Some Methodological Issues in CDM
Analyses of Power Sector Projects

Ram M. Shrestha
School of Environment Resources and Development
Asian Institute of TechnologyThailand
AIM Workshop, 24-25 March
2000, NIES, Tsukuba,Japan1

Introductionz

GHG abatement cost and emission mitigation due to a candidate CDM
power project can vary depending upon whether or not no-regret DSM
options are considered in the power development plan.
Power development planning without no-regret DSM option (i.e., TRP)z Power development planning with DSM option (i.e., IRP)z Capacity-mix, fuel-mix and generation-mix will be different under TRPand IRPz Baseline emission and total cost will also be differentz A CDM power plant can affect the generation-, capacity- and fuel-mix
differently under TRP and IRP.
zAIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

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Introduction

Issues:How to determine the additional emission mitigations due to theCDM project under IRP ?
z What would be the baseline emission and costs with and without
no-regret DSM options ?
z What would be the additional emission mitigations due to thecandidate CDM project with and without DSM options ?
z

AIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

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Emission mitigation with CDM project under IRP
Existing Power
Plants Data

Projected Load
Profile (L0)

CDM as acommitted plant

DSM Options

Candidate Power
Plants Data

(EI0)

Optimal DSM
Options(DSMI0)Optimal Plant
Mix(SSI0)

Projected Load
Profile (L10 )Candidate Power
Plants Data

Integrated Generation
Expansion Planning Model

Emission

Existing Power
Plants Data

Integrated Generation
Expansion Planning Model

Optimalload profile(LI0 )

Emission(EIC )

Optimalload profile(LIC )

Optimal Plant
Mix(SSIC )Emission Mitigation due to CDM-Plant, ∆ECDM = EI0 _ EIC

AIM Workshop, 24-25 March
2000, NIES, Tsukuba,Japan4

Rebound effect

Energy efficiency improvement results in a decrease in theeffective price of services which would increase the service
demand. As a result, actual energy savings due to theintroduction of efficient appliances would be less than thesavings based on engineering estimates (also known as“feedback effect”).
How big is the rebound effect?
Examples:z Actualsavings due to efficiency improvement on home-heating
appliances: 8 to 13 percent below than the engineering estimate (Dubin,Miedema and Chandran, 1986).
Khazzoom (1987) reports actual electricity savings from electricallyheated homes 67% less than the engineering estimate of savings.

zAIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

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Rebound effect(1) According to Khazzoom, 1980:
e = |γ | - 1
where,e = elasticity of demand for electricity with respect to applianceefficiency, andγ = long-run price elasticity of demand for electricity
Here, rebound effect (Khazzoom) = |γ |(2) According to Henly et.al., 1988:
e = |γ | + γs,k . γ k,η - 1

where,γs,k = elasticity of service demand with respect to appliance price andγ k,η = elasticity of appliance price with respect to efficiency
Here, rebound effect (Henley et al) = |γ | + γs,k . γ k,ηNote that: RE (Henley et al) < RE (Khazzoom)
AIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

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Rebound effectRebound effect from selected studies
Study
Khazzoom (1987)

Use of energy efficient appliances in US

Reboundeffect (%)
75

Greene (1992)

Vehicle efficiency improvement in US

5-15

Murck et.al (1985)

Policy simulation to reduce wood use inSudan
Passenger vehicle use and rebound effectin US
Improved stoves programs in Sub-SaharanAfrica
Energy conservation incommercial/household sectors in Norway

Jones (1993)
Zein-Elabdin (1997)
Ronald and Haugland(1994)

Focus of the Study

AIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

4860
50
10-40

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Generation savings in IRP with and without RE
Power Generation(MW)Savings without RE

Savings with RE

L0 : Generation profile
under TRP

LIR0: Generation profile
under IRP with RE

LI0 : Generation profile
under IRP without RETime

Power Generation Profiles under TRP and IRP Cases
AIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

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Simulation results from a case study of Vietnam

Total CO 2 emission during the planning horizon in different cases, million tons
Cases
TRP Base Case without RE
IRP Base Case with RE
TRP-CDM-Hydro #IRP-CDM-Hydro with RE *CO 2 Emissions

CO2 Emissions avoided +

848.6
730.8
830.1
709.8

18.5
20.3

+ Each figure here is with respect to the corresponding base case (i.e., baseline emission).
* With the same level of generation as in IRP base case
# The size of the CDM-Hydro is 105 MW, ROR type

Total SO 2 and NO x emission during the planning horizon, thousand tons
Cases
TRP Base Case
IRP Base Case with RE
TRP-CDM-Hydro
IRP-CDM-Hydro with RE*SO 2NO x

3,630.0
3,196.0
3,580.2
2,960.9

2,960.0
2,423.2
2,877.7
2,319.5* With the same level AIMof generation
as in
IRP basecase
Workshop,
24-25
March
2000, NIES, Tsukuba,
Japan9Simulation results from a case study of Vietnam

Total cost of the generation during the planning horizon, average incremental
generation cost (AIC) and incremental cost of the emission abatement at 1998 prices.

Cases
TRP Base Case
IRP Base Case with RE
TRP-CDM-Hydro
IRP-CDM-Hydro with RE *Total discountedcost
6(10 $)AIC(Cents/kWh)9934.98553.0.610050.3
8879.0

2.87
2.85
3.36
3.20

Incremental abatement
cost(US$/ton of carbon)

46.2
36.2

* With the same level of generation as in IRP base case

AIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

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Some Methodological Issues in CDM
Analyses of Power Sector ProjectsAIM Workshop, 24-25 March
2000, NIES, Tsukuba,
Japan

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Decomposition of emission mitigation with CDM
project under IRP
Total emission mitigation with the introduction ofcommitted CDM in IRP comprises three components:z Supply-side effect: change in emission due to the change ingeneration- mix after the CDM is introducedz DSM effect: change in emission due to change in the levelof DSM after the CDM is introducedz Joint effecti.e. ∆E Total = ∆ESS + ∆EDSM + ∆EJOINT EFFECTIssue:
What is the level of emission mitigation solely due to CDM i.e.
Supply-side effect ?
AIM Workshop, 24-25 March
2000, NIES, Tsukuba,Japan

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Emission mitigation with the CDM project and DSM

Existing Power
Plants Data

Projected Load
Profile (L0)

CDM as acommitted plant

DSM Options

Candidate Power
Plants Data

Existing Power
Plants Data

Candidate Power
Plants Data

Integrated Generation
Expansion Planning Model

Emission(EI0)

Optimal DSM
Options(DSMI0)Optimal Plant
Mix (SSI0 )Projected Load
Profile (L0)DSM Options

Integrated Generation
Expansion Planning Model

Optimal load
profile(LI0)

Emission(EICD )

Optimal DSM
Options(DSMICD)

Optimal Plant
Mix(SSICD)

Optimalload profile(LICD )

Emission Mitigation due to CDM-Plant and DSM, (∆ ECDM + ∆ EDSM ) = EI0 _ EICD
AIM Workshop, 24-25 March
2000, NIES, Tsukuba,Japan

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