Cdm Project Financial Analysis by sgk24546


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									                                   PROJECT IDEA NOTE

A.      Project description, type ,location and schedule
   Name of the project: Use of the waste heat from the sintering furnace for generation
of electricity and heat in Shanxi Taiyuan Steel and Iron Group Company
  Technical summary of the project             Date submitted: Jan. 2006

Objective of the project               The project is desighed to help Shanxi Taiyuan Steel and Iron
                                 Group Company to use the waste heat from the sintering furnace for
                                 generation of electricity and heat to increase the energy efficiency for
                                 effective use of the resource, reduction of coal consumption and
                                 reduction of the CO2 emission.
Project description and proposed    Shanxi Taiyuan Steel and Iron Group is a state owned enterprise
activities(including a technical with steel and iron as its main products. The electricity needed has to
description of the project )     be obtained from the grid and the steam used in the process is
                                 supplied through the coal fired boiler, however, a huge amount of
                                 waste heat is lost in the sintering furnace.
                                    In order to make comprehensive use of the energy, to improve the
                                 energy efficiency and to alleviate the electricity shortage in the
                                 company ,the use of waste heat from the sintering furnace for
                                 cogeneration is proposed, which includes the following two main
                                    1. Installation of the heat recovery equipment in the sintering
                                 furnace, which generates power by steam turbine to the grid.
                                    2. The low pressure steam after electricity generation is used to
                                 supply the heat for the productive process. Corresponding equipments
                                 The heat recovery equipment with capacity of 1 x 140t/h, The steam
                                 boiler with capacity of 74t/ at 4.14 Mpa and the 12,000KW steam
                                 The project can recover waste heat which equals to burn about 40,000
                                 tons coal, being equal to reduce 106,600tons CO2 emission every
Technology to be employed             The utilization of the industrial waste heat is an advanced
                                 technique in steel and iron industry abroad.
                                      The main technique is as follow,
                                      The heat carried by hot sintering pellets at 950-1050 oC from the
                                 sintering furnace is exchanged with the inert gas in the heat recovery
                                 installation. The heated gas at 850oC enters to the boiler to produce
                                 the steam at 3.82MPa and 450oC and generates electricity to grid in
                                 the 12000 kW steam turbine. The low pressure steam after electricity
                                 generation is sent to the steam pipe for heat supply in the plant.
                                 Considering the lack of the water resource, air cooling system is used
                                 for the turbine.

Project developer
Name of the project developer       Shanxi Air CDM Technical Center
Organizationa category              e. Non-government
 Other functions of the project     c.Intermediary
Developer in the project            d.Technical advisor

 Summary of the relevant                  Shanxi Air CDM Technical Center(SACTC) is a non-enterprise
experience of the project developer institution which mainly engaged in the consulting and technical
                                    service of CDM mainly related to coal energy.
                                          Feng Zheng, the director of the SACTC has a long time
                                    diplomatic experience in science and technology, having attended the
                                    countermeasure work with global climate change and got a deep
                                    understanding to CDM, which favors the development of the CDM
Address                             50 Tao Yuan North Road,5th floor, Taiyuan,Shanxi 030002 P.R.
Contact person                      The director of SACTC ; Feng Zheng
Telephone /Fax                      TEL;86-351-4052395/FAX:86-351-3332989
E-mail and Website        
Project sponsor
The name of the project sponsor     Shanxi Taiyuan Steel and Iron Group Company
Organization category               a. State owned company

Address (include web address,if         Country ;China
Any)                                    City;Taiyuan city
                                        Address;Number2,Jian Cao Ping district
                                       Post code:030003

Main activities                        Exploration and preparation of raw materials, Steel and iron
                                       production, the manufacture of equipment and parts etc.
Summary of the financial                 Finance for registration:33.4572 billion yuan RMB
Type of the project
Greenhouse gas targeted                 CO2
Type of the activities                  Emission reduction
Field of the activities                a. energy supply/cogeneration
  a. Energy supply *                   cogeneration
Location of the project
Region                                  East asian & Pacific
Country                                 China
City                                    Taiyuan city ,Shanxi province
Brief description of the location of   The group company lies in the north of Taiyuan city ,the west
the project                            of Jiefang revenue and the east of Datong road with its own
                                       Railway. The project activity is located in the factory
Expected schedule
Earliest project start date            Plan to be run by the end of 2006
Estimate of time required before       Time for financing:8 month
becoming operational after             Time for law procedure;4 month
approval of the PIN                    The time for commercial negotiation; 6month
                                       The time for building:8month

Expected first year of CER             2007
Project lifetime                        20years
Current status or phrase of the        The feasible study and engineering design have been completed. It is
Project                                ready to purchase the equipment and begins the construction. After
                                       the preliminary screening of the project, the PIN and PDD documents
                                       are being produced 。

Current status of the acceptance of Applying to the approval documents of the Host Country
the Host Country
The position of the Host Country a. signed or acceded to the Kyoto Protocol
With regard to the Kyoto

