Page 1 Project Idea Note Page 1 of 15 PROJECT IDEA NOTE (PIN) Name of Project: Adoption of 3 phase DC/AC IGBT/GTO Technology for EMUs with Regenerative Braking for Mumbai Area. Date submitted: December 19, 2006 Draft Description of size and quality expected of a PIN Basically a PIN will consist of approximately 5-10 pages providing indicative information on: · the type and size of the project · its location · the anticipated total amount of greenhouse gas (GHG) reduction compared to the “business-as-usual” scenario (which will be elaborated in the baseline later on at Project Design Document (PDD) level) · the suggested crediting life time · the suggested Certified Emission Reductions (CERs)/Emission Reduction Units (ERUs)/Verified Emission Reduction (VERs) price in US$ or /ton CO 2 e reduced · the financial structuring (indicating which parties are expected to provide the project’s financing) · the project’s other socio-economic or environmental effects/benefits 54098 Page 2 Project Idea Note Page 2 of 15 A. PROJECT DESCRIPTION, TYPE, LOCATION AND SCHEDULE OBJECTIVE OF THE PROJECT Describe in not more than 5 lines The objective of the project is to install advanced regenerative braking technology in new three- phase Electric Multiple Units (EMUs), which are passenger trains whose carriages have the ability to draw electricity for captive us es directly from the overhead grid. Regenerative brakes essentially make use of the kinetic energy that is normally lost upon braking, which can be up to 30 % of an engine’s output, and converts it to reusable energy, thus saving on the energy input required to operate the EMU. PROJECT DESCRIPTION AND PROPOSED ACTIVITIES About ½ page In India, the transport sector consumes a substantial portion of the national energy use. In the context of energy security and economic growth, energy efficiency measures are of crucial importance. Although rail transport is already more energy efficient than road transport, Indian Railways, which has the second largest network (~ 63000 route- km) in the world under single management, has embarked on an energy efficiency program. The project activity replaces the conventional electro- pneumatic braking technology with dynamic regenerative braking technology. The regenerative electrical energy is used by other powering rolling stock cars connected to same supply line. The re generative electrical energy reduces the consumption of equivalent grid electrical energy required by the powering train, thereby conserving electrical energy and subsequently leading to GHG emission reduction. Indian Railways will replace the existing El ectric Multiple Units (EMUs) with new ones fitted with regenerative brakes (three phase GTO/IGBT) and will manufacture new EMUs, which are capable of regenerating 25 to 30 % of the energy used, and can amount to 0.046 MW/unit/ day. The retrofittment / new production would be as per the following schedule: Page 3 Project Idea Note Page 3 of 15 Year Production Target (Nos. in terms of units*) Expected target Range (Nos. in terms of units*) 2007-08 120 ** 100-145 2008-09 180 ** 160-190 2009-10 180 ** 160-190 2010-11 45 ** 2011-12 2012-13 2013-14 2014-15 2015-16 Under Planning stage Under Planning stage In an initial phase, some 100 units have been manufactured so far. · 1 unit basically consists of 1 motor coach +1driving trailer coach +1 non-driving trailer coach ** This is a tentative figure, actual figure may increase . TECHNOLOGY TO BE EMPLOYED 1 Describe in not more than 5 lines The technology to be used is advance regenerative braking systems. It is DC/AC IGBT/GTO technology for EMUs. The regenerative braking s ystem works on the principal of converting kinetic energy of the train while decelerating in to electrical energy by Variable voltage Variable Frequency Control by altering the frequency of current of traction motors in reverse direction. In this mode the traction motors work as generators and the inverter- converter converts the electrical energy direct current(DC) and subsequently converts to single phase line frequency alternate current(AC). The electrical energy is regenerated by the braking system and f ed back to the supply line through overhead equipments(OHE). The regenerative electrical energy supplied back is used by other accelerating rolling stock 1 Please note that support can only be provided to projects that employ commercially available technology. It would be useful to provide a few examples