CDM-PDD-FORM Project design document form for CDM project activities (Version 05.0) Complete this form in accordance with the Attachment “Instructions for filling out the project design document form for CDM project activities” at the end of this form. PROJECT DESIGN DOCUMENT (PDD)

Title of the project activity

Yalova Wind Power Plant

Version number of the PDD

1.00

Completion date of the PDD

1/03/2016

Project participant(s)

N/A

Host Party

Republic of Turkey

Sectoral scope and selected methodology(ies), and where applicable, selected standardized baseline(s)

1- Energy industries (renewable - / non-renewable sources) ACM0002: Consolidated baseline methodology for gridconnected electricity generation from renewable sources --- Version 16.0.0

Estimated amount of annual average 112,000 tonnes of CO2e GHG emission reductions Appendix 1- Contact information of project participants and responsible persons/ entities Appendix 2- Affirmation regarding public funding Appendix 3- Applicability of methodology and standardized baseline Appendix 4- Further background information on ex ante calculation of emission reductions Appendix 5- Further background information on monitoring plan Appendix 6- Summary of post registration changes Appendix 7- The Legal Framework of the Host Country That Binds the Project Activity Appendix 8- Certification of the Project Related to EIA

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CDM-PDD-FORM

SECTION A. A.1.

Description of project activity

Purpose and general description of project activity

The Yalova Wind Power Plant (will be refered to as Yalova WPP from this point forward) is a wind farm that is planned to be constructed by “AROVA RES Elektrik Üretim A.Ş.(AROVA A.Ş. in short)” in the vicinity of Mecidiye Village of Armutlu town of Yalova Province. The wind farm is going to convert the potential energy of the wind into electricity by means of 36 wind turbines with 1.5 MW capacity each. The total generation capacity of the power plant will be 54 MW. The project is a large scale, Voluntary Emission Reduction. The host Country is the Republic of Turkey, which is an Annex-1 Party to the UNFCCC. Although Turkey has ratified the Kyoto Protocol, due to its special circumstances, Turkey is not listed in Annex-B of the protocol and does not have a binding emission reduction target. Therefore projects hosted by Turkey are eligible under the Gold Standard voluntary regime. The type of the project activity fits in the ‘Renewable Energy Supply” category and this category is defined as “Generation and Delivery of Energy Services” from “non-fossil” and “non-depleatable” energy sources. The wind turbines will be imported from abroad (China) whereas, the cabling, transformers and other electromechanical equipment will be obtained from within country. To be able to produce and sell electricity to the Turkish national electricity grid the project has obtained electricity production licence from the Energy Market Regulatory Agency (EMRA) with the licence number EÜ/3301-11/1991. This licence allows the project owner to produce electricity using the potential energy of the wind for 49 years. As shown on the EMRA approved electricity production license the established capacity of Yalova WPP is 54 MW. The project is expected to produce a total of 145,400.00 MWh of electricity per year, therefore the plant load factor of the project calculates to be, 30.73 %, as shown in the below calculation:

The wind farm that will be established in the project site is expected to generate an annual amount of up to 145,400 MWh of electricity per year. The produced electricity will then be connected to the Turkish National Grid. The project was developed by AROVA A.Ş. .It was first designed as 54 MW with 60 turbines having 900 KW each, later the design was improved to allocate 36 units with 1.5 MW capacity each. The project feasibility studies were finalized in June 2011 . The project construction is expected to start in October 2012 and the construction is expected to be completed in about one year. The project history in the chronological order is given as follows (Table 1): Table 1:Chronological history of the project development . Date 05/July/2011 23/02/2012 1

11/02/11

August, 2008 16/06/2012 18/06/2012 to

1

Event Emra Granted project license for the following 49 years Bird Survey Report No:1 Issued (Preliminary Bird Survey) Sinovel Wind Group is contracted as the turbine supplier Yalova WPP Project Introductory File submitted to Yalova Provincial Directorate of Ministry of Environment and Urban Planning Mecidiye Village Head (Muhtar) is visited to seek help for the organization of the LSC Meeting Invitation letters was sent to relevant stakeholders

This date is onsidered to be the investmet decision date

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CDM-PDD-FORM 21/06/2012 23/6/12

Local Stakeholder Consultation Meeting is announced in Local News Papers

23/6/12

Local Stakeholder Consultation Meeting is announced in Hurriyet News Paper

29/06/2012

Local Stakeholder Consultation Meeting is held in Mecidiye

29/06/2012

Women of the village is visited seperately and they were given information about the project and their opinion is collected. The project was granted EIA Not Needed Certification.

31/August/2012

How the project activity will be operating, and the boundary of the project activity (indicated in broken red line) is outlined in the following figure (Figure 1).

Figure 1: The Schematic representation of the Yalova WPP Project.

