1. CDMability of off-grid electrification projects
Pallav Purohit
International Institute for Applied Systems Analysis (IIASA), Austria
Prepared for - International workshop on off-grid electrification in South Asia
CEPMLP, University of Dundee, UK
6th July 2011

2. Contents
 Why off-grid electrification?
 Clean Development Mechanism (CDM)?
 Off-grid rural electrification projects under CDM
 CDM Programme of Activities (PoA)
 Summary

3. Why off-grid electrification?
• Over 1.4 billion people – over 20% of the global population -
lacks access to electricity (~ 85% of them in rural areas).
• Over 2.7 billion people - some 40% of the global population –
rely on traditional use of biomass for cooking.
• Over 2.0 million premature deaths per year are associated with
the burning of solid fuels indoors in unventilated kitchens.
• Over 400 million people not having access to electricity in 2009,
India hosts the world’s largest population deprived of electricity.
• Over 800 million people in India relying on biomass for cooking
in traditional cookstoves.
Source: IEA(2010); WHO (2009)

4. Number of people without access to electricity
in rural and urban areas (million)
Source: IEA(2010)

5. Overview of Indian power sector
Thermal Hydro Renewable Nuclear Total
113,559 MW 37,567 MW 18,455 MW 4,780 MW 174,361 MW
As on 30th April 2011
Source: CEA (2011)

6. Installed capacity of renewables in India
- until 31st March 2011
Grid-interactive renewable power Off-Grid/Distributed Renewable Power
(19974 MW) (including Captive/CHP Plants)
(511 MW)
Source: MNRE (2011)

7. Status of renewables in India
Annual global (total + diffue) radiation
varies from 1600 to 2200 kWh/m2. The
equivalent energy potential is about
6,000 million GWh of energy per year.
National Solar Mission
20000 MW of solar power
2000 MW solar PV for off-grid applications
20 million m2 solar thermal collector area
20 million solar lighting systems for rural areas
Source: MNRE (2011)

8. Financial attractiveness of solar energy technologies?
Source: Purohit and Michaelowa (2006)

9. Clean Development Mechanism
CDM: a development tool or a market mechanism?

10. CDM Project Cycle

11. Key CDM terms - I
• Baseline
– Emissions level that
would have existed in the
business-as-usual
CO2 emissions
Business as usual:
situation (in the absence baseline
of the CDM project)
• Additionality
Reduced emissions
– A CDM project should be when credited: CERs
motivated by the revenue
Project implemented
coming from the CER
sales. If it is already an
Year
attractive business
without the CER benefit,
it is not additional

12. Key CDM terms - II
• Crediting period
– Duration for which a CDM project can generate CERs. Either
10 years or three times 7 years
• Small-scale projects
– Projects of less than
• 15 MW for renewable energy
• 60 GWh annual savings for energy efficiency
• 60,000 t annual CO2 reductions for other types
• SSC projects benefit from
– simplified rules, especially pre-defined baseline methodologies
– lower fees

13. Key CDM statistics - I
Annual average CERs Expected CERs until
end of 2012
CDM project pipeline: N/A > 2,700,000,000
> 5600 of which:
--- 3212 are registered 485,818,373 > 2,020,000,000
--- 108 are requesting registration 10,342,872 > 10,000,000
Source: cdm.unfccc.int/

14. Key CDM statistics - II
63% (3952) renewable
energy projects out of
6292 CDM projects in
the pipeline constitute
35% CERs.
1.9% (117) HFCs,
PFCs and N2O
reduction projects
constitute 27% CERs.
Off-grid electrification
projects are rare in the
project pipeline.
Source: Fenhann (2011)

15. Off-grid solar energy projects for rural electrification
Globally, 103 solar
Solar projects in the pipeline
(103) can generate 5.9 million
CERs until 2012.
Solar PV Solar thermal
(73) (30)
Solar PV Solar water heating
(71/26) (13/3)
Solar PV water Solar cooking
disinfection (2/0) (12/5)
Solar thermal power
(3/2)
Solar thermal
(2/0)
• Out of 36 registered solar energy projects under CDM pipeline until 1st June 2011, only three
projects (2 from India and 1 from Morocco) are based on off-grid electrification - generating
394,000 CERs until 2012 and 897,000 CERs until 2020.
Source: Fenhann (2011)

16. Project size, types & total transaction costs
Size Type Reduction Transaction
(t CO2 per yr) cost
(€/tCO2)
Very Large Large hydro, geothermal, >200,000 0.1
landfill methane
Large Wind power, solar thermal, 20,000 – 200,000 0.3 – 1
energy efficiency
Small Boiler conversion, DSM, 2000 – 20,000 10
small hydro
Mini Energy efficiency in 200 – 2000 100
housing, mini-hydro
Micro PV < 200 1000
Source: Michaelowa et al. (2003) >800 SHS of 37 Wp

17. Break-even price of CER for solar energy technologies
Break-even price of CER <15 Euro??
Source: Purohit and Michaelowa (2006)

18. Barriers to the deployment of off-grid renewable
energy based CDM projects
Technology adoption and diffusion
(characteristics of the
technologies, adopters etc.)
High up-front (capital) cost, high
transaction cost, risk for investors,
financing, etc.
High transaction
cost, risk for
investors (plitical, CER price, renewable
market, etc.), low energy potential, high
CER price etc. risk, etc.
Source: Río (2005)

19. Programme of activities (PoA)/
CDM programme activity (CPA)
• A programme of activities (PoA) is
– a voluntary coordinated action;
– by a private or public entity which coordinates and implements any
policy/measure or stated goal (i.e. incentive schemes and voluntary
programmes);
– which leads to GHG emission reductions or net removals by sinks
that are additional to any that would occur in the absence of the
PoA;
– via an unlimited number of CDM programme activities (CPAs) .
• A CDM programme activity (CPA) is :
– a project activity under a programme of activities (PoA),
– a single, or a set of interrelated measure(s), to reduce GHG
emissions or result in net removals by sinks, applied within a
designated area defined in the baseline methodology.

20. PoA distribution by type

21. Status of CPA projects from South Asia
32% projects are on
efficient lighting and
improved cookstoves
Type of projects Bangladesh India Nepal Pakistan Sri Lanka
Biomass energy 0 2 0 0 2
EE households 4 7 0 2 0
EE industry 0 2 0 0 0
EE service 0 2 0 0 0
Energy distribution 0 2 0 0 0
Landfill gas 0 2 0 0 2
Methane avoidance 2 2 2 2 0
Solar 2 4 0 0 0
Total 8 23 2 4 4
20% projects
are on biogas
SHS projects

22. Summary
• Off-grid electrification projects especially contribute to sustainable
development but are rare in the CDM project pipeline.
• CDM in its current state and design has typically failed to deliver the
promised benefits with regard to development objectives in rural areas.
• For the renewable energy based off-grid electrification projects in rural
areas
– A more credible roadmap towards post 2012 scenario will help
instill more confidence among project developers.
– The provisions of the Programme of Activities (PoA) or
Programmatic CDM is critical for promotion of off-grid electrification
projects in rural areas (Flexibility in terms of implementation
schedules, sectoral spread of the individual activities, transaction
costs of the CDM project cycle, etc).

23. Thank you!
For further information:
purohit@iiasa.ac.at