Bundled Wind Power Project in Tamil Nadu, India, co-ordinated by Tamil Nadu Spinning Mills Association (TASMA-II)
Host party(ies) India
Methodology(ies) ACM0002 ver. 11
Standardised Baselines N/A
Estimated annual reductions* 759,344
Start date of first crediting period. 01 Jun 10
Length of first crediting period. 10 years
Period for comments 09 Jun 10 - 08 Jul 10
PP(s) for which DOE have a contractual obligation Tamil Nadu Spinning Mills Association
The operational/applicant entity working on this project has decided to make the Project Design Document (PDD) publicly available directly on the UNFCCC CDM website.
PDD PDD (2675 KB)
Local stakeholder consultation report: N/A
Impact assessment summary: N/A
Submission of comments to the DOE/AE Compilation of submitted inputs:
•	The PDD claims  that  , “Financial indicators like IRR/DSCR/NPV are not applicable as the primary objective of TASMA is to generate power that is reliable to run the textile and allied businesses of its members i.e. the investment is to gain low cost access to reliable power to run the members textile operations and not to achieve higher return on investment by entering into new power generation business. Hence the level zed cost of electricity generation (INR/kWh) is the most suitable financial indicator in this decision making context “ . The PDD also claims “ that , The energy generated by the project activity is consumed by the promoters at their mills by way of Energy Wheeling Agreements12 or sold to TNEB  “
•	If the primary objective of this bundle is to generate power and gain access to low cost power,   did the DOE check how the companies who are selling power to EB can fit into this group? How many companies in this group are selling to EB?  What is their selling price to EB  ? How did the levelised costing influence their decision  making  ?
•	As per PDD “The levelized cost of electricity generation using Coal as the energy source calculated using the above values comes out to be 2.258 INR/kWh. “ pertaining to 2004 values . How this  can be compared with financial analysis  of WTGs that ends in 2007. ? 
Submitted by: B.Subramanian

The investment analysis which compares (a) 120 MW coal plant  referenced in 2003– with ( b) 460 MW fro  800+ WTGs  owned by 300+  people in a span of 2003-2007 – makes a mockery of  additionality tool provided by UNFCCC . The PDD concludes that the members had a feasible , cost effective choice of (a)  , and they chose (b) because of CDM consideration . Is this a credible comparison ?  Was the following points considered by the DOE. Is coal plant a credible alternative?


·         How a investment proposal of 130 MW single plant , in a single location with a single investment proposal – can be compared with 800 turbines invested by 300 odd varied people in different locations in different time span from 2003-2006?

·         For (a) ,  the coal plant the selected supplier will be one  and the investor would be a single entity ,  where as  for (b) , the suppliers will be many and the investors directly  make the payment to the supplier .. How was the funding envisaged in (a) , the equity funding and the debt funding ?  Are these two situations truly comparable?

·         Was the land requirement , water requirement considered?

·         The  environmental clearance for commissioning and running of  a coal plant is not comparable with WTG . With WTG  it is much easier .

·         How a levelised  costing of 2004  of (a) can be compared with 2003-2007 levelised cost of (b)?

·         What would be the levelised cost of the  of  (a) , the coal plant if it  is commissioned in 2007 ?

·         Even for levelised cost , the cash flows such us income tax shield and TUF  benefits should be considered , was it considered . ?

·         How  many members in this project sell to TNEB . Will coal pant be a credible alternative for them ? 
Submitted by: Ramya Sriram

The PDD declares that “The TASMA member units, keeping in mind the provisions of then impending Electricity Act, have been seriously considering captive power generation as an option as a separate single industrial unit managed by Association. TASMA has considered various options of captive power generation5. Pending final decision on the same due to statutory constraints this proposal of the members was not able to be considered “

This clearly admits the captive power generation option as a separate unit was not feasible due to statutory constraints and was discarded....

But in additionality  argument, a   120 MW single power plant is   taken an as the only alternative to be compared  with the individual WTGs  But the PDD in the beginning itself states that proposal for  power plant was  not considered , So obviously WTG  was the only choice available for the members  Which of  these statements is to be believed  
Submitted by: Divya Rao

The long list of events given in the PDD covering a span of 2001-2010 (10 Years !) ,  appears to lack credibility of real  action.  The list of events is made up differently from the previously hosted PDD.  How is it possible for real actions to change from the previous PDD and current PDD.  Also the  events are not given  in a completely transparent way . One wonders how the DOE checked the veracity of these statements before publishing the PDD 
Submitted by: Siva Kumar

I am surprised to see the additionality argument for the project. It looks like the project developer is trying to tell us a story from the dream world. TASMA will build up a coal based power plant.  Whether TASMA as a association does have the desire and capability to establish a coal based power plant? Does TASMA deed reflects the change in objective for this profit making venture?