In absence of the project activity (same as pre project scenario) equivalent amount of electricity would have been generated in the national grid which is electricity deficient. The project contributes to sustainable development by lowering energy costs and the dependency on imported resources like natural gas and oil. Turkey, being in a region where continuous and powerful wind resources exist, has great potential to utilise renewable resources for electricity generation2. One of the Millennium Development Goals of Turkey is defined as “Target.9. Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources”. Air pollution is one of the concerns under the heading defined with three indicators: • Energy use per $1 Gross Domestic Product: Energy production and consumption have not reached the desired levels and total energy supply per $1 GDP is below OECD average. Turkey’s GDP decreased due to the unstable economic environment, however unit price of energy increased. • Carbon dioxide emissions (per capita) and consumption of ozone depleting CFCs: CO2 emissions are the highest among the other greenhouse gas (GHG) emissions. 10% increase in CO2 emissions per capita has been observed between1995-2003. 2

http://www.yesilekonomi.com/yayinlar/yesilkose/yenilenebilir-enerji-kaynaklari.htm (Last visited on 28.10.2010) http://www.eie.gov.tr/duyurular/YEK/YEKrepa/REPA-duyuru_01.html http://www.cumhuriyet.com.tr/?hn=149076 http://www.alternaturk.org/turkiyede-ruzgar-enerjisi.php http://www.solar-santral.com/menu_detay.asp?id=326

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CDM-PDD-FORM • Proportion of the population using solid fuels.3 The project will contribute to these targets in Millennium Development Goals by: • Utilising local renewable resources for electricity production and lowering the unit price of energy, • Lowering CO2 emissions by promoting clean energy production instead of fossil fuel fired power plants. The project also stimulates the economic development as wind power, being an infinite and natural resource, is ecologically more sustainable than other fossil fuel based choices. From a local perspective, the project will provide job opportunities for local people and create household income for them. Associated works such as wiring will be done by local companies and this will increase their technological capacity in renewable energy projects and will stimulate the local economy as well. A.2.

Location of project activity

A.2.1. Host Party The host party is the Republic of Turkey4. A.2.2. Region/State/Province etc. Eastern Mediterranean Geographical Region/ Hatay Province A.2.3. City/Town/Community etc. Yalova /Armutlu Town A.2.4. Physical/Geographical location The following are the coordinates of the wind Turbines that will constitute the Yalova Wind Farm (Table 2): Table 2: The coordinates of the turbines in groups of 6 Turbines

1

2

3

4

5

Latitude

40°35'6.20"N

40°35'3.22"N

40°35'2.75"N

40°34'57.54"N 40°34'53.42"N

6 40°34'52.80"N

Longitude 28°55'26.65"E 28°55'42.76"E 28°55'57.69"E

28°56'7.44"E

28°56'19.32"E 28°56'33.38"E

Turbines

7

10

11

Latitude

40°34'47.38"N 40°34'44.28"N 40°34'39.92"N 40°34'29.45"N 40°34'19.99"N 40°34'49.43"N

8

9

12

Longitude 28°56'45.23"E 28°56'57.27"E

28°57'7.64"E

28°57'36.07"E

28°57'57.67"E 28°57'30.69"E

Turbines

13

15

16

17

Latitude

40°34'45.33"N 40°34'42.51"N 40°34'35.27"N 40°34'41.34"N 40°34'58.55"N 40°35'2.11"N

14

18

Longitude 28°57'44.07"E 28°57'57.38"E 28°58'5.65"E

28°58'26.34"E 28°58'6.11"E

28°57'51.17"E

Turbines

19

20

21

22

24

Latitude

40°35'8.47"N

40°33'2.89"N

40°32'57.21"N 40°32'52.80"N 40°32'49.35"N 40°32'45.31"N

Longitude 28°57'34.84"E 28°54'8.35"E

23

28°54'19.81"E 28°54'31.38"E 28°54'45.01"E

28°54'55.18"E

3

Millennium Development Goals Report, Turkey 2005 The host country Turkey is an Annex 1 country under UNFCCC, and a party to Kyotoprotocol without a binding emission reduction target. For more detail please visit : http://www.mfa.gov.tr/united-nations-framework-convention-on-climate-change-_unfccc_-and-thekyoto-protocol.en.mfa 4

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CDM-PDD-FORM Turbines

25

26

27

28

29

30

Latitude

40°32'39.58"N 40°32'32.43"N 40°32'23.85"N 40°32'35.81"N 40°32'36.71"N 40°32'59.31"N

Longitude 28°55'5.24"E

28°55'12.36"E 28°55'25.07"E 28°55'51.61"E

28°55'35.02"E 28°55'9.85"E

Turbines

31

32

34

35

36

Latitude

40°31'19.28"N 40°31'13.13"N 40°31'8.36"N

40°30'58.69"N

40°31'8.25"N

40°31'16.57"N

Longitude 28°50'53.90"E 28°51'1.38"E

33

28°51'12.12"E 28°51'53.80"E

28°51'47.09"E 28°51'37.36"E

The following Figure (Figure 2) shows the project location on Satelite image via Google Earth.

Figure 2: Satelite image showing project location in Turkey

A.3. Technologies and/or measures The project aims to generate electricity by utilising wind power to supply the increasing national electricity demand in a more cleaner and sustainable manner. It will reduce the air pollution caused by the grid connected power plants which are mostly fossil fuel fired. The project involves installation of 36 wind turbines, each having 1.5 MW capacity, which will be located in Armutlu, Yalova, Turkey. The total installed capacity is designed to be 54 MW and the annual electricity generation will be 145,400 MWh. The project is a green field project and in the Version 05.0

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CDM-PDD-FORM absence of the project activity an equivalent amount of electricity would have been generated in the fossil fuel based national grid. The Yalova WPP project will be utilizing Sinovel SL1500-82 turbines that are calculated to provide outmost yield of electricity in the conditions that are present at the project site. The characteristics of the Sinovel SL1500-82 type turbines can be listed as follows5: General data Rotor Generator • Nominal power: 1,500 kW • Start-up wind speed: 3 m/s • Output voltage: 690 V • Rotor diameter: 82.9 m • Nominal wind speed: 10,5 • Manufacturer: Pitch • Available model m/s Tower • Minimum hub height: 65 m • Wind class: IEC II/III • Maximum wind speed: 20 • Maximum hub height: 100 m • Offshore model: no m/s • Swept area: 5,398 m² Gear box • Gear box: yes • Power density: 3.6 m²/kW • Speed number: 2 • Number of blades: 3 The following table (Table 3) is a list of the equipment that will be installed to the Yalova Wind Power Plant: Table 3: List of Equipments that will be installed to the Yalova Wind Power Plant.

