PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 CDM Executive Board

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PROJECT DESIGN DOCUMENT FORM FOR CDM PROJECT ACTIVITIES (F-CDM-PDD) Version 04.1

PROJECT DESIGN DOCUMENT (PDD)

La Cascata Hydroelectric Project 02 25/06/2012 Enel Guatemala, S.A. Guatemala Sectoral scope: 1 - Energy Industry (renewable sources) Methodology: ACM0002. Consolidated baseline methodology for grid-connected electricity generation from renewable sources (version 13.0.0). 273,500

Title of the project activity Version number of the PDD Completion date of the PDD Project participant(s) Host Party(ies) Sectoral scope and selected methodology(ies)

Estimated amount of annual average GHG emission reductions

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SECTION A. Description of project activity A.1. Purpose and general description of project activity La Cascata Hydroelectric Project (hereafter, the Project activity or Project) is constructed and operated by Enel Guatemala, S.A. (hereafter, the Project proponent). The project activity is a daily regulation power plant that utilizes water from the Quisil River. The project is located between the communities Brisas Poxlac and Crinolina from San Juan Ixcoy and San Pedro Soloma municipalities located in the Department of Huehuetenango in the Republic of Guatemala (hereafter, the Host Country). The total installed capacity of the project activity will be 137 MW with an expected generation of 566,435 MWh per annum. The project activity will be physically connected to the Guatemalan National Interconnected System (SNI according to its abbreviation in Spanish). The total energy generation of SNI was 8,276 GWh in 2011. The electricity generation matrix of SNI consists of a mix of different types of power sources such as: hydro (45.5%), geothermal (3.1%), biomass (10.8%), coal (12.5%), fuel oil (23.6%), diesel oil (0.1%) and imports (4.4%). Generation technology includes: hydro, reciprocating engines, steam turbines, cogeneration, geothermal and gas turbines1. The electricity generated by the implementation of the proposed project activity will displace electricity that would have been produced with other power plants (fossil-fuel powered) that supply electricity to the SNI. The annual GHG emission reductions are expected to be approximately 273,500 tCO2e per year. Moreover, the project activity will help to diversify the energy matrix to cover the increased electricity demand required for the social and economic development of the country based on a renewable energy source. Thus, contributing to the local and national sustainable development goals through the following actions: Environment: Use of a natural and renewable source for clean power generation and optimize the rational use of local hydro resources through hydroelectric development; It will contribute to the reduction of local air pollution by avoiding fossil fuel burning to generate electricity; Economic: It will contribute to mitigate poverty by creating employment during the construction phase and through the operation of the hydro power plant; Reduce dependency on fossil fuel imports used for power generation. Social: The proposed project activity creates new jobs during construction and operation stages. The nonspecialized labour will be sourced in communities surrounding the Project activity and specialists will come from other parts of the country, even from abroad;

Annual report 2011. Wholesale Market Administrator. Available at: http://www.cnee.gob.gt/xhtml/memo/Informe%20estadistico%202011.pdf. (Accessed: January 16, 2012).

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The Project will strengthen the interconnected national grid system and improve local electrical supply by extending the system coverage for neighbouring communities; It provides a very good opportunity to make the community aware of climate change issues and to get it involved in its impacts, consequences and the mitigating measures that can be adopted. This is particularly important in small towns where awareness of these issues is not widespread; No population is displaced as a result of the project implementation.

A.2. Location of project activity A.2.1. Host Party(ies) Guatemala A.2.2. Region/State/Province etc. Department of Huehuetenango A.2.3. City/Town/Community etc. Municipality of San Juan Ixcoy and San Pedro Soloma A.2.4. Physical/Geographical location The project activity is located in the Municipality of San Juan Ixcoy and San Pedro Soloma in the Department of Huehuetenango in Guatemala (Figure 1).
Table 1. Main coordinates of the project.

Points Dam Surge Tank Power House

Coordinates N 1537'2.25" 1540'41.98" 1541'57.79" W 9116'41.80" 9113'17.31" 9111'34.59"

Figure 1. Project activity location in Guatemala. Left within the Department of Huehuetenango. Right Main individual project points.

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A.3. Technologies and/or measures The project activity is a daily regulation power plant that utilizes water from the Quisil River. It includes a daily regulation reservoir that allows increased generation during peak hours. The installed capacity will be 137 MW and the electricity generation approximately 566,435 MWh per year. In the following some basic information about the individual project components is presented: Dam For the daily reservoir, a concrete dam of 114 m crest height will be constructed, allowing an increase in power generation during peak hours. The dam has a spillway and two bottoms discharges. The location of the dam axis was determined by the next factors: - The spillway requirements: crest width is 30 m and two bottom discharges of 4 m-width each of them. Their axes have to correspond to the rivers axis. - The morphological characteristics of the dam location; - Geological-geotechnical conditions of the foundation rock. The daily reservoir volume is estimated in 230,400 m3. Intake The design of the intake has included two main objectives: 1) to obtain a constant flow of water in the way to the turbine area to avoid any cavitations risk, and 2) to allow water flows without debris. The location of the intake has taken into account topographic, hydraulic and geological criteria. This structure is located at the left side margin of the Quisil River, out of the dam body, approximately 40 m upriver of the dam axis. The intake has a trash/safety rack and the total dimensions are 10.10 m width in the base and 5 m height, this is equivalent to a gross collection section of 50.50 m2. Surge Tank The surge tank is restricted orifice type, underground and vertical. The vertical well has a circular shape and it is covered with concrete. The dimensions are 4 m diameter and 102 m height. The restricted orifice is located at the base of the surge tank with an elevation of 1,392 masl, steel 2.00 m in diameter. Penstock The penstock is composed for the upper and lower tunnels. The upper tunnel will have a diameter of 4 m, while the hydraulic section will be 3.60 m. The total longitude is 9,134 m and it has a continuous slope of 2.1%. The flow level will be 16 m3/s with a mean velocity of 1.57 m/s. The lower tunnel will have a diameter of 4 m, while the diameter of the hydraulic section is 2.20 m/s. Due to the geological conditions, two stretches were considered: 1) First stretch, concrete coated, will have a longitude of 1,584 m with an internal diameter of 2.20 m, 2) Second stretch, steel coated, will have a length of 2,693 m with an internal diameter of 2.20 m, too. Powerhouse The powerhouse is located in a natural platform immediately adjacent to the right of the Yul San Juan River and at the left of the Quisil River. This platform is located with an elevation of 500 masl and it was

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designed based on the electromechanical equipment dimensions and the modelling study of the river. The powerhouse will contain two 68.5 MW rated power Pelton vertical generating units. Substation The electrical output from La Cascata facility will be stepped up from13.8 kV to 230 kV at the La Cascata substation (near to the power house) which will include two 13.8/230-kV transformers. The substation will be connected to the interconnection point through a 21-km transmission line at the San Juan Ixcoy substation (located in the municipality of Barillas in Huehuetenango).

A.4. Parties and project participants

Table 2. Project Participant

Party involved (host) indicates a host Party Guatemala

Private and/or public entity(ies) project participants (as applicable) Enel Guatemala, S.A. Private company

Indicate if the Party involved wishes to be considered as project participant (Yes/No) No

A.5. Public funding of project activity No public funding is provided to this project.

