Project Feasibility Study - VGP Emissions Reduction and Electricity Generation Project

7/27/2019 Project Feasibility Study - VGP Emissions Reduction and Electricity Generation Project

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Project Feasibility Study

VGP Sanitary Landfill Biogas Emission Reduction

and Energy Generation Project

City of San Jose del Monte, Bulacan

Submitted as partial fulfillment of academic requirements in

PA 143: Program and Project Development and Managament

Calibara, Jan Arianne

Estrera, Martin

Eugenio, Paul

Indunan, Norbert Peter

Velasquez, Rein

Asst. Prof. Ebinezer R. Florano, Ph. D.

October 18, 2013


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Project Summary

Project title : VGP Sanitary Landfill Biogas Emission

Reduction and Energy Generation Project

Location : Minuyan Proper, City of San Jose del Monte,

Bulacan

Operation Period : 2022-2031 (10 years)

Estimated Project Cost : Php 253,331,195

Annex I Country Partner : New Zealand

Main Sources of Income : Feed-in Tariff Rate (FIT) and sale of

Certified Emission Reduction Units (CERs)

Net Present Value : Php 113,053,628 (at 4.51% Inflation Rate)

Internal Rate of Return : 11.75%

Benefit - Cost Ratio : 1.1710

Cash Payback Period : 6 years

Sensitivity Indicators: : FIT, CERs, Exchange Rate

Ownership Structure :

Private-sector led project, with either the landfill operator or a local / foreign

investor investing through equity. The Annex I country partner, New Zealand, will

purchase the projects CERs for conversion to New Zealand Units (NZUs) to be traded in

the countrys Emissions Trading Scheme.


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Table of Contents

Project Summary 2

Chapter 1 - Introduction 6

1.1 Information About the Study 7

1.2 Project Location 8

Chapter 2 - Market Analysis 9

2.1 Demand 9

2.1.1 Certified Emissions Reductions 9

2.1.2 Electricity 10

2.2 Supply 10

2.2.1 Population 10

2.2.2 Electricity in the Luzon Grid 10

2.3 Addressing the Demand-Supply Balance 11

Chapter 3 - Technical Analysis 12

3.1 Scope and Methodology Used 12

3.2. Computation of the Baseline Emissions and 12

Ex-Ante Emission Reductions

3.3 Computation of the Emission Factor and the Electricity Supplied to Grid 15

Chapter 4 - Financial Analysis

4.1 Assumptions 19

4.1.1 Financial Assumptions 19

4.1.2 Technical Assumptions 20

4.2 Costs Estimation 21

4.2.1 Investment Costs 21

4.2.2 Operational Costs 22


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4.2.3 Depreciation 22

4.3 Income Statement 23

4.3.1 Income with CER Revenue 23

4.3.2 Income without CER Revenue 25

4.4 Cash Flow Statement 25

4.5. Profit Margins 26

4.5.1 Net Profit Margin 27

4.5.2 Operating Profit Margin 27

4.5.3 Gross Profit Margin 28

4.6 Sources of Funding 28

Chapter 5 - Socio-Economic Analysis 29

5.1 Assessments 29

5.1.1 Benefits 29

5.1.2 Costs 30

5.2 Measurement Tools 30

5.2.1 Net Present Value 31

5.2.2 Internal Rate of Return 32

5.2.3 Benefit-Cost Ratio 33

5.2.4 Cash Payback Period 34

Chapter 6 - Sensitivity Analysis 36

6.1 Possible Scenarios 36

Chapter 7 - Environmental Impact Analysis 38

7.1 General Assessment 38

7.2 Compliance with national environmental laws 38


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Chapter 8 - Institutional Analysis 40

8.1 Legal considerations in support of the project 40

8.2 Project Organization and Management 41

8.2.1 Ownership set-up 41

8.2.2 Public sector participation 42

Chapter 9 - Risks and Opportunities Analysis 44

9.1 Political and institutional risks 45

9.2 Economic and technical risks 45

9.3 Social and behavioral risks 45

9.4 Geographical and environmental risks 46

Annexes

1 Population Projections 47

2 Waste Generation Projectiona 48

3 Waste Collection Projections 49

4 Computation of Methane Emissions 50

5 Computation of Methane Reductions 51

6 Key Assumptions 52

7 Operational Cost Assumptions 53

8 Investment Cost Assumptions 53

9 Depreciation Assumptions 53

10 Set-up of Scenarios for Sensitivity Analysis - NPV 54

11 Set-up of Scenarios for Sensitivity Analysis - IRR 55


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Chapter 1

Introduction

The issues of energy security and climate change go hand in hand. Both are

national and global concerns that is currently being addressed by governments here andabroad. Conventional non-renewable energy sources, such as coal, oil and natural gas

has a significant contribution to greenhouse gas (GHG) emissions which fuel climate

change in the planet.1 Renewable energy technologies, such as wind, hydro-electric,

geothermal, solar, biogas, biofuel and tidal energy is being introduced to replace these

usual sources in the long run.

Also, there is a pressing concern in addressing the issue of waste management

and disposal, as the country continues to develop economically. Population growth,

establishment of new communities and opening of businesses and industries will entail

problems in managing waste people create - how they will be collected and disposed of.

In connection to the greenhouse gas problem, methane, a by-product of waste degrading

in landfills, is considered to be 21 times more harmful than usual carbon dioxide

emissions.2 If not addressed, this will be emitted to the atmosphere, aggravating

damage to the Earths climate.

In 1991, several developed and developing countries signed an agreement called

the Kyoto Protocol which provides a framework in addressing the issue of climate

change. One of the key measures of the document is the Clean Development Mechanism

(CDM), in which selected developed countries (Annex I countries) may opt of off-set

their emissions by investing in environmentally-responsible projects that address

greenhouse gas emissions. These projects are to be established in developing countries

such as the Philippines, which will benefit not just from revenue from the CDM but in

terms of managing their own emissions, additional forms of investment and

technological transfer.

1 US EPA Global Emissions Gas Emissions Data (http://www.epa.gov/climatechange/ghgemissions/global.html2 Overview of greenhouse gases - Methane emissions (http://epa.gov/climatechange/ghgemissions/gases/ch4.html)
http://www.epa.gov/climatechange/ghgemissions/global.htmlhttp://epa.gov/climatechange/ghgemissions/gases/ch4.htmlhttp://epa.gov/climatechange/ghgemissions/gases/ch4.htmlhttp://www.epa.gov/climatechange/ghgemissions/global.html


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1.1 Information about the study

This project feasibility study is patterned after the Pangea Green Energy project

in Payatas, Quezon City, the first solid waste management project in the country to

qualify under the CDM.3 The project, started in 2008 uses biogas-to-energy technology

in which methane from the landfill is extracted, flared and transformed into renewable

energy. The plant is designed to emit zero emissions and capture methane gas that

normally releases to the atmosphere as greenhouse gas.

The projects main sources of revenue will be the income from the Feed-in Tariff

(FIT) for renewable energy projects and Certified Emission Reductions (CERs), a unit of

greenhouse gas reduction created under the Kyoto Protocol. These CERs are to be sold

to an Annex I country, countries mandated to reduce emissions as identified under the

treaty, chosen as New Zealandfor purposes of this document.

This Project Feasibility Study is designed using data and techniques from the UN

Framework Convention on Climate Change4, the Pangea Green Energy Project5, and

the Rosales, Pangasinan BERP Feasibility Study6. Using a conservative approach on

measuring revenues and costs, the project is deemed feasible, though conditions starting

from the writing of this document to project operation may change and may lead to

better or dismal performance.

This document, in general, is written to provide the local government, interested

investors, academics and other stakeholders information they may need in assessing the

viability of the project, or CDM-qualified projects in general. More than assessing

financial viability, it also evaluates the project using other quantitative and quantitative

values, measuring its economic, social and political impact.

3 Quezon City Controlled Disposal Facility Biogas Emission Reduction Project

(http://pgephil.com/links/projects.html)4 Methodology: ACM0001 Consolidated baseline methodology for landfill gas project activities

(http://uvle.up.edu.ph/mod/resource/view.php?id=34707)5 Pangea (2007) Quezon City Controlled Disposal Facility Biogas Emission Reduction: CDM Project

(http://uvle.up.edu.ph/mod/resource/view.php?id=3152)6 Project Feasibility Report - Rosales, Pangasinan (http://uvle.up.edu.ph/mod/resource/view.php?id=36956)
http://pgephil.com/links/projects.htmlhttp://uvle.up.edu.ph/mod/resource/view.php?id=34707http://uvle.up.edu.ph/mod/resource/view.php?id=31521http://uvle.up.edu.ph/mod/resource/view.php?id=31521http://uvle.up.edu.ph/mod/resource/view.php?id=34707http://pgephil.com/links/projects.html


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1.2 Project location

The project will be located in the VGP

Sanitary Landfill, a privately-owned and

operated landfill in Brgy. Minuyan Proper, City

of San Jose del Monte, Bulacan. The landfill

serves as the main disposal site for the city, in

addition to 5 local government units (LGUs) in

he province.

San Jose del Monte is located

immediately North of Metro Manila, bordered

by the cities of Caloocan and Quezon City. Established as a town in 1752 as part of the

Spanish reduccion, SJDM became a city in 2000, the first city in the province. In the

latest Census, more than 450,000 people currently live in the city.

The city has an area of 105.53 square kilometers, with the western portion more

developed compared to the east, which has a more mountainous and forested terrain. It

is currently divided into 59 barangays, with most of the population concentrated in

Tungkong Mangga, Muzon and Sapang Palay areas.

More than being a sleeper town hosting private subdivisions and government

relocation sites, the city has experienced growth due to expansion of the service sector as

the population grows, in part due to its proximity from Metro Manila. Major real estate

developers have entered the city, as well as variety of industrial and commercial

developments, such as the proposed MRT-7 Project and North Luzon East Expressway,

Altaraza Town Center, Colinas Verdes, and the ABS-CBN Sound Stage.


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Chapter 2

Market Analysis

Market Analysis is primarily focused on assessing demand or supply of a certain

product or service. This is considered to be the most essential part of project feasibility,as the results of such analysis determines the projects ultimate viability.

It seeks to determine the size of the demand, supply situation, how it is currently

addressed, potentials for growth, price of products, and the appropriate plan in bringing

supply to those who need them.

2.1 Demand

2.1.1 Certified Emission Reductions (CERs)

The total projected demand by 2020 is 3.14 billion CERs.7 Currently, the

termination of the Kyoto Protocol on December 31, 2012 has caused significant impact

to the demand for CERs. However, it it still expected that demand for CERs will be

maintained due to negotiations for a second commitment period under the Kyoto

Protocol, to be decided by the Ad Hoc Working Group on Further Commitments for

Annex I Parties under the Kyoto Protocol(AWG-KP), in addition to the introduction of

local emission trading markets in several countries.

The New Zealand government has introduced its own Emissions Trading Scheme

(ETS) in 2008 in order to fulfill its greenhouse gas obligations. 8 For purposes of trade,

the New Zealand Unit (NZU) is created parallel to the CER scheme. Several industries

are given set quotas for their greenhouse gas emissions, to which they may purchase or

sell NZUs to address this. The scheme also allows importation of CERs from outside of

New Zealand for conversion to local units.

7 Bloomberg Energy Finance Carbon Market Update

(http://www.iea.org/media/workshops/2012/ghg/1_Turner_IETAEPRI_Paris2012.pdf)8 New Zealand Emissions Trading Scheme Basics. (http://www.climatechange.govt.nz/emissions-trading-

scheme/about/basics.html)
http://www.iea.org/media/workshops/2012/ghg/1_Turner_IETAEPRI_Paris2012.pdfhttp://www.climatechange.govt.nz/emissions-trading-scheme/about/basics.htmlhttp://www.climatechange.govt.nz/emissions-trading-scheme/about/basics.htmlhttp://www.iea.org/media/workshops/2012/ghg/1_Turner_IETAEPRI_Paris2012.pdf


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2.1.2 Electricity

Based on the Philippine Energy Plan 2012 - 2030, the Luzon Grid is expected to

require to up to 10,500 MW of additional electricity as the economy and population

grows. By 2015, there is significant risk that the grid may experience shortfalls in

electricity due to the lack of generating capacity.

2.2 Supply

2.2.1 Certified Emission Reductions - Population and Waste Generation

The City of San Jose del Monte currently has a population of 454,553 based on

data from the National Statistical Coordination Board (NSCB). Based on the citys 2011

Waste Analysis and Characterization Study, each resident generated about 433.01 grams

of waste per day, 42% is set for disposal to sanitary landfills.9

On its own however, the citys current solid waste generation will not be enough

to sustain possible supply of methane gas to which the project will be ultimately

dependent into. Details of this is written in Part 2.3.

2.2.2 Electricity in the Luzon Grid

There is currently 12,578.8 MW of electricity capacity installed in the Luzon

Grid.10 Most of these sources are depended on conventional fuels such as oil, coal and

natural gas. It is to be noted that the grid is highly dependent on the Malampaya

natural gas field, supplying around 40% of the grids electricity supply.

Most of these sources are privately-owned as reforms in the Electric Power

Industry Reform Act (EPIRA) was implemented in 2001. San Miguel Corporation,

Aboitiz Power and First Gen are the dominant suppliers in the grid, though more and

more players are starting to introduce both renewable and non-renewable power plants

in the grid such as Ayala Corporation, KEPCO, GT Power and MERALCO.

9 CSJDM Socio-Economic and Physical Profile - Solid Waste Management (http://www.csjdm.gov.ph/sep.html)10 DOE List of Power Plants - Luzon Grid, 2012


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2.3 Addressing the demand-supply balance

While it is assured that the city will experience increase in population and will

require increased energy demand, in itself it is not enough to sustain the project based

on current methodology. This was based on a list of standards used for the Pangea

project, specifically:

There must be at least 1,000,000 tons of waste already disposed in the plant for

the past 10 years in order to sustain at least 1 mW of generating capacity, and

At least 100,000 tons of waste should be disposed in the landfill every year for at

least 5 years immediately after the landfill reached the 1,000,000 mark.

Upon consultation from the operator of the VGP Landfill, it was disclosed that

the landfill currently accepts 200 tons of waste a day even if it could accept up to 2,000tons. These waste comes from 6 LGUs: San Jose del Monte, Santa Maria, Bocaue,

Meycauwayan, Baliuag and San Rafael. These 6 municipalities can generate only

around 200,000 tons of waste a year, with only a portion expected to be disposed to the

landfill.

To address this, the proponents estimated the total waste generation for the

whole province of Bulacan. Assuming that the landfill will accept the whole provinces

waste, it could hit the 1 million mark the earliest by 2016 and could have the project

feasible for operation in 2022. This can be achieved by increasing the volume of waste

disposed to the site from 200 tons to a minimum of750 tons/day.

Details of these estimates are included in the attached annexes.


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Chapter 3

Technical Analysis

Technical Analysis provides an idea on how the demand for a certain product

could be fulfilled. It examines the extent of production, materials and technologies to beused, how it must be processed, and the resulting products of such process.

3.1 Scope and Methodology Used

The proponents proposes a biogas emission reduction project be installed similar

to the Pangea project. It will involve both flaring and production of energy to displace

Luzon grid electricity produced from conventional sources.

The methodology used for the Project Feasibility Study is similar to the

methodologies used by Pangea, the ACM0001 Consolidated Baseline Methodology for

Landfill Gas Project Activities.11 The baseline scenario is the expected total atmospheric

release of biogas from the solid waste disposal site if the biogas emission reduction

project is absent.

3.2 Computation of the Baseline Emissions and Ex-Ante Emission

Reductions

The baseline emission scenario is the amount of biogas emissions that would

have been released to the environment if the project activity will not be realized. The

baseline emission for year y (BEy) in tCO2e/yr can be calculated using the following

equation:

Where:

11 ACM0001: Consolidated baseline and monitoring methodology for landfill gas project activities - Version 11.0

(http://cdm.unfccc.int/methodologies/DB/203B03KT6N8QCC0R1C56DFOF9OYO2T)
http://cdm.unfccc.int/methodologies/DB/203B03KT6N8QCC0R1C56DFOF9OYO2Thttp://cdm.unfccc.int/methodologies/DB/203B03KT6N8QCC0R1C56DFOF9OYO2T


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The BECH4,SWDS,y was calculated using a formula identical with the formula

found in the IGES ERs Calculation Sheet which is:

Where:

The following values were used to calculate the BEy, mainly based on the 2011

WACS of the city. Several assumptions for the proposed biogas emission reduction plantwere also used, mainly based from those used from Pangea.


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After calculating the values of BEy, the proponents recognized that the said

amounts are sufficient enough to produce CERs and electricity that would yield a

positive net income.

Using the default values, the above data from the Bulacan landfill and

assumptions for the proposed biogas emission reduction plant, the expected baseline

emissions were computed for every year y. Details of this data are available in the

attached annexes.

The BEy can then be used for the calculation of the baseline emission reductions

in tCO2eq of the project activity for a year y. The estimate ER in tCO2eq for a year y was

calculated using the formula:

Where:

PEy was computed using the formula:


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Where:

Using the values of BEy and PEy from year 2012 to 2021 , the total amount of

emission reductions for the project is summarized in the table below:

3.3 Computation of the Emission Factor and the Electricity Supplied to

Grid

The proponents then proceeded to calculate for the baseline emission factor EFy

to get the EGBL,y (MWh) or the net electricity supplied to the Luzon grid as a result of


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the implementation of the CDM project for a year y. EFy is the amount of emissions in

tCO2e for every MWh of electricity that was supplied to the grid as a result of the

implementation of the project.

The EFy was computed using the formula:

Where:

The EFOM,y has the formula:

Where:

The tables below show the data and computation for EFOM,y. The values for

Fi,j,y and GENj,y were derived from the Philippine Power Statistics 2012 DOE.


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The EFBM,y is computed the same way as EFOM,y, the only difference is that

the variable m is used instead of j, where m are the five most recentlybuilt power

units in the country. However, the proponents preferred to use computations from the

National Grid Emission Factor provided by the Department of Energy.12

Using the values obtained for EFOM and EFBM, EFy can now be obtained. The

table below shows the computation for EFy. The proponents used the simple average

method in computing the EFy.

12 DOE National Grid Emission Factor, 2009-2011 (http://www.doe.gov.ph/power-and-electrification/national-grid-

emission-factor-ngef)


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Lastly, using the values obtained above, ERy and EGBL can now be computed.

The table below shows the values obtained for ERy and EGBL.

EFy is calculated as overall expected greenhouse gas reductions, computed as:

ERy= BEy - PEy - LEy

Where:

BEy = Net Annual Methane Emissions (in metric tons) x 21 (the Greenhouse Gas

Potential of Methane)

PEy = Projected project emissions (in this study, estimated to be 10% of BEy)

LEy = Emissions due to leakage (assumed to be zero since the plant is not expected to be

moved on relocated in its entire project life)

EGBl, on the other hand, is computed to be the product of ERy and the EFy as

computed above.


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Chapter 4

Financial Analysis

Financial analysis is fundamental especially to investors in determining projects

sustainability, profitability, stability, solvency and liquidity. Moreover, it is a way to seeif the project is able to use its resources efficiently. To analyze the projects financial

viability, the proponents prepare necessary documents such as income statement and

cash flows, as well as tools to measure profitability such as profit margin, operating

margin and gross margin.

4.1 Assumptions

To estimate potential revenues and costs of the project, several values are

established to give an idea of the possible conditions once the plant is commissioned.

These values are enumerated below:

4.1.1 Financial Assumptions

a) Certified Emissions Reduction (CER) Value

This is identified to be around NZ$ 5.00, the current long-term price of New

Zealand Units (NZUs) in the New Zealand Emissions Trading Scheme.13 Under its

current regulations, participants may import CERs from other countries for

conversion to local New Zealand Units to offset their emissions.

b) Feed-in Tariff Rates

Under current regulations, FIT rates for biogas power plants are set around Php

6.63 / kWh.14 This is set to be reduced by 0.5% every year starting from the 3rd year

of the project.

c) Royalty

This is a set payment for the owners/developers of the technology to be used for the

13 Commtrade Carbon Market Prices (https://www.commtrade.co.nz/)14 DOE Circular 2013-05-0095 Guidelines for the selection process of renewable energy projects under the Feed-in

Tariff system and the award of certificiate of Feed-in Tariff eligibility
http:///reader/full/https///www.commtrade.co.nz/http:///reader/full/https///www.commtrade.co.nz/


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plant, based on the number of emissions expected to be offset. For the purpose of

this document, this is set around 15% of yearly revenue.

d) Contingencies and Insurance Cost

This is set as 10% of yearly revenue.

e) Share of Proceeds

Under current UNFCCC rules, up to 2% of the projects income should be given to

the host country and the CDM Executive Board, respectively.15

f) Depreciation

The proponents used a straight-line method, offsetting 10% of total investment in

each year of operation.

g) Taxes

It is assumed that the project will qualify under current incentives for renewable

energy projects. A 10% flat tax on income will be levied starting from the 8th year of

operation in lieu of all national and local taxes. 16

h) Exchange Rates

This is set under current Bangko Sentral ng Pilipinas (BSP) rates as of October 18,

2013. Assuming stable exchange rates, these values could be similar by the time ofproject commissioning.17

i) Price Index

A price index was used to estimate possible inflation scenarios until such time that

the project is commissioned. Using the 5-year average from the National Statistical

Coordination Board (NSCB), the proponents expect an average annual increase in

prices by 4.51% from 2012 to 2021, the years before the plant is expected to go

online.

15 UNFCCC Adaptation Fund

(http://unfccc.int/cooperation_and_support/financial_mechanism/adaptation_fund/items/3659.php)16 2012 Philippine Investment Priorities Plan (http://www.gov.ph/2012/06/13/investment-priorities-plan-2012/)17 BSP Exchange Rates (http://www.bsp.gov.ph/statistics/sdds/ExchRate.htm)
http://unfccc.int/cooperation_and_support/financial_mechanism/adaptation_fund/items/3659.phphttp://www.gov.ph/2012/06/13/investment-priorities-plan-2012/http://www.bsp.gov.ph/statistics/sdds/ExchRate.htmhttp://www.bsp.gov.ph/statistics/sdds/ExchRate.htmhttp://www.gov.ph/2012/06/13/investment-priorities-plan-2012/http://unfccc.int/cooperation_and_support/financial_mechanism/adaptation_fund/items/3659.php


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4.1.2 Technical Assumptions

Based on the Pangea project, the proponents assumed a possible construction of

a 1.4 mWh plant similar in technology to Pangea. The plant is also assumed to operateup to 7,500 hours/year.

Deducting internal energy consumption, the plant can generate up to 9.9 million

kWh of electricity. Provided a monthly household electricity consumption of 100

kwH/month, the plant can serve the demand of up to 8,250 households.

4.2 Costs Estimation

To come up with the total project costs, operation and investment costs are

summed up. This will reflect on the financial statement of the project. The basis of these

costs is discussed in order to justify the expenses.

4.2.1 Investment Costs

The VGP Sanitary Landfill is about 45-50 hectares, twice the size of the Payatas

Landfill. Considering this ratio, purchasing costs of the materials in Pangea are doubled

in VGP. Expenses for drilled wells, HDPE pipes, well heads, substations, connection to

three phase grid and combustion plant with 200 kW engine are doubled and adjusted to

price inflation using the assumed inflation rate.

Other expenses such as civil works, office building, roofing, portable analysis

instruments, shipment and logistics, traveling costs and superintendence are also

adjusted. These costs are primarily based on the Pangea project, except for fencing and

security, which are omitted with the assumption that the landfill operator will shoulder

it in behalf of the plant.

For Phase 2, the new engine is the only investment. In Payatas, the engine has a

capacity of 700 kW. For the VGP project, this capacity is doubled to 1.4 mW. The price

of this investment is also adjusted similar to what has been done to the other variables.


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4.2.2 Operational Costs

The projects operational

costs are also adjusted and estimatedbased on the size of the plant. Only ten

employees are intended for the plant

because is mainly operated by

machines, more so that the plant can

opt to outsource some of it operations

to current workers in the landfill if the

need arises.

The plant is estimated to have four laborers, two engineers, one finance officer,

one consultant, one office personnel and one utility personnel. Regarding the salaryof

employees, the average wage is taken from the NWPC Region 3 rate, adjusted for

inflation and increased by 33% to assume higher wages for professional staff, such as

engineers, more so provide contingency should there be a need for more labor.

Extraction and engine service costs are estimated based on the Pangea

project at around Php 1,250,000 per year. Engine Service Cost, on the other hand, is

valued at Php 1.25 per kWh. The proponents decided not to adjust this value for

inflation in the assumption that technological advances will reduce or maintain this

costs in the long run.

Finally, travel expenses including gas and travel allowances for official

business trips are estimated at Php 25,000 every month while a spending of Php

100,000/year is set for utilities, such as water and communications.

4.2.3 Depreciation

Depreciation of assets such as equipment is accounted as expenses in the future

to account for possible reduction in value once it is retired. To compute for depreciation,

the straight-line method is used, dividing the total investment from the number of years

the equipment from such investment is expected to be used.


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The total investment from Phase 1 is divided equally to ten periods while for

Phase 2, the total investment is divided into 8 periods, given that the equipment is used

starting on year 3. Hence, depreciation per year in Phase 1 is worth Php 18,078,503 and

in Phase 2, Php 27,146,744.

4.3 Income Statement

Income statement measures the financial performance of the project as it reflects

the summary of expenses and revenues of the project. The income statement is

presented annually in order to monitor the progress of the projects financial situation.

It is vital to observe the results of these statement because it will guide the management

of the project regarding the projects viability.

4.3.1 Income with CER Revenue


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From the technical analysis part, calculated electricity and CER generation

comprises the revenues of the project which is shown in the income statement.

If the production of electricity is fixed, it is expected that the project has fixed

revenue given that FIT rates are constant. However, in practice, this revenue might

fluctuate due to higher or lower production of electricity. In the VGP proposal, it is

assumed that electricity generated is constant and that there will be no significant

changes to FIT rates, resulting to revenues that are generally constant for the duration

of the project.

The same situation is expected with CER revenues. In practice, CERs sold every

year may vary and revenues might increase or decrease as well depending on these

changes. Moreover, price of CERs in the open market may go up and down, influencing

revenue. For the VGP project, a fixed price was assumed to simplify analysis.

When revenues from the electricity and CERs are added, total revenues from the

project is projected to be increasing. However, revenues measure only the amount of

money that the project receives in a particular time. It is still subject to deductions of

costs, taxes, and other fees such as contingencies ad insurance costs.

Another component of income statement is the net income where calculated

revenues are subtracted with the costs and other expenses such as depreciation and

taxes. Considering the current revenue and costs projections, the income statement

shows that the project will yield net income for all 10 years of the project.


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4.3.2 Income Statement without CER Revenue

The proponents also analyzed the income viability of the project with the absene

of revenue from CERs. Though the trend for revenue is still increasing from the third

year to tenth year, it is observed that the first two years of the project does not have any

revenues at all. Without CER revenue, the project is expected to have negative net

income given that the costs are the same.

4.4 Cash Flow Statement

The Cash Flow Statement demonstrates the changes in the amount of cash of an

organization. It is essential to solvency and the entitys survival especially whenever

there are debts or expenses that are needed to be paid. Hence, it is advisable to monitor

cash flows during the projects life as it can be used as an indicator of the organizations

financial strength.

In the VGP project, cash inflows come from income from the sale of electricity


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and CERs. Conversely, cash outflows are comprised of the investment costs. On the first

two years of the project, even though it does not yet receive revenues from electricity, it

already has a positive net income, but net cash flow is negative. These negative cash

flows last until its fifth year though the project already receives revenue from the sales of

electricity generated on the third year.

It is on the sixth year of the project when net cash flows become positive,

meaning that the accumulated cash inflow from the projects first year until sixth year is

enough to cover the cash outflows for the investment. The succeeding years show that

net cash flows are already positive.

Meanwhile, cash flow statement without CER revenues has a negative net cash

flow for the whole period of operation. Hence, it means that revenue from electricity

sales alone cannot compensate the cash flow on investment costs of the project.

4.5 Profit Margins

The Net Profit Margin, Operating Margin and Gross Margin are some of the

measures to verify the financial performance and efficiency through testing the projects

profitability.

The following tables summarizes of margins for both cases: (a) with CER revenue

and (b) without CERs.

(a) With CERs


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(b) Without CERs

4.5.1 Net Profit Margin

Net Profit Margin is the ratio between net income and revenues. This explains

how much from the revenues are translated into profits and usually expressed in

percentage. A higher Net Profit Margin indicates that the project is highly profitable.

The formula used is:

Net Profit Margin (%) = Net Profit/Total Revenue

If the project has CER revenues, certainly, it has positive net profit margins

compared to if the project does not have CER revenues, in which the project will result

to a negative net profit margin in ten years. Hence, it means that if the project does not

sell CERs, it will not be profitable at all.

4.5.2 Operating Profit Margin

Operating Profit Margin measure the companys pricing strategy and

efficiency. Moreover, it is a measurement of the part of the revenue that is left after

paying variable costs such as salary, raw materials, etc. A positive operating margin

means that the company is still able to pay its fixed costs, such as debts and interest

expenses. It is calculated as:

Operating Profit Margin (%) = Operating income (EBIT) / Net Sales (Revenues)

The calculated operating margins from the projects income statement with CER

revenues are positive within the ten year period. However, in the projects income

statement without CER revenues, calculated operating margins are all negative,

interpreted that the project can pay its fixed costs if it has CER revenues.


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4.5.3 Gross Profit Margin

Gross Profit Margin is the percentage of the total sales revenue that the

company retains after incurring direct costs of producing the goods or services sold by

the company. The higher the percentage, the higher the value retains to the company to

use it in other costs or obligations. To calculate the formula used is:

Gross Profit Margin (%) = Total Revenue - Total Costs of Goods Sold/Total Revenue

Unlike the first two margins, both cases gain positive gross margins in ten years.

However, gross margins without CER revenues are lower compared to when the project

earns from CER revenues. It means that the project has more savings to be allocated on

other projects administrative or emergency expenses when the project has CER

revenues.

4.6 Source of Funding

For investment costs, the proponents assume that these will be financed through

equity. Interested local and foreign investors will receive economic interest in the

project in exchange for their investment in the project. Financing through debt was not

assumed as it is seen to significantly affect the projects cash flow.

Revenues are expected to come from the sale of electricity (as translated into FIT

rates) and CERs. The electricity generated by the plant will be sold either in

arrangement with the local electricity distributor (for SJDM, MERALCO) or to the

Wholesale Electricity Stock Market. For CERs, it is assumed that the Annex I country

will directly purchase these for re-sale to the New Zealand Emissions Trading Scheme.


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Chapter 5

Socioeconomic Analysis

Socioeconomic analysis is a process of determining the feasibility projects

desirability equated to its net contribution to social and economic welfare.

Socioeconomic analysis plays an important role in the feasibility study as it helps

in evaluating the costs and benefits of the project. It presents a calculation of how the

projects may affect stakeholders, may it be positive or negative, favorable or unfavorable.

Furthermore, this type of analysis serves as a tool to search for best measures that will

give us net contribution of economic and social benefits considering the basic

assumptions of employment, taxes, supply of commodities and demand for materials.

