Oficina Guatemalteca de Implementacion Conjunta

Roberto Figueroa

Jeffrey Keeler

Item

Name of organization (original language)

Name of individual if unaffiliated with any organization

Oficina Guatemalteca de Implementacion Conjunta

Name of organization (English)

Guatemalan Joint Implementation Office

Acronym (original language)

OGIC

Acronym (English)

Department

Executive Director

Function(s) within the AIJ project activities

Government Regulation/Oversight

Street

Torre 1 Oficina 402, Diagonal 6

City

Guatemala

State

Post code

10-65 zona 10

Country

Guatemala

Telephone

+502.332.7952

Fax

+502.332.7958

E-mail

Investinguat@guate.net

World Wide Web-URL address

Surname

Dopazo

First name, middle name

Eduardo

Job title

Executive Director

Direct telephone

+502.332.7952 x 56

Direct fax

As above

Direct e-mail

As above

Surname

First name, middle name

Job title

Direct telephone

Direct fax

Direct e-mail

Item

Name of organization (original language)

Name of individual if unaffiliated with any organization

Enron – Central America

Name of organization (English)

Acronym (original language)

Acronym (English)

Department

Function(s) within the AIJ project activities

Project development/Administration

Street

6a Avenida 1-36, Zona 14, Edificio los Arcos 40 Nivel

City

Ciudad de Guatemala

State

Post code

01014

Country

Guatemala

Telephone

+502.368.1858

Fax

+502.368.2555

E-mail

World Wide Web-URL address

Surname

Figueroa or Melinchon

First name, middle name

Roberto Ermes

Job title

Country Manager

Direct telephone

As above or 713/646-7475

Direct fax

As above

Direct e-mail

Surname

Keeler

First name, middle name

Jeffrey

Job title

Director, Environmental Strategies

Direct telephone

202/466-9157

Direct fax

202/331-4717

Direct e-mail

JKeeler@enron.com

Sector(s)

Energy

Primary activity(ies)

Renewable Energy Generation

Country

Guatemala

Exact location (city, state, region)

Rio Colorado Basin, Department of Zacapa

Project starting date (month/year)

03/2001 (construction begins)

Project ending date (month/year)

06/2023

Project lifetime (years)

20

Current stage of project

Mutually agreed

Project Objectives: Guatemala has been experiencing steady double-digit growth in electricity demand for the past decade, and following Hurricane Mitch, the demand has intensified. Finding ways to generate the needed electricity from indigenous, renewable resources will help the country grow in a more sustainable way.

Project activities: The Rio Hondo II Hydroelectric project will help meet this demand for electricity by producing 142 GWh per year of electricity delivered to the national grid system.

Construction of the Project dam will be on the Rio Colorado, which together with the Rio Agua Fria form the Rio Hondo. A penstock will be constructed from the new dam to a powerhouse located 1000 meters below in the lower reaches of the Rio Hondo basin. The project will be placed upstream of the Rio Hondo I facility (which was damaged in Hurricane Mitch and its capacity has been removed from the grid). The present Rio Hondo I transmission line will be upgraded to connect the electrical generators at the project to the Panaluya substation, integrating the project’s power into the national grid. An access road will also be built for the construction of the project dam, penstock, and powerhouse. Several kilometers of existing roads will be upgraded as part of this project.

Project Site: Rio Hondo II will be located in the sub-basin of the Rio Colorado, on the Sierra de las Minas range approximately 140 km to the east of Guatemala City in the Department of Zacapa. The sub-basin belongs to the municipality of Rio Hondo and falls within the coordinates of 15.03’ and 15.10’ north latitude, and 89.35’ and 89.42’ west longitude. The area is located on the crests and sides of Monte Verde, an area characterized by steep hillsides and crossed by small rivers. The Projects has an area of influence of 40 sq. km from its highest point in the basin to the reservoir, and 15 sq. km from the reservoir to the Rio Motagua.

Types of data: The Project is expected to generate reductions of approximately 141,186 tons of CO2 per year beyond that which would have otherwise occurred using the baseline fuels set by OGIC. These are current estimates, based on estimated 142 GWh of electricity delivered to the grid. Actual emission reductions will depend on actual performance of delivered electricity, which will be monitored as part of the power purchase agreement.

For business reasons, we prefer to keep the cost details proprietary.

(US$)

Total

(US$)

(US$)

Project Development and finalization

confidential

Construction

Operation

Subtotal

0

0

confidential

Subtotal

0

0

Net Project Cost (Project Costs-Project Revenues)

0

0

Party(ies) that will be monitoring project activities

Project operators, Guatemalan officials

Party(ies) that will be externally verifying project results

Not yet decided

Date when the monitoring plan became (or will become) operational (month/year)

Upon completion of Project and start of electricity delivery to the grid (estimated 2004)

Types of data that will be collected

Electricity supplied to the grid

OGIC officials in conjunction with the Project development team will be involved in monitoring the process or designating the individual(s) to monitor and audit the Project’s components according to the international standards and requirements for monitoring and verification programs. The Project will install appropriate instrumentation in the power station in order to monitor the electricity generated. This will provide the necessary data to quantify and verify the total emissions avoided. GHG reductions will be determined from official generation data supplied by the facility and correlated with INDE (the national electricity board) and Guatemala government records of the electricity received at the grid.