SECTION B. Application of selected approved baseline and monitoring methodology B.1. Reference of methodology 1. The approved methodology is ACM0002 Consolidated baseline methodology for grid-connected electricity generation from renewable sources (version 13.0.0). 2. According to the methodology, the calculation of the electricity system emission factor is done by applying the latest version of the Tool to calculate the emission factor for an electricity system (version 02.2.1). 3. The additionality of the project activity is demonstrated and assessed using the Tool for the demonstration and assessment of additionality (version 06.0.0). 4. The Guidelines for Reporting and Validation of Plant Load Factors (version 1) are also used. (Annex 11 of EB 48 report). 5. The Guidelines on the assessment of investment analysis (version 05) are also applied. More information about the methodologies can be found on the website: http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html B.2. Applicability of methodology The ACM0002 (version 13.0.0) methodology is applicable to grid-connected renewable power generation project activities that:

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a) Install a new power plant at a site where no renewable power plant was operated prior to the implementation of the project activity (Greenfield plant); b) Involve a capacity addition; c) Involve a retrofit of (an) existing plant(s); d) Involve a replacement of (an) existing plant(s). In this case, the project activity involves the installation of a new power plant at a site where no renewable plant was operated prior to the implementation of the project activity, i.e. a in the list above. It involves the construction of a new grid-connected hydroelectric unit with a total installed capacity of 137 MW. According to methodology ACM0002 (version 13.0.0), in case of hydro power plants, one of the following conditions must apply: The project activity is implemented in an existing single or multiple reservoirs, with no change in the volume of any of reservoirs; or The project activity is implemented in an existing single or multiple reservoirs, where the volume of any of reservoirs is increased and the power density of each reservoir, as per the definitions given in the project emissions section, is greater than 4 W/m2; or The project activity results in new single or multiple reservoirs and the power density of each reservoir, as per the definitions given in the project emissions section, is greater than 4 W/m2.

The Project activity is a daily regulation hydro power plant with new reservoir that does not allow its volume to increase due to an emergency spillway crest in case the water levels in the reservoir are exceeding the maximum level. The methodology is not applicable to the following: Project activities that involve switching from fossil fuels to renewable energy sources at the site of the project activity, since in this case the baseline may be the continued use of fossil fuels at the site; Biomass fired power plants; A hydro power plant that results in the creation of a new single reservoir or in the increase in an existing single reservoir where the power density of the power plant is less than 4 W/m2.

Since the project activity is a new hydroelectric power unit, there will be no switching from fossil fuels to renewable energy. B.3. Project boundary According to the guidance specified in the Methodology ACM0002 (version 13.0.0), the spatial extent of the project boundary includes the project power plant and all power plants connected physically to the electricity system that the CDM project power plant is connected to (see Figure 2).

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Figure 2. Project Boundary

Spatial extent of the project boundary includes the project power plant and all power plants connected physically to the electricity system that the CDM project power plant is connected to. The greenhouse gases and emission sources included in or excluded from the project boundary are shown in Table 3.
Table 3. Emission sources included or excluded from the project boundary

Source CO2 emissions from electricity generation in fossil fuel fired power plants that are displaced due to the project activity For hydro power plants, emission of CH4 from the reservoir Baseline scenario

Gas CO2 CH4 N2O CO2 CH4 N2O

Included? Yes No No No No No

Justification/Explanation According to ACM0002, main emission source of emissions in the baseline. According to ACM0002, minor emission source, excluded for simplification. According to ACM0002, minor emission source, excluded for simplification. According to ACM0002, minor emission source. According to ACM0002, since power density is 3,876 W/m2, larger than 10 W/m2, this can be neglected. According to ACM0002, minor emission source.

B.4. Establishment and description of baseline scenario The approved consolidated methodology applied to the proposed project activity, ACM0002 (version 13.0.0), establishes that baseline scenario for project activities consisting of new-grid connected renewable power plants is defined as follows: Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the Tool to calculate the emission factor for an electricity system. The proposed project activity involves the installation of a hydropower plant that will be connected and deliver electricity to the SNI. B.5. Demonstration of additionality

Project scenario

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The Guidelines on the demonstration and assessment of prior consideration of the CDM (version 04), require that for project activities with a starting date on or after 2 August 2008, the project participant must inform a Host Party designated national authority (DNA) and the UNFCCC secretariat in writing of the commencement of the project activity and of their intention to seek CDM status. The table below lists the main events relating to the serious and early consideration of the CDM as well as feasibility of execution of the proposed project activity. In this case, the project has not yet started implementation and is still in preliminary planning phase. Therefore, the starting date of the project activity, i.e. the moment when real action begins, is not yet defined. The Project Proponent submitted the Annex 62 Prior consideration of the CDM form to the UNFCCC secretariat on October 24, 2011 and received an email from the UNFCCC on October 25, 2011 in which the Project Proponent was informed about the addition of La Cascata Hydroelectric Project to the Prior Consideration of CDM list. The Project Proponent submitted the Annex 62 Prior consideration of the CDM form to the Designed National Authority (DNA) in Guatemala on October 25, 2011, and received an email confirmation on December 2nd, 2011. Therefore the start date, whatever it may be, is after the submission of the Prior consideration form. Hence the project meets the conditions for Prior Consideration of the CDM. Date
24/10/2011 25/10/2011 25/10/2011 02/12/2011 02/05/2012 19/09/2012 11/10/2012 02/11/2012

Event
Prior consideration form sent to the UNFCCC UNFCCC sent Prior Consideration confirming publication of the project in the webpage. Prior consideration form sent to the Guatemalan DNA Prior consideration form sent to the Guatemalan DNA confirmation receipt Project participant acquired the PEG-2-2012 bid forms Investment decision from EGP Submission of tender offer Selection of winning bid(s)

Supporting documentation
Copy of the e-mail sent to the UNFCCC by the project proponent. Copy of the e-mail confirming that the project was added to the Prior Consideration of CDM list. Copy of the e-mail sent to the DNA Copy of the e-mail confirmation receipt from DNA Copy of letter delivery bid forms Copy of e-mail sent to ENEL Guatemala Binding offer Copy of letter selection of bid winner

Additionality The additionality of the project activity is demonstrated and assessed applying the Tool for the demonstration and assessment of additionality (version 06.0.0), as stated in ACM0002 (version 13.0.0). The tool provides a step-wise approach to demonstrate and assess additionality: Step 1. Step 2. Identification of alternatives to the project activity; Investment analysis to determine that the proposed project activity is either: (1) not the most economically or financially attractive, or (2) not economically or financially feasible; Barriers analysis; and Common practice analysis.

Step 3. Step 4.

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Step 1: Identification of alternatives to the project activity consistent with current laws and regulations The identification of alternatives to the project activity that can be part of the baseline scenario is defined through the following sub-steps: Sub-step 1a: Define alternatives to the project activity The project activity involves the installation of a new grid-connected renewable power plant/unit. According to the approved methodology ACM0002 Consolidated baseline methodology for gridconnected electricity generation from renewable sources (version 13.0.0), the baseline scenario is the following: Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the Tool to calculate the emission factor for an electricity system (version 02.2.1). For the project proponent, the possible alternatives to the proposed project include: Alternative 1: The proposed project activity undertaken without being registered as a CDM project activity. Alternative 2: Continuation of the current situation: In this case, the project activity will not be constructed and the power will be solely supplied by the operation of power plants connected to the SIN and by the addition of new power plants. Sub-step 1b: Consistency with mandatory applicable laws and regulations Power generation in Guatemala is developed in a free and competitive environment comprising a market approach based on short term marginal cost dispatch, and by a contract market in which agents and important users freely agree on the conditions of their contracts, regarding the term, amounts and price. Transmission and distribution are regulated activities. The legal framework, on which the electric power subsector is governed and based on the following2:

The Political Constitution of the Republic; The Electric Power Law, Decree No. 93-96; The Electric Power Law Regulations, Government Agreement No. 256-97, and its modifications; Wholesale Market Administrator Regulations, Government Agreement No. 299-98 and its modifications; Commercial and Operational Coordination Regulations pertaining to the Wholesale Market Administrator.