The quantifiable indicators in this analysis includes the net present value,internal rate of return, benefit-cost ratio and cash payback period.

5.1 Assessment of Benefits

In a nutshell, CDM projects intend to help developed countries to reduce biogas

emissions and assist developing countries attain sustainable development.

The identified benefits of the project are classified into tangible and intangible

benefits. The intangible benefits are the following:

Improved local safety. This pertains to the reduction of biogas emissions leading

to a safer environment for the people located near the landfill, making them breathe

cleaner air and live in a healthier setting.

Job creation. Employment generation in the country is of importance for years

and this project contributes to help the local people by offering jobs.

Capacity building. The local staff in the landfill will be provided proper training

and information in order to gain knowledge with the right monitoring equipment

and monitored data, all for enhanced general competence.

Climate change awareness. The local community will benefit from the

stakeholder consultations, wherein the purpose of CDM projects and potential

biogas reductions will be discussed and issues on the local situation of the landfill


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will be addressed.

The tangible benefits include:

Revenues from CER sales. These are the revenues coming from the sale of CERs

to the partnered country of the project.

Revenues from the annual generated electricity. These refer to the revenues

from the sale of the generated electricity to the local power distributor supplying the

community.

Transfer of technology. Essential equipment and technology that are not

available in the country will be imported and be of use and of great value for the

project to operate in its best function.

5.1.2 Assessment of Costs

CDM projects always come with a price. Mainly, the costs of the project will come

from the investment and operation of the plant, involving the use of real resources,

classified into capital or investment costs and operating and maintenance expenses.

Capital/Investment costs. This refers to the costs for the general development,

construction and building of the project, including the purchase of tangible goods

such as the plant and the machinery before the project is operational.

Operation and maintenance expenses. This include all costs spent to finance

the day-to-day operations of the facilitycomprising of administrative costs, wages

and salaries, travel payments, security and other monitoring and evaluating costs.

5.2 Measurement Tools

5.2.1 Net Present Value

The Net Present Value (NPV) analysis will be used in order to assess the costs

and benefits of the project. It considers the time value of money and estimates the net

benefit from the project considering the possible risks the financial market might inflict.

This is done by converting the value of future costs and benefits to their actual present


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value.

To compute for the future value, a discount rate is used. The discount rate to be

considered is 4.51%, the value of inflation assumed in the financial analysis.

In computing for the NPV, the annual benefits and costs must be identified to bediscounted using the discount factor:

Where:

df= discount factor

r= discount rate (3.6%)

n= Number of years over which a future value is being discounted

Then, the Present Value (PV) using the formula:

PV= FV x df

Where:

PV= Present Value

FV= Future Value

df= discount factor

Finally, the following formula is used to get the NPV:

Where:

B= benefits

C= costs

df= discount factor


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The NPV of the project is greater than zero, meaning that the discounted value ofthe future total benefits is greater than the costs or the investment therefore getting a

positive yield. The calculation shows that the project is economically feasible.

5.2.2 Internal Rate of Return

The Internal Rate of Return (IRR) determines how the investment fares to

other possible alternatives. It is the discount rate at which the NPV is equal to zero,

which indicate discounted benefits that can equal discounted cost.

The project is a good investment if the IRR is greater than the rate of interest if

spent in an alternative investment. In the project, the proponents considered the yield

granted by the Philippine 20-year Treasury Bond which has a latest coupon rate of

3.625%.18

The proponents used the manual method involving trial and error and the use of

the formula:

18 Bureau of the Treasury Daily Rates of OTC Sales of Government Securities

(http://www.treasury.gov.ph/govsec/dailyrates.html)
http://www.treasury.gov.ph/govsec/dailyrates.htmlhttp://www.treasury.gov.ph/govsec/dailyrates.html


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Where:

r+ = biggest discount rate with a positive NPV

NPV+ = the NPV at r+

r- = smallest discount rate with a negative NPV

NPV- = the NPV at r-

After a series of guesses and estimates, the proponents came up with the r+ and

r-, and then computed for the NPV at both discount rates.

Using all the values from the table above and after plugging them into theformula, the calculated IRR for the project resulted better compared to the Treasury

Bonds. This means that the project is a reasonably better investment.

5.2.3 Benefit-Cost Ratio

The Benefit Cost Ratio (B-C Ratio) aims to determine the evaluation of the

extent to which the project may achieve its objectives. It compares the total benefits of a

project with its total costs. If the benefits exceed the costs, then the project iseconomically viable.

The variables to be considered are the total discounted benefits or the sum of the

product of the annual benefits and the discount factor, and the total discounted costs or

the sum of the product of the annual costs and the discount factor.


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After computing for the total discounted costs and benefits, the discounted

benefits and costs are summed up and divided.

The B-C Ratio of the project resulted in a value greater than 1. This indicates that

the benefits from the project is greater than the costs, hence, it makes the project

economically viable.

5.2.4 Cash Payback Period

The Cash Payback period provides information as to the length of time an

investor must wait to gain the benefits of its investment. Projects with positive cash

flows are more likely to have a shorter payback period.

The net cash flows for every year were calculated as shown in Part 4.4. The

computation for the cash payback period requires the value for the last year with a

negative Net Cash Flow (NCF) added to the quotient of the Absolute value of NCF in

that year and the total cash flow in the following year. The formula is summarized as

follows:

Cash Payback Period = (Last Year with a negative NCF) +

(Absolute value of NCF in that year) /(Total Cash flow in the following year)


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Year 5 is the last year with a negative NCF. Using the formula, the Cash Payback

Period is 6 years.


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Chapter 6

Sensitivity Analysis

Sensitivity Analysis is conducted to study and assess possible changes in financial

feasibility due to certain factors. It tries to identify key variables that has significantimpact in the projects financial situation, and if these may cause positive or negative

outlook.

6.1. Possible scenarios

The original estimations in Part 4 is established as the baseline for facilitating

sensitivity analysis. In addition, the proponents chose 3 key variables that has direct

impact in the projects finances:

A) Certified Emission Reductions (CERs)

It is estimated that demand for CERs will spike starting in 2020, thereby raising

market prices. The CER price is established in this scenario to be NZ$ 25, the

original set price during the commencement of the New Zealand Emissions

Exchange.

B) Feed-in Tariff (FIT)

The Feed-in Tariff is established with the assumption that investment costs for

renewable energy projects will fall down in the long-term. The proponents

estimated a reduction of 25% in FIT rates by the start of project commissioning.

C) Foreign Exchange Rate

Foreign Exchange Rates are vulnerable to global economic situations and

fluctuates every day. A 25% increase in NZ$ to PHP exchange rates was assumed

for the analysis.

Financial statements were created using these scenarios, in addition to

estimating the Net Present Value and Internal Rate of Return. These values were then

used in computing the Sensitivity Indicators using the following formulas:


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After the computations, the resulting indicators were assessed to conclude which

key variable causes higher sensitivity.

The following table shows the results of the conducted analysis. It could be seen

that the Feed-In Tariff rates contributes the highest possible sensitivity, interpreted to

mean that changes in FIT rates will have the highest financial impact to the project.

However, it should also be noted that the other variables will cause significant

impact as well, as stated by the SI-IRR computation. As all of them showed a result

higher than the cut-off rate (i.e. the discount factor used for NPV), it only confirms thatthese variables are important factors to be considered for the project.


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Chapter 7

Environmental Impact Analysis

7.1 General Assessment

In line with the principles of sustainable development, this project ensures a

rational balance between socio-economic development and environmental protection

for the benefit of present and future generations.

Landfills produce gas mainly composed of methane, a type of greenhouse gas that

contributes in the damage of the atmosphere. The Biogas Emission Reduction project in

San Jose del Monte, Bulacan is expected to collect this from the landfill. The methane

collected will be later on combusted and flared. This process results in the reduction of

greenhouse gas emissions. It also decreases the contaminants from the landfill and

lessens the possibility of on-site fires. The project is also a source of renewable energy

and thus gives an alternative to using non-renewable energy like coal and oil that

produces additional greenhouse gases.

However, the project also produces minor pollution, specifically noise pollution.

The noise comes from the construction and operation of the plant. The noise can be

controlled by operating at specific hours of the day and locating the plant in an area farfrom residential areas, thus minimizing the adverse effects.

7.2 Compliance with national environmental laws

According to the rules and regulations set by the Department of Environmental

and Natural Resources (DENR) through its Administrative Order No.30 Series of 2003,

all agencies and instrumentalities of the national government including government

owned and controlled corporations as well as private cooperating firms and entities are

required to prepare an Environmental Impact Statement (EIS) for every action, project

or undertaking, which significantly affects the quality of the environment. Under the

said order, the Biogas Emission Reduction project falls under Category C, these are

projects intended to directly enhance environmental quality or address existing


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environmental problems.

Since category C projects are not covered by the Philippine EIS System, this

project is not required to secure an Environmental Compliance Certificate (ECC) from

the Environmental Management Bureau. As an alternative, the project needs to secure a

Certificate of Non-Coverage from the Environmental Management Bureau (EMB) of

Region III.


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Chapter 8

Institutional Analysis

Institutional Analysis seeks to assess policies and structures that can influence

the stability of the project. It enumerates laws and regulations to which the project mustadhere to through-out the course of operation. Also, it aims to examine organizational

structures that is key to ensuring smooth project operation.

8.1. Legal Considerations in support of the project

In the Philippines, environmental awareness and protection is a concept backed

up with legal grounds. In Article 2 Section XVI of the 1987 Philippine Constitution,

the state is mandated to protect and advance right of the people to a balanced and

healthful ecology in accord with the rhythm and harmony of nature. It is also found

under Article II Section 15 of the constitution that the state has the responsibility to

protect and promote the right to health of the people and instill health consciousness

among them.

In the Local Government Code of 1991 (Chapter II Section 17), local

government units are responsible in setting up a Solid Waste Management System and

an Environmental Management System. The project will help the local government ofSan Jose del Monte, Bulacan in achieving this mandate.

Aside from the Local Government Code of 1991, the Biogas Emission Reduction

Project is also in line with three other laws. Under Republic Act 8749, commonly known

as the Clean Air Act of 1999, the State shall pursue a policy of balancing development

and environmental protection by pursuing the frame work for sustainable development.

Under Section 4 of this act, it is stated that citizens have the right to breathe clean air.

The project reduces greenhouse gases and helps clean the air, thus giving citizens acleaner air to breathe.

Another law is Republic Act 9003 or the Solid Waste Management Act of 2000.

Due to health, environmental and social hazards brought about by public dumpsites, it

is the objective of this project to uphold the objectives of RA 9003 by utilizing

environmentally-sound methods that maximize the utilization of valuable resources and


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encourage resource conservation and recovery.

Republic Act 9729 or the Climate Change Act of 2009 aims to stabilizing

greenhouse gas concentrations in the atmosphere at a level that would prevent

dangerous anthropogenic interference with the climate system which should be

achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate

change, to ensure that food production is not threatened and to enable economic

development to proceed in a sustainable manner. The project is guided by this act since

the project involves the extraction, combustion and flaring of methane which is a

greenhouse gas.

The project is also in accordance with the Philippine Development Plan

(Chapter 10) of the Aquino administration that aims to conserve, protect and

rehabilitate environmental and natural resources of the country. The administration

recognizes that our natural resources are in grave threat. The government plans to

address the problem using an integrated and community-based ecosystems approach to

environment and natural resources management, precautionary approach to

environment and natural resources, sound environmental impact assessment (EIA) and

cost-benefit analysis (CBA).

8.2. Project Organization and Management

8.2.1. Ownership set-up

The project is intended to be a private-sector effort, to be organized under a

corporation. Equities representing economic interest in the created company will then

be assigned to investors.

Potential investors to the project are listed on the next page, as well as potential

setbacks that may hinder their investment.


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Potential Investor Issues that may prevent them from investing

Landfill owner / operator (VGP) May be constrained in capital and would opt to focus on

operating the landfill.

Private banks and/or development

institutions (LandBank, DBP, World

Bank, ADB etc.)

Might be difficult to be invited due to possible risks they

have to shoulder or unfamiliarity with the CDM

mechanism. There is also lack of financing dedicated to

environment-friendly projects in private banks.

Local private company other than

VGP

Might not invest due to unfamiliarity with the project.

Currently, there are no local energy companies

generating power from biogas from landfills.

National Government and/or the Local

Government of CSJDM

May opt to use their money for their own projects,

especially for social spending.

Foreign company (e.g. Pangea) May not invest due to unfamiliarity with the Philippines

energy program and investment climate.