of where the proposed technology has been employed. Page 4 Project Idea Note Page 4 of 15 of same service line. The regenerative electrical energy reduces the consumption of equivalent amount of grid electrical energy which would otherwise be consumed by the accelerating train, thereby conserving electrical energy and reducing GHG emission. In the project activities the electrical energy regenerated is consumed by other powering rolling stock c ars of same service lines. TYPE OF PROJECT Greenhouse gases targeted CO 2 /CH 4 /N 2 O/HFCs/PF Cs/SF 6 (mention what is applicable) CO 2 Type of activities Abatement/CO 2 sequestration Abatement Field of activities (mention what is applicable) See annex 1 for examples 3E, Other Energy Efficiency LOCATION OF THE PROJECT Country INDIA City Several Brief description of the location of the project No more than 3-5 lines The location will be trains based in Mumbai. PROJECT PARTICIPANT Name of the Project Participant Ministry of Railways, Government of India Role of the Project Participant Owner of the site or project Organizational category Government agency Contact person Mr. R.K. Singh, Executive Director (Electrical Engineering), Railway Board Address Room No. 102A, Rail Bhawan , Raisina Road, New Delhi 110001 Page 5 Project Idea Note Page 5 of 15 Telephone/Fax 011-23386991 (Tele/Fax) E-mail and web address, if any www.indianrail.gov.in ; edeed@rb.railnet.gov.in Main activities Describe in not more than 5 lines Indian Railways provide efficient and safe movement of bulk cargo and passengers through the length and breadth of the country. They are by far India’s single largest employer organiza tion with staff strength of over 1.5 million persons. Summary of the financials Summarize the financials (total assets, revenues, profit, etc.) in not more than 5 lines As a government entity, IR does not operate on a PROFIT model, but key figures are: Capital at Charge INR 593469.3 million Revenues INR 473702.1 million Expenses INR 427588.8 million Summary of the relevant experience of the Project Participant Describe in not more than 5 lines Since 2005, Indian Ra ilways has implemented regenerative braking technology in a limited number of electric locomotives and EMUs, and has gained initial experience in operational and maintenance issues. EXPECTED SCHEDULE Earliest project start date Year in which the plant/project activity will be operational 2007 Estimate of time required before becoming operational after approval of the PIN Time required for financial commitments: 6 months Time required for legal matters: 3 months Time required for construction: 3 months Expected first year of CER/ERU/VERs delivery 2008 Project lifetime Number of years 25 years For CDM projects: Expected Crediting Period 7 years twice 10 years Page 6 Project Idea Note Page 6 of 15 renewable or 10 years fixed For JI projects: Period within which ERUs are to be earned (up to and including 2012) Current status or phase of the project Identification and pre- selection phase/opportunity study finished/pre-feasibility study finished/feasibility study finished/negotiations phase/contracting phase etc. (mention what is applicable and indicate the documentation) Pilot projects have been undertaken for the installation and use of regenerative braking technology for EMUs. Current status of acceptance of the Host Country Letter of No Objection/Endorsement is available; Letter of No Objection/Endorsement is under discussion or available; Letter of Approval is under discussion or available (mention what is applicable) Process for Letter of No Objection will commence after the PIN is approved. However, this would not be a major bottleneck in processing the project. The position of the Host Country with regard to the Kyoto Protocol Has the Host Country ratified /acceded to the Kyoto Protocol? __________ YES , in 2002 _______ Has the Host Country established a CDM Designated National Authority / JI Designated Focal Point? Page 7 Project Idea Note Page 7 of 15 __________ YES , in 2002 B. METHODOLOGY AND ADDITIONALITY ESTIMATE OF GREENHOUSE GASES ABATED/ CO 2 SEQUESTERED In metric tons of CO 2 - equivalent, please attach calculations Annual (if varies annually, provide schedule): in tCO 2 - equivalent Year Holding Yearly CERs Cumulative CERs 2008 120 30905 30905 2009 180 77262 108167 2010 180 123619 231786 2011 45 135208 366994 2012 135208 502202 2013 135208 637410 2014 135208 772618 2015 135208 907826 2016 Under planning