The Electric Power Law is the basic law in matters of electricity and is sustained through the principles detailed below:

The generation of electric power is free and does not require prior authorization or precondition from the State, other than those acknowledged by the Political Constitution of the Republic of

Available at: http://www.investinguatemala.org/index.php?option=com_content&task=view&id=45&Itemid=46&lang=english

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Guatemala and the national laws. Nonetheless, in order to use State assets for such purposes, the authorization of the Department will be required when the plant power exceeds 5 MW; Electric power transmission is free, when the use of public domain assets is not required; Electric power transmission implying the use of public domain assets and the final electric power distribution service shall be subject to authorization; Electric power buy/sell contracts are freely negotiated among the parties, except for transmission and distribution services, which are subject to authorization. The transfer of power among generators, marketers, importers and exporters resulting from Wholesale Market operations are subject to regulation as set out by law.

Guatemalas wholesale power market administrator AMM is a non-profit private agency created by the state to regulate local power safety and supply. Its key functions include coordinating generation plant operations, international interconnections, and transport lines, as well as setting power transfer rates for generators, marketers, distributors, importers and exporters. Wholesale Market buying and selling operations are carried out in accordance with the Commercial Coordination Regulations through3:

The Opportunity Market or Spot Market; The PPA (Power Purchase Agreement) Market or Forward Market. Large users agree on the terms, amounts and prices of power through a PPA; A market of transactions for daily and monthly imbalances between supply and demand.

Both alternatives given above are fully in compliance with all mandatory laws and regulations. In the following steps, it is shown that the proposed project is not viable without the incentive from the CDM, and therefore is additional. Step 2: Investment analysis The purpose of this step is to show that the proposed project activity is economically and financially less attractive than at least one other alternative, identified in step 1, without the revenue from the sales of certified emission reductions (CERs). The analysis is in compliance with the Guidance on the Assessment of Investment Analysis (version 05). Sub-step 2a: Determine appropriate analysis method The project activity generates incomes other than CDM related income, so a simple cost analysis (Option I) cannot be applied. The available alternatives are investment comparison analysis (Option II) and benchmark analysis (Option III). As stated in the Guidance on the Assessment of Investment Analysis (version 05): If the proposed baseline scenario leaves the project participant no other choice than to make an investment to supply the same (or substitute) products or services, a benchmark analysis is not appropriate and an investment comparison analysis shall be used. If the alternative to the project activity is the supply of electricity from a grid this is not to be considered an investment and a benchmark approach is considered appropriate. Thus, benchmark analysis (Option III) is chosen to prove additionality. Sub-step 2b: Option III. Apply benchmark analysis Note: Guidance on the Assessment of Investment Analysis (version 5) states (paragraph 6):
3

Available at: http://www.investinguatemala.org/index.php?option=com_content&task=view&id=45&Itemid=46&lang=english

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Input values used in all investment analysis should be valid and applicable at the time of the investment decision taken by the project participant. Since the project has not started yet, the date for the investment decision is in the future. Hence the investment analysis is being undertaken with current date, and will be updated once the start date becomes defined. The financial indicator chosen is the Internal Rate of Return (IRR) and the IRR of the project will be compared against benchmark value published in the Guidance on the Assessment of Investment Analysis (version 5) for Guatemala. In this analysis an equity IRR is calculated in accordance with the corresponding guidelines indicated above. Taxation is included as an expense in the IRR calculation, i.e. the IRR is determined as a post-tax indicator. In accordance with the Guidelines on the Assessment of Investment Analysis (version 05) a default value for the expected return on equity is used for the benchmark. The relevant benchmark for energy projects in Guatemala (Group 1 with Moodys rating Ba2 as given in the guidelines) is 12.5% in real terms. As per the guidelines, since the investment analysis is carried out in nominal terms, the real term values provided can be converted to nominal values by adding the inflation rate. Since no long-term inflation forecasts or target rates of the Central Bank for the duration of the crediting period exist, the average forecasted inflation rate of 4.73% for the next five years after the start of the project activity published by the IMF (International Monetary Fund World Economic Outlook) is used (based on the forecasts in 2011 for the period from 2012 to 2016). The benchmark, i.e. the Nominal Return on Equity, is therefore given as 12.50% + 4.73% = 17.23%. Sub-step 2c: Calculation and comparison of financial indicators For the financial analysis the main cash outflows are given by the investment, the ongoing O&M costs and other expenses, such as fees and taxes. The cash inflows are generated from revenues of electricity sales, which depend on power generation and electricity prices. Input values for the investment analysis The financial structure is applied as suggested by the Guidelines on the Assessment of Investment Analysis (version 05). Table 7 lists the parameters and values used for carrying out the investment analysis.
Table 4. Input values used in the Investment Analysis available at the moment of decision making (all sources and calculations are provided in the Investment Analysis spreadsheets4) GENERAL DESCRIPTION Basic Parameters Date of investment analysis (project start date in the future) Operational life time Expected operational starting date Electricity generation Total net energy generation for sales Installed Capacity REVENUES Electricity sales Electricity tariff
4

19-Sep-12 50 1-Jul-16 566,435 137

date years date MWh / year MW

117.5

USD/MWh

See Excel file Financial_Analysis_Cascata 10 05 12.

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CDM Executive Board INVESTMENT Total Capital Costs Total investment OPERATING COSTS & EXPENSES Operational costs Variable Costs Fixed Costs Development (only for the first three years) Taxes Income tax rate FINANCIAL PARAMETERS Inflation Inflation rate (forecast) Benchmark Benchmark Return on Equity (real terms) Inflation Adjustment Nominal Return on Equity (Ke)

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$352,461,594

USD

$2,575,034 $3,950,802 $1,000,000 31

USD / year USD / year USD / year %

4.73% 12.50% 4.73% 17.23%

% % % %

Result of the investment analysis Based on the parameters above, the Internal Rate of Return (equity IRR) was calculated to be 15.63 %, which is below the benchmark rate of 17.23%. This calculation is detailed in the file Financial_Analysis_Cascata 10 05 12. Sub-step 2d: Sensitivity analysis A sensitivity analysis was carried out by varying the following key parameters to analyze the impact on the equity IRR: Total Incomes (USD/year), Investment costs (USD), and O&M costs (USD/year). Table 8 shows that the variations do not result in any significant change of the IRR and that in those scenarios the IRR remains clearly below the benchmark.
Table 5. For the sensitivity analysis each parameter is varied by 10% Variation of net revenues IRR +10% 16.69%

Variation of investment costs IRR

-10% 16.72%

Variation of O&M costs IRR

-10% 15.72%

Therefore, it can be concluded that the project activity is not financially attractive. Outcome of Step 2:

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According to the Tool for the demonstration and assessment of additionality (version 06.0.0): If after the sensitivity analysis it is concluded that the proposed CDM project activity is unlikely to be financially/economically attractive, then proceed to Step 4 (Common practice analysis).

Step 3: Barrier analysis Barrier analysis is not used to demonstrate additionality of the proposed project activity. Step 4: Common practice analysis Sub-step 4a: Analyse other activities similar to the proposed project activity Sub step 4a requires providing an analysis of any other activities that are operational and that are similar to the proposed project activity. According to the Tool for the demonstration and assessment of additionality (version 06.0.0) the stepwise approach for Common Practice includes the following steps: Step 1. Calculate applicable output range as +/- 50% of the design output or capacity of the proposed project activity. The total capacity of the proposed project activity will be 137 MW. Therefore, common practice analysis will include projects in a range between 68.5 MW and 205.5 MW. Step 2. In the applicable geographical area, identify all plants that deliver the same output or capacity, within the applicable output range calculated in Step 1, as the proposed project activity and have started commercial operation before the start date of the project. Note their number Nall. Registered CDM Project activities shall not be included in this step. Table 5 summarizes the identified operational power plants that match the installed capacity criteria established in Step 1 and started operation before the starting date of the project. Other project activities that have been registered as CDM project activities are excluded from the common practice analysis.
Table 6. Power plants with installed capacity within the output range in the Guatemalan power grid5 Type Hydro Thermal Thermal Thermal Thermal Thermal Thermal Thermal Thermal Plant Aguacapa San Jos Tampa Arizona Poliwatt Puerto Quetzal Power Las Palmas Generadora del Este Magdalena Capacity (MW) 90 139 80 160 129.36 118 66.8 71 90 Municipality Pueblo Nuevo Vias Masagua Escuintla Puerto San Jos Puerto Quetzal Puerto Quetzal Escuintla Amatitln La Democracia Implementation date February/22/1982 January/1/2000 1995 April/May 2003 May 2000 1993 September 1998 1996 1994

Source: Ministry of Energy and Mines.

