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Cuyamapa Hydroelectric Project

Appendix A1 to the simplified modalities and procedures for small-scale CDM project activities

CLEAN DEVELOPMENT MECHANISM

SIMPLIFIED PROJECT DESIGN DOCUMENT
FOR SMALL SCALE PROJECT ACTIVITIES (SSC-PDD)
Version 01 (21 January, 2003)

CUYAMAPA HYDROELECTRIC
PROJECT

March 7, 2005

1
This appendix has been developed in accordance with the simplified modalities and procedures for small-scale
CDM project activities (contained in annex II to decision 21/CP.8, see document FCCC/CP/2002/7/Add.3) and it
constitutes appendix A to that document. For the full text of the annex II to decision 21/CP.8 please see
http://unfccc.int/cdm/ssc.htm).
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Cuyamapa Hydroelectric Project

CONTENTS

A. General description of project activity

B. Baseline methodology

C. Duration of the project activity / Crediting period

D. Monitoring methodology and plan

E. Calculation of GHG emission reductions by sources

F. Environmental impacts

G. Stakeholders comments

Annexes

Annex 1: Information on participants in the project activity

Annex 2: Information regarding public funding

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Cuyamapa Hydroelectric Project

A. General description of project activity

A.1 Title of the project activity:

Cuyamapa Hydroelectric Project

A.2. Description of the project activity:

The Cuyamapa Hydroelectric Project is a run-of-river hydroelectric project located in Honduras. The
project will have an installed capacity of 12.2 MW and will rely on a daily regulation dam using the
Cuyamapa River that has a basin of 118.55 km2, 1,500 mm of annual rainfall, and 2.45 m3/s average
annual flow. The objective of Cuyamapa Hydroelectric Project is to generate energy and sell it to the
national grid, ENEE, through a 15-year PPA contract.

Development of the Cuyamapa Hydroelectric Project will directly reduce greenhouse gases emissions
produced by thermal energy using fossil fuels that are currently in operation in Honduras. With an
average annual generation of 48.19 GWh, the Project will reduce emissions by 38,552 tons of CO2e per
year.

The purpose of the project is to generate electricity by using the renewable hydraulic resources of the
area. The local community of El Salto will directly benefit from the electric energy produced by this
project. Furthermore, the project includes community development benefits aimed to contribute to the
sustainable socio-economic development of the region and country. The project will also reduce
dependence on imported fossil fuels that currently dominate the energy composition of the national grid.

As part of the Cuyamapa Hydroelectric Project, ENETRAN will implement a Community Development
Plan that will include programs and projects in such areas as: health, education, infrastructure and
environment. The main objective of this plan is to develop self-managing community projects that
contribute to the quality of life of the local people. These projects will include improvements to health
services, and environmental quality through projects focused on the management and protection of
natural resources. Based on the results of consultations with the community, the following community
development project areas have been designed: teaching aid, community organization, natural resources
management, production reinforcement, and preventive health.

Additionally, ENETRAN and the Yoro Municipality will design and implement a Reforestation Plan.
Other organizations related to protection and conservation of natural resources will be involved in this
activity. For this plan, ENETRAN has already developed a biophysical diagnosis of the conditions of the
basin.

The community of El Salto’s main productive activity is subsistence agriculture of basic grains.
Therefore sources of employment are reduced and limited to agricultural labour and cattle raisers during
the two harvest seasons per year. The remainder of the year some of the inhabitants carry out informal
activities that do not require qualified labour. Many others have had to relocate to the north zone of the
country to work in the assembly plants located in San Pedro Sula and El Progreso. A smaller group is
displaced to the city of Yoro to look for employment however the opportunities are scarce.

During the construction phase approximately 80 jobs will be created for local people. Locals will be
hired as bricklayers, carpenters, electricians, welders and security. Health insurance and a first aid clinic
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Cuyamapa Hydroelectric Project

are also components of this project. Also during the construction phase electric energy will be provided
to the local community.

The project will also direct activities to women to teach them how to improve their quality of life. A
reforestation plan is being designed to protect the river basin including planting tress and protecting the
zones where there is low grade degradation.

