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Case study:Sofia District Heating

Dr. Venkata R. PuttiTeam Leader, Carbon Finance Assist

The World Bank

Minsk / Belarus, March 2007

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BackgroundDistrict heating is the dominant form of space heating in major cities in Bulgaria:

• 11 GWh heat energy and 1.8 GWh electricity in 2004

• Accounted for 25% of the total energy consumption

• Sources: Natural Gas 80%. Coal 12% and Heavy Fuel Oil 8%

Actions by the Government since 2000 to help a turn-around

tariff increases Strengthen the connection of four zones in the

district heating system demand-side measures through metering

consumption; rehabilitation of sub-stations

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Project Description Managed by the Sofia District Heating Company,

owned by the municipality Aim of the Project: rehabilitate DH system in Sofia by

replacing 60 km of pipelines and 7,000 substations. reduce heat losses and improve network efficiency correspondingly, energy consumption and CO2

emissions are reduced. Project has been fully implemented Sofia DH network is now a variable flow, that allow

consumers to automatically regulate their heat consumption. It has strengthened the connections between the four zones of Sofia, optimizing the heat supply.

Still to be decided whether the project follows JI Track 1 or 2; some revision for documentation may be needed

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Measures Taken Replacement of piping: 60 km of transmission

pipelines and over-ground thermal insulation have been implemented.

Replacement of substations: About 7,000 substations replaced.

Variable-speed pumping: Electricity consumption reduced by 30%; Improvements to match better the required heat output to actual, real-time consumer demand

Measures resulted in aggregate savings of (i) input fuel (gas and HFO) in CHPs, and (ii) electricity used by primary distribution pumps.

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Emissions Reductions

Achieved through: 1. Reductions in heat and water losses in the

pipeline distribution system,2. Improved interconnectivity among the

four zones in Sofia DH transmission system, and

3. Electricity consumption reduced by 30% due to frequency controlled pumps

All three efficiency gains lead to lower consumption of fossil fuels and thus lower CO2 emissions

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Estimated Emissions Reductions

Length of period (VER)

4 years

Year Annual ERs tCO2

2004 106,000

2005 133,000

2006 104,000

2007 126,000

Total 469,000

Length of JI crediting period (ERU)

5 years

Year Annual ERs tCO2

2008 124,000

2009 122,000

2010 119,000

2011 117,000

2012 115,000

Total 596,000

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Baseline setting

Baseline study for Sofia DH project conducted in 2004: Identification of most likely baseline scenario, based

on assessment of alternative sources of heat, including electricity, natural gas and individual heating systems such as solid or liquid fuels.

All alternatives result in higher cost for consumers and higher infrastructure investments than those needed to rehabilitate and upgrade the existing DH system.

On the other hand, inability of the company to raise required capital to rehabilitate the DH system (w/o carbon leverage).

Baseline scenario: continuation with operation of DHS for the foreseeable future, with no changes to the operation of the system

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Baseline

No CDM methodology was available for this type of project.

The following baseline approach was taken: Baseline scenario is continuation of the

existing situation This is appropriate in those technology

projects where the energy consumption and emissions can be expected to follow historical trends in the absence of the project (system changes).

Additionality: demonstration of an Investment barrier

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Project Boundary: Emission Sources & Monitoring Points

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Monitoring The monitoring plan describes how the achieved

ERs are estimated and monitored, and how the baseline emissions and project emissions are calculated.

No approved monitoring methodologies were available at the time the project was designed.

A Tracking Database (Excel-based workbook) was developed for this project:

Monitor emission reductions monthly and annually;

Determination of monitoring points, to monitor fuel savings;

Some parameters are measured, while some are calculated.

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Monitoring PlanOperational and management

arrangements: TS operating personnel responsible for

ensuring daily/monthly data collection and update of Tracking Database on a routine basis.

Periodic aggregation and recording of data from all the individual DH plants that comprise the Sofia DH System into the Tracking Database, including monthly calculation of achieved emission reductions.

Recording of data is done at the TS head office, where staff prepares daily, weekly, and monthly management reports.

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Public Consultation

Environmental issues related to the project were made public through the Environmental Management Plan (EMP).

The EMP was published in local newspapers and also was placed in the WB’s website.

Public meetings were also held to discuss the EMPs. In these meetings, no concerns about the environment were raised.