As can be observed, there are 9 power plants that comply with the established selection criteria. Therefore Nall = 9.

See AMM - Installed Capacity January 2011.pdf. Available at: http://www.amm.org.gt/pdfs/capacidad_instalada.pdf (Accessed: October 26, 2011).

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Step 3. Within plants identified in Step 2, identify those that apply technologies different that the technology applied in the proposed project activity. Note their number Ndiff. From the power plants identified in step 2, eight are thermal power plants and only one is hydro power plants. Moreover, the Aguacapa hydro power plant was implemented before the enactment of the current electricity law in 1996, which means that if had a different regulatory framework than the project. Therefore, given by the tool, this project is considered having a different technology in the context of common practice. Therefore Ndiff = 9. Step 4. Calculate factor F=1-Ndiff/Nall representing the share of plants using technology similar to the technology used in the proposed project activity in all plants that deliver the same output or capacity as the proposed project activity.

The proposed project activity is a common practice within a sector in the applicable geographical area if the factor F is greater than 0.2 and Nall-Ndiff is greater than 3.

Therefore it is clear that the proposed project activity is not a common practice in Guatemala. Sub-step 4b: Discuss any similar options that are occurring: As discussed in the previous section no other similar projects are observed that need to be further discussed.

B.6. Emission reductions B.6.1. Explanation of methodological choices The equations from approved methodology ACM0002 (version 13.0.0) were used to determine the GHG emissions from each scenario. Project emissions According to the approved methodology ACM0002 (version 13.0.0), the only project emissions from hydro power project activities that could be relevant are the CH4 and CO2 emissions from reservoirs. The power density of the project activity (PD) is calculated as follows:

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PD =

CapPJ CapBL 137 006 W W = = 3,876 2 2 APJ ABL 35,343 m m

Equation 1

Where: PD CapPJ CapBL APJ ABL

= Power density of the project activity (W/m2) = Installed capacity of the hydro power plant after the implementation of the project activity (W) = Installed capacity of the hydro power plant before the implementation of the project activity (W). For new hydro power plants, this value is zero. = Area of the single or multiple reservoirs measured in the surface of the water, after the implementation of the project activity, when the reservoir is full (m2) = Area of the single or multiple reservoirs measured in the surface of the water, before the implementation of the project activity, when the reservoir is full (m2). For new reservoirs, this value is zero

Since PD is greater than 10 W/m2, the project emissions are zero:

PEy = PEHP, y = 0
Where: PEy PEHP,y

Equation 2

= Project emissions in year y (tCO2e/yr) = Project emissions from water reservoirs of hydro power plants in year y (tCO2e/yr)

Baseline emissions Baseline emissions include only CO2 emissions from electricity generation in fossil fuel fired power plants that are displaced due to the project activity. The methodology assumes that all project electricity generation above baseline levels would have been generated by existing grid-connected power plants and the addition of new grid-connected power plants. The baseline emissions are to be calculated as follows:

BE y = EGPJ , y EFgrid ,CM , y

Where: BEy EGPJ,y EFgrid,CM,y

Equation 3

= Baseline emissions in year y (tCO2/yr) = Quantity of net electricity generation that is produced and fed into the grid as a result of the implementation of the CDM project activity in year y (MWh/yr) = Combined margin CO2 emission factor for grid connected power generation in year y calculated using the latest version of the Tool to calculate the emission factor for an electricity system (tCO2/MWh)

Calculation of EGPJ,y The calculation of EGPJ,y is different for: (a) Greenfield plants, (b) retrofits and replacements; and (c) capacity additions. For the calculation of EGPJ,y option (a) for greenfield plants is applied, since the project activity is the installation of a new grid-connected renewable power plant/unit at a site where no renewable power plant was operated prior to the implementation of the project activity:

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EGPJ , y = EGfacility, y
Where: EGfacility,y Leakage According to the applied methodology, no leakage emissions are considered. Emission reductions

Equation 4

= Quantity of net electricity generation supplied by the project plant/unit to the grid in year y (MWh)

Emission reductions obtained during the year y (ERy, in tCO2e) are equal to baseline emissions minus project emissions:

ERy = BEy PEy

Where: ER,y BE,y PEy

Equation 5

= = =

Emission reductions in year y (tCO2/yr) Baseline emissions in year y (tCO2/yr) Project emissions in year y (tCO2/yr)

Since project emissions and leakage are 0, the emission reductions by the implementation of the project activity for each year are given by

Calculation of EFgrid,CM,y According to the Tool to calculate the emission factor for an electricity system (version 02.2.1), the baseline emission factor (EFgrid,y) is determined as a combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM) factors according to the procedure described in the Tool and explained below. In order to calculate the combined margin CO2 emission factor, the tool establishes the following six steps: STEP 1. Identify the relevant electricity systems. STEP 2. Choose whether to include off-grid power plants in the project electricity system (optional). STEP 3. Select a method to determine the operating margin (OM). STEP 4. Calculate the operating margin emission factor according to the selected method. STEP 5. Calculate the build margin (BM) emission factor. STEP 6. Calculate the combined margin (CM) emission factor. STEP 1. Identify the relevant electricity systems. For the proposed project activity, the relevant electric power system is the National Interconnected System (SNI). This choice is justified because: It is the grid to which the electricity generated by the Project will be sold; It is the spatial extent of the power plants that are physically connected through transmission and distribution lines to the project activity;

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It is the grid which serves the whole country without considerable transmission constraints.

For the purpose of determining the operating margin emission factor, the CO2 emission factor for electricity imports is 0 tCO2/MWh. Moreover, as per the Tool, electricity exports are not subtracted from electricity generation data used for calculating and monitoring the electricity emission factors. STEP 2. Choose whether to include off-grid power plants in the project electricity system (optional). Under this tool, the emission factor for the project electricity system can be calculated either for grid power plants only or, as an option, can include off-grid power plants. In Guatemala, electric generation from off-grid power units is insignificant compared with the SNI, thus only grid power plants are included in the emission factor calculation (Option I).

STEP 3. Select a method to determine the operating margin (OM) Four different procedures are indicated for determining the operating margin emission factor (EFgrid,OM,y): (a) Simple Operating Margin. (b) Simple Adjusted Operating Margin. (c) Dispatch Data Analysis Operating Margin. (d) Average Operating Margin. The tool states that the Simple Operating Margin method can only be used where low-cost/must run resources constitute less than 50% of total grid generation in: 1) average of the five most recent years, or 2) based on long-term averages for hydroelectricity production. In Guatemala, the long-term averages for hydroelectricity production are around 36.1% (see Annex 3), which is clearly below 50%; therefore the Simple Operating Margin method is applied. The tool states that for the simple OM, the simple adjusted OM and the average OM, the emissions factor can be calculated using either of the two following data vintages: Ex ante option: A 3-year generation-weighted average, based on the most recent data available at the time of submission of the CDM-PDD to the DOE for validation, without requirement to monitor and recalculate the emissions factors during the crediting period, or Ex post option: The emission factor is determined for the year in which project activity displaces grid electricity, requiring the emissions factor to be updated annually during monitoring. If the data required to calculate the emission factor for year y is usually only available later than six months after the end of year y, alternatively the emission factor of the previous year (y-1) may be used. If the data is usually only available 18 months after the end of year y, the emission factor of the year proceeding the previous year (y-2) may be used. The same data vintage (y, y-1 or y-2) should be used throughout all crediting periods.

