1 Case study: Sofia District Heating Dr. Venkata R. Putti Team Leader, Carbon Finance Assist The World Bank Minsk / Belarus, March 2007

2 Background District heating is the dominant form of space heating in major cities in Bulgaria: 11 GWh heat energy and 1.8 GWh electricity in 2004 Accounted for 25% of the total energy consumption Sources: Natural Gas 80%. Coal 12% and Heavy Fuel Oil 8% Actions by the Government since 2000 to help a turn-around tariff increases Strengthen the connection of four zones in the district heating system demand-side measures through metering consumption; rehabilitation of sub-stations

3 Project Description Managed by the Sofia District Heating Company, owned by the municipality Aim of the Project: rehabilitate DH system in Sofia by replacing 60 km of pipelines and 7,000 substations. reduce heat losses and improve network efficiency correspondingly, energy consumption and CO 2 emissions are reduced. Project has been fully implemented Sofia DH network is now a variable flow, that allow consumers to automatically regulate their heat consumption. It has strengthened the connections between the four zones of Sofia, optimizing the heat supply. Still to be decided whether the project follows JI Track 1 or 2; some revision for documentation may be needed

4 Measures Taken Replacement of piping: 60 km of transmission pipelines and over-ground thermal insulation have been implemented. Replacement of substations: About 7,000 substations replaced. Variable-speed pumping: Electricity consumption reduced by 30%; Improvements to match better the required heat output to actual, real-time consumer demand  Measures resulted in aggregate savings of (i) input fuel (gas and HFO) in CHPs, and (ii) electricity used by primary distribution pumps.

5 Emissions Reductions Achieved through: 1. Reductions in heat and water losses in the pipeline distribution system, 2. Improved interconnectivity among the four zones in Sofia DH transmission system, and 3. Electricity consumption reduced by 30% due to frequency controlled pumps  All three efficiency gains lead to lower consumption of fossil fuels and thus lower CO 2 emissions

6 Estimated Emissions Reductions Length of period (VER) 4 years Year Annual ERs tCO , , , ,000 Total469,000 Length of JI crediting period (ERU) 5 years Year Annual ERs tCO , , , , ,000 Total596,000

7 Baseline setting Baseline study for Sofia DH project conducted in 2004: Identification of most likely baseline scenario, based on assessment of alternative sources of heat, including electricity, natural gas and individual heating systems such as solid or liquid fuels. All alternatives result in higher cost for consumers and higher infrastructure investments than those needed to rehabilitate and upgrade the existing DH system. On the other hand, inability of the company to raise required capital to rehabilitate the DH system (w/o carbon leverage).  Baseline scenario: continuation with operation of DHS for the foreseeable future, with no changes to the operation of the system

8 Baseline No CDM methodology was available for this type of project. The following baseline approach was taken: Baseline scenario is continuation of the existing situation This is appropriate in those technology projects where the energy consumption and emissions can be expected to follow historical trends in the absence of the project (system changes). Additionality:  demonstration of an Investment barrier

9 Project Boundary: Emission Sources & Monitoring Points

10 Monitoring The monitoring plan describes how the achieved ERs are estimated and monitored, and how the baseline emissions and project emissions are calculated. No approved monitoring methodologies were available at the time the project was designed. A Tracking Database (Excel-based workbook) was developed for this project: Monitor emission reductions monthly and annually; Determination of monitoring points, to monitor fuel savings; Some parameters are measured, while some are calculated.

11 Monitoring Plan Operational and management arrangements: TS operating personnel responsible for ensuring daily/monthly data collection and update of Tracking Database on a routine basis. Periodic aggregation and recording of data from all the individual DH plants that comprise the Sofia DH System into the Tracking Database, including monthly calculation of achieved emission reductions. Recording of data is done at the TS head office, where staff prepares daily, weekly, and monthly management reports.

12 Public Consultation Environmental issues related to the project were made public through the Environmental Management Plan (EMP). The EMP was published in local newspapers and also was placed in the WB’s website. Public meetings were also held to discuss the EMPs. In these meetings, no concerns about the environment were raised.