(Basic Study on Support for promoting JCM-related policies ... · (Basic Study on Support for promoting JCM-related policies and measures ... Figure：Flare Gas Recovery System (2)

Feasibility Study Project for the JCM (2015FY)

(Basic Study on Support for promoting

JCM-related policies and measures

in the Islamic Republic of Iran)

March 2016

Mizuho Research Institute, Ltd.

[Table of Contents]

1．Background and purpose of this project .......................................................................................... 1

2．Identification of the project candidates suitable for the JCM scheme .............................................. 2

2.1 Technological requirement and industrial trends in Iran .............................................................. 2

2.2 Possibility of contribution of Japanese companies ....................................................................... 4

2.3 Identification of high priority types ............................................................................................. 4

3．Study of the business opportunity and financial environment .......................................................... 6

3.1 Study of the business opportunity ................................................................................................ 6

3.2 Study of the financial environment ............................................................................................ 15

4．Draft of JCM methodology and estimate of GHG emission reductions ......................................... 18

4.1 Flare Gas Recovery ................................................................................................................... 18

4.2 Conversion of the Gas-Fired Power Plant from Simple to Combined Cycle .............................. 21

4.3 Low-loss transmission / distribution line ................................................................................... 25

5．Analysis of the Benefit of both countries ....................................................................................... 30

5.1 Flare Gas Recovery ................................................................................................................... 30

5.2 Conversion of the Gas-Fired Power Plant from Simple to Combined Cycle .............................. 31

5.3 Low-loss transmission / distribution line ................................................................................... 32

6．Steps towards the JCM Projects .................................................................................................... 33

1

1．Background and purpose of this project

In the Islamic Republic of Iran, energy consumption is expected to increase in the near

future. Expansion of power generation capacity by introducing high efficiency power

system and renewable energy is required. JCM scheme making use of Japanese energy

efficiency and low-carbon technologies will be one of the promising alternatives for the

solution.

In this project, we will identify the high priority industry sectors for JCM projects

making use of low-carbon technologies from the Iranian economic, industrial and policy

perspectives and will promote an understanding of Iranian government about JCM

scheme in conducting studies on the necessary actions (e.g. policy recommendations,

financial support) for JCM projects and the rough estimation of expected GHG emission

reductions.

2

2．Identification of the project candidates suitable for the JCM scheme

2.1 Technological requirement and industrial trends in Iran

Technologies required in measures against global warming is described in “Intended

Nationally Determined Contribution (INDC)”（2015/11/19）which Iranian Government

submitted to UN in 2015, and in “TNA (Technology Needs Assessment to Address Climate

Change)”（Third Edition: unpublished）.

Table：Technological requirement in Intended Nationally Determined Contribution（INDC）

【Financial and Technological Needs】

Due to the significant share of energy sector in emissions (more than 90%) and

consequently the high potential of this sector in emissions mitigation, its major technological

requirements are as follows:

Technologies needed to curb and utilize gas flares;

Reducing natural gas leakage in the distribution networks;

Increasing efficiency through the development of CHP and combined-cycle power

plants;

Reducing transmission and distribution electricity losses;

Energy demand optimization and management; and

Use of renewable and alternative energy resources (like nuclear power) as well as

biofuels, biogas, waste to energy production and CCS.

Source: Department of Environment, Islamic Republic of Iran, “Intended Nationally Determined

Contribution”, 19 November 2015.

Table：Technological requirement in the 3rd

Technology Needs Assessment（TNA）

The priorities of the 3rd TNA of Iran are :

Combined Cycle Thermal Power Plant (TPP)

Optimization of Fuel gas system, Heaters, Boilers

CNG Cars

Waste to Electric Technologies

Micro Hydroelectric Power Production

Heating and Ventilation System

Carbon Capture and Storage (CCS)

Flare Improvement Facilities

Hybrid and Electric Vehicles

Source: Interviews to CITC

3

According to the technology requirements in INDC and TNA, Iran has the needs for

energy savings in the field of oil and natural gas, energy conservation, energy

transmission, energy demand and CCS. These fields largely cover the industrial fields

whose potentials for energy savings and CO2 reductions are high.

Table：Technology requirements in INDC and TNA

Sector Project Type INDC (2015) 3rd

TNA (2016)

1 Oil & Gas Gas flare Curb and utilization Improvement

2 Gas leakage Reduction in the

distribution networks -

3 Energy

conversion

Thermal power CHP

Combined Cycle

Combined Cycle

Optimization of Fuel

gas system

4 Heater / Boiler -

Optimization of

Heaters and Boilers

5 Renewable / alternative

energy

Biofuels

Biogas

Waste to Energy

Nuclear

Waste to Energy

Micro Hydropower

6 Energy

transmission

Electricity loss Reduction in the

transmission and

distribution

-

7 Energy

demand

Demand optimization

and management

Demand optimization

and management

Heating and

Ventilation System

8 Transportation

-

CNG Cars

Hybrid and Electric

Vehicles

9 CCS CCS CCS

Source: INDC and interviews to CITC.

