Hydro Plant on the Bobr River

The small hydro plant on Bobr River was put into operation in 2001/2002 and has been a pilot full-scale demonstration of financing RES-e projects through JI mechanism in Poland under a bilateral agreement between the Polish and Canadