Overview
The project was a set of three cascade hydropower stations located on the White Waters River (or Bái Shuǐ Jiāng) of Yunnan Province in southwestern China. The total installed capacity is 78 MW, with expected annual average electricity sales of 355.9 GWh over the first crediting period to the Yunnan Provincial Grid, part of the China Southern Power Grid (CSPG). Through production of renewable power, the project was expected to displace an average of 274,560 tCO2e/yr from 1 August, 2007 to 31July, 2014 for the first crediting period.
Construction began in 2004, with Station #2 breaking ground in January 2004, Station #3 in June 2004, and Station #1 in October 2004. The Yunnan Zhongda Yanjin Power Generation Corporation Ltd. has been unable to fully raise the capital required to complete the project domestically and has sought debt financing from the International Finance Corporation (IFC) and other international development banks, and has proposed selling Clean Development Mechanism (CDM) credits. The IFC lent up to US$22 million and helped mobilize other long-term funding from Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), and Société de Promotion et de Participation pour la Coopération Economique (Proparco) (all three parties are collectively referred to as “the Lenders”). Clean Development Mechanism (CDM) funding was needed because the Project: 1) was unable to attract sufficient funding from domestic financiers, and 2) the debt service capacity was substantially lower than other projects with similar risks that the Lenders have financed elsewhere before.
Benefits
The project has contributed to two of China’s major developmental challenges. First, the project has helped satisfy increasing electricity demand in CSPG feeding China’s fast-growing Pearl River Delta Region by exploiting China’s untapped clean and renewable energy resources. This increasing demand has stimulated development of coal-fired power plants, which utilize China’s most abundant fuel resource. The continued deployment of coal-fired power plants will aggravate the deleterious effects of air pollution on human health and increase greenhouse gas emissions. In addition, China’s coal industry has a troubled safety record, with estimates of more than 5,000 coal miners killed annually. The project, by utilizing hydropower, has played a part in shifting power generation to more sustainable alternatives. To minimize its own environmental and social impact, the project has limited the scale of its water reservoirs, and has implemented comprehensive environmental management and resettlement plans, which have been developed through extensive stakeholder consultation.
Secondly, the project has introduced much-needed investment capital and employment to a poverty-stricken, remote mountainous region of Yunnan Province. Yanjin County is a “national level poverty county”, with limited development prospects owing to its remote location, inadequate infrastructure, limited cultivable land, and lack of non-farming employment opportunities. The project has created approximately 600 locally filled construction jobs, and 50-60 permanent operating jobs thereafter.