In addition, it was found that the organizations and companies were actually involved

in the energy projects such as power generation including renewable energy, waste heat

recovery system, fuel conversion to natural gas and biogas recovery. These projects are

generally consistent with the fields where CDM projects have been conducted in Iran.

4

2.2 Possibility of contribution of Japanese companies

In addition to the identification of the Iranian needs, we investigated the possibility of

contribution of Japanese companies to JCM projects based on the interview research.

As a result, it was found that several Japanese companies had examined projects such

as renovation and raising efficiency of existing power plants, introducing high-efficiency

steam turbines, reduction of electricity transmission loss, and flare gas recovery and

energy use of existing gas refinery plants.

2.3 Identification of high priority types

Assuming the possibility of a contribution of Japanese companies, high priority types to

address the Iranian needs and to have a large business potential in Iran are the following

three types. These can be an important business candidate for JCM.

Flare gas recovery

Conversion of the gas-fired power plant from simple to combined cycle

Low-loss transmission/distribution line

Table：Project Candidate for the important business field（three types）

Project type Business potential

Flare gas recovery ・Flare gas recovery has not been progressed in Iran. Japanese

technology in this field is advanced, so it is considered to be

fit to JCM scheme if the project scale is small.

・Iran has the south Pars gas field which has a development

zone of 24 phases.

・It is assumed that there will be a business opportunity for

introducing the concept design and equipment in the

package into the plants.

Conversion of the

gas-fired power plant

from simple to combined

cycle

・Japanese technology will be welcomed by Iranian companies

because there are needs for replacement of old equipments

and facilities in the power plants.

・ Some of the Japanese companies pursue business

opportunities for providing a steam turbine additionally to

an existing gas turbine power plant.

・Ministry of Energy has promoted the conversion of the

existing power plant (17,000MW) from simple to combined

cycle.

Low-loss transmission /

distribution line

・There is a high efficient wire which only Japanese company

can manufacture.

・As of 2014, total length of transmission lines (400kv, 230kv)

is 50,726 km/circuit in Iran, some of these are very aged.

5

In addition to these three types, waste to energy, waste heat recovery in cement

factories, waste heat recovery in paper mills, and geothermal power plants, and

small-scale CHP can be a project candidate for JCM considering Iranian needs and

Japanese technologies.

Table：Other candidates for JCM

Project type Views of Iranian organization and Japanese companies

Waste to Energy ・A large amount of waste is generated in the large cities in

northern area. Introduction of an efficient incineration

system contributes to reduce CO2 emissions and solve

the problem of waste management.

・In Teheran, 7,000t/day waste is generated.

Waste heat recovery in

cement factory

・A high priority fields of introducing the heat recovery

system are cement, steel and chemical.

・There are more then 50 factories which are owned by

private sector.

Waste heat recovery in

paper mill

・Electricity is generated by a boiler in paper mills. The

introduction of a high efficiency boiler made by Japanese

high technologies can be a JCM project candidate.

Geothermal power plant ・There is a geothermal power plant project at the foot of

Mt. Savalan.

Small-scale CHP ・ The project to introduce 2~3 MW CHP per one

government facility can be a JCM project candidate. The

total potential of introducing small-scale CHP is 800MW.

In the following sections, we investigate the three project types in detail, which we

selected as important business fields for JCM scheme.

6

3．Study of the business opportunity and financial environment

3.1 Study of the business opportunity

（1）Flare Gas Recovery

①Outline of the technology

In the gas processing plant (GPP) such as petroleum refineries, chemical plants or

natural gas processing plants, associated gas of hydrocarbon including methane (flare

gas) is released and burnt in a gas combustion device named flare stack. As a result,

considerable amount of CO2 is emitted into the air.

Instead of burning, certain percentage of flare gas can be recovered and returned back

to the same GPP, by applying the following facilities:

Water Seal Drum: to prevent any flashback of the flame from the top of the flare

stack.

FOV (Fast Opening Valve) and Rapture Disk: applied when Water Seal Drum is not

applicable when (1) temperature may go below water freezing point; or (2) allowable

liquid height is too small (difficult to maintain).

Compressor

After Cooler

Controlling System

Figure：Flare Gas Recovery System (1)1

1 Japanese engineering company

7

Figure：Flare Gas Recovery System (2)2

Furthermore, flare gas which is not recovered can be utilized for generating electricity.

②Technological superiority

Conceptual design of flare gas recovery is the superior technology owned by Japanese

engineering companies.

Compressor manufactured by Japanese companies is superior to the other countries’

products in the technological reliability and energy efficiency.

Table：Technological superiority3

Conceptual Design Applied Facilities

Technology Ability for conceptual design owned

by Japanese engineering

companies is superior to the other

countries’ companies.

Compressor manufactured by

Japanese companies is superior to

the other countries’ products in the

technological reliability and energy

efficiency.

2 Japanese engineering company 3 Japanese engineering company

8

③Business opportunity

As for the gas field development, the South Pars Gas Field has a development zone of

24 phases and the gas is sent to a gas refinery plant in Assaluyeh and refined.

The project can be expanded in the gas refinery plants in Assaluyeh.