stage 135208 1043034 BASELINE SCENARIO CDM/JI projects must result in GHG emissions being lower than “business-as- usual” in the Host Country. At the PIN stage questions to be answered are at least: · Which emissions are being reduced by the proposed CDM/JI project? · What would the future look like without the proposed CDM/JI project? About ¼ - ½ page There are several viable options to the project: a. Construction of conventional EMUs without any regenerative braking system – which essentially is happening currently and represents the likely baseline scenario b. Construction of EMUs with regenerative braking using the three phase regenerative technology (essentially the project) c. Construction of EMUs with other regenerative braking technology. The additionally analysis will show that in the absence of the CDM project, EMUs would be constructed without any regenerative braking systems, given that regenerative braking is not a financially viable technology. The additional energy used for l ocomotives with conventional braking is 568.8 tCO2e/locomotive /annum, and for EMUs with conventional braking, 257.54 tCO2e/EMU/annum. ADDITIONALITY In 2005 and 2006, the Railway Board has piloted the Page 8 Project Idea Note Page 8 of 15 Please explain which additionality arguments apply to the project: (i) there is no regulation or incentive scheme in place covering the project (ii) the project is financially weak or not the least cost option (iii) country risk, new technology for country, other barriers (iv) other installation and use of regenerative brakes in electric trains and EMUs. The installation and use of regenerative brakes is considere d additional based on the following analysis: Financial Barrier: The budget of the Railway Board is approved on an annual basis by the Indian Parliament, and given the mandate to generate a sufficient surplus by financing economically viable projects as well as to provide social services, the budget process in unpredictable. Honourable Minister of Railways at para 40 of his speech while introducing the Railway Budget 2007-2008 on 26 th February 2007 has stressed for development of World Class passenger sy stems with a special note that Global Warming and changing climate conditions are a World Wide concern today. These energy efficient and environment friendly systems would go a long way in alleviating these concerns. At time of writing, the Parliament had not approved the financing of the installation and use of regenerative brakes for fiscal years beyond 2007-08 onwards. Any carbon finance revenue would serve to reduce the funds required from Parliament to use the more efficient braking technology. Technological Barrier: Regenerative brakes are a novel technology, which cannot be wholly manufactured in India. In order to implement such a technology change, Indian Railways will rely on several highly specialized technology providers from other countries, and must build capacity to convert the necessary number of units in a short time frame. Financial Analysis: The most attractive economic alternative option to the project activity is to continue the present style of operation, without regenerative brakes. With regard to the current/existing EMUs, there is no economic incentive to replace these with ones that have Page 9 Project Idea Note Page 9 of 15 regenerative brakes, as the current braking systems could be in use for an additional ten years. The investment required is in the order o f 4 crore per EMU unit, with a payback period of more than 20- 30 years, on a technology that has a lifetime of approximately 25 years. There is no regulation or incentive scheme that requires the Indian Railways to switch to regenerative braking technolo gy for electric locomotives and EMUs. Though there has been a sustained effort to improve energy efficiency measures, these efforts have been slowed down by insufficient funds for investment for such high capital investments, or insufficient projected revenue. One of the motivations for the adoption of regenerative braking system is to modernize the railway infrastructure, as well as to promote security and reduce energy intensity. It should be noted that the use of regenerative brakes is not common pract ice in developing countries (China is the only other non- Annex I country besides India that has begun its deployment), and only a handful of Annex I countries currently use such technologies including Japan, Germany, Canada, Switzerland