A.3. Project participants:

ENETRAN
Roberto Nunez
Tegucigalpa, Honduras
Tel: +504 236-8788

CABEI – Central American Bank for Economic Integration

Gracia Barahona
Tegucigalpa, Honduras
Tel: +504 240-2263

A.4. Technical description of the project activity:

The diversion dam consists of a 24-meter high concrete structure that will divert 3.92 m3/s of water
through a 1,310 m length tunnel, followed by a forebay tank. A steel penstock 660 m long and 56’’ in
diameter will carry the water to the powerhouse. The gross head is 373 m and the net head is 368.30 m.
The powerhouse will be equipped with two horizontal Pelton turbines with 6,100 kW of nominal power.
The transmission voltage is a 69 kV circuit through a 3.97 km line that will connect to the national grid
through the Morazán substation. The average annual generation is 48,190 MWh and the plant power
factor is 0.45.

The water that comes from the dam flows through the tunnel, into an oscillation tank, then through the
steel penstock and finally down to the powerhouse where the water powers the turbines. The turbines
move the generators that generate the electricity that goes to the national grid.

Nominal Data:

Installed Capacity 12.2 MW

Average annual generation: 48.19 GWh
Design head: 368.30 m
Number of units: 2 Pelton Turbines
Powerline: 69 kV

A.4.1. Location of the project activity:

A.4.1.1 Host country Party: Honduras

A.4.1.2 Region/State/Province etc.: Yoro

A.4.1.3 City/Town/Community etc: El Salto and Subirana

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A.4.1.4 Detail on physical location:

The community of El Salto is located upstream of the dam, 8 km northwest from the town of Subirana.
Subirana is 58 km from Yoro, the capital of the department. Yoro is located on the main road number
CA-23, approximately 300 kilometres from the capital city of Tegucigalpa.

The basin is located on the department of Yoro in the north-central zone of Honduras with the following
UTM coordinates: 16P 0446 559, 1684 251 (Dam site). Geographically, it is surrounded by the Pijol
Mountain and the town of Nueva Esperanza in the West; the towns of Cedritos and Subirana in the South;
El Plan Grande mountain to the North; and Piedras Gordas mountain and Palos Blancos community to the
East.

It is possible to confirm this information on cartographic sheets: IGN Subirana 2761-IV and IGN El
Negrito 2661-I.

Cuyamapa
Project Site

A.4.2 Type and category(ies) and technology of project activity

The category for the project activity according to the UNFCCC’s published simplified procedures for
small-scale activities is Type 1D – Renewable Electricity Generation for a Grid. The project conforms to
the project category since the nominal installed capacity of the Cuyamapa project is below the 15 MW
threshold and the plant will sell its generated electricity to the National Utility under its Power Purchase
Agreement.

Two horizontal Pelton turbines with 6,100 kW of nominal power each will be used, the technology used
is well-known and it had been used with success in other countries within Central America, notably
Central America.
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A.4.3 Brief statement on how anthropogenic emissions of greenhouse gases (GHGs) by

sources are to be reduced by the proposed CDM project activity:

The inclusion of the Cuyamapa Hydroelectric Project with its 12,200 kW of installed capacity and an
average 48.19 GWh annual generation will directly reduce the greenhouse gases emissions produced by
thermal energy plants using diesel fuel that are currently in operation in Honduras. Under the business as
usual scenario there would be continuing growth in diesel based electricity generation capacity and large
scale hydroelectric projects.

A.4.4. Public funding of the project activity:

This project has not received and is not seeking any public funding.

A.4.5 Confirmation that the small-scale project activity is not a debundled component of a
larger project activity:

Based on the information provided in Appendix C, this Project is not a debundled component of a larger
project activity since the project participants have not registered or operated another project in the region
surrounding the project boundary.

B. Baseline methodology

B.1 Title and reference of the methodology applied to the project activity:

Project Activity I.D. Renewable electricity generation for a grid.