In this PDD, the ex-ante option is selected. As a consequence, the operating margin emission factor is calculated ex-ante and will remain constant during the first crediting period. STEP 4. Calculate the operating margin emission factor according to the selected method. As explained in step 3, the Simple OM (option a) is applied.

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According to the methodological tool, the simple OM emission factor is calculated as the generationweighted average CO2 emissions per unit net electricity generation (tCO2/MWh) of all generating power plants serving the system, not including low-cost/must-run power plants/units. Also, the tool gives two different options to calculate OM emission factor, as follows: Option A. Based on the net electricity generation and a CO2 emission factor of each power unit. Option B. Based on the total net electricity generation of all power plants serving the system and the fuel types and total fuel consumption of the project electricity system. Option B can only be used if: a) The necessary data for Option A is not available; and b) Only nuclear and renewable power generation are considered as low-cost/must-run power sources and the quantity of electricity supplied to the grid by these sources is known; and c) Off-grid power plants are not included in the calculation (i.e., if Option I has been chosen in Step 2).

Since necessary data for Option A is not available, Option B is applied. Under this option, the simple OM emission factor is calculated based on the net electricity supplied to the grid by all power plants serving the system, not including low-cost/must-run power plants/units, and based on the fuel type(s) and total fuel consumption of the project electricity system, as follows:

EFgrid ,OMsimple, y =
Where: EFgrid,OMsimple,y FCi,y NCVi,y EFCO2,i,y EGy i y

(FC
i

i, y

NCVi , y EFCO 2,i , y EGy

)
Equation 6

= = = = = = =

Simple operating margin CO2 emission factor in year y (tCO2/MWh) Amount of fossil fuel type i consumed in the project electricity system in year y (mass or volume unit) Net calorific value (energy content) of fossil fuel type i in year y (GJ/mass or volume unit) CO2 emission factor of fossil fuel type i in year y (tCO2/GJ) Net electricity generated and delivered to the grid by all power sources serving the system, not including low-cost/must-run power plants/units, in year y (MWh) All fossil fuel types combusted in power sources in the project electricity system in year y The relevant year as per the data vintage chosen in Step 3

STEP 5. Calculate the build margin (BM) emission factor In terms of vintage of data, the project participant has chosen option 1 of the Tool to calculate the emission factor for an electricity system (version 02.2.1): Option 1: For the first crediting period, calculate the build margin emission factor ex ante based on the most recent information available on units already built for sample group m at the time of CDM-PDD submission to the DOE for validation. For the second crediting period, the build margin emission factor should be updated based on the most recent information available on units already built at the time of submission of the request for renewal of the crediting period to the DOE. For the third crediting period, the build margin emission factor calculated for the second crediting period should be used. This option does not require monitoring the emission factor during the crediting period.

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The sample group of power units m used to calculate the build margin is determined as per the procedure presented in the Tool to calculate the emission factor for an electricity system (version 02.2.1), consistent with the data vintage selected above, as follows: a) Identify the set of five power units, excluding power units registered as CDM project activities, that started to supply electricity to the grid most recently (SET5-units) and determine their annual electricity generation (AEGSET-5-units, in MWh); b) Determine the annual electricity generation of the project electricity system, excluding power units registered as CDM project activities (AEGtotal, in MWh). Identify the set of power units, excluding power units registered as CDM project activities, that started to supply electricity to the grid most recently and that comprise 20% of AEGtotal (if 20% falls on part of the generation of a unit, the generation of that unit is fully included in the calculation) (SET20%) and determine their annual electricity generation (AEGSET-20%, in MWh); c) From SET5-units and SET20% select the set of power units that comprises the larger annual electricity generation (SETsample); Identify the date when the power units in SETsample started to supply electricity to the grid. If none of the power units in SETsample started to supply electricity to the grid more than 10 years ago, then use SETsample to calculate the build margin. In this case ignore steps (d), (e) and (f). Otherwise: d) Exclude from SETsample the power units which started to supply electricity to the grid more than 10 years ago. Include in that set the power units registered as CDM project activities, starting with power units that started to supply electricity to the grid most recently, until the electricity generation of the new set comprises 20% of the annual electricity generation of the project electricity system (if 20% falls on part of the generation of a unit, the generation of that unit is fully included in the calculation) to the extent is possible. Determine for the resulting set (SETsample-CDM) the annual electricity generation (AEGSET-sample-CDM, in MWh); If the annual electricity generation of that set is comprises at least 20% of the annual electricity generation of the project electricity system (i.e. AEGSET-sample-CDM 0.2 AEGtotal), then use the sample group SETsample-CDM to calculate the build margin. Ignore steps (e) and (f). Otherwise: e) Include in the sample group SETsample-CDM the power units that started to supply electricity to the grid more than 10 years ago until the electricity generation of the new set comprises 20% of the annual electricity generation of the project electricity system (if 20% falls on part of the generation of a unit, the generation of that unit is fully included in the calculation); f) The sample group of power units m used to calculate the build margin is the resulting set (SETsampleCDM->10yrs). The build margin emissions factor (EFgrid,BM,y) is the generation-weighted average emission factor (tCO2/MWh) of all power units m during the most recent year y for which electricity generation data is available, calculated as follows:

EFgrid , BM , y

EG EF = EG
m, y m m, y m

EL , m , y

Equation 7

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Where: EFgrid,BM,y EGm,y EFEL,m,y m y

= = = = =

Build margin CO2 emission factor in year y (tCO2/MWh) Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) CO2 emission factor of power unit m in year y (tCO2/MWh) Power units included in the build margin Most recent historical year for which electricity generation data is available

The CO2 emission factor of each power unit m that is used in the build margin calculation is determined as per the guidance in Step 4 (a) for the simple OM option A2 proposed by the tool. Since only data on electricity generation and the fuel types used is available for power unit m, the emission factor of power unit m is determined based on the CO2 emission factor of the fuel type used and default efficiency of the power unit. Build margin is calculated as per guidance in Step 5 (a), (b),(c) and (d). STEP 6. Calculate the combined margin (CM) emissions factor The calculation of the combined margin (CM) emission factor is based on one of the following methods: a. Weighted average CM; or b. Simplified CM. In this PDD option A is selected. Weighted average CM

The tool provides the following formula:

EFgrid,CM , y = EFgrid,OM , y wOM + EFgrid,BM , y wBM

Where: EFgrid,BM,y EFgrid,OM,y wOM wBM = = = = Build margin CO2 emission factor in year y (tCO2/MWh) Operating margin CO2 emission factor in year y (tCO2/MWh) Weighting of operating margin emission factor (%) Weighting of build margin emissions factor (%)

Equation 8

The default values indicated to be used for wOM and wBM are: Wind and solar power generation project activities: wOM = 0.75 and wBM = 0.25 (owing to their intermittent and non-dispatchable nature) for the first crediting period and for subsequent crediting periods, or All other projects: wOM = 0.5 and wBM = 0.5 for the first crediting period, and wOM = 0.25 and wBM = 0.75 for the second and third crediting period, unless otherwise specified in the approved methodology refers to this tool.

The weights therefore are wOM = 0.5 and wBM = 0.5.