and France. SECTOR BACKGROUND Please describe the laws, regulations, policies and strategies of the Host Country that are of central relevance to the proposed project, as well as any other major trends in the relevant sector. Please in particular explain if the project is running under a public The Indian Railways are the only entity whose entire budget is voted on by the Indian Parliament unlike others who are allocated monies under the Union Budget (also voted on by Parliament), thus providing an additional public accountability. Historically, the outlay for Railways reduced from about 53% (up to 4th Plan) of outlay for Transport Sector to about 37% for the 9th Plan period. Currently, the share of all major commodities transported by IR in bulk has been dropping except for Coal and Iron ore. In 2005-20 06, Indian Railways operated on a budget surplus for the first time in five years, given the high wage and pension liability. On the one hand, Indian Railways is expected to earn to meet their working Page 10 Project Idea Note Page 10 of 15 incentive scheme (e.g. preferential tariffs, grants, Official Development Assistance) or is required by law. If the project is already in operation, please describe if CDM/JI revenues were considered in project planning. expenses and also generate sufficient surplus for deve lopment, and on the other hand, it is to discharge social services without compensation from the General Exchequer. Such social services include: essential commodities to be transported below cost, some passenger and other coaching services are to be main tained, the operation of uneconomic branch lines are to be maintained, and new lines should be completed with negatives rates of return. Moreover, issues related to cross- subsidization of passenger traffic from revenues out of goods transport and the exte nt to which socially desirable projects should carry explicit subsidies are also being discussed. Honourable Minister of Railways at para 40 of his speech while introducing the Railway Budget 2007- 2008 on 26 th February 2007 has stressed for development of World Class passenger systems with a special note that Global Warming and changing climate conditions are a World Wide concern today. These energy efficient and environment friendly systems would go a long way in alleviating these concerns. The project will help in reducing the CHG emission through more energy efficient equipment and is therefore taken up as a priority over competing conventional way of manufacturing locomotives. Although the price of conventional locomotive is 1/3 of the proposed state of art locomotive. METHODOLOGY Please choose from the following options: For CDM projects: (i) project is covered by an existing Approved CDM Methodology or Approved CDM Small- Scale Methodology (ii) project needs a new methodology The project proposes to use the small scale Methodology III. C —that covers emission reductions from low greenhouse gas emitting vehicles. The Delhi Metro Corporation (DMRC) has already submitted a PDD that is at the validation stage using this methodology. Bundling will be used to meet the applicable thresholds . Page 11 Project Idea Note Page 11 of 15 (iii) projects needs modification of existing Approved CDM Methodology For JI projects: (iv) project will use a baseline and monitoring plan in accordance with Appendix B of the JI Guidelines and further JISC guidance (V) project will use Approved CDM or CDM Small-Scale Methodology C. FINANCE TOTAL CAPITAL COST ESTIMATE (PRE-OPERATIONAL) Development costs (Feasibility studies, resource studies, etc.) Installed costs (Property plant, equipment, etc.) Land ___ Other costs (please specify) (Legal, consulting, etc.) Total project costs SOURCES OF FINANCE TO BE SOUGHT OR ALREADY IDENTIFIED Equity Name of the organizations, status of financing agreements and finance (in US$ million) Ministry of Railways, Government of India Debt – Long-term Name of the organizations, status of financing agreements and finance (in US$ - Page 12 Project Idea Note Page 12 of 15 million) Debt – Short term Name of the organizations, status of financing agreements and finance (in US$ million) - Carbon finance advance payments 2 sought from the World Bank carbon funds. (US$ million and a brief clarification, not more than 5 lines) - SOURCES OF CARBON FINANCE Name of carbon financiers other than any of the World Bank carbon funds that your are contacting (if any) Indian Railways intends to sell 80 % of the emission reductions generated by 2012 to the World Bank. INDICATIVE CER/ERU/VER PRICE PER tCO 2 e 3 Price is subject to negotiation. Please indicate VER or CER preference if known. 