Name of Part

Unit

Anchor Parts 36 Tower Groups 36 Tower Equipment 36 Tower Bolts 36 Blade 1 36 Blade 2 36 Blade 3 36 Nacelle incl. 36 Accessories Drive Train 36 Cooling Hood 36 Hub 36 Converter Cabinet 36 Accessory and 36 Consumable Container Scada Equipment 1 6 Electricity Meters 2 The project provides sustainable means of electricity generation compared to the fossil fuel fired thermal power plants. The majority of the electricity generated in the grid is from natural gas fired power plants and there are no incentives or future targets defined for wind energy by the government. The know-how and technology will be imported from European countries in the context of the project which will stimulate the development of wind energy sector in the country. Thus, the project uses an environmentally safe and sound technology in the project activity.

5 6

Information is taken from the following link: http://www.thewindpower.net/turbine_en_281_sinovel_1500.php (Last visited on 26/02/16) The electricity meters belong to TEİAŞ, and will be sealed and locked as they will be installed in the main control room.

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CDM-PDD-FORM A.4. Parties and project participants Party involved (host) indicates host Party AROVA RES Elektrik Üretim A.Ş. see Annex.1 for contact details.

Private and/or public entity(ies) project participants (as applicable) Private entity

Indicate if the Party involved wishes to be considered as project participant (Yes/No) No

A.5. Public funding of project activity There is no public funding involved in the project activity

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CDM-PDD-FORM

SECTION B. B.1.

Application of selected approved baseline methodology and standardized baseline

and

monitoring

Reference of methodology and standardized baseline

The following UNFCCC methodology and its related tools are utilised: Approved consolidated baseline and monitoring methodology ACM0002 “Consolidated baseline methodology for grid-connected electricity generation from renewable sources.” Version 16.0.0. The Approved Methodology refers to the following tools: • • •

“Tool for the demonstration and assessment of additionality” (Version 07.0.0; EB 70 -Annex 8 ) “Tool to calculate the emission factor for an electricity system” (Version 04.0.0;EB 75-Annex 15) “Methodological tool: Investment analysis” (Version 06.0; EB 85-Annex 12) In addition to this the following tools are utilized:

•

“Methodological Tool: Common practice” (Version 03.1; EB 84 Annex 7)

•

“Methodological Tool to determine the remaining lifetime of equipment” (Version 01; EB 50 Report Annex 15)

B.2.

Applicability of methodology and standardized baseline

The ACM0002 (version 16.0.0) methodology is applicable to grid-connected renewable power generation project activities that: (a) install a new power plant at a site where no renewable power plant was operated prior to the implementation of the project activity (greenfield plant); (b) involve a capacity addition; (c) involve a retrofit of (an) existing plant(s); or (d) involve a replacement of (an) existing plant(s). The choice of methodology ACM0002, Version 16.0.0, is justified as the project activity meets the following applicability criteria: Reference Applicability Criteria Justification page in ACM0002 (version 16.0.0) 4 paragraph ((a) The project activity may include The Yalova WPP project activity is the 4 renewable energy power plant/unit of one of Installation of a new wind power plant at the following types: hydro power plant/unit a site where no renewable power plant with or without reservoir, wind power was operated prior to the plant/unit, geothermal power plant/unit, solar implementation of the project activity power plant/unit, wave power plant/unit or (Greenfield plant) tidal power plant/unit; (b) In the case of capacity additions, retrofits, rehabilitations or replacements (except for wind, solar, wave or tidal power capacity addition projects the existing plant/unit started commercial operation prior Version 05.0

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CDM-PDD-FORM to the start of a minimum historical reference period of five years, used for the calculation of baseline emissions and defined in the baseline emission section, and no capacity expansion, retrofit, or rehabilitation of the plant/unit has been undertaken between the start of this minimum historical reference period and the implementation of the project activity. 5 paragraph In case of hydro power plants: 5 One of the following conditions shall apply: (a) The project activity is implemented in an existing single or multiple reservoirs, with no change in the volume of any of reservoirs; or (b) The project activity is implemented in an existing single or multiple reservoirs, where the volume of any of reservoirs is increased and the power density is increased and the power density calculated using equation (3), is greater than 4 W/m2; or (c) The project activity results in new single or multiple reservoirs and the power density, calculated using equation (3), is greater than 4 W/m2; or (d) The project activity is an integrated hydro power project involving multiple reservoirs, where the power density for any of the reservoirs, calculated using equation (3), is lower than or equal to 4 W/m2, all of the following conditions shall apply: (i) The power density calculated using the total installed capacity of the integrated project, as per equation (4), is greater than 4 W/m2; (ii) Water flow between reservoirs is not used by any other hydropower unit which is not a part of the project activity; (iii) Installed capacity of the power plant(s) with power density lower than or equal to 4 W/m2 shall be: a. Lower than or equal to 15 MW; and b. Less than 10 per cent of the total installed capacity of integrated hydro power project. 5 paragraphs In the case of integrated hydro power 6 to 8 projects, project proponent shall: Demonstrate that water flow from upstream power plants/units spill directly to the downstream reservoir and that collectively constitute to the generation capacity of the integrated hydro power project; or Provide an analysis of the water balance covering the water fed to power units, with all possible combinations of reservoirs and without the construction of reservoirs. The purpose of water balance is to demonstrate the requirement of specific combination of reservoirs constructed under CDM project activity for the optimization of power output. This demonstration has to be carried out in the specific scenario of water availability in different seasons to optimize the water flow at the inlet of power units. Therefore this Version 05.0

Not Applicable as the project activity is not hydro power.