B.2 Project category applicable to the project activity:

Appendix B of the simplified modalities and procedures for CDM small-scale project activities offers the
following two choices for preparing the baseline calculation for this type of project activity:

(a) The average of the “approximate operating margin” and the “build margin”
OR
(b) The weighted average emissions (in kgCO2/kWh) of the current generation mix.

Option A is selected for this project because the project will displace mostly fossil-fuel generating sources
since they are at the margin of the electricity generation system. According to the Honduran Generation
Expansion Plan, 2002 – 2007, prepared and published by ENEE, the majority of future generating
capacity expected to come online over the next several years will be primarily fossil-fuel plants. For
example, a 210 MW diesel plant is expected to come online in 2005 and a 200 MW combined cycle plant
in 2006.

B.3 Description of how the anthropogenic GHG emissions by sources are reduced below those
that would have occurred in the absence of the proposed CDM project activity (i.e. explanation of
how and why this project is additional and therefore not identical with the baseline scenario)

Market Situation:
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As of the end of 2003, energy in Honduras was generated by 39% renewable energy (hydroelectric and
biomass) and 61% fuel oil and diesel. Hydroelectric projects made up 80% of total generation in 1993.
In the last ten years, primarily only diesel generation plants or large hydro have been built, except for two
small-hydro projects, Babilonia (3 MW) and La Nieve (0.5 MW). Considering total current hydro
capacity, well below 1% represents small hydro plants (below 15 MW capacity according to CDM
criteria). It is worth noting that hydroelectric plants under 50 MW are considered small-scale according
to Honduran legislation.

ENEE estimates that local demand for energy will require an increase in gross capacity from 798 MW in
2002 to 1690 MW in the year 2015, equal to an increase of 892 MW. To help meet this demand ENEE:

ƒ Increased diesel production by 75 MW in 2001,

ƒ Negotiated a public bidding with a diesel producer Lufussa for an additional 200 MW of supply
to come online in 2005, and
ƒ Finalized a contract in 2003 to purchase 200 MW from ENERSA for a combined cycle project
expected to come online in 2006.

Small power producers, including hydro developers, are also expected to help further fill the demand. As
of April 2004, sixteen project developers have negotiated PPAs with ENEE to implement small-scale
projects. These include Cuyamapa and the two projects, Babilonia and La Nieve, which are already
operating. The sixteen projects include 75.4 MW of hydro and 20.8 MW of biomass. At present, few of
these plants have completed all the required government permits and licenses, let alone secured financing.
An optimistic estimate is that 50% of these projects will actually come online in the next few years
considering the current status of the project and the track record in the country. As described below, due
to the significant barriers, especially access to finance and regulatory requirements, none of the six hydro
projects originally projected to come online in 2004 according to ENEE’s expansion plan of the year
2002 will actually do so.

The present laws supporting this project are listed below, there are also a number of revisions to these
laws being discussed in government now to further encourage and increase private participation in the
energy sector of the Honduran economy.

i. Framework Law of the Electrical Sub-sector – Decree No 158-94

ii. Regulations of the Law - Decree No. 934-97
iii. Incentive Law – Decree No. 85-98
iv. Additions to the Incentive Law - Decree No. 267-98
v. Law of Production / Stimulation Decree No. 131-98 and includes reforms to framework Law of
Electrical Sub-sector Decree No. 158-94
vi. Master Plan for National Reconstruction and Transformation

ADDITIONALITY:

According to Attachment A to Appendix B of the simplified modalities and procedures for CDM small-
scale project activities evidence to why the proposed project is additional is offered under the following
categories of barriers: (a) investment barrier, (b) technological barrier, and (c) prevailing practice.

a) Investment Barrier:

Honduras suffers from a weak local financial infrastructure. Local banks charge high interest rates, up to
32% for Lempira based loans and 15% for US dollar loans, for their limited funds. Foreign banks are
generally not willing to lend into the country without significant levels of guarantees and secured hard
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currency. Given the lack of access to capital, energy systems with high up-front capital expenditures
(such as hydro) are particularly challenging in this environment.