Similar to Pangea, the proponents prefer a foreign investor to take majority

interest in the project, more so desired if the investor comes from the partner Annex I

country, New Zealand. This set-up will accelerate partnership with the Annex I partner,

especially for the take-up of produced CERs.

However, no matter who will be the investor in the project, the Annex I country is

expected to be the ultimate beneficiary of the CERs. These will bought by the New

Zealand government for conversion as New Zealand Units (NZUs) to be traded in the

New Zealand Emissions Trading Scheme.

8.2.2 Public Sector Participation

The City Environment and Natural Resources Office (CENRO) is in charge of the

implementation of Solid Waste Management (SWM) programs and other environmental

laws. It also monitors the daily operations of the personnel handling the wastes of the

city.

The Solid Waste Management Board of the city monitors and evaluates solid

waste management plans and programs and adopts viable revenue generating strategies


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to sustain their continuity. The Solid Waste Technical Working Group assists the board

by providing technical assistance in the formulation of plans, data, documentation,

monitoring and evaluation.

A representative from the CENRO shall represent the local government of San

Jose Del Monte in the operations of the project. The representative will coordinate with

the project supervisor regarding environmental compliance and regulatory

requirements. In addition, key environmental indicators from the project, such as the

volume of emissions captured, shall be certified by the CENRO and transmitted to the

DENR-Environmental Management Bureau, the national agency in charge of

monitoring CDM projects.


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Chapter 9

Risks and Opportunities Analysis

This chapter enumerates potential issues that may assist or hamper the

commencement of the project according to political, economic, social andenvironmental factors.

9.1. Political and institutional risks

Local governments in the Philippines are current elected every 3 years as

mandated by the Local Government Code of 1991. Knowing this situation, there is a

chance that the elected city government may withdraw support for the project, if not be

against the project at all. Since most aspects of the project is ultimately dependent upon

the host community, the project may not push through without the local governments

cooperation.

A major factor considered for this study is the disclosure of the landfill operator

(VGP) that they were restrained by the city government to accept waste from Metro

Manila due to environmental and health concerns. Knowing this situation, several

targets, including the target waste generation rates to which the project is ultimately

dependent may not be fulfilled. This may be considered as lost opportunity with the factthat the Payatas landfill in Quezon City is set to be closed in 2013, in addition to

expected population growth in that region.

In addition, national policies regarding environment and energy may change,

which may cause an adverse environment for CDM projects. Extreme situations such as

a military takeover (coup d etat) may cause adverse effects to the economy and to the

project. But currently, with the country as signatory to the Kyoto Protocol and with

national government bodies in charge, the risk of failure in this aspect is low.In the possibility that the CDM mechanism is scrapped due to a new climate

change treaty, the project will suffer significant loss in revenue. However, assuming that

the New Zealand Emissions Trading Scheme operates even without the Kyoto Protocol,

this risk may be considered non-existent. A potential introduction of a local emissions

market may also help in offsetting such risk.


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9.2 Economic and technological risks

The country is currently experiencing high economic growth rates of around 6-7%

due to strong macro-economic fundamentals. However, a potential economic crisis

similar to the 1998 Asian Crisis or the 2009 Global Economic Crisis may slow down the

economy, if not trigger a recession. This may affect investor outlook in the country and

will make the search for investors to the project difficult.

In addition, several costs such as taxes, wage rates and fiscal incentives may

change which will cause lower income for the project. High inflation rates or an extreme

fluctuation in foreign exchange rates will also have significant impact in revenue sources.

Potential corruption may slow down project commencement, if not put an end to it

unless properly addressed.

A significant over-supply in either renewable energy projects or CDM projects in

general may cause lower FIT and CER rates, leading to lower revenue. However, current

trends point to expected significant increase demand in the future, thereby raising

prices for both FIT and CERs.

Technological advances in renewable energy should also be considered, which

may bring more efficiency and lower expected investment in the production of expected

products. To the contrary, such advances may cause the projects methodology to be

obsolete, causing significant costs in equipment maintenance.

9.3 Social and behavioral risks

The opening of the VGP Sanitary Landfill has encountered opposition from

residents and other stakeholders due to perceived health and environmental damage.19

However, as documented in the Pangea project, the construction of the biogas reduction

project may cause this opposition to die down, provided there is significant and effectivestakeholder engagement.

Also, current consumption behaviors may be considered in estimating potential

source of waste. As more and more Filipinos become environmentally-conscious, their

19 Envi groups appeal for closure of Bulacan and QC Dumpsites

(http://ecowastecoalition.blogspot.com/2011/03/envi-groups-appeal-for-closure-of_25.html)
http://ecowastecoalition.blogspot.com/2011/03/envi-groups-appeal-for-closure-of_25.htmlhttp://ecowastecoalition.blogspot.com/2011/03/envi-groups-appeal-for-closure-of_25.html


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consumption patterns may change which can cause lower waste generation or an

alteration in waste components, either to more biodegradable waste or to the contrary,

as more wastes are recycled. Potential methane emissions will be therefore dependent

on such patterns.

9.4. Geographical and environmental risk

In Chapter 2 of this document, it is recommended that the VGP Landfill should

be assigned as the sole operating landfill for the whole of Bulacan in order to make the

project feasible. However, not all municipalities and cities in the province are directly

accessible from SJDM and vice versa and might prefer operating landfills on their own

or bring their solid waste elsewhere. Currently, 2 similar landfills are also existing in the

municipalities of Norzagaray and Obando.

San Jose del Montes high elevation makes the city safe when it comes to floods

caused by typhoons. However, due to its hilly terrain, potential landslides may occur,

including in the location of the VGP landfill. Earthquakes should also be considered in

order to protect the plant from possible damage.


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Annex 1

Population Projections


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Annex 2

Waste Generation Projections


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Annex 3

Projections - Waste Going to Landfill


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Annex 4

Computation of Methane Emissions


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Annex 5

Computation of Methane Reduction


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Annex 6

Key Assumptions


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Annex 7

Operational Cost Assumptions

Annex 8

Investment Assumptions

Annex 9

Depreciation Assumptions


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Annex 10

Set-up of Scenarios for Sensitivity Analysis - NPV


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Annex 11

Set-up of Scenarios for Sensitivity Analysis - IRR

Project Feasibility Study - VGP Emissions Reduction and Electricity Generation Project

Documents

Transcript of Project Feasibility Study - VGP Emissions Reduction and Electricity Generation Project