture
Do quantitative data exist for evaluation of environmental benefits?	Yes. Some measurements have been carried out at 1994.
Describe social/cultural benefits in detail:	More stable energy supply Improved working conditions, increased motivation More employment (new fuel and service companies), Improved trade balance
Do quantitative data exist for evaluation of social benefits?	Yes. Some reports have been produced Viljandi Town Energy Plan, 1999
Describe economic benefits in detail:	Decreased fuel costs approx. 3.5 USD/MWh. Decreased import costs approx. 27.000 US$ per year
Do quantitative data exist for evaluation of economic benefits?	Yes. Some reports have been produced. Viljandi Town Energy Plan, 1999.

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:

Present data reflect emission reductions using calculations, according to the top-down baseline method for emissions from heat sector in Estonian. (Top- Down Baselines setting for the revised Calculations of CO2 emission Reduction, SEI-Tallinn, Estonian Energy Research Institute, May 1999, Tallinn)

2) Estimated emissions with the activity:

Description of the scenario, including methodologies applied:

Emission reductions are calculated using the IPCC Guidelines, using the Carbon Emission Factor (CEF) for different types of fuel, using actual system efficiency. For boiler conversion, the decrease in emissions is calculated in relation to the amount of fossil fuel replaced (status quo).

For an energy efficiency project the decrease in emissions reflects the amount of fuel that is saved through the project. In the case that the system uses renewable fuels, the reduction is calculated comparing the amount of fossil fuels that was used before the conversion to renewable fuels.

Below comparison is based upon that the base-line scenario represents a status quo solution.

Summary table: Projected emission reductions:

	GHG	Year 1 =1995	Year 2 =1996	Year 3 =1997	Year 4 =1998	Year 5 =1999	...	Year 16 =2010
Planned energy production on biofuels, MWh/year		12100	30000	30000	30000	30000		30000
A) Project baseline scenario (revised)	CO2	3815	9113	9021	8929	8837		7691
	CH4
	N2O
	other
B) Project activity scenarioa)	CO2	0	0	0	0	0		0
	CH4
	N2O
	other
C) Effect ( B-A )	CO2	-3815	-9113	-9021	-8929	-8837		-7691
	CH4
	N2O
	Other
D) Cumulative effect	CO2	-3815	-12928	-21949	-30878	-39715		-128768
	CH4
	N2O
	Other

Includes indirect GHG leakages.

Summary table: Actual emission reductions:

	GHG	Year 1 = 1995	Year 2 = 1996	Year 3 =1997	Year 4 =1998	Year 5 =1999	...	Year 16 =2010
Factual energy production on biofuels, MWh/year		9860	25969	30930	30677	32871		30677
A) Project baseline scenario (revised)	CO2	3177	8187	9396	9225	9783		8510
	CH4	-	-	-
	N2O	-	-	-
	other	-	-	-
B) Project activity scenarioa)	CO2	0	0	0	0	0		0
	CH4	-	-	-
	N2O	-	-	-
	other	-	-	-
C) Effect ( B-A )	CO2	-3177	-8187	-9396	-9225	-9783		-8510
	CH4	-	-	-
	N2O	-	-	-
	Other	-	-	-
D) Cumulative effect	CO2	-3177	-11364	-20760	-29984	-39768		-138599
	CH4	-	-	-
	N2O	-	-	-
	Other	-	-	-

a) Includes indirect GHG leakages.

F. Additionality to 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 all sources of project funding.

Category of funding (For each source one line)	Amount (US dollars)
Loan from NUTEK	622.875
Grant from NUTEK for technical assistance	61.250

1 USD = 8,00 SEK

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

Transfer of environmentally sound technologies and know-how

Describe briefly

Schematically, the transfer of knowledge involves the following activities over time:

i) Technology transfer through STEM technical specialist during the implementation of the project.

ii) Technology transfer through co-operation between foreign supplier and local partner

iii) Conferences, seminars, documentation and training.

iv) Stimulate "net-working" for the exchange of experience between plant owners with similar problems, e g "bio-clubs"

Technology transfer has taken place through:

STEM technical specialist support to the local project leader;

Knowledge in negotiations to foreign companies;

Knowledge in managing and planning of bigger industrial projects;

Transferring of environmental issues to the local parties;

Transferring of knowledge in operation and maintenance issue;

Operation and maintenance software was introduced to the plant-owners.

Personal from boiler plant has been invited to different seminars and work-shops and several presentations about company experience have made, documentation for training has been handed over.

There were arranged seminars through close cooperation between STEM and Estonian partners:

Environmentally Friendly Energy Systems in the Baltic Region and Eastern Europe - seminar in Tallinn , 14-15 April, 1994;
Environmentally Friendly Energy Systems in the Baltic Region and Eastern Europe - seminar and workshops in Tartu , 25 November, 1994 (prepared information by topics in Estonian over than 150 pages);
EAES Programme District Heating Day in Vändra, 27 July, 1995;
Environmentally Adapted Local Energy Systems - seminar and presentation of translated into Estonian booklet "Environmentally Adapted Local Energy Planning" in Rakvere, 11 November, 1998 and in Tartu, 12 November, 1998.

iv)Activities have been supported by STEM to establish Estonian Biofuels Association: meetings representatives of plant owners and consultants were arranged in Haabneeme, Valga, Võru, Tartu, Pärnu and Viljandi.

The boiler plant has been visited by specialists of other boiler plants (incl. from Russia, Baltic Countries), the staff has an exchange of experience with other boiler plants. Estonian Biofuels Association is established in 1998 (mainly by "bio-club" and local experts) and the company is a member.

Endogenous capacity supported or enhanced:

Endogenous capacity

(Name of organisation1)

Development (DEV) /

enhancement (ENH)

Describe briefly

Viljandi Heating Co

(DEV)

The staff at boiler plant has got

experience in how to handle biofuel firing equipment

1) Please ensure that detailed contact information for all organisations listed is reported under section A.2 above.

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

Fill in as appropriate:

Any practical experience gained:

Good training and experience of the staff is necessary to operate biofuel boiler at full capacity.

A department for electrical supply is established in the company, which has been supplier to he STEM projects.

A department for net work supply is established and has been rather successful.

Is very important to control temperature in the prefurnace and the temperature gauge must be installed in the suitable place to avoid lining damages.

2) Technical difficulties:

To get the managers understanding about maintenance of existing equipment in co-operation to the new and operation of new equipment during guaranty time (reliability of grates, combustion process adjustment). These problems are solved and the converted boiler heat production is above projected level.

The existing gas fired boiler (used as peak load boiler) is too big to start for small loads when converted boiler is operating with full capacity.

3) Effects encountered:

Several local companies have participated in the project

Execution of the follow up and monitoring activities to get feedback to the programme and for evaluation of the results of the different measures.

Consulting support from both Swedish and Estonian side, also after commissioning.

4) Impacts encountered:

The experiences from EAES Programme projects have formed the basis for a new policy as respect to increasing renewable energy sources in the total energy balance of Estonia.

Reduced dependence on imported fuels.

5) Other obstacles encountered:

Lack of a strong national focal point to support and promote biomass energy activities.

6) Other:

About 60 % of the project costs are spent local.

No subsidies to renewables, taxation policy is not in support of biofuel use.

Calculations of the volume of emissions of sulphur dioxide and nitrogen oxide in the section D are revised and new emissions values are calculated according to the Regulation No. 33 of 17. March 1999 of the Ministry of the Environment "The procedure and methods of determination of the volume of pollutants from combustion plants to the air".

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