Not Applicable as the project activity is the addition of a new “wind” power plant

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CDM-PDD-FORM water balance will take into account seasonal flows from river, tributaries (if any), and rainfall for minimum five years prior to implementation of CDM project activity. 5-6 The methodology is not applicable to: paragraph 9 (e) Project activities that involve switching from fossil fuels to renewable energy sources at the site of the project activity, since in this case the baseline may be the continued use of fossil fuels at the site; (f) Biomass fired power plants/units. 6 paragraph In the case of retrofits, rehabilitations, 10 replacements, or capacity additions, this methodology is only applicable if the most plausible baseline scenario, as a result of the identification of baseline scenario, is “the continuation of the current situation, that is to use the power generation equipment that was already in use prior to the implementation of the project activity and undertaking business as usual maintenance”. 6 paragraph In addition, the applicability conditions 11 included in the tools referred to below apply7.

B.3.

The Project activity is eligible as : It does not involve switching from fossil fuels It is not a biomass fired power plant.

Not Applicable as the project activity is the addition of a new wind power plant , and it is not a retrofit, replacement or a capacity addition project.

Not applicable as the tools referred does not have additional requirements and is not used in the case of the project activity.

Project boundary

Source Baseline Scenario

Project scenario

Electricity generation in baseline (Turkey’s Grid) Emission from the reservoir of the proposed project

GHGs

Included?

CO2 CH4 N 2O Other

Yes No No

Main emission source Minor emission source Minor emission source

N.A.

N.A.

CO2

No No No

N.A. N.A. N.A.

N.A.

N.A.

CH4 N 2O Other

Justification/Explanation

CO2 emission is included in the baseline but the project activity does not emit any of the gases listed, above . The project boundary includes net electricity generated and supplied to the Turkish national grid.

B.4.

Establishment and description of baseline scenario

Since the proposed project activity is the installation of a new grid-connected wind power plant, that is renewable power plant and therefore, the baseline scenario is defined as the following based on ACM0002 (Version 16.0.0):

7

The condition in the “Combined tool to identify the baseline scenario and demonstrate additionality” that all potential alternative scenarios to the proposed project activity must be available options to project participants; does not apply to this methodology, as this methodology only refers to some steps of this tool.

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CDM-PDD-FORM “Electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources, as reflected in the combined margin (CM) calculations described in the. Tool to calculate the emission factor for an electricity system (v.04.0.0; EB 75-Annex 15).” Since the proposed project activity is going to be connected to the Turkish national grid, the baseline scenario of the proposed project is the supply of the equivalent amount of annual power output by the existing Turkish national grid which is the continued operation of existing power plants and the addition of new sources to meet electricity demand. Based on ACM002, baseline emissions are equal to power generated by the project activity that is delivered to the Turkish national grid, multiplied by the baseline emissions factor. This baseline emissions factor (EFy) is calculated as the Combined Margin (CM), of which the breakdown and detailed description is given below in section B.6.

B.5.

Demonstration of additionality

The proposed project activity reduces GHG emissions by substituting fossil fuel based electricity generation by renewable resources (hydro) based electricity generation. This part refers to the “Tool for the Demonstration and Assessment of Additionality Version 7.0.0” and the numbering in this section reflects the Tool’s Guidelines provided at EB 70, Annex 8. Step 1 - Identification of Alternatives to the project activity consistent with current laws and regulations Sub-step 1a - Define alternatives to the project activity: The tool notifies that “Project activities that apply this tool in context of approved consolidated methodology ACM0002, only need to identify that there is at least one credible and feasible alternative that would be more attractive than the proposed project activity.” The project alternative can be defined as follows: Continuation of the current situation (No project activity or other alternatives undertaken). This alternative is the most likely scenario, since there are no legal obligation to implement such a project and without VER support the project implementation is financially not attractive. Outcome of Step 1a: The only realistic and credible alternative scenario to the project activity is Continuation of the current situation, without any project undertaken . Sub-step 1b. Consistency with mandatory laws and regulations: The project alternative, the baseline scenario, which is the continuation of the existing situation, is in compliance with all mandatory applicable and legal and regulatory requirements. Also the alternative scenario of addition of a new power generation capacity to the grid is regulated by Energy Market Regulatory Authority (EMRA) who issues the licenses for electricity generation and is responsible for ensuring that new capacity applies with its rules and regulations. The list of the

