Your location: Home
ACTIVITIES IMPLEMENTED JOINTLY(AIJ)
Assessment of the E7 Group (including EDF) Proposal
for a Mini-hydroelectric Power Station in Zimbabwe
DESCRIPTION OF PROJECT
A.1. General Description
The Manyuchi dam in Zimbabwe is designed to irrigate an agroindustrial complex (2,000 hectares of sugar cane), 40 km downstream from the dam. The E7 project consists in setting up a mini-hydroelectric power station at the foot of the dam. It will be connected to the national electricity grid of Zimbabwe’s national electric-utility company, ZESA (Zimbabwe Electricity Supply Authority), which will purchase its production at a price amounting to 80 % of the going sales price. The generation station will be linked to the national grid by a 25 kilometer medium voltage line. In addition, a regional medium voltage distribution network will be built in order to meet the needs of nearby villages and industry.
The revenue from the sale of the electricity produced will be used to cover the operating costs of the station and power lines, and to reconstitute the initial capital invested in order to ensure the sustainability of the project, by providing for the replacement of equipment at the end of useful life. The difference between revenue (from the sale of electricity to ZESA) and costs (including maintenance and the reconstitution of the capital) will be invested in local development operations, as loans, or, more rarely, as gifts.
Capital saved for future replacement of the power station may also be invested in local development operations, on the condition that these projects be screened for their level of risk. This is of course necessary so as not to endanger the long term savings needed to guarantee renewal of the power plant.
The dam is to be used primarily to meet irrigation needs. Studies show, however, that the water availability should make it possible to drive two 350-kilowatt turbines 6 000 hours per year, so as to generate 4.2 gigawatthours per year.
A.2. Type of Project
Generation, transmission, and distribution of electricity: renewable energy, mini-hydroelectric.
A.3. Parties Involved
Of the E7 Group members (the world’s eight most important electric-utility companies) four companies - EDF (France), Ontario Power Generation, RWE (Germany) and Hydro-Québec – are investing in the project. EDF is the lead investor.
A.4. Institutional Organization
Ownership of the power lines will be transferred to ZESA when completed. ZESA will be responsible for operating and managing the local grid, including billing clients.
The power station will become the property of a nonprofit company (created for this project), which will operate the plant.
The legal setup of the project will be a Trust. The E7 Fund, ZESA, the Triangle company (owner and operator of the dam), local authorities, and customers will be Trustees. The Trust will be responsible for overseeing the management and operations of the installation, after having transferred its ownership to the nonprofit company. The Trust will manage a fund, fed by annual operating profits. The fund will be used to accumulate capital to replace equipment at the end of useful life, and will also finance development projects.
A number of possible designs have been explored and evaluated. The solution that was decided upon requires an investment of US$ 1.6 million, including 200 000 from ZESA. Furthermore, the costs of the detailed specifications of the network, of the call for bids, and of overseeing of the construction site will amount to US$ 400 000.
A.6. Technical Data
A market study was carried out in order to determine electricity needs in the region. There are 70 000 inhabitants (including 300 civil servants), 25 craft production centres, 29 schools and 7 clinics.
Providing electricity service to the region would require 120 km of medium voltage lines.
Since the power station will be tied into the national grid, it will be able to generate at full capacity whenever water is available, and all power produced will be fed into the grid. Hydrological studies indicate that the station will be able to function 6 000 hours per year, and produce 4.2 GWh/year, without in any way infringing on water needed for irrigation.
Under current economic conditions (exchange rate, power purchase tariff) the project would be profitable at 5 500 hours per year of production.
A.7. Long-term Sustainability
The long-term economic viability of the project depends on its capacity to generate enough resources to cover the running expenses and capital reconstitution on the basis of a 25-year useful life of the installation. As mentioned in paragraph A.6, this is guaranteed by a minimum production of 5 500 hours per year.
Ecological sustainability of the project should pose no problems, since the power station is non polluting. The dam exists already, and construction of the power station (essentially civil engineering works) should have no impact on the environment. Water use has been negotiated with other water users and with the Zimbabwean government, and should not harm water reserves. Sedimentation studies have shown that the intake pipes are sufficiently high to guarantee a residual capacity of 10 million m3 behind the dam. Pipes necessary for the operation of the turbines do not modify this configuration. The power station does not modify the physical or chemical properties of the water.
Social and institutional sustainability should be favoured by the participation of ZESA, of the Triangle company and of village representatives in the organisation responsible for operation of the station.
Manyuchi Dam, Zimbabwe.