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B.6.2. Data and parameters fixed ex ante Data / Parameter Unit Description Source of data EFCO2,i,y tCO2/TJ CO2 emission factor of fossil fuel type i used in power unit m in year y IPCC default values at the lower limit of the uncertainty at a 95% confidence interval as provided in table 1.4 of Chapter 1 of Vol. 2 (Energy) of the 2006 IPCC Guidelines on National GHG Inventories Fuel oil (Bunker): 75.5 Diesel oil: 72.6 Coal: 89.5

Value(s) applied

Choice of data or Measurement methods and procedures Purpose of data Additional comment Data / Parameter Unit Description Source of data Value(s) applied Choice of data or Measurement methods and procedures Purpose of data Additional comment Calculation of baseline emissions EGm,y, EGk,y MWh Net electricity generated by power plant/unit m or k in year y. Here k stands for low-cost /must-run plant/unit, while m stands for others Annual reports 2007-2009. Wholesale Market Administrator. Available at: http://www.amm.org.gt/pdfs/informes/ Please see Annex 3 Data on electricity generated by the plants is used to calculate the operating margin and build margin.

Calculation of baseline emissions -

B.6.3. Ex ante calculation of emission reductions Project Emissions As explained in Section B.6.1, project emissions are zero, since the power density is considerably above 10 W/m2. Baseline Emissions The calculated CO2 combined margin emission factor of the grid for year 2010 (the most recent year for which data are available) is 0.4828 tCO2/MWh.6 Details of calculations are given in Appendix 3 and Excel file EF Guatemala_02-05-12.xls.

See Excel file EF Guatemala_02-05-12.xls

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Based on equations 1 and 4, and using the expected annual electricity generation for the project activity of 566,435 MWh/year, the baseline emissions are estimated as follows: ERy = BEy = EGPY,y x EFgrid,CM,y = 566,435 MWh/year x 0.4828 tCO2/MWh = 273,500 tCO2/year.

B.6.4. Summary of ex ante estimates of emission reductions Baseline emissions (t CO2e)

273,500 273,500 273,500 273,500 273,500 273,500 273,500 1,914,503

Year
01/07/2016 30/06/2017 01/07/2017 30/06/2018 01/07/2018 30/06/2019 01/07/2019 30/06/2020 01/07/2020 30/06/2021 01/07/2021 30/06/2022 01/07/2022 30/06/2023

Project emissions (t CO2e)

0 0 0 0 0 0 0 0

Leakage (t CO2e)
0 0 0 0 0 0 0 0

Emission reductions (t CO2e)

273,500 273,500 273,500 273,500 273,500 273,500 273,500 1,914,503

Total Total number of crediting years Annual average over the crediting period

7
273,500

273,500

B.7. Monitoring plan B.7.1. Data and parameters to be monitored Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures Monitoring frequency QA/QC procedures EGPJ,y = EGfacility,y MWh/yr Quantity of net electricity generation supplied by the project plant/unit to the grid in year y Electricity meters 566,435 Measurement of the quantity of electricity supplied by the project plant/unit to the grid Continuous measurement by electricity meters and at least monthly recording Sales record of electricity to the grid is used to ensure the consistency. Moreover, the measurement will be cross-checked with generation certificates issued by the AMM at the request of the project proponent Calculation of baseline emissions -

Purpose of data Additional comment

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Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures Monitoring frequency QA/QC procedures Purpose of data Additional comment B.7.2. Sampling plan

APJ m2 Area of the reservoir measured in the surface of the water, after the implementation of the project activity, when the reservoir is full Project site 35,343 Measured from engineering plans and/or map Yearly Calculation of project emissions -

No sampling is involved in the project.

B.7.3. Other elements of monitoring plan The Monitoring Plan of the project specifies the continuous monitoring of electricity generation of the project activity in order to ensure that the net electricity delivered to the grid is monitored completely within the crediting period. In each vintage year, the amount of emission reductions obtained by the project activity will vary in accordance with the total measured power generation. A. Monitoring of the emission reductions A.1 Objective:

The objective of the present plan is to assure the complete, consistent, clear, and accurate monitoring and calculation of the emission reductions within the project activity boundaries, during the crediting period. A.2 Methodology

According to the approved consolidated baseline and monitoring methodology ACM0002 (version 13.0.0), for the monitoring methodology all data collected as part of monitoring should be archived electronically and be kept at least for 2 years after the end of the last crediting period. Moreover, all measurements should be conducted with calibrated measurement equipment according to relevant industry standards. A.3 Boundaries

The boundaries of the project activity will remain constant during the entire crediting period. A.4 Equipment to be used

Electricity generated by the plant would be measured using a meter which measures the electricity that is produced within the boundaries of the project activity and exported net to the grid.

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The meter complies with the Commercial Coordination Norm No. 14 of the Wholesale Market Administrator (AMM according to its Spanish abbreviation)7 and with IEC 687 or ANSI / IEEE 12.20, in regard to metering and taking into account that the kind of accuracy should be 0.2% and number of elements must be three (3). According to Norm No. 14, the accuracy of measuring elements should be: IEC 185/186/044-1 Accuracy type (%) Load (Burden) 0.2 100 VA 0.2 50 VA ANSI/IEEE C57.13 Accuracy type (%) Load (Burden) 0.3 75 VA 0.3 45 VA

PT CT

Whilst, the energy data record should be: The pulses generated by the energy meter may be stored in the same apparatus or be passed on to independent registrars collect information from different meters located on the same site. In both cases the pulses must be stored in separate channels for each scale to record, at times adjustable from 15 to 60 minutes. Registrars must have non-volatile memory that allows storing information from the past thirtyseven (37) days at least, for two-way considering the use of six (6) channels and capable of integrating the records every 15 minutes, unidirectional considering the use of three (3) channels and capable of integrating the records every 15 minutes. They should have built-in battery to keep data stored in memory for at least seven (7) days before the auxiliary power failure.

The meter accuracy will be checked by AMM in periodic verifications at the facilities, at least once a year and according to the technical procedure8 for periodic verifications at the commercial measurement points of the wholesale market in Guatemala. The verification is made by the Wholesale Market Manager or qualified companies for this purpose, which shall be approved by the Board of the AMM. A.5 Installation point of the electricity meter

The electricity meter will be installed in the San Juan Ixcoy substation located the municipality of Santa Cruz Barillas in Huehuetenango.9

7 8

Available at: http://www.amm.org.gt/pdfs/normas/ncc-14.pdf (Accessed: April 12, 2012) Available at: http://www.amm.org.gt/pdfs/proc_tecnicos/Verificaciones_Puntos_Medicion_Comercial_AMM.pdf (Accessed: April 12, 2012) 9 The meter will be located following the current regulation Norma de Coordinacin Comercial nmero 14. Art. 14.2 bis. Available at: http://www.comegsa.com.gt/comegsa/files/ncc-14%20actualizada.pdf (Accessed: April 17, 2012).

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A.6

Personnel responsible:
Plant Manager Collection, review and analysis of the monitoring parameters during the vintage year; Responsible for monitoring procedures; Data verification

CDM Coordinator Calculation of emission reductions; Development of Monitoring Report

Instrumentation and Control Engineer Measurement of the energy produced

Figure 3. Operational structure of the monitoring plan Responsible personnel: The Plant Manager is responsible for the Monitoring Plan, ensuring its effective functioning, as well as corrective measures that would be necessary. He is also in charge of the verification of energy measurements; checking and verifying meter readings issued by the Instrumentation and Control Engineer and crosschecking with both the monthly measurements from the AMM and the energy invoices of the allocated energy. The CDM Coordinator is in charge of calculating the emission reductions of the monitoring period and preparing the monitoring report. The Plant Manager is responsible for verification of energy measurement. It is responsible of checking and verifying the meter readings download executed by the Instrumentation and Control Engineer. The Instrumentation and Control Engineer is responsible for electricity generation reading and for processing the energy produced by La Cascata from the meter installed in the San Juan Ixcoy substation located in Huehuetenango on a monthly basis. Records of the meter are downloaded in a spreadsheet for measurement control and the data discharged from the meter is stored electronically.

Personnel who carry out any monitoring function are trained in CDM. New personnel have to undergo a training program and are trained in the specific skills required to carry out the Monitoring Plan. A.7 Measuring and calculation procedure

The first step is the measuring process, followed by verification of the measurement, calculation of the emission reductions, and finally, review and analysis of results.