Table：Development of the South Pars Gas Field

Phase Natural gas

capacity (Bcf/d) Condensate

capacity (bbl/d) Completion or expected

completion year

1 1 40,000 2003

2 2 80,000 2002

3

4 2 80,000 2004

5

6

3.7 158,000 2008 7

8

9 2 80,000 2010

10

11 2 80,000 after 2022

12 3 120,000 2014

13 2 80,000 after 2020

14 2 77,000 after 2021

15 2 80,000 2015

16

17 2 80,000 2016

18

19 2 77,000 after 2020

20 2 75,000 after 2020

21

22

2 77,000 after 2021 23

24

Total 30 1,184,000

Source: U.S. Energy Information Administration, “Iran”, June 19, 2015.

9

（2）Conversion of the Gas-Fired Power Plant from Simple to Combined Cycle


In the project, to the existing gas turbine, steam turbine is attached additionally

(Add-on: conversion from simple-cycle to combined cycle). By conducting Add-on project,

thermal efficiency is to be improved drastically.

Combined cycle means the system which is composed by multi power generation

system. Currently, mainstream is GTCC (Gas Turbine Combined Cycle) which is

composed both by gas turbine and steam turbine. GTCC utilizes waste heat from gas

turbine to drive steam turbine, which achieves the high efficiency and small fuel

consumption.

Figure：Conversion from Simple to Combined Cycle4

Table：Facilities for Add-on project

Gas Turbine Generator (GTG) Existing facilities

Steam Turbine Generator (STG) Installed additionally.

Heat Recovery Steam Generator

(HRSG)

Installed additionally.

②Technological superiority and cost competitiveness

Japanese companies have been developing the GTCC system, in which gas turbine

generator (GTG), steam turbine generator (STG) and Heat Recovery Steam Generator

(HRSG) are combined, and it can gain thermal efficiency drastically. (The increase of

thermal efficiency depends on the conditions of existing GTG.)


10

Table：Technological superiority and initial cost5

Technological

Superiority

Matching technology of the facility components to achieve

high thermal efficiency.

Initial cost Approximately 10 billion JPY for the Add-on to the existing

gas-fired power plant (simple-cycle) that has capacity of

30-50 MW.


Based on our interview research with Iranian organisations, Iranian government

wants to proceed conversion of existing simple-cycle gas-fired power plants (total capacity

17,000MW) to combined-cycle ones as soon as possible.

It is considered that there may be business opportunities in these conversion projects.


11

（3）Low-loss transmission / distribution line


Low-loss transmission / distribution line is called as LL-ACSR/AS: Low Electrical

Power Loss Aluminum Conductors, Aluminum-Clad Steel Reinforced, which have lower

transmission loss compared to ACSR by increasing the area of conductive component

(hereinafter called “Low Loss Conductor”).

By installing that type of energy-efficient technology, transmission losses can be

reduced by roughly 10-25% compared with conventional conductors.

Option 1: Reduce power loss by roughly 10-15 %

Option 2: Reduce power loss by roughly 20-25 %

Figure：Cross sectional view and Key component6

6 Japanese manufacturer

Cross sectional view

Conventional Conductor (ACSR)

Low Electrical Power Loss Conductor

Aluminumwire

GalvanizedSteel wire

Aluminum Clad Steel wire

OPTION 1

Thermal ResistantAluminum Alloy wire

OPTION 2

Key component for Low Electrical Power Loss ConductorAluminum Clad Steel Wire

Aluminum Clad Steel wire・ Conductivity : 14% IACS・ Tensile Strength : 1770MPa

Aluminum

Steel

12

Figure：Option of Low Electrical Power Loss Conductor7

②Technological superiority and cost competitiveness

Extra High Strength Aluminum-Clad Steel wire, which is used for LL-ACSR/AS

instead of Galvanized Steel wire, can be manufactured only in Japanese manufactures.

Price of LL-ACSR/AS is higher than that of ACSR having the same diameter, due to

special aluminum-clad steel wire.

Table：Technological superiority and initial cost8

LL-ACSR/AS ACSR

Technology Only Japanese manufactures own

the technology

Conventional technology

Initial cost 100%

Around 50%

(It depends on the situation in

Iran)

This initial cost difference is largely compensated by the significantly lower operational

cost of the transmission line.

7 Japanese manufacturer 8 Japanese manufacturer

Two applications as Conductors

Saving 15% electrical power ｌossNo sag increase・Tower reinforcement/modification is not required.

Saving 25% electrical power loss Sag increase (can operate upto 150℃) Slight weight increase High current carrying capacity by TAL

・Slight tower reinforcement/modification is necessary

Option 1 : LL-ACSR/AS

・Same diameter ・Same weight(No Tower load increase)

・Pure AL Wire(Allowable operating temp. 80℃)

Option 2 : LL-TACSR/AS・Same diameter・Max. AL area(Tower load increase)

・Thermal resistant AL alloy (TAL) wire (Allowable operating temp. 150℃）

Re-conductoring on existing T/LNew line construction, but detail of tower

design fixed

New line construction with N-1 System

Applicable for

Compare with ACSR

13


As of 2014, a total length of transmission lines (400kv, 230kv) is 50,726km / circuit,

around one-fourth of which has over 25 years of age. There may be business opportunities

in replacing these lines.