The main source of local funds is CABEI (Central American Bank of Economical Integration). CABEI is
currently the primary lender for small-scale hydro projects in Honduras and without them it is unlikely
most small hydro projects would advance2. Similar to other external finance sources, CABEI has very
strict lending requirements, including at least a 100% guarantee and co-participation from local banks.
Even taking CABEI's regional development mandate into account, these represent significant barriers for
project developers. Furthermore, as the primary lender to most small hydro projects, CABEI has
substantially increased their risk exposure, meaning that willingness to invest in future small hydro
projects may be reduced.

The inclusion of CER revenue and hard currency based on the ERPAs has therefore become an important
part of CABEI’s strategy to be able to lend to a higher percentage of small renewable energy projects than
their normal portfolio diversification process would allow. To underline this fact, CABEI is a designated
CDM project participant. CABEI specifically commissioned development of this project as a CDM
activity in order to increase the project’s financial attractiveness thereby reducing their overall portfolio
risk from this sector. CABEI believes that CER revenue provides a hard currency revenue stream that is
critical to project development and allows developers to pay for equipment that must be sourced from
hard currency countries.

(b) Technological Barrier:

Overall, the predominant and known technology is thermal plants and all experience is oriented to that
sector. The lack of available knowledge and confidence in the technology involved in small, privately
built hydroelectric projects makes this type of development non-existent and difficult to establish. As a
result, the government and Banks see thermal plants as less risky. This risk is reflected in the fact that
well under 1% of the current hydro capacity represents small hydro plants (below 15 MW capacity).

(c) Prevailing Practice:

Privately financed, built and operated small hydro plants are not common practice in Honduras. The
primary barriers within the institutional and regulatory framework are the unclear process, sudden and
unsubstantiated changes to the legal process, and timing for completing licenses and permits. All of these
issues amount to enough uncertainty to deter many project developers from starting small-scale energy
projects and financial institutions from supporting project that choose to do so.

The time frame for the legal documentation required to develop small renewable energy projects has
proven to be more than three years for each project. The paperwork involved with the government is not
well defined with procedure and personnel changes frequently causing significant delays.

Another uncertainty within the government is a pending reform to the framework law stating that all
concessions must go for public bidding. Documentation of the proposed law is available. The risk with
this law taking effect is that small developers could locate a potential site, do all preliminary feasibility,
and then face the possibility that the site will be given to another developer in the auction process.

2
Project developers with very strong finances or significant assets or capital in other activities may qualify for local
loans without assistance from CABEI, but this is generally not the case and does not impact the additionality
argument.
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These uncertainties are further illustrated through the Babilonia project. Babilonia, one of the two
operational small-scale hydro projects, was developed by a project developer with numerous other assets
and was able to obtain financing by securing the project to other tangible assets. Despite this, the project
was under construction for over three years due to several political and institutional barriers. For
example, in order to receive the public support and approval of the project, the mayor required that
$40,000 was put into his escrow account to cover social projects. There was much public debate about
the legalities of this requirement and after many months the project reached agreement and continued
advancing.

Considering that government procedures, laws and paperwork to access the licenses and permits required
to develop a small hydro project takes significantly longer than for a diesel power plant (in some cases
over 3 years as opposed to less than a year for some diesel plants), it is very likely that the ratio of diesel
to hydro energy production in Honduras will increase significantly or that all of the small-scale hydro
projects under development will actually be implemented.

Summary:

The current and expected practice of predominantly relying on thermal sources and some large hydro in
expanding the generation capacity, as well as the combination of lack of access to finance, institutional
and regulatory barriers, and perceived risks of the selected technology, clearly demonstrate that the
Cuyamapa project is additional and therefore not the baseline scenario. The CDM has allowed Cuyamapa
to overcome the barrier to finance since CABEI is now willing to invest in the project. The prohibitive
barriers that exist in Honduras are confirmed by the observed trend in recent capacity additions and small
hydro plants’ low share of the total electricity generation in the country.