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CDM-PDD-FORM rules and regulations of the host country that a new electricity generation project has to comply with is given in Appendix 7 . Outcome of Step 1b: The alternative scenario to the project activity is the supply of electricity by the existing grid with additional capacity is in compliance with mandatory legislation and regulations. Step 2 - Investment Analysis At this step it will be demonstrated that “the proposed project activity is not the most economically or financially attractive" option. Please note that, at this step, the “Methodological tool: Investment analysis” Version 06.0 is followed. Sub-step 2a - Determine appropriate analysis method There are three options for investment analysis method: Simple Cost Analysis Investment Comparison Analysis and Benchmark Analysis “Simple Cost Analysis” is not applicable for this project activity as the project generates economic benefits from sale of electricity to the Turkish national grid”. Investment Comparison Analysis is also eliminated since the baseline for the project is “the generation of electricity by the existing grid” and no similar investment alternatives exist. Therefore, Benchmark Analysis is the most appropriate approach for the evaluation of the project activity. Sub-step 2b - Option III-Apply benchmark analysis Internal Rate of Return (IRR) on equity is taken for this project to be the financial indicator for assessing the financial viability of the project activity.. Equity IRR is the cash flow return to equity shareholders after debt repayments. And therefore also takes into account the debt repayments. Equity IRR takes into consideration that you use debt for the project, so the inflows are the cash flows required minus any debt that was raised for the project. The outflows are cash flows from the project minus any interest and debt repayments. To be able to assess the financial viability of the project a benchmark to compare the equity IRR is needed. The Tool for the Demonstration and Assessment of Additionality Version 7.0.0 (EB 70, Annex 8) and “the Methodological tool on Investment analysis Version 06.0 state that “...Discount rates and benchmarks shall be derived from: Government bond rates, increased by a suitable risk premium to reflect private investment and/or the project type, as substantiated by an independent (financial) expert or documented by official publicly available financial data” The “Methodological tool on Investment analysis Version 06.0” , provides the default values for the expected return on equity as an appendix, and Moody’s index values of most of the CDM Countries. At the time of investment decision (See Table 1, 11/02/2011) Turkey’s Moody’s index (Ba2) was comparable to country’s with the same Moody’s index, and same default benchmark

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CDM-PDD-FORM value from this point of view a reasonable and appropriate benchmark to compare the Equity IRR can be taken as 12.508 %. Sub-step 2c - Calculation and comparison of financial indicators The following parameters are taken into account for the assessment of the investment (Table 4) and supplementary parameters are provided in the “YalovaFinancialAnalysis” workbook and submitted to the validating DOE. Table 4:Major parameters taken into account for the financial analysis and determination of the Equity IRR of the Yalova Project:

Parameter Installed Capacity Expected Annual Electricity Generation Expected Average Annual Emission Reduction (ER) Total Investment Annual Operation Costs Loan Loan Period Electricity Sales Price VAT Income Tax

Value 54.00

Unit MWe

145,400

MWh

85,664

tCO2e

References EMRA approved Electricity Generation License of the project activity. P90 value reported in Site-related Wind Potential Analysis and Energy Yield Assessment at the Site Yalova Report by DEWI Calculated (see Section B.6 for details) based on the electricity production data.

49,821,860 Euro 967,098 Euro 40,000,000 Euro Loan Term Sheet 10 years Loan Term Sheet 0.55 Euro/KWh Price Guaranteed by the renewable energy law number 5346 18 % V.A.T. Law No:3065 20 % Income Tax Law number 5281

The value of the investment has been depreciated on a reducing balance basis over 20 years, 70 % of the long lasting assets are depreciated over 45 years and the residual book value (20,781,889.23 €) is added back to the cash flow. The economic life time of a wind power plant investment is assumed to be about 25 years, based on the default technical life time of a wind turbine, as listed in Methodological Tool to determine the remaining lifetime of equipmentî (Version 01; EB 50 Report Annex 15). Even if the facility can last longer years the major equipment needs to be replaced in every 25 years. As a result the project lifetime is estimated to be about 25 years, but the investment analysis is done for a time frame of 20 years, as suggested by "Guidelines on the assessment of investment analysis (Version 05)" of EB 62 Annex 5. For the assessment of the viability of the project activity the Equity IRR is compared to the benchmark. The equity IRR is worked out as 10.06%, which is below the benchmark of 12.50%. Sub-step 2d - Sensitivity Analysis To be able to conclude if the investment decision is the financially the most attractive alternative or not, a sensitivity analysis is performed. Three parameters that affect the equity IRR are examined for the sensitivity analysis: 8

The Moody’s index for turkey at the time of investment decision (September 2010) was assigned to Ba2 see http://countryeconomy.com/ratings/turkey

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CDM-PDD-FORM Investment Cost Operating and Maintenance Cost Electricity Revenue The sensitivity analysis is performed for a range of ±10% fluctuations in the above parameters. The figures in the following table (Table 4) are obtained. Following the "Guidelines on the assessment of investment analysis (Version 05)" of EB 62 Annex 5 when any of the key variables are increased or decreased by at least 10%, and the benchmark is not exceeded (also see Figure 5). Table 5: Sensitivity analysis for the Equity IRR without carbon revenue for the project (Benchmark: 11.55%) Change

-10%

-5%

5%

10%

Exceed Benchmark?