Figure：Transmission Lines Length (by age)

Source: Tavanir Holding Company, “Statistical Report on 48 Years of Activities of Iran Electric Power

Industry (1967-2014)”, Dec 2015.

1,251

1,919

1,514

481

3,991

2,692

5,590

2,245

3,565

2,201

2,738

3,767

5,757 6,123

4,336

2,557

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

<35 31～35 26～30 21～25 16～20 11～15 6～10 1～5

400kv 230kv

(Age)

（Km Circuit）

14

Figure：Contribution of Transmission lines Length by Age

Source: Tavanir Holding Company, “Statistical Report on 48 Years of Activities of Iran Electric Power

Industry (1967-2014)”, Dec 2015.

more than

35 Year

9.5%31-35 Year

8.1%

26-30 Year

7.9%

21-25 Year

8.4%

16-20 Year

19.2%

11-15 Year

17.4%

6-10 Year

19.6%

1-5 year

9.5%

15

3.2 Study of the financial environment

(1) Foreign Investment Protection and Incentive Measures

Foreign Investment Promotion and Protection Act (FIPPA) stipulates foreign

investment under FIPPA shall equally enjoy all rights, protections, and facilities

available to local investments. Under FIPPA, there is no limitation on foreign ownership

and no minimum capital regulation.

As for overseas remittance, FIPPA stipulates that the principal of the foreign capital

and profits therefrom, or the balance of capital remaining in the country, after fulfillment

of all obligations an payment of legal dues and upon the approval of the Foreign

Investment Board (hereinafter “the Board”) and confirmation by the Minister of

Economic Affair and Finance, shall be transferable abroad subject to a three-month prior

notice submitted to the Board.

Regarding taxation system, corporate income shall be taxed at the flat rate of 25%.

There are tax breaks as follows.

Table：Highlights of Tax Holidays

Activity Level of

Exemption

Duration of

Exemption

Agriculture 100% Perpetual

Industry and Mining 80% 4 Years

Industry and Mining in

Less-Developed Areas 100% 20 Years

Tourism 50% Perpetual

Export of services & non-oil goods 100% During 5th

Development Plan

Handicraft 100% Perpetual

Educational & sport services 100% Perpetual

Cultural activities 100% Perpetual

Salary in Less-Developed Areas 50% Perpetual

All Economic Activities in Free

Zones 100% 20 Years

Source: OIETAI, “Guide on Iranian Taxation System for Foreign Investors”

16

(2) Bilateral Investment Agreement between Japan and Iran

The Agreement between Japan and the Islamic Republic of Iran on Reciprocal

Promotion and Protection of Investment (the Japan - Iran Investment Agreement) was

signed on 5th of February in 2016.

The Agreement aims at further protection and promotion of investment between Japan

and Iran. It stipulates the treatments accorded to investment activities and investments

when an investor (an enterprise etc.) of a Contracting Party invests in the other

Contracting Party, such as national treatment, most-favoured-nation treatment, fair and

equitable treatment, observance of undertaking, prohibition to impose or enforce special

requirements including export requirement, conditions for expropriation and

compensation, free transfers requirements and procedures for dispute settlements.

It is expected that this Agreement, which improves legal stability of investment, will

contribute to promotion of the reciprocal investment between the two countries.

Table：Key points of the Agreement

(1) National treatment and most-favored-nation treatment

The Agreement stipulates an obligation under which a contracting country

should treat investors from the other contracting country and their

investments no less favorably than the contracting country’s own investors

or a third country’s investors and their investments.

(2) Obligation to observe any commitments made by the contracting countries with

investors

The Agreement stipulates the obligation to fulfill commitments when

contracts such as those for resource development and infrastructure projects

are made between the contracting countries and investors

(3) Prohibition of performance requirements

The Agreement forbids export restrictions, export-import balancing

requirements, and export requirements.

(4) Investment protection provisions, including compensation for expropriation,

protection from strife, and free transfers of funds

(5) Settlement of investment disputes between the contracting countries and

investors (Investor-state dispute settlement, or ISDS)

When an investor suffers damage from the contracting country that the

investor has invested in due to a breach of obligations under the Agreement

by the said country, the investor may submit the dispute with the country to

an international arbitration procedure for settlement.

Source: Ministry of Economy, Trade and Industry of Japan, “Japan and the Islamic Republic of Iran

Sign a Bilateral Investment Agreement”, News Release, February 5, 2016.

17

(3)Iranian Banking Sector

There are banks and credit Institutions such as Commercial Government-Owned

Banks, Specialized Government-Owned Banks and Non-Government-Owned Banks in

Iran. Large and major banks are Commercial Government-Owned Banks.

From the view point of obtaining finance for the JCM projects, it should be noted that

banks’ lending rates for transaction contracts are over 20% and the ratio of

Non-Performing Loan (NPL) to gross loan are high, particularly for private banks

(non-government-owned banks) in Iran.