B.4 Description of the project boundary for the project activity:

The project boundary is defined as the notional margin around a project within which the project’s impact
(in terms of carbon emission reductions) will be assessed. As referred to in Appendix B for small-scale
project activities, the project boundary for a small scale hydropower project that provides electricity to a
grid encompasses the physical, geographical site of the renewable generation source. For the Cuyamapa
project this includes emissions from activities that occur at the project location. .

The system boundary for the proposed project is defined as the national grid in Honduras. The project
boundary for the baseline will include all the direct emissions, being the emissions related to the
electricity produced by the facilities and power plants to be replaced by the Cuyamapa project. This
involves emissions from displaced fossil fuel use at power plants.

Conforming to the guidance and rules for small scale project activities, the emissions related to
production, transport and distribution of the fuel used for the power plants in the baseline are not included
in the project boundary as these do not occur at the physical and geographical site of the project. For the
same reason the emissions related to the transport are also excluded from the project boundary.

B.5 Details of the baseline and its development:

B.5.1 Specify the baseline for the proposed project activity using a methodology specified in the
applicable project category for small-scale CDM project activities contained in appendix B of the
simplified M&P for small-scale CDM project activities:

As specified for project category Type 1.D, the appropriate baseline is number 29a.
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B.5.2 Date of completing the final draft of this baseline section (DD/MM/YYYY): 07/06/2004

B.5.3 Name of person/entity determining the baseline:

Roberto Nunez
ENETRAN

Annika Lundgren Colston

EcoSecurities

C. Duration of the project activity / Crediting period

C.1 Duration of the project activity:

C.1.1 Starting date of the project activity:

05/07/04

The construction of Cuyamapa Hydroelectric project is planned to start in June 2004 and will be in
operation by September 2006.

C.1.2 Expected operational lifetime of the project activity: (in years and months, e.g. two years
and four months would be shown as: 2y-4m.)

50y-0m

C.2 Choice of the crediting period and related information: (Please underline the selected option
(C.2.1 or C.2.2) and provide the necessary information for that option.)

C.2.1 Renewable crediting period (at most seven (7) years per crediting period)

C.2.1.1 Starting date of the first crediting period (DD/MM/YYYY):

C.2.1.2 Length of the first crediting period (in years and months, e.g. two years
and four months would be shown as: 2y-4m.):

C.2.2 Fixed crediting period (at most ten (10) years):

C.2.2.1 Starting date (DD/MM/YYYY): 01/09/2006

C.2.2.2 Length (max 10 years): (in years and months, e.g. two years and four
months would be shown as: 2y-4m.)
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10y-0m

D. Monitoring methodology and plan

D.1 Name and reference of approved methodology applied to the project activity:

Metering the electricity generated as described in the Simplified Procedures for SSC Projects for Type 1D
Projects.

D.2 Justification of the choice of the methodology and why it is applicable to the project
activity:

The methodology was selected as suggested by the Simplified Monitoring Methodologies for small-scale
CDM projects. Measuring and recording the amount of electricity supplied to the buyer is the most
accurate method of monitoring the project.
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D.3 Data to be monitored:

(The table below specifies the minimum information to be provided for monitored data. Please complete the table for the monitoring methodology chosen for
the proposed project activity from the simplified monitoring methodologies for the applicable small-scale CDM project activity category contained in
appendix B of the simplified M&P for small-scale CDM project activities.

Please note that for some project categories it may be necessary to monitor the implementation of the project activity and/or activity levels for the calculation
of emission reductions achieved.

Please add rows or columns to the table below, as needed)

ID Data type Data Data unit Measured (m), Recording Proportion of How will the For how long Comment
number variable calculated (c) or Frequency data to be data be is archived
estimated (e) monitored archived? data to be
(electronic/ kept?
paper)
1 Electricity MWh M Daily 100% Electronic and Crediting -
Generation of paper period plus 2
the Project years
delivered to
the Grid

D.4 Name of person/entity determining the monitoring methodology:

Roberto Nunez
ENETRAN

Annika Lundgren Colston

EcoSecurities
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E. Calculation of GHG emissions by sources

E.1 Formulae used:

E.1.1 Selected formulae as provided in appendix B:

No formula is provided for the baseline for Project Category 1.D, paragraph 29 a.