Investment Cost

12.20%

11.04%

9.22%

8.49%

No

Operating Cost

10.24%

10.15%

9.98%

9.89%

No

Electricity Revenue

8.60%

9.33%

10.78%

11.49%

No

Figure 3: Sensitivity analysis: Fluctuation of the Equity IRR without the carbon revenue, by changing major parameters that effect the Equity IRR by ±10% To exceed the benchmark, the electricity revenue must increase by about 17.30 % over the life of the project, or the investment cost must be reduced by about 11.10 %. The Renewable energy law only guaranties a minimum price of EURO 0.055 per kWh for renewable energy, and the price that was announced at the EMRA web site was approximately 6.4 US cents9, indicating that our estimation for the renewable energy price was reasonable. However, we do not expect an increase in the electricity revenue related to a price increase and since the project’s electricity production licence and the design of the project is based on the maximum available capacity of the Yalova Areas wind stream, and since our entire financial analysis is based on the maximum net electricity output of the project, a number which was also certified by the project activities electricity production licence, such an increase based on an increased amount of electricity generation is also very unlikely. The investment costs we have considered in our financial analysis was based on a project owner’s estimates that is baked up by the construction and E&M contracts signed prior to project start. And as some parameters such as turbine costs was already known the numbers we have considered are realistic. Therefore these numbers are reasonable and reflect the average market conditions but are unlikely to go down, as the focus of the project developer is to secure and improve the electricity yield and therefore they will not be able to cut costs. Therefore it is very unlikely for the investment cost to finalize below the amounts estimated and shown in the financial analysis. Outcome of Step 2: Without the VER revenue the Internal Rate of Return of the project cannot get close to the benchmark of 12.50 %, with an equity internal rate of return of 10.06%. A fluctuation of ± 10% in the key parameters also does not make the project exceed the benchmark. Step 3 - Barrier Analysis 9

The officially announced price for the time of investment decision was 9.67 ykrs/ kWh this converts to approximately 6.4 Dolar Cents. http://www.epdk.gov.tr/documents/elektrik/mevzuat/kurul_karar/elektrik/Elk_Tarife_Top_Sts_Tetas_2007.zip

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CDM-PDD-FORM As the investment analysis concludes that the proposed project activity is unlikely to be the most financially attractive option, the sub step 3- Barrier analysis is optional to be applied and barrier analysis is not considered for the Yalova WPP. Step 4: Common Practice Analysis This step is performed in accordance with the stepwise approach in the Methodological tool: Common practice (Version 03.1; EB 84 Annex 7). This methodological tool provides a stepwise approach for the conduction of the common practice analysis as referred to in methodological tool “Tool for the demonstration and assessment of additionality”, the methodological tool "Combined tool to identify the baseline scenario and demonstrate additionality", or baseline and monitoring methodologies that use the common practice test for the demonstration of additionality. Common Practice Step 1: calculate applicable capacity or output range as +/-50% of the total design capacity or output of the proposed project activity. As a renewable energy project, the installed capacity is chosen as an appropriate proxy for “similar scale”. The power generation capacity of 54 MW of the proposed project activity is selected as the total design capacity. Therefore, the range from 27 MW to 81 MW is considered as applicable capacity. Outcome of Step 1: Applicable capacity range is 27 MW to 81 MW. Step 2: identify similar projects (both CDM and non-CDM) which fulfill all of the following conditions: (a) The projects are located in the applicable geographical area; (b) The projects apply the same measure as the proposed project activity; (c) The projects use the same energy source/fuel and feedstock as the proposed project activity, if a technology switch measure is implemented by the proposed project activity; (d) The plants in which the projects are implemented produce goods or services with comparable quality, properties and applications areas (e.g. clinker) as the proposed project plant; (e) The capacity or output of the projects is within the applicable capacity or output range calculated in Step 1; (f) The projects started commercial operation before the project design document (CDMPDD) is published for global stakeholder consultation or before the start date of proposed project activity, whichever is earlier for the proposed project activity.10. The host country is considered as the applicable geographical area, and the facilities that are identified to be operational as part of the year 2012 grid (the data for years 2013 and 2014 does not provide a detailed list of the individual power plants) are listed below on Table 6:

10

While identifying similar projects, project participants may also use publicly available information, for example from government departments, industry associations, international associations on the market penetration of different technologies, etc.

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CDM-PDD-FORM Table 6: Renewable Energy Power Plants that are operational within the borders of Turkey based on the Addendum 1 of the TEIAŞ Capacity Projection report that enlist all the operational power units of 11 the Turkish Electricity Grid(http://www.teias.gov.tr/KAPASITEPROJEKSIYONU2012.pdf ). Name of Facility

Fuel Type

VER Status

Hydro

Ownership Capacity (MW) EUAS 27

1.

Almus

2. 3.

Yamanli Iii Himmetli (Mem)

Hydro

Private

27

VCS 1015

Burçbendi (Akkur En.)

Hydro

Private

27.3

VCS 419

4.

Çamlica Iii

Hydro

Private

27.6

VCS 759

5.

Selen El.(Kepezkaya Hes)

Hydro

Private

28

VCS

6.

Cindere Denizli

Hydro

Private

28.2

7.

Günder Reg.(Arik)

Hydro

Private

28.2

VCS 912

8.

Yamanli Iii Gökkaya (Mem)

Hydro

Private

28.5

VCS 1014

9.

Akçay

Hydro

Private

28.8

10.

Alize Enerji (Sarikaya Şarköy)

Wind

Private

28.8

GS577

11.

Feke I (Akkur En.)

Hydro

Private

29.4

VCS 533

12.

Ceykar Bağişli

Hydro

Private

29.6

VCS 657

13.

Datça Res

Wind

Private

29.6

ID: 103000000002478

14.

Çanakkale Res (Enerji-Sa)

Wind

Private

29.9

ID: 103000000002023

15.

Mazi 3

Wind

Private

30

ID: 103000000002528

16.

Wind

Private

30

GS?

17.

Sebenoba (Deniz Elek.)Samandağ Seyitali Res (Doruk En.)

Wind

Private

30

ID: 103000000002338

18.