(4) Establishment of a Financing Facility and Iran’s provision of sovereign guarantee

On February 5, 2016, Minister of Economy, Trade and Industry of Japan, signed a

memorandum of cooperation concerning establishment of a financing facility and

provision of sovereign guarantees for this facility by the government of the Islamic

Republic of Iran (hereinafter “Iran”) with Minister of Economic Affairs and Finance of

Iran, Chairman and CEO of Nippon Export and Investment Insurance (NEXI), and

Executive Managing Director and COO of Japan Bank for International Cooperation

(JBIC).

This memorandum of cooperation aims to provide financial cooperation, which will be

provided to the projects with Japanese involvement in Iran. Through this facility, both

countries will contribute to the development of Iran and the promotion of business

activities conducted by Japanese companies in Iran.

Table：Key points in the memorandum of cooperation

(1) JBIC and NEXI will establish a financing facility, up to JPY equivalent to USD

10 billion, which will be provided to projects with Japanese involvement in Iran.

(2) Ministry of Economic Affairs and Finance of Iran will provide sovereign

guarantee for the financing facility.

(3) The Trade and Investment Working Group under the Japan-Iran Cooperation

Council (bilateral governmental dialogue framework) will recommend specific

projects for this facility as necessary.

(4) The terms and conditions of each financing will be subject to satisfactory result

of due diligence for each project and credit assessment by JBIC and NEXI.

(5) Japan and Iran will endeavor to facilitate and implement projects which

contribute to the enhancement of the economic relationship between the two

countries.

Source: Ministry of Economy, Trade and Industry of Japan, ”Signing of a Memorandum of Cooperation

with Iran concerning Establishment of a Financing Facility and Iran’s provision of sovereign

guarantee”, News Release. , February 5, 2016.

18

4．Draft of JCM methodology and estimate of GHG emission reductions

4.1 Flare Gas Recovery

（1）Assumption of the project

Project design is assumed to be as follows:

Counterpart: to be confirmed (depending on the phases in Assaluyeh)

Project site: South Pars Gas Field in Assaluyeh (to be identified among 24 phases)

Initial cost: 2.4-2.5 billion JPY for each phase

Construction period: 2-2.5 years

Concept and design: Japanese engineering company

Manufacturing of compressor and controlling system: Japanese companies

Manufacturing of some facilities and assembly: Iranian company

EPC contractor: Iranian or Japanese companies

Finance: to be investigated

（2）Concept of the JCM methodology

Flare gas is recovered and utilized as the additional raw materials in the process plant

that has released the flare gas.

①Eligibility criteria

The Eligibility criteria are defined as follows:

Table：Eligibility criteria

Criterion 1 About conceptual design.

Criterion 2 About technological conditions on the applied compressor.

②Calculation of emission reductions

Reference emissions are calculated on the assumption that burning of the released

flare gas (as a first approximation, methane gas by 100%) in the flare stack makes CO2

by 100%.

Reference scenario: Gas released from process plant is treated in the Flare KO Drum.

All of the separated gas is burned in the flare stack.

Project Scenario: Gas released from process plant is treated in the Flare KO Drum. A

part of separated gas is recovered by utilizing Seal Drum or FOV (Fast Operating Value)

+ Rupture Disk, followed by utilizing Compressor and After Cooler, and returned to the

process plant. Recovered gas is used for additional raw material in the process plant (in

some conditions, it may be used as additional fuel in the steam boiler).

19

③Conservativeness

Recovered gas that is returned to the process plant is used as the additional raw

material (or additional fuel) that leads to reduce consumption of raw material (or fuel).

However, for conservativeness, it is not accounted in the GHG reduction.

（3）GHG reductions

①Reference emissions

Reference emissions are calculated by the following equation:

CH4) of(weight 16

CO2) of(weight 44FGRE yy

Where

REy = Reference emission in year y [tCO2/y]

FGy = Amount of gas released from process plant followed by separation in

the Flare KO Drum in year y [t/y]

■Rough calculation

REy = 40 [t/h] * 24 * 365 * (44/16)

= 964 [ktCO2/y]

②Project emissions

Project emissions are calculated by the following equation:

yyyyy EFELRR1CH4) of(weight 16

CO2) of(weight 44FGPE

Where

PEy = Project emission in year y [tCO2/y]

FGy = Amount of gas released from process plant followed by separation in

the Flare KO Drum in year y [t/y]

RRy = Recovered Ratio of the flare gas in year y [%]

ELy = Electricity consumption applied for the recovery and usage of the

flare gas in year y [MWh/y]

EFy = Grid Emission Factor in year of y [tCO2/MWh]


REy = 40 [t/h] * 24 * 365 * (44/16) * (1-75%) + (***)

= 241 [ktCO2/y]

(Now emissions related to electricity consumption is not included.)

20

③Emission reductions

Emission reductions are calculated by the following equation:

yyy PEREER

Where

ERy = Emission reduction in year y [tCO2/y]




ERy = 964 kt-CO2/y – 241 kt-CO2/y = 723 kt-CO2/y

21

4.2 Conversion of the Gas-Fired Power Plant from Simple to Combined Cycle



Counterpart: to be identified

Project site: to be identified

Capacity (existing simple-cycle): 30-50MW

Initial cost: Approximately 10 billion JPY (STG: 3-4 billion JPY, HRSG: 2 billion

JPY)

Construction period: to be investigated

Concept and design: Japanese engineering company

EPC contractor: Iranian or Japanese companies

Manufacturing of STG and HRSG: Japanese companies

Manufacturing of some facilities and assembly: Iranian company

Construction: Japanese engineering company




The Eligibility criteria are to be investigated including followings:

Table：Eligibility criteria

Criterion 1 On the thermal efficiency of STG installed additionally.