4 $9 /ton for CERs as a floor price TOTAL EMISSION REDUCTION PURCHASE AGREEMENT (ERPA) VALUE A period until 2012 (end 9,639,000 US$ 2 Advance payment subject to appropriate guarantees may be considered. 3 Please also use this figure as the carbon price in the PIN Financial Analysis Model (cell C94). 4 The World Bank Carbon Finance Unit encourages the seller to make an informed decision based on sufficient understanding of the relative risks and price trade-offs of selling VERs vs. CERs. In VER contracts, buyers assume all carbon-specific risks described above, and payment is made once the ERs are verified by the UN- accredited verifier. In CER/ERU contracts, the seller usually assumes a larger component - if not all – of the carbon risks. In such contracts, payment is typically being made upon delivery of the CER/ERU. For more information about Pricing and Risk, see “Risk and Pricing in CDM/JI Market, and Implications on Bank Pricing Guidelines for Emission Reductions” . Page 13 Project Idea Note Page 13 of 15 of the first commitment period) A period of 10 years ___ US$ / A period of 7 years ___ US$ / Please provide a financial analysis for the proposed CDM/JI activity, including the forecast financial internal rate of return for the project with and without the Emission Reduction revenues. Provide the financial rate of return at the Emission Reduction price indicated in section “Indicative CER/ERU/VER Price”. DO NOT assume any up-front payment from the Carbon Finance Unit at the World Bank in the financial analysis that includes World Bank carbon revenue stream. Provide a spreadsheet to support these calculations. The PIN Financial Analysis Model available at www.carbonfinance.org is recommended. D. EXPECTED ENVIRONMENTAL AND SOCIAL BENEFITS LOCAL BENEFITS E.g. impacts on local air, water and other pollution. ¾ Less local emissions to air – SPM, SOx ¾ Less noise and more comfort for travelers GLOBAL BENEFITS Describe if other global benefits than greenhouse gas emission reductions can be attributed to the project. - SOCIO-ECONOMIC ASPECTS What social and economic effects can be attributed to the project and which would not have occurred in a comparable situation without that project? Indicate the communities and the number of people that will benefit from this project. Overall improvement in efficiency of the transport of bulk goods/passengers could reduce their landed costs to consumers – individual as well as industrial leading to all round economic development, with lower environmental damages. Page 14 Project Idea Note Page 14 of 15 About ¼ page What are the possible direct effects (e.g. employment creation, provision of capital required, foreign exchange effects)? About ¼ page - What are the possible other effects (e.g. training/education associated with the introduction of new processes, technologies and products and/or the effects of a project on other industries)? About ¼ page - ENVIRONMENTAL STRATEGY/ PRIORITIES OF THE HOST COUNTRY A brief description of the project ’s consistency with the environmental strategy and priorities of the Host Country About ¼ page Higher economic well- being is a key criterion in India’s strategy for CDM. This project can directly contribute to lower costs of a more efficient technology and consequent higher economic well-being for people using rail transport. Environmental well being would be enhanced at the local level due to reduced emissions of pollutants like SPM and SOx. Thus the project is in line with India’s environmental strategy and priorities. Page 15 Project Idea Note Page 15 of 15 ANNEX I - Technologies 1. Renewables 1a Biomass 1b. Biogas 1c. Bagasse 1d. Wind 1e. Hydro 1f. Geothermal 1g. Photovoltaic 1h. Solar Thermal 2. Fossil Fuel Switch 3. Energy Efficiency 3a. Cement Efficiency Improvement 3b. Construction material 3c. District heating 3d. Steel Gas Recovery 3e. Other Energy Efficiency 4. Waste Management 4a. Landfill Gas recovery/utilization 4b. Composting 4c. Recycling 4d. Biodigestor 4e. Wastewater Management 5. Coalmine/Coalbed Methane 6. Oil and Gas Sector 6a. Flared Gas Reduction 6b. Reduction of technical losses in distribution system 7. N 2 O removal 8. HFC23 Destruction 9. SF6 Recovery 10. Transportation 9a. Fuel switch 9b. Modal switch 11. Others