E.1.2 Description of formulae when not provided in appendix B:

E.1.2.1 Describe the formulae used to estimate anthropogenic emissions by sources of

GHGs due to the project activity within the project boundary: (for each gas, source,
formulae/algorithm, emissions in units of CO2 equivalent)

No formula is used. Emissions by sources are zero since hydroelectric power is a zero
CO2-neutral source of energy.

E.1.2.2 Describe the formulae used to estimate leakage due to the project activity, where
required, for the applicable project category in appendix B of the simplified modalities
and procedures for small-scale CDM project activities (for each gas, source,
formulae/algorithm, emissions in units of CO2 equivalent)

This is not applicable as the renewable energy technology used is not equipment
transferred from another activity. Therefore, as per the Simplified Procedures for SSC
Project Activities no leakage calculation is required.

E.1.2.3 The sum of E.1.2.1 and E.1.2.2 represents the project activity emissions:

Zero Emissions

E.1.2.4 Describe the formulae used to estimate the anthropogenic emissions by sources
of GHG’s in the baseline using the baseline methodology for the applicable project
category in appendix B of the simplified modalities and procedures for small-scale CDM
project activities: (for each gas, source, formulea/algorithm, emissions in units of CO2
equivalent)

Total emissions, E, are given by:

E(ton CO2/yr) = ∑JEJ(ton CO2/yr) [Equation 1]

Where EJ = CO2 emissions per year of the generation mode j, calculated as:

EJ (tCO2/yr) =

PGJ (MWh/yr) * FCJ (TJ/yr) * PEJ(%) * CEFJ(tC/TJ) * CCJ (tC/yr) [Equation 2]

Where PGJ = electricity generation of power plant j

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FCJ = fuel consumption conversion factor – 3.6 MWh to TJ

PEJ = plant efficiency in percent
CEFJ = emission capacity of the fuel-fired power plant j
CCJ = carbon content conversion factor – 44/12 TC to CO2

Weighted average emission <E>, representing the emission intensity, is given by:

<E> (ton CO2/MWh) = E (ton CO2/yr) / PG (MWh/yr) [Equation 3]

Where E is given by equation (1);

PG (MWh/yr) = ∑J PG J (MWh/yr)

Equation 3 applies to both the operating margin and build margin cases. The only difference is the set of
power plants used in each case.

The emission intensity coefficient, <E>baseline, is thus obtained as:

<E>baseline (t CO2/MWh) = {<E>operating margin (t CO2/MWh) + {<E>build margin (t CO2/MWh)} / 2

[Equation 4]

Finally, baselines emissions, Ebaseline, are given by:

E baseline (t CO2/yr) = <E>baseline (t CO2/MWh) * CG (MWh/yr) [Equation 5]

Where CG stands for Cuyamapa’s electricity generation.

E.1.2.5 Difference between E.1.2.4 and E.1.2.3 represents the emission reductions due to
the project activity during a given period:

Emission reductions are achieved from the equation in section E.1.2.4.

Emission reductions of project activity are

0.740 tons CO2/MWh * 48,190 MWh/year = 35,660 tons CO2/year

E.2 Table providing values obtained when applying formulae above:

Based on Cuyamapa’s assumptions and findings in the Feasibility Study the installed capacity will be
12.2 MW and the plant operating capacity is 45%. The Project has an annual electricity generation of
48,190 MWh per year.