Criterion 2 On the overall efficiency of the combined cycle system.

Criterion 3 Generated electricity is supplied only to the power grid.

22

②Calculation of emission reductions

Comparison between reference scenario and project scenario is to be made for the net

gain of power generation by increasing the net efficiency from simple-cycle to

combined-cycle.

Reference scenario: Electricity generation in the power plants connected to the grid (for

the net gain of generated electricity)

Project Scenario: Electricity generation in the combined-cycle power plant (for the net

gain of generated electricity) = zero

Figure：Power generation and CO2 emissions

③Conservativeness

In principle it is difficult to apply BaU emissions as JCM reference scenario, so we

cannot sum up total CO2 reduction between before and after the installation. It has to be

investigated how to set up the reference scenario. It may be adequate to assume the

generated electricity under the reference scenario to be larger than BaU level, e.g.

calculated by applying the design efficiency.

Generated Electricity

Simple-Cycle

Combined-Cycle

Net gain

CO2 Emissions

Simple-Cycle

Combined-Cycle

Grid-connected power plants (Reference Scenario)

23

（3）GHG reductions

Based on the case study result shown below, now we assume the project on existing

simple-cycle plant having the capacity of 42.45MW (one quarter of the table).

Table：Conversion from Simple to Combined Cycle9



yGrid,yy EFNGRE

Where


NGy = Net gain of the generated electricity [MWh/y]

EFGrid,y = CO2 emission factor of the grid in year y [tCO2/MWh]


EFGrid,y = 0.6323 t-CO2/MWh10

REy = (258.4 – 169.8) / 4 [MW] * 24 * 365 * 0.6323 [tCO2/MWh]

= 123 [ktCO2/y]

9 Japanese engineering company 10 Average of CM (Combined Margin) applied in the existing CDM projects in Iran: IGES Database

24


Project emissions is regarded as zero.

0PEy

Where



Emission reductions are the same with the reference emissions.

yyyy REPEREER

Where





ERy = 123 [ktCO2/y]

25

4.3 Low-loss transmission / distribution line



Counterpart: Tavanir (if LL-ACSR/AS is installed in the national grid)

Initial cost: Around 3 million USD for 1 circuit, 100km length. (only transmission

lines; total construction cost is around 15 million USD.) (It depends on the technical

requirements in Iran.)

Manufacturing of steel wire: Japanese company

Manufacturing of aluminum wire and assembly: Iranian company (technology is to

be transferred by Japanese company)

EPC contractor: Japanese trading firm


26


JCM methodology MN_AM001 “Installation of energy-saving transmission lines in the

Mongolian Grid” has been approved by the JCM Joint Committee of Mongolia and Japan

on February 20, 2014. It will be efficient way to revise that methodology by considering

the differences of business circumstances between Mongolia and Iran.


According to that approved methodology MN_AM001, the Eligibility criteria are

defined as follows:

Table：Eligibility criteria of MN_AM00111

Criterion 1 The transmission line constitutes of a single or double circuit(s) directly

connecting a substation and another substation within the country with no

branching in between, and does not constitute a part of a loop.

Criterion 2 The type of conductor is LL-ACSR/AS, which meets the following technical

criteria12.

Type of energy-saving

conductors unit

Equivalent to

LL-ACSR/AS

279/20mm2

Equivalent to

LL-ACSR/AS

337/27mm2

Equivalent to

LL-ACSR/AS

445/36mm2

Outer diameter of

conductor mm ≦ 21.6 ≦ 24.0 ≦ 27.5

Direct current

resistance (@20degC) Ω/km ≦ 0.1063 ≦ 0.0862 ≦ 0.0659

Tensile strength N ≧ 75,050 ≧ 90,574 ≧ 120,481

Weight kg/km ≦ 921 ≦ 1,132 ≦ 1,490

Corresponding

conductors currently

in use that forms the

basis of calculating

the reference

emissions.

ACSR

240/32mm2

ACSR

300/39mm2

ACSR

400/51mm2

11 MN_AM001 12 Outer diameter and weight are equal or less, tensile strength is equal or more, and direct current resistance is 10%

lower than that of existing conductors according to MNS5870: 2008. Direct current resistance is measured according to IEC

60468 (Method of measurement of resistivity of metallic materials) or other relevant national or international standards,

and outer diameter, tensile strength and weight are measured according to IEC 62219 (Overhead electrical conductors

-Formed wire, concentric lay. stranded conductors) or other relevant national or international standards.

27

Criterion 2 shown above includes technical condition (especially tensile strength of

steel wire), so as to limit the applied technology to the low-carbon technology, that is,

LL-ACSR/AS.