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A.7.1

Measurement

The Plant Manager obtains the information from the meters installed in the San Juan Ixcoy substation located in Huehuetenango on a monthly basis, recording those readings in the spreadsheet for measurement control and storing the data electronically discharged from the meter. This process takes place during the first week of the following month. A.7.2 Calculation of energy produced and verification

The measurement crosschecking is carried out as shown in the following table which will be the basis for the electronic spreadsheets used for measurement and control:
La Cascata Hydroelectric Project measurement control A B C Month La Cascata AMM commercial measurement measurement (MWh) (MWh) Year: D La Cascata validated generation (MWh) If B=C, measurement is validated. If not, AMM value will be used.

Annual total

In case there is a discrepancy between the La Cascata measurement and the AMM commercial measurement, the Plant Manager will determine the cause of the problem. If a calibration error is found, the meter will be recalibrated. Other corrective actions will be undertaken, as needed, depending on the problem identified. A.7.3 Calculation of emission reductions

The CDM Coordinator calculates the emission reductions for each year of the crediting period using the emission factor determined by the ex-ante option, according to Section B.6.3. SECTION C. Duration and crediting period C.1. Duration of project activity C.1.1. Start date of project activity Expected start date: 19/09/12 C.1.2. Expected operational lifetime of project activity 50 years

C.2. Crediting period of project activity C.2.1. Type of crediting period Renewable

C.2.2. Start date of crediting period 01/07/2016

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C.2.3. Length of crediting period 7 years SECTION D. Environmental impacts D.1. Analysis of environmental impacts Guatemalan environmental legislation includes a wide range of legal dispositions related to environmental assessment and protection. The dispositions start with the Guatemalan Political Constitution. (1985) and continues with a series of Laws, Decrees, Regulations, Agreements, etc. Article 97 of the Constitution denominated Environment and Ecological Balance serves as the basis for environmental legislation, which has been developed since 1986. In that year the National Environment Commission (CONAMA according to its abbreviation in Spanish) promulgated the Law of Protection and Enhancement of the Environment by means of Decree No. 68-86, Article 8 states that: "for any project, work, industry or any other activity which by its nature can cause damage to renewable or nonrenewable natural resources, environment, or changes to landscape and cultural resources of national heritage, a prior Environmental Impact Assessment (EIA) should be developed and carried out by technicians in the field and approved by CONAMA.10 In 2002, through Decree No. 90-2000, the Ministry of Environment and Natural Resources (MARN) was created as the ultimate authority in environmental matters in the country, acquiring in this way all functions that were previously the purview of CONAMA. The process of Environmental Impact Assessment is regulated by MARN using the Decree 23-2003: Evaluation, Control and Environmental Monitoring Regulation. This Regulation establishes all procedures for the evaluation, control and follow-up. Article 33 of the Decree requires the proponent and MARN to create a public participation process within the Environmental Impact Assessment. The Evaluation, Control and Environmental Monitoring Regulation was adapted with minor changes as Decree No. 704-2003, establishing procedures for environmental evaluation. Finally, the last Decree No. 431-2007 establishes a unique and coordinated system for previous identification, prevention, supervision, control and correction of negative environmental impacts derived from human activities.11 An Environmental Impact Assessment (EIA) study for the implementation of La Cascata Hydroelectric project was prepared based on the Terms of Reference Guidelines for the Environmental Impact Assessment Elaboration12. The company SIGA (Sistemas Integrales de Gestin Ambiental, S.A) was authorized to carry out the study following the official guidelines. This study presents the negative and positive impacts caused by the project in its different stages: final design, construction, operation, maintenance, and abandonment. The methodology consists in successively implementing the following tools: 1) Checklist and 2) Effects Identification Interactive Matrix. The first method considers all the impacts and environmental factors that should be included initially in the study. A list was prepared including all the project activities and environmental factors that could be affected. Only the most relevant activities and factors were considered in the interactive matrix. As a second step the matrix was implemented, there were identified weighting criteria. From this matrix, the main impacts were found in the following components:
10

Decree No. 68-86 Law of Protection and Enhancement of the Environment. Available at: http://www.marn.gob.gt/aplicaciones/normas10g/pdf/377.pdf (Accessed: April 14,2011) 11 Decree No. 431 2007. Available at: http://www.ncenterprise.com/uploads/CalidadAmbientalGuatemala.pdf. (Accessed: January 9, 2012). 12 Official Guide, MARN. 2004.

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Soil (erosion) Air (particulate matter) Landscape Noise Socioeconomic

Based on the analysis of the impacts generated by the project, an action plan was proposed to mitigate the impacts for each of the environmental components. D.2. Environmental impact assessment The EIA for La Cascata Hydroelectric Project identified the possible environmental impacts of the Project in the construction, operation and abandonment of the installation, with the objective of proposing measures to mitigate such impacts. The results of the environmental evaluation showed the necessity of developing and implementing actions and programs to address negative impacts of the project. The following mitigation actions are a summary presented in the EIA, taking into account all the environmental components of the project:
Table 7. Potential impacts and mitigation measures Component Potential impact Mitigation measure For the emissions from mobile sources: All mobile sources used during construction cannot release to the atmosphere particulate matter above the permissible international levels. Vehicles and utilized equipment should be schedule in a maintenance program before the works begin. Vehicles not controlling their emissions will be separated from their functions for being reviewed, fixed and adjusted before entering again to the transport service. All vehicles will have installed silencers equipment. Oils and lubricants and waste material from maintenance and cleaning should be in containers tightly closed. These containers must have a label to easy identify the content; label must include date and waste origin. Disposal of construction waste will be done in proper places. At the end of the work/maintenance the contractor should have a proper disposal of the generated waste. Material excavated will be withdrawn immediately from the work area and located in places previously selected. The oily liquid waste must be in containers tightly closed.

Air quality

Impact on air quality

Soil and geology

Impact on soil quality and geoforms

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Superficial water degradation Water quality Wastewater and ground water

Flora

Vegetal cover loss

Fauna

Alteration of structure and composition

Health and hygiene

Social Impacts on local groups Employment generation Increase in trade and services

Landscape

Alteration of landscape

Limit strictly the land movement in the land adjacent to the project activity. Waste from the construction must be separated in categories. Take measures to ensure the accurate water captation Ecological flow for its use downstream during drought periods; this will minimize the conflict with local farmers who use water for agricultural practices. Take measures to avoid damaging the agriculture areas outside of the project. Use proper techniques for cleaning and clearing. After construction phase, it will begin the restoration phase. Some conservation plans will be developed to protect endangered species. Limit strictly the construction and operation activities inside the works area in order to avoid the impacts of the wildlife. Avoid noise intensification Some conservation plans will be developed to protect wildlife habitat. Health and occupational safety measures implemented Contractors will comply with the Work Safety Regulations during the electric installation works. Contractors will impose to the employees, sub-contractors, suppliers and related agents to the contract execution the compliance of the health and safety conditions included in the contract. Determine the fair price for the loss or damage land due to the works. Employment opportunities during the construction stage will be mainly for the local inhabitants. Hire local inhabitants in other activities, if it is required. Protect flora and fauna Develop conservation projects in the area It will be prohibited to hunt and deforestation

SECTION E. Local stakeholder consultation E.1. Solicitation of comments from local stakeholders The project proponent has carried out several meetings since 2008 with the local communities in order to explain and sign agreements with the people directly affected by the project implementation. The stakeholders were invited to participate following the next steps: 1) The project proponent have an