Söke Çatalbük Res (Abk En.)

Wind

Private

30

ID ID: 103000000002274

19.

Ütopya Elektrik

Wind

Private

30

ID: 103000000002255

20.

Bilgin Elek. (Hazar 1-2)

Hydro

ORT

30.1

21.

Tüm En. Pinar

Hydro

Private

30.1

22.

Anemon Enerji (İntepe)

Wind

Private

30.4

23.

Kalen Ener. (Kalen I-Ii)

Hydro

Private

31.3

24.

Ayen Enerji (Akbük)

Wind

Private

31.5

25.

Çamligöze

Hydro

EUAS

32

26.

Karacaören-1

Hydro

EUAS

32

27.

Arpa Hes (Mck El.)

Hydro

Private

32.4

28.

Bağiştaş Ii (Akdeniz El.)

Hydro

Private

32.4

29.

Kepez I-Ii

Hydro

EUAS

32.4

30.

Akdeniz Elek. Mersin Res

Wind

Private

33

31.

Tefen Hes (Aksu)

Hydro

Private

33

32.

Sefaköy (Pure)

Hydro

Private

33.1

33.

Narinkale Hes (Ebd En.)

Hydro

Private

33.5

34.

Kale Hes

Hydro

Private

34.1

VCS 893

35.

Sayalar Rüzgar (Doğal Enerji)

Wind

Private

34.2

ID: 103000000002542

36.

Bares (Bandirma)

Wind

Private

35

GS1072

37.

Murat I-Ii Reg.

Hydro

Private

35.6

PL 1193

38.

Lamas Iii-Iv (Tgt En.)

Hydro

Private

35.7

39.

Belen Hatay

Wind

Private

36

40.

Tuna Hes (Nisan)

Hydro

Private

37.2

11

ID: 103000000002564 ID: 103000000002480

ID:103000000002175

ID: 103000000002526

Please note that in more recent capacity projection reports the detailed list of facilities is not provided since 2012.

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CDM-PDD-FORM Name of Facility

Fuel Type

VER Status

Hydro

Ownership Capacity (MW) Private 37.5

41.

Bereket (Dalaman)

42.

Otluca I Hes (Beyobasi)

Hydro

Private

37.5

VCS755

43.

Muratli Hes (Armahes Elek.)

Hydro

Private

37.7

44.

Hydro

Private

37.8

45.

Ceyhan Hes (Berkman HesEnova) Yenice

Hydro

EUAS

37.9

46.

Dim Hes (Diler Elek.)

Hydro

Private

38.3

47.

Hydro

Private

38.6

VCS565

48.

Değirmenüstü (Kahramanmaraş) Dağpazari Res (Enerji Sa)

Wind

Private

39

ID: 103000000001896

49.

Kayadüzü Res (Baktepe En.)

Wind

Private

39

ID: 103000000001979

50.

Metristepe (Can En.)

Wind

Private

39

ID: 103000000001863

51.

Mare Manastir

Wind

Private

39.2

ID: 103000000002543

52.

Bereket (Mentaş)

Hydro

Private

39.9

53.

Killik Res (Pem En.)

Wind

Private

40

ID: 103000000001982

54.

Hydro

Private

40.2

VCS905

55.

Kalkandere-Yokuşlu Hes(Akim En.) Niksar (Başak Reg.)

Hydro

Private

40.2

VCS 1019

56.

Kilavuzlu

Hydro

EUAS

40.5

57.

Tektuğ-Andirin

Hydro

Private

40.5

58.

Ayrancilar Hes Muradiye El.)

Hydro

Private

41.5

59.

Bereket (Koyulhisar)

Hydro

Private

42

60.

Eşen-Ii (Göltaş)

Hydro

Private

43.4

61.

Akres (Akhisar Rüzgar)

Wind

Private

43.8

62.

Diğerleri

Hydro

EUAS

45

63.

Erenler Reg.(Bme Birleşik En.)

Hydro

Private

45

64.

Susurluk (Alantek En.)

Wind

Private

45

65.

Karacaören Ii

Hydro

EUAS

46.4

66.

Bayramhacili (Senerji En.)

Hydro

Private

47

67.

Gürmat En.

Geothermal Private

47.4

68.

Kemer

Hydro

EUAS

48

69.

Manavgat

Hydro

EUAS

48

70.

Enerji-Sa Birkapili

Hydro

Private

48.5

71.

Poyraz Res

Wind

Private

50

72.

Şanli Urfa

Hydro

EUAS

51

73.

Kovada-Ii(Batiçim En.)

Hydro

ORT

51.2

74.

Kapulukaya

Hydro

EUAS

54

75.

KAPULUKAYA

Hydro

EUAS

54

76.

KADINCIK II

Hydro

EUAS

56

77.

DERBENT

Hydro

EUAS

56.4

78.

Hydro

Private

56.8

79.

SEYRANTEPE HES (SEYRANTEPE BARAJI) İNNORES ELEK. YUNTDAĞ

Wind

Private

57.5

ID: 103000000002559

80.

ZİYARET RES

Wind

Private

57.5

ID: 103000000002310

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VCS (Listed in GTE'sWeb Page:http://www.gte.com.tr/hy dro_above_20MW.asp) VCS 713 ID: 103000000001974

ID: 103000000002075 VCS (Listed in GTE'sWeb Page:http://www.gte.com.tr/hy dro_above_20MW.asp)

ID: 103000000002341

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CDM-PDD-FORM Name of Facility

Fuel Type Wind

Ownership Capacity (MW) Private 60

81.