Furthermore, to eliminate the companies that pretend to have that kind of low-carbon

technology, it will be significant to add the criteria as follows:

Track record (more than some number)

Operation years of the LL-ACSR/AS (more than some years)

②Calculation of emission reductions13

Reference emissions are calculated by multiplying transmission loss in ACSR by the

emission factor of the grid.

The methodology assures net reductions by introducing a multiple conservativeness

assumptions as follows.

The ratio of direct current resistance between ACSR and LL-ACSR/AS, which is in

many cases smaller than the ratio of alternative current resistance between ACSR and

LL-ACSR/AS, is applied in this methodology.

Reference scenario: Transmission loss will be bigger than using LL-ACSR/AS by the

ratio of direct current resistance of transmission line using currently used transmission

conductors to that using LL-ACSR/AS conductors (@20 deg. C).

Project Scenario: Transmission loss will be calculated based on the direct current

resistance of transmission line using LL-ACSR/AS conductors (@20 deg. C).

③Conservativeness14

The ratio of direct current resistance between ACSR and LL-ACSR/AS at the same

conductor temperature (20 deg. C.) is applied in this methodology. This ratio is smaller

than the ratio of direct current resistance at the same ambient temperature, since the

conductor temperature of ACSR would be higher than that of LL-ACSR/AS at the same

ambient temperature due to higher resistance of ACSR. Therefore, there is a further

element of conservativeness by assuming that conductor temperature is the same

between ACSR and LL-ACSR/AS at the same ambient temperature.

13 MN_AM001 14 MN_AM001

28

（3）Emission reductions（GHG reductions）15



L

yGrid,yL,RF,y EFLOSSRE

LPJ,

LRF,

yL,PJ,yL,RF,Rdc

RdcLOSSLOSS

Where

REy = Reference emissions during the period of year y [tCO2/y]

LOSSRF,L,y = Reference transmission loss at transmission line L in year y [MWh/y]


LOSSPJ,L,y = Project transmission loss at transmission line L in year y [MWh/y]

RdcRF,L = Direct current resistance of transmission line L using currently used

transmission conductors (@20 deg. C) [Ω/km]

RdcPJ,L = Direct current resistance of transmission line L using LL-ACSR/AS

conductors (@20 deg. C) [Ω/km]


LOSSPJ,L,y = [X = Transmission & distribution loss by application of LL-ACSR/AS]

MWh/y (to be assumed based on additional survey in Iran)

25.1)20.01(

1

Rdc

Rdc

LPJ,

LRF,

(in case of saving 20% electrical power loss)

LOSSRF,L,y = 1.25 * [X] MWh/y = [Y] MWh/y

EFGrid,y = 0.6323 t-CO2/MWh16

REy = [Y] MWh/y * 0.6323 t-CO2/MWh = [Z1] t-CO2/y

15 Calculation formula: MN_AM001 16 Average of CM (Combined Margin) applied in the existing CDM projects in Iran: IGES Database

29


Project emissions are calculated by multiplying transmission loss in the project

(LOSSPJ,L) by the CO2 emission factor of the grid (EFGrid,y):

L

yGrid,yL,PJ,y EFLOSSPE

yreceive,L,ysend,L,yL,PJ, E-ELOSS

Where

PEy = Project emissions during the period of year y [tCO2/y]

LOSSPJ,L,y = Project transmission loss at transmission line L in year y [MWh/y]

EL,send,y = Power sent from the point of origin/supply to the transmission line L in year y

[MWh/y]

EL,receive,y = Power received at the point of receipt of the transmission line L in year y

[MWh/y]



LOSSPJ,L,y = [X] MWh/y (to be assumed based on additional survey in Iran)

EFGrid,y = 0.6323 t-CO2/MWh

PEy = [X] MWh/y * 0.6323 t-CO2/MWh = [Z2] t-CO2/y


Emission reductions are calculated by the following equation:

yyy PEREER

Where





ERy = [Z1] t-CO2/y – [Z2] t-CO2/y

30

5．Analysis of the Benefit of both countries

5.1 Flare Gas Recovery

The South Pars Gas Field has a development zone of 24 phases and the gas is sent to a

gas refinery plant in Assaluyeh and refined.

The project can be expanded in the gas refinery plants in Assaluyeh, to which Natural

Gas mined in the South Pars Gas Field (24 phases) are sent.

Figure：GHG Reduction Potential (Flare Gas Recovery)

GHG Reduction Note

Model Project 723 kt-CO2/y

Potential 17,400 kt-CO2/y 24 Phases of the South Pars Gas Field

（1）Benefit for Japanese companies

Assumptions on the model project by identifying one phase of the South Pars Gas Field

are as follows:

Initial investment: Approx. 2.4-2.5 billion JPY (Japan: Iran = 1:1)

Project participants of Japan: Engineering company (e.g. EPC contractor,

design), manufacturing company (e.g. compressor, controlling system)

Project participants of Iran: Manufacturer (e.g. valve, supplemental facility,

assembly), constructing company (construction)

Benefit for Japanese companies are to be obtained by business contracts of those

projects (on Japanese portion).