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interview with the members of the Communal Development Council (Consejo Comunitario de Desarrollo, COCODE) of each community involved. The COCODEs are a government subsidized community project organization that supports projects ranging from paving roads to starting social programs. They act based upon majority decisions and are a well-respected board of local men.13 During this meeting, the project is explained to the COCODE members. Then, the COCODE members share the information with the rest of the inhabitants of the community. Afterwards, the project participant is invited to explain the project to the local inhabitants, if needed. The municipalities involved in the stakeholder consultation were San Pedro Soloma, San Juan Ixcoy and Santa Eulalia. After the entrance of the new municipal board, Santa Eulalia ratified the agreement previously signed with the project proponent (February 14, 2012). The municipality of San Pedro Soloma and project participant signed a collaboration agreement in 2008; however after the entrance of the new municipal board, the agreement was not ratified. Currently, the project proponent is still negotiating with the municipalities San Juan Ixcoy and San Pedro Soloma. The project proponent is following all procedures to guarantee a correct and transparent stakeholder consultation process. E.2. Summary of comments received Some comments were received from the San Pedro Soloma community in which the project participant prepared a video to show the project to the communities. Inhabitants were concerned about no receiving the complete information from Enel in regard to the project activity. On the other side, other opinions expressed positive comments about the construction of a highway and new access roads, as well as, the construction of the bridge on the Rio Quisil, offered by the project proponent. E.3. Report on consideration of comments received The project proponent is still negotiating with San Pedro Soloma and San Juan Ixcoy communities. The project proponent has received the ratification of Santa Eulalia municipality to support the project in the area. SECTION F. Approval and authorization Project participant will start the process to obtain the letter of approval. -----

13

Manna Project International. Available at: http://www.mannaproject.org/guatemala-partners. Accessed: April 24, 2012).

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Appendix 1: Contact information of project participants Organization name Street/P.O. Box Building City State/Region Postcode Country Telephone Fax E-mail Website Contact person Title Salutation Last name Middle name First name Department Mobile Direct fax Direct tel. Personal e-mail Enel Guatemala, S.A. Diagonal 6, 10-65 Zona 10 Centro Gerencial Las Margaritas, Torre I, Nivel 8, Oficina 801 Guatemala Guatemala 01010 Guatemala +502 2327-7000 +502 2339-3176 oswaldo.smith@enel.com www.enelgreenpower.com General Manager Mr. Smith Oswaldo +502 5369-5962 +502 2339-3176 +502 2327-7000 Ext. 7018 casiopea.ramirez@enel.com

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Appendix 2: Affirmation regarding public funding No Funding from Annex I parties is available for the project activity.

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Appendix 3: Applicability of selected methodology The following data corresponds to the power grid of Guatemala. The individual data sources are indicated in the Excel spreadsheet.14
Table 8. Long-term hydro power production (2001-2010) Electricity Generation (SEN) Hydropower Total generation (w/out imports) Long-term hydro average (10 yrs) Unit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 GWh 2,277 2,122 2,187 2,565 2,939 3,303 3,031 3,675 2,942 3,849 GWh 6,383 6,972 7,284 7,691 8,049 8,165 8,756 8,717 9,046 8,893 % 36.1%

Table 9. Power generation by fuel type Power generation by fuel type Hydropower Geothermal Bagasse Coal Fuel Oil Diesel Oil Imports3 LC/MR no LC/MR TOTAL Unit GWh GWh GWh GWh GWh GWh GWh GWh GWh GWh 2008 3,675 294 862 1,139 2,729 19 4.70 4,831 3,892 8,722 2009 2,942 387 1,114 733 3,835 36 37.20 4,442 4,641 9,083 2010 3,849 271 1,558 1,170 2,039 6 362.30 5,678 3,577 9,255

Table 10. Fuel consumption by fuel type Fuel consumption Fuel oil Diesel oil Bagasse Coal Unit barrils gallons tons tons 2008 3,965,350 1,360,795 3,335,014 451,481 2009 5,884,390 4,521,106 4,240,511 294,183 2010 2,870,913 464,912 6,115,301 491,391

Table 11. CO2 emissions by fuel type CO2 emissions Fuel oil Diesel oil Bagasse Coal Total Unit tCO2 tCO2 tCO2 tCO2 tCO2 2008 1,827,907 12,694 0 804,110 2,644,711 2009 2,712,526 42,176 0 523,955 3,278,657 2010 1,323,404 4,337 0 875,192 2,202,933

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Further information in Excel file EF Guatemala_02-05-12.xls.

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Table 12. New power plants installed

Op. start 2010 2009 2008 2008 2008 2008 2007 2007 2007 2006 2006 2005 2005 2005 2004 2004 2004 2003 2003 2003 2002 2002 2001 2000 2000 2000 1999 1998 1998 Generation (MWh) 259,556 38,299 41,857 7,797 12,443 57 140,819 8,906 144,879 57,306 23,708 35,213 10,196 310,536 1,386 233,372 643,014 32,383 42,324 63,734 11,263 53,805 942,539 454,749 114,429 94,400 BM order 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Accum. MWh (BM order) 1,755,911 38,299 80,156 87,953 100,396 100,453 241,272 250,178 395,057 452,364 1,779,620 487,577 487,577 497,773 808,309 808,309 809,696 1,452,709 1,485,093 Gen type1 Hydro COG ST ST ICE ICE Hydro ICE GEO Hydro Hydro Hydro Hydro ICE Hydro ST COG Hydro ICE ICE Hydro Hydro COG Fuel type Biomass Coal Fuel oil Fuel oil Diesel Fuel oil Fuel oil Biomass Fuel oil Fuel oil Biomass Efficiency (%) 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0% EF (tCO2/GJ) 0.0895 0.0755 0.0755 0.0726 0.0755 0.0755 0.0755 0.0726 TOTAL Gen included (MWh) 259,556 38,299 41,857 7,797 12,443 57 140,819 8,906 144,879 57,306 23,708 35,213 0 10,196 310,536 0 1,386 643,014 32,383 Emissions included (tCO2) 0 0 34,580 5,434 8,672 38 0 6,207 0 0 0 0 0 7,106 0 0 0 448,131 21,702

PLANT HIDRO XACBAL (CDM project) TRINIDAD LA LIBERTAD ARIZONA VAPOR GECSA 2 COENESA EL RECREO GECSA ORTITLAN MONTECRISTO CANDELARIA (CDM project) POZA VERDE PALN 2 ELECTRO GENERACIN CRISTAL BUNKER RENACE DARSA SAN DIEGO EL CANAD (CDM project) ARIZONA ELECTRO GENERACIN LAS VACAS (CDM project) MATANZAS + SAN ISIDRO (CDM project) TULUL PASABIEN SAN JOS POLIWATT ZUNIL SECACAO LAS PALMAS

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1,496,355

11,263 1,779,620

0 531,870

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CDM Executive Board Table 13. Summary of the CM Emission Factor 2008 EF grid,OMsimple,y Generation EF OM Simple 08,09,10 EF BM 07 0.6796 8,722.00 2009 0.7065 9,083.30 0.6668 2010 0.6159 9,255.20 tCO2/MWh tCO2/MWh

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0.2989

EFCM (weight 0.5)

0.4828

tCO2/MWh

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Appendix 4: Further background information on ex ante calculation of emission reductions No additional information presented here. All background information on ex ante calculation of emission reductions can be found in section B.6.3 of the PDD.

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Appendix 5: Further background information on monitoring plan No additional information presented here. All monitoring information can be found in section B.7 of the PDD.

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Appendix 6: Summary of post registration changes ----History of the document Version 04.1 04.0 Date 11 April 2012 EB 66 13 March 2012 Nature of revision Editorial revision to change version 02 line in history box from Annex 06 to Annex 06b. Revision required to ensure consistency with the Guidelines for completing the project design document form for CDM project activities (EB 66, Annex 8).

03

EB 25, Annex 15 26 July 2006 02 EB 14, Annex 06b 14 June 2004 01 EB 05, Paragraph 12 03 August 2002 Decision Class: Regulatory Document Type: Form Business Function: Registration

Initial adoption.