Approximate Operating Margin:

<E>operating margin = .765 (ton CO2/MWh)

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Build Margin:

<E>build margin = .716 (ton CO2/MWh)

Baseline Emissions:

<E>baseline = (<E>operating margin + <E>build margin)/ 2

= (.765 + .716) / 2 = .740

Therefore, the baseline emissions are:

.740 tons CO2/MWh * 48,190 MWh/year = 35,660 tons CO2/year

Calculation of Emission Factors:

Fuel Cum % of Year

Plant Name Technology Type GWh GWh Generation MW Online
La Esperanza hydro 0 0 0% 1.7 2003
Nacional de 2002 (45
Ing mdmv bunker 172.6 172.6 4% 50 to 50)
2002 (25
Laeisz mdmv bunker 191.1 363.7 8% 60 to 60)
2002 (1.5
Aysa biomass 15 378.7 8% 8 to 8)
Aguan biomass 0 378.7 8% 0.5 2002
La Grecia biomass 0.2 378.9 8% 8 2002
Lean biomass 1 379.9 8% 0.5 2002
La Nieve hydro 0.2 380.1 8% 0.5 2002
Nacaome hydro 31.6 411.7 9% 30 2002
Cemcol mdmv bunker 343.8 755.5 17% 65 2002
El Coyolar hydro 0 755.5 17% 1.7 2000
EMCE II mdmv bunker 360.9 1116.4 25% 55 1999
Lufussa II mdmv bunker 520 1636.4 36% 80 1999
Eda TV bunker 0 1636.4 36% 1.2 1998
La Puerta -
MEX diesel T Gas diesel 10.4 1646.8 36% 15 1995
Lufussa I diesel T Gas diesel 170.5 1817.3 40% 39.5 1995
EMCE I mdmv bunker 508.7 2326 52% 86.6 1995
Santa Maria hydro 0.5 2326.5 52% 1.2 1994
Zacapa hydro 0.7 2327.2 52% 0.8 1994
Ampac mdmv bunker 0.3 2327.5 52% 4.5 1994
Elcosa mdmv bunker 458.3 2785.8 62% 80 1994
Santa Fe mdmv diesel 4.5 2790.3 62% 5 1994
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La Puerta diesel T Gas diesel 16.9 2807.2 62% 18 1993

Canaveral hydro 172.9 2980.1 66% 29 1993
El Cajon -
Francisco hydro 955.5 3935.6 87% 300 1993
El Nispero hydro 36.9 3972.5 88% 22.5 1993
Rio Lindo hydro 540.5 4513 100% 80 1993
Source: ENEE 2003

Average IPCC 1996

CEF Calculation Plant Inventory
Operating Margin: Efficiency Workbook
Carbon
Fuel 27.4% and Emission Carbon Total
Consumption 37% Factor Content Emissions Generation CEF
Fuel tons
Type GWh/yr TJ/yr tC/TJ tC/yr tCO2/yr GWh CO2/MWh

Bunker 2,555.70 9,200.52 24,712.65 21.1 521,436.94 1,911,935.44

Diesel 202.30 728.28 2,655.05 20.2 53,631.99 196,650.65

Total 2,108,586.08 2,758.00 0.765

IPCC 1996
CEF Calculation Build Inventory
Margin: Workbook

Average
Fuel Bunker Carbon Carbon Total
Consumption Efficiency Content Content Emissions Generation CEF
Fuel tons
Type GWh/yr TJ/yr 37% tC/TJ tC/yr tCO2/yr GWh CO2/MWh

Diesel - - - 20.2 - -

Bunker 1,068.40 3,846.24 10,331.02 21.1 217,984.59 799,276.84

RE 48.00 172.80 0 -

Total 799,276.84 1,116.40 0.716

Calculation of Emission Reductions:

Output
Calculations:
Emission
MW MWh CEF Reductions
Cuyamapa 12.2 48,190 0.740 35,660

F. Environmental impacts

F.1 If required by the host Party, documentation on the analysis of the environmental impacts
of the project activity: (if applicable, please provide a short summary and attach documentation)

An Environmental Impact Assessment (EIA) was completed in accordance with Honduran law for the
project and is available in hard copy in Spanish. A copy of the EIA as well as mitigation measures will be
provided to the Operational Entity validating the project. The outcome of the EIA was favorable and the
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project was found not to have significant environmental impacts. Where impacts were identified,
mitigation measures were defined.