A.9. Useful Life of the Project
Since the power purchase agreement with ZESA covers the life of the power station, certification for the Pilot Phase AIJ is equal to this useful life (25 years).
Reduction of CO2 emissions will be additional, in the sense of the Pilot Phase, for the entire life or the installation. Since national power needs are growing, and all new needs will be met by increased coal generation, the hydro power will replace coal generated electricity for the entire life of the project.
A.10. Project Assessment Procedure
The project was assessed by the Secretariat of the French Fund for the Global Environment, responsible for Pilot Phase AIJ.
GOVERNMENTal ACCEPTANCE, APPROVAL, OR endorsement
B.1. Approval procedures
The Government of Zimbabwe has given its agreement for the power station. The Triangle company, owner of the MDC (Mwenezi Development Corporation) which financed the construction of the dam, and which has signed a 50-year agreement on the operation of the dam with the Government of Zimbabwe, has stated that it has no objection to the use of its water, on condition that requirements for irrigation are complied with. It even offered to give the project the benefit of its expertise in the field of irrigation at cost price.
B.2. Comments of the French focal point
The French focal point, in the context of the AIJ pilot phase, applies an "hypothesis of development" to projects in developing countries. That is to say, the proposed AIJ project is compared with the most likely alternative that would have provided a comparable level of service, even if there may be some doubts as to whether the alternative project would have been put into practice. This approach is used in consistency with the principle that the future flexibility mechanisms should contribute to sustainable development. It is assumed that economic development should and will take place, even if it would lead to increases in GHG emissions.
compatibility with, and supportiveness of, national economic development, and socioeconomic and environment priorities and strategies
The project is based on the sale of the power produced to ZESA, which will resell it at its regular rate. The electricity will be purchased at 80% of the going sales rate. The difference between purchase cost and sales cost will be used by ZESA to maintain the local distribution grid, and to cover customer billing costs.
As stated above, operating profits from the power station, as well as funds budgeted for equipment replacement, will be invested in a regional development fund. The Trust which will govern the fund is responsible for choosing projects which will receive soft loans, or, in some cases, grants.
BENEFIts derived from the activities implemented jointly project
The details of the benefits in terms of greenhouse gases are laid out below. Overall, the emissions reductions exceed 5 000 tons of CO2 per year, that is, approximately 125 000 tons of CO2 over the life of the installation.
E.1. Technical Data
Installed capacity will be 700 kilowatts. Given the water needs for irrigation (the primary purpose of the dam) yearly production of 4.2 gigawatthours can be considered a probable value. It will be used as the basis for estimates of CO2 savings.
The electricity distributed by ZESA comes from three sources: hydroelectric dams, coal-fired power stations, and import. Nevertheless, given that electricity consumption is rising, and that hydro-electric capacity is limited, with no new hydro capacity planned, the increase in production in the next years will come from expansion of the Hwange coal-fired power plant. In fact, expansion of the currently saturated Hwange power plant has already begun. The new capacity is scheduled to come on line in 2001. It will absorb increasing demands for electricity, as well as replace current electricity imports.
Thus, the baseline used is electricity generated in a coal-fired power plant.
According to data furnished by ZESA, the coal plant burns 505 grams of coal per kWh. This corresponds to 1 205 grams of CO2 per kWh generated, according to the IPPC Guidelines Reference Manual method.
505 g/kWh * 25.75 GJ/ton * 25.8 kg/GJ *0.98 * 1000 *(44/12) = 1 205 gCO2/kWh
505 g/kWh = coal consumption of the baseline power plant
25.75 GJ/ton = net heat value of Zimbabwean coal
25.8 kg/GJ = emission factor for coal
0.98 = percentage of coal burned (unburned = 2%)
44/12 = ratio of molecular and atomic weights of CO2 and C.
The plant is scheduled to go into operation in 2001, for 25 years.
The following table gives emissions reductions, calculated as:
(annual production in kWh) x (CO2 per kWh in the baseline scenario)Emissions reductions
According to these hypotheses, for a project lifetime of 25 years, 126 600 t of CO2 emissions will be saved.
The operating company will provide the Secretariat every year with the actual sales figures for electricity sold to ZESA.
ZESA will provide annual figures on coal consumption at the Hwange plant.
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
The E7 Group will finance the power station from its own resources. Operating costs and equipment renewal will be covered by revenue from sales to ZESA.
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.
This operation should make it possible to gain experience in the installation of mini-hydro power plants in Zimbabwe. This type of operation that could be repeated in other regions of the country.