All parties will agree to annual external verification by independent auditors that meet international standards and qualifications.

Please check one of the following.

This report is a first report.

This report is an intermediate report.

This report is a final report.

Please check one of the following:

This report is a joint report. Letter(s) of approval of this report from the designated national authority of the other Party(ies) involved in the activity is (are) attached in Section J, Annex.

This report is a separate report.

Additional comments (if any):

This is the first report submitted following the initial application for approval from US IJI. It is being submitted without additional copies of the original letters of approval to avoid redundancy.

Due to the double-digit growth in demand for electricity, more power is needed to fuel Guatemala’s economic growth. To the extent that electricity can be provided using indigenous, renewable resources, the country will save on operating costs, environmental ‘externalities’ costs, and foreign exchange (no need to import fuel). Some jobs will be provided by the project construction, as well as in the monitoring of the project and the surrounding biosphere.

The deforestation of several hectares (approximately 1000 trees) in the construction process will be reforested, most likely above and beyond the original state of secondary growth forest. The harvested trees will be sold, rather than burned, which will also bring socioeconomic benefits and retain the ability to sequester carbon. The project has contracted with Fundacion Defensores de la Naturaleza to manage the land including the road construction and maintenance, fire protection, nature conservation, and harvest of tree removal.

Environmental priorities will be followed with the addition of non-polluting sources of electricity, thus preserving the local and global air quality from avoiding emissions from fossil fuel powered generation. Also, the increase in water storage from the reservoir is expected to increase vegetation in the area. This project offers a step forward in the long-term strategy of wise use of natural resources.

As mentioned previously, the generation of electricity from renewable sources will improve local air quality by avoiding emissions associated with fossil fuel-based sources of energy, such as CO, VOCs, NOx, SO2, and particulate matter. The quantities of these emissions depend on the type, size, and output of the thermoelectric plants, and the resultant effects on human health additionally depend on geography and topography of the area. The fuel mix used as a reference case for the displacement scenario is 43% bunker fuel, 44% diesel, and 13% coal.

Several hectares of land will be used during construction and to build the dam and reservoir. The trees that will be removed as part of the initial construction process are considered secondary growth—taking place in the last 15 years. There will be about 1000 trees removed and sold. Many of the small trees were washed away by flooding caused by Hurricane Mitch, which has made the ravine wider and steeper. The project proposes to replant the trees removed during the construction process and the land will be managed under a forest management plan. Land use change-related emissions and sequestration potential of the reforestation have not been counted as part of the greenhouse gas emissions calculations.

During construction, a diversion tunnel will be constructed to continue the water flow of the river. Water quality will be maintained after the Project is developed. The additional water storage from the reservoir will provide a source for fire control in the area.

Jobs will be available to the local communities in the construction of the Project, and in the management of the land reserve. Indirect jobs in the areas of transportation, fueling, food, and housing will also be created. The development of access roads will provide additional avenues for individuals in villages along the road to seek job opportunities outside of the community. Training in fire prevention, safety issues, land conservation and management, and many other areas in the land management and project construction will add skills and knowledge to the local population.

There will be no resettlement issues in conjunction with the project, because the reservoir area is uninhabited.

This project fits into the national program for rural electrification developed by Guatemalan energy and environmental policymakers.

Site number (order of presentation in this report)

1

Site name/designation

Rio Hondo II

Project sector

energy

Primary activity(ies)

electricity generation

Has the reference scenario changed since the last report? (If yes, explain any changes below.)

Yes

No

This is the first project report.

Description:

The reference scenario as determined by CONAMA Proyecto inventario de Gases de Efecto Invernadero Sector Energia de Guatemala is Bunker fuel 43%, Diesel 44% coal 13%. Peak power by the hydroelectric facility is expected to displace the fuel mix as above with 142,000 MWh of electricity to the grid per year, based on a generating capacity of 50 MW.

Primary activity(ies)

Renewable electricity generation

Description:

Rio Hondo II will offer peak power generation capacity that is expected to displace power generation from diesel, bunker fuels and coal.

Primary activity(ies)

Description:

Site number

1

Project sector

Energy

The Reference Scenario uses the displacement of existing/future generating facilities of the grid as 43% bunker fuel, 44% diesel and 13% coal with the carbon intensity of each fuel type per gigajoule as .0211, .0202, .0258, respectively. The displacement ratios are based on information from CONAMA, the national environmental agency and OGIC. The carbon intensity is that listed in the IPCC Second Assessment Report, Table 1-1.