Table：Benefit for project participants (Japan)

Benefit Note

Model Project 1.25 billion JPY 50% of the total initial investment

Potential 30 billion JPY 24 Phases of the South Pars Gas Field

（2）Benefit for Iranian companies

Benefit for Iranian companies are to be obtained by the following activities:

1) Business contracts of those projects (on Iranian portion)

2) Reduction of operation cost by recycling flare gas as additional material

3) Medium-to-long term business development by the technology transfer

As for 2) above, at this stage it is hard to estimate cost for obtaining natural gas from

the South Pars Gas Field, refinery cost in the Assaluyeh plant and additional revenue by

gaining raw material. As for 3), that revenue will be changed depending on the future

31

business models. Then, now we estimate benefit only on 1).

Table：Benefit for project participants (Iran)

Benefit Note

Model Project 1.25 billion JPY 50% of the total initial investment

Potential 30 billion JPY 24 Phases of the South Pars Gas Field

5.2 Conversion of the Gas-Fired Power Plant from Simple to Combined Cycle

Existing simple-cycle gas turbine is assumed to be as follows:

Typical capacity of the existing simple-cycle gas turbine is 30-50 MW.

There are more than operating 40 simple-cycle gas turbines, thermal efficiency of

which is not good, and the total capacity is assumed to be more than 20,000 MW.

Supposing to implement 40 similar projects, GHG reduction potential is roughly

estimated.

Table：GHG Reduction Potential (Conversion from Simple-cycle to Combined cycle)

GHG Reduction Note

Model Project 123 kt-CO2/y 42.5 MW

Potential 4,920 kt-CO2/y 40 plants

（1）Benefit for Japanese companies

Assumptions on the model project are as follows:

Initial investment: Approx. 10 billion JPY (Japan: Iran = 7: 3)

Project participants of Japan: Engineering company (e.g. EPC contractor,

design), manufacturing company (e.g. STG, HRSG)

Project participants of Iran: Manufacturing company (e.g. supplemental

facilities, assembly), constructing company (construction)

Benefit for Japanese companies are to be obtained by business contracts of those

projects (on Japanese portion).

Table：Benefit for project participants (Japan)

Benefit Note

Model Project 7 billion JPY 70% of the total initial investment

Potential 280 billion JPY 40 plants

32

（2）Benefit for Iranian companies

Benefit for Iranian companies are to be obtained by the following activities:

1) Business contracts of those projects (on Iranian portion)

2) Additional generated electricity to be sold

3) Medium-to-long term business development by the technology transfer

As for 3) above, that revenue will be changed depending on the future business models.

Then, now we estimate benefit on 1) and 2).

As for 2), additional generated electricity will be as follows:

Gains of power generation = (258.4 – 169.8) / 4 [MW] * 24 * 365

= 194,000 [MWh/y]

Assuming the wholesale electricity price as 680 IRR/kWh17,

Increase of revenue= 194,000 [MWh/y] * 680 * 1,000 [IRR/MWh] * 0.003725 [JPY/IRR]

= 491 [million JPY/y]

Table：Benefit for project participants (Iran)

Benefit Note

Model Project 3 billion JPY 30% of the total initial investment

491 million JPY/y Increase of electricity selling revenue

Potential 120 billion JPY 40 plants

19.6 billion JPY/y Increase of electricity selling revenue

5.3 Low-loss transmission / distribution line

GHG reduction potential by promoting application of low-loss transmission /

distribution line depends on the development plan of the power grid.

（1）Benefit for Iranian companies and Japanise companies

It depends on the scale of business.

17 Electricity generation cost: Trend News Agency (2014/2/28) http://en.trend.az/iran/2247258.html

33

6．Steps towards the JCM Projects

Through this research project, we have conducted a basic study on three types of

projects, namely, (1)Flare Gas Recovery, (2)Conversion of the gas-fired power plant from

simple to combined-cycle and (3)Low-loss Transmission Line.

Following this basic study, we intend to progress to the detailed JCM Feasibility Study,

towards implementation of JCM demonstration project in the coming years.

Figure：Steps towards Detailed JCM F/S and Demonstration Project

Year Phase Project Summary

2015

2016

2017

2018

2019

After 2020

Basic Study

(This research project)

Identification of the important sectors

Confirmation of willingness to JCM

Study of the business opportunity and

financial environment

Detailed JCM

Feasibility Study

JCM

Demonstration

Project

First

Flare Gas Recovery

Conversion of the gas-fired power

plant from simple to combined-cycle

Low-loss Transmission Line

Implementation of the

Demonstration Second

Third

Expansion of similar projects in Iran

（様式２）

頁図表番号

8

13,14

15

タイトルU.S. Energy Information Administration, “Iran”,

June 19, 2015.

Tavanir Holding Company, “Statistical Report on 48

Years of Activities of Iran Electric Power Industry

(1967-2014)”, Dec 2015.

OIETAI, “Guide on Iranian Taxation System for

Foreign Investors”.

二次利用未承諾リスト

平成27年度地球温暖化対策技術普及等推進事業

イランにおけるJCMの推進に向けた調査

みずほ総合研究所株式会社

Documents

(Basic Study on Support for promoting JCM-related policies ... · (Basic Study on Support for promoting JCM-related policies and measures ... Figure：Flare Gas Recovery System (2)