Baseline for electricity sector CDM projects: Simplifying estimation of operating margin emission factor

The Clean Development Mechanism-Executive Board (CDM-EB) has proposed a consolidated methodology to estimate baseline emission factor (EF) for renewable-energy-based grid-connected power projects. The methodology is based on Combined Margin approach, estimated as weighted average of operating margin (OM), and build margin emissions factors. One of the options suggested for estimating OM EF, simple adjusted operating margin (SAOM), takes into account the possibility that existing low-cost/must-run (LCMR) generation sources in a power system may be affected by the introduction of new generation sources in systems. SAOM method is prescribed for a power system where the power generation from LCMR sources is 50% or more of the total system generation. The paper demonstrates that a better decision criterion for use of SAOM is comparison of average yearly load of LCMR sources, calculated as total LCMR generation divided by 8760, with the minimum system load. Further, the CDM-EB methodology recommends use of SAOM method over average operating margin (AOM) method. The paper demonstrates that SAOM method results in a higher estimate of baseline EF as compared to the AOM method and, therefore, the recommendation is contrary to conservative principle stressed by CDM-EB in developing baselines.