B. Expected environmental and social benefits
Estimate of Greenhouse Gases     Annual :up to 2012(including 2012): 106.6 thousand tco2
Abated /CO2sequestered(in        Up to a period of 10 years: 1.066million tco2
metric tons of CO2-equivalent      Up to a period of 7 years: 746.2thousand tco2
                                 Up to a period of 14years: 1.4924million tco2
                                      The project activity will use the waste heat from the sintering
                                 furnace for generation of electricity and heat.
Baseline scenario                     If without the proposed project, the electricity would be supplied
                                 from Shanxi electric network and he heat would be provided by coal
                                 fired boiler, which will be as the baseline scenario.
                                      Because the high costs of gas turbine and operation fee, the
                                 company will still use coal for its electricity and heat supply with low
                                 efficiency and a great amount of GHG emission, if without the CDM
                                    It is calculated that considering the lifetime of the power plant of 20
                                 years, there will be 106,600tons CO2 emission reduction every year
                                 and 2.132 x 106 tCO2-eq/a GHG emission reduction during the
                                 operation duration.

Onlyto the Carbon absorbing ;
forest and land

Specific global& local
envirommental benefits
Which guidelines will be applied?    The target of CDM project is consist with the development strategy
                                     and policy in China and the project activity is suggested in ten and
                                     eleven 5 year plan by national and provincial government.
Local benefits                            The project activity will reduce not only 106,600tco2-eq/a of
                                     GHG but also a considerable amount of pollutants including SOx,
                                     NOx and PM using waste COG instead of coal firing, which will
                                     greatly improve the local environment.
Global benefits                           The performance of the project proposed can reduce GHG
                                     emission with lower cost because its low cost in Shanxi, being
                                     beneficial of the action to mitigate the global warming. During the
                                     performance, enterprise will accelerate its pace to be merged in the
Socio-ecomomic aspects                   Power and heat generating by the waste heat in the sintering
What social and economic effects furnace will make comprehensive use of the energy and save about
can be attributed to the project and 40,000tons coal every year, bring great social economy benefits.
which would not have occurred in         Taiyuan Iron and steel Group is located at the north of Taiyuan
a comparable situation without that city, the up stream wind region. Thus the improvement of the air
project?                             quality by this project will be favorable of the environment and health
                                     of the 3 x 106 inhabitants.
Which guidelines will be applied? The major relevant environmental protection laws, regulation,

                                     standards as follows were applied:

                                     1.Design Regulation of environmental protection of construction
                                     project (The State Environment Protection Bureau, Document 002,
                                     2.Management Regulation of environmental protection of
                                     construction project (The State Council, Document 253, 1998)
                                     3.Prevention and control regulation of air pollution (April 29, 2000)
                                     4.Prevention and control regulation of water pollution (May
                                     5.Standars for comprehensive air pollutant discharge (GB
                                     6. standard for the noise in industrial enterprises (GB12348-90)

                                        The possible direct effects are as follows:
What are the possible direct            The project will save a lot of energy, being about more than 40
effects(e.g.,employment              x103t/a coal or the total saving of 800x103 t coals if its lifetime is 20
creation,capital required ,foreign   years, or about 304 x 106 Yuan RMB based on the coal price of 380
exchange effects)                    yuan RMB/t coal.
                                        The project can provide 110 job opportunities which will greatly
                                     promote the local development.

What are the possible other          It is beneficial of the improvement of enterprise management and the
effects?                             severe training of the staff due to the scientific controlling and
                                     monitoring works in performing the CDM project.

Environmental                          To pay more attention to environmental protection in a high growth
strategy/priotities of the Host      rate of economic development is one of the environmental strategy.
Country                              The key fields for the CDM are in energy efficiency, the new energy
                                     and renewable energy resources, the recycle and use of CH4 including
                                     coke oven gas and landfill gas.

C.      Finance

Total project cost estimate
development costs                                                                                 Million US$
installed costs                                                                                   Million US$
other costs                                                                                       Million US$
total project costs                                                                          6.25 Million US$
Sources of finance to be sought
or already identified
Equity                               Name of the organization and equity (unit: million US$)
                                       Amount raise by the enterprise:1.56 million US$
Debt-long term                         Name of the organization and equity (unit: million US$)
                                       Development bank of china:3.13million US$
                                     Construction bank of china:1.56million US$
Debt--short term                     Name of the organization and equity (unit: million US$)
not identified                       xx Million US$

CDM contribution sought              Xx Million US$
CDM contribution in advance          Xx Million US$ ,and brief clarification
Sources of carbon finance             Name of carbon financiers other than PCF that your are contacting(if
Indicative CER Price(subject to                                                               8US$/CO2t
negotiation and financial due
Total Emission Reduction
Purchase Agreement(ERPA)
A period until 2012(end of the first                                                            5,116,800US$
budget period)
A period of 10 years                                                                            8,528,000US$
A period of 7 years                                                                             5,969,600US$
A period of 14 years(2*7)                                                                     11,939,200US$
  If finacial analysis is available for The financial analysis for the proposed CDM activity is going on.
the proposed CDM
activity ,provide the forecast
financial internal tate of return for
the project with and without the
CER revenues .Provide the
financial rate of return at the
expected CER price above and
US$3/tCO2e. DO NOT assume
any upfront payment from the PCF


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