BANDIRMA RES (BORASKO)

82.

VER Status ID: 103000000002183

ERTÜRK ELEKT. (ÇATALCA)

Wind

Private

60

ID: 103000000002544

83.

EŞEN-I (GÖLTAŞ)

Hydro

Private

60

84.

SEYHAN I

Hydro

EUAS

60

85.

ADIGÜZEL

Hydro

EUAS

62

86.

Hydro

Private

62.2

87.

KARADENİZ ELEK.(UZUNDERE I HES) BÜYÜKDÜZ HES (AYEN EN.)

Hydro

Private

68.9

88.

DEMİRKÖPRÜ

Hydro

EUAS

69

89.

SUAT UĞURLU

Hydro

EUAS

69

90.

FEKE 2 (AKKUR EN.)

Hydro

Private

69.3

91.

KADINCIK I

Hydro

EUAS

70

92.

AKSU RES (AKSU TEMİZ EN.)

Wind

Private

72

93.

DOĞANKENT

Hydro

EUAS

74.5

94.

KESİKKÖPRÜ

Hydro

EUAS

76

ID: 103000000001796

Outcome of Common Practice Tool Step 2: There are 94 projects within the comparison range of the project activity, within the selected geographical boundary. Step 3: within the projects identified in Step 2, identify those that are neither registered CDM project activities, project activities submitted for registration, nor project activities undergoing validation. Note their number Nall. The above list covers all the renewable energy power plants within the geographical boundary defined above (host country). Checking all the power plants within the capacity range determined in Step 1, and looking projects that have started commercial operation before the start date of the project, and eliminating the ones that do claim VER credits, We end up with the following table (Table 7): Table 7 : The list of power plants that are identified to be counted in the Nall list. NO: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Name of Facility Almus Cindere Denizli Akçay Bilgin Elek. (Hazar 1-2) Tüm En. Pinar Kalen Ener. (Kalen I-Ii) Çamligöze Karacaören-1 Arpa Hes (Mck El.) Bağiştaş Ii (Akdeniz El.) Kepez I-Ii Tefen Hes (Aksu) Sefaköy (Pure)

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Fuel Type Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro

Ownership EUAS Private Private ORT Private Private EUAS EUAS Private Private EUAS Private Private

Capacity (MW) 27 28.2 28.8 30.1 30.1 31.3 32 32 32.4 32.4 32.4 33 33.1 Page 18 of 78

14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38.

Narinkale Hes (Ebd En.) Lamas Iii-Iv (Tgt En.) Tuna Hes (Nisan) Bereket (Dalaman) Muratli Hes (Armahes Elek.) Yenice Dim Hes (Diler Elek.) Bereket (Mentaş) Kilavuzlu Tektuğ-Andirin Eşen-Ii (Göltaş) Diğerleri Erenler Reg.(Bme Birleşik En.) Karacaören Ii Gürmat En. Kemer Manavgat Enerji-Sa Birkapili Şanli Urfa Kovada-Ii(Batiçim En.) Kapulukaya KAPULUKAYA KADINCIK II DERBENT SEYRANTEPE HES (SEYRANTEPE BARAJI) EŞEN-I (GÖLTAŞ) SEYHAN I ADIGÜZEL KARADENİZ ELEK.(UZUNDERE I HES) BÜYÜKDÜZ HES (AYEN EN.) DEMİRKÖPRÜ SUAT UĞURLU FEKE 2 (AKKUR EN.) KADINCIK I DOĞANKENT KESİKKÖPRÜ

39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49.

Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Geothermal Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro

Private Private Private Private Private EUAS Private Private EUAS Private Private EUAS Private EUAS Private EUAS EUAS Private EUAS ORT EUAS EUAS EUAS EUAS Private

Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro

Private EUAS EUAS Private Private EUAS EUAS Private EUAS EUAS EUAS

CDM-PDD-FORM 33.5 35.7 37.2 37.5 37.7 37.9 38.3 39.9 40.5 40.5 43.4 45 45 46.4 47.4 48 48 48.5 51 51.2 54 54 56 56.4 56.8 60 60 62 62.2 68.9 69 69 69.3 70 74.5 76

Therefore the number of Nall is 49. Nall=49 Step 4: within similar projects identified in Step 3, identify those that apply technologies that are different to the technology applied in the proposed project activity. Note their number Ndiff.

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CDM-PDD-FORM When we consider the wind power plants listed in Step 3, and comparing their electricity production technologies to the other projects amongst all 49 in table 7 (See Table 7), non of them utilises wind turbines and wind power to produce electricity (there is 1 geothermal power plants and 48 hydroelectric power planst listed in table 7). As the tool suggests the proposed project activity is utilizing a diferent technology compared to those projects identified as Nall. Outcome of Common Practice tool Step 4 is Ndiff=49 Step 5: calculate factor F=1-Ndiff/Nall representing the share of similar projects (penetration rate of the measure/technology) using a measure/technology similar to the measure/technology used in the proposed project activity that deliver the same output or capacity as the proposed project activity. F=1-Ndiff/Nall F=1-(49/49) F=0 Conclusion of Common Practice tool version 3.01 (EB 84 Report Annex 7): The proposed project activity is a “common practice” within a sector in the applicable geographical area if the factor F is greater than 0.2 and Nall-Ndiff is greater than 3. Factor F is calculated to be 0 < 0.2. And, Nall-Ndiff =49-49=0