Construction Phase:

In general, the main impacts generated during a hydro project’s construction affect the biological
environment because interventions on the vegetation, aquatic and terrestrial populations are necessary.
The project has no significant as all interventions are located in areas with little to no vegetation, and in
the case of the tunnel and of the penstock, are located on a cattle ranch with very little vegetation
diversity. Roads will be built on existing gaps and developed areas, however if new roads are necessary,
they will be built on cattle ranch areas. The impacts on aquatic and terrestrial species will be negligible
since the routes established for the construction of the tunnel, penstock, powerhouse and intake do not
represent ideal natural conditions for wildlife populations.

The construction phase of the project will have some impact related to the possible alteration of the
river’s water quality and sediments, as well as modification of the hydrologic behavior in a section of
approximately 2.30 km of the river bed where the intake and Powerhouse spillway will be placed. The
impacts are related to the aquatic life of the river that will be affected by the decreased water flow. To
mitigate or diminish this impact, the project design must use an ecological flow, which is deemed as the
necessary volume to maintain the ecological systems in the river. This will assure the survival of the
aquatic life of the river in this section.

Other impacts during this phase include fuels and lubricants waste generation, solid waste, suspended
particles and noise pollution. These impacts are easily mitigated through the application of good
engineering practice including the construction of silt traps, adequate fuels and lubricants management
and waste disposal, construction of provisional dam during the intake construction, and interventions in
only the strictly necessary areas.

Operation Phase:

The main impacts that will be generated once the project is operating involve alteration of the hydrologic
conditions in the section of the river with the intake and the powerhouse. The reduction of the present
water volume will cause changes in the water quality, such the temperature and decrease dissolved
oxygen; which can negatively affect aquatic life in the section of the river mentioned above. In the
reservoir it is also possible that sediment accumulation and contaminants concentration will occur.
Increased humidity around the reservoir may negatively impact existing flora species. Other affected
groups include amphibians, aquatic insects and some species of clams, arthropods or river shrimps, whose
habitat is transformed.

G. Stakeholders comments

G.1 Brief description of the process by which comments by local stakeholders have been invited
and compiled:

Several public meetings have been held with residents in the community of Yoro as well as the
municipality to explain the project, including how it will be developed and operate as well as the
environmental and social impacts and benefits.

G.2 Summary of the comments received:

The Environmental Impact Assessment was approved by the Secretaría de Recursos Naturales y
Ambiente (SERNA). A letter of approval from the Municipality of Yoro is also on file. The majority of
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the comments expressed concerns of whether the project would be large and similar to other dammed
hydroelectric projects in the country. Once the project and process was explained, as well as the local job
creation and local benefits, the local stakeholders had no objection to the project.

G.3 Report on how due account was taken of any comments received:

There were no negative comments received therefore it was not necessary to incorporate the comments
into the project design or alter the project in any way.
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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

(Please copy and paste table as needed)

Organization: ENETRAN
Street/P.O.Box: Col. 21 de Octubre entrada barrio El Rincón 500 después del plantel de la
alcaldía. Apartado postal 1119
Building:
City: Tegucigalpa
State/Region: Francisco Morazán
Postfix/ZIP:
Country: Honduras
Telephone: +504 236-8788
FAX: +504 221-417
E-Mail: rnunez@terra.hn
URL:
Represented by:
Title:
Salutation:
Last Name: Nuñez
Middle Name:
First Name: Roberto
Department:
Mobile:
Direct FAX:
Direct tel: +504 236-8788 extension 231
Personal E-Mail:

Organization: CABEI
Street/P.O.Box: P.O. Box 772
Building:
City: Tegucigalpa
State/Region:
Postfix/ZIP:
Country: Honduras
Telephone: +504 240 2263
FAX: +504 240 2135
E-Mail: gbarahon@bcie.org
URL: www.bcie.org
Represented by:
Title:
Salutation: Mrs.
Last Name: Barahona
Middle Name:
First Name: Gracia María
Department: International Finance Department
Mobile:
 Page 20

Direct FAX:
Direct tel:
Personal E-Mail:
 Page 21

Annex 2

INFORMATION REGARDING PUBLIC FUNDING

NOT APPLICABLE

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