After calculating the avoided CO2 emissions using different assumptions about the fuel, technological change, etc., we have chosen to submit the most conservative estimates for emission reductions using the projected energy placed on the grid as 142,000 MWh and comparing that to the reference scenario above. Electricity output generation displaced by the project is determined by taking the annual Rio Hondo capacity multiplied by the generation displaced by Rio Hondo for each fuel, according to the expected fuel mix to the grid. The fuel consumption displaced is calculated by dividing the electricity output generation displaced by the project by the energy conservation conversion, yielding a quantity in MWh that is multiplied by 3.6 to convert the result to gigajoules. Multiplying the fuel consumption displaced for bunker, diesel and coal by the fuel carbon intensity (tons/GJ) yields the quantity of carbon avoided. These amounts are multiplied by 3.664 to convert them to avoided CO2 emissions per year.

See table below.

Rio Hondo II Capacity: 50 MW

Hydro

1

0

0

Bunker

0.3

0.0211

0.024

Annual Electricity Production: 1420,000 MWh

Diesel

0.25

0.0202

0.023

Coal

0.35

0.0258

0.025

Source: Steam, Babcock & Wilcox, 1979

Source: IPCC Second Assessment Report, Table 1-1

Source: Project Engineer Calculations

Hydro

0

0

Bunker

61060

732720

Diesel

62480

899712

Coal

18460

189874.3

Source: CONAMA

Total

142000

Hydro

0

0

Bunker

15460.4

17585.28

56646.88

64432.47

Diesel

18174.2

20693.38

66590.2

75820.53

Coal

4898.8

4746.857

17949.04

17392.48

Total

38533.3

43205.51

Total

141186 tons CO2/yr

157645.5 tons CO2/yr

Indirect greenhouse gas impacts will result from the change in land use by the project. Land will be cleared for the building of the dam, to upgrade some access roads, and in the creation of the reservoir. The majority of the trees that will be lost are less than 15 years old, "secondary growth," and will be replanted in excess of the amount harvested. A fire and forest management plan is being developed in cooperation with the Fundacion Defensores de la Naturaleza that will result in additional protection. Land use change impacts have not been quantified, but will likely result in net sequestration.

The construction project will emit greenhouse gases, in transportation and the cement used to build the dam, which has been quantified and listed in the spreadsheet as the greenhouse gas emissions for the first three years of the project.

Future loss of GHG benefits could result from damage of the dam, or adverse weather conditions such as (drought or hurricane) which would change the flow of the river and decrease the amount of electricity that can be produced.

The only viable strategy to reduce the risk of future loss of GHG benefits to a hydroelectric project is to build and operate the dam to the highest standards to ensure full capacity operation.

Enron, S.D. Rio Hondo S.A.

Total

Debt financing and partner equity

InterAmerican Development Bank

Total

We will likely seek some degree of financing from the InterAmerican Development Bank.

The JI component of the Project strengthens the commitment by all involved to the Project by including domestic (Guatemalan) and U.S. review and understanding of the project. Host government expert involvement contributes to capacity building for more AIJ activities and creates the groundwork for future CDM projects. Policies and procedures to encourage AIJ projects are developed and refined as real project proposals come into existence.

The experience of completing the AIJ application process also enhances the capacity of Enron to develop more JI and CDM projects. As the project comes to fruition, the experience in monitoring and verifying results will have positive spillover effects for all parties involved in other such projects.

Capacity for land, fire, and forest management in the area surrounding Rio Hondo will also be enhanced, paving the way for other such programs in the area with or without concomitant hydropower projects.

The project has become larger with a higher MW capacity than in the initial project application. For a variety of reasons, the project has not progressed according to schedule. Construction is expected to begin in 2001.

Guatemala/Rio Hondo II Hydroelectric project

Oficina Guatemalteca De Implementacion Conjunta

Ministerio de Energia y Minas, Direccion General de Energia

25/06/99

25/06/99

Item

Name

Jeffrey Keeler

Organization (English)

Enron Corp.

Telephone

202.466.9157

Fax

202.331.4717

E-mail

Jkeeler@enron.com

Substantive discussions regarding project

Pre-feasibility study

Feasibility study

Project development (including construction and/or setting up on-site offices, purchase of lands, etc.)

Project operations (including starting management practices, distributing information, training, purchase of operating equipment, etc.)

Sequestration or reduction of GHG emissions

Project financing obtained

Other (please specify)

No voluntary agreements have been established to assign emission reductions from this project. Project developers will negotiate with the Guatemalan partners and the Guatemalan government (OGIC) to determine the assignment of emission reductions following pre-specified guidelines.

As the process moves from AIJ phase to CDM, appropriate assignment of emission reductions will be established with all appropriate parties.

Total