Apart from the CDM benefits the essential factor considered by the WTG manufacturers is the accelerated depreciation benefits and the 80 IA benefits which will accrue due to the installation of the wind mills. It is important to note that the company which installs the wind mill can only claim the 80 IA benefits and the accelerated depreciation benefits. However we fail to understand how the consultant can argue that TASMA as an operating entity could have constructed a coal based power plants as in such cases the project developer will not be able to claim the 80 IA benefits and the accelerated depreciation benefits and CDM revenue is only the incentive for wind projects. This means that the alternative doesn’t provide the same kind of financial services to the project developer. Hence we feel that the alternative cant be a possible alternative.

It has been mentioned that the wind mills installed in the year 2003-2005 have been included in TASMA II project activity because they couldn’t submit the documents necessary within the stipulated timeframe for them to be included in TASMA I project activity. Under such circumstances it is evident that the electricity requirement for the investors was in the years in which the wind mills have been established. How can the consultant say that TASMA would have constructed a coal based power plant of 120 MW in such cases where the PP’s from 2001-2005 could have as well been in the TASMA I bundle had they managed the required documents. Moreover we fail to understand the logic behind TASMA constructing 120 MW power plants and giving electricity to customers who have installed wind mills at different junctures of points during the years 2001 till 2007. 

The same applies to the wind mills installed after 2007 too. It can be noted that the investment in the wind mills by the project developers has not been made at the same time, it was made as and when the project developer felt it was necessary i.e. the investment was made in stages. If the DOE does a through check at the P.O.’s and commission dates of the wind machines, they can identify a pattern where most of the wind machines will be commissioned either in September or in March depending on the balance sheet for the particular year of the investing company to claim the accelerated depreciation benefits for the company. Consider such circumstances it is hard to believe that TASMA has had a foresight that 450 MW of wind mills installations will happen and they will have to build a 120 MW coal based power plant. More than that it is impossible to digest the fact that TASMA would have constructed a 120 MW coal based power plant and wait for the wind developers to invest in the wind mills in different stages of time spanning from the year 2003 till 2007.

It is important to note that all the documents required by the CDM process such as the loan documents, the commissioning certificates, the clearances from the pollution control board and the land documents will be available to the wind mill owner at the time of commissioning of the wind mill. We then fail to understand what the delay was for the customers who installed the wind mills during the period of 2003-2006 in submitting the documents for them to be included in TASMA 1 bundle which is registered with UNFCCC.
The registered PDD under TASMA 1 got registered with the additionality based on IRR. The current bundle is based on levelised cost of generation. TASMA says that it will build up a power plant of capacity 120 MW. Thus, TASMA has two case 1) registering wind mills for some set of companies under TASMA 1 who has considered IRR additionality and did not considere getting power from 120 MW coal based power plant in the absence of the project2) another set of companies who wanted to take the power from 120MW coal based  power plant that would have been built up by TASMA. How TASMA come to know about the 120 MW power generation requirements for all the clients’ part of the current PDD? why TASMA didn’t include the TASMA 1 client  in the business plan for generation of power from coal based power plant? How TASMA come to know in 2003 about the electricity generation requirement of clients who has installed wind mills in subsequent years. Whether all the clients part of the project was in a position to give their commitment for power requirements during the year 2003? what about the client who is selling the power to grid? why they have put up their commitments in advance for certain percentage of electricity generation?  what are the supporting that is available to substantiate your reasoning for the above queries? It looks like  TASMA and consultants are writing a series fairy tale and thinking that the stakeholders are fool.  

It can be presumed that for most of the wind mills the debt service obligation must have been completed by this time. In such cases it is difficult to understand why the CDM revenue is necessary as the only expense after serving the Debt obligation is only towards the O&M maintenance which is very minimal when compared to the revenue obtained from the sale of electricity.

As per the guidelines on assessment of investment, version 03, EB 51, “The benchmark approach is therefore suited to circumstances where the baseline does not require investment or is outside the direct control of the project developer, i.e. cases where the choice of the developer is to invest or not to invest.” Over here the baseline as per ACM0002 which has been pre defined is the generation of electricity from the grid which is outside the direct control of the project developer. Moreover even if we consider the coal based power plant as the alternative which is not at all factual this is also outside the control of the project developer as the coal based power plant is managed by TASMA and not the wind mill owners who are the project developers. Hence we fail to understand how investment comparison analysis can be applied in the project.

The recent rejections of EB in considering the new Greenfield coal based power plant as an alternative scenario for the WHRB based power plants should also be kept in mind by the DOE in evaluating such projects. It is not without any logic that EB is not allowing a new Greenfield coal based power plant as a possible alternative scenario to the WHRB power plants. In such cases how can the consultant argue that the Coal based power plant can be a possible alternative scenario for wind based power plant.
Submitted by: Lallu Ghodbole

The comment period is over.
* Emission reductions in metric tonnes of CO2 equivalent per annum that are based on the estimates provided by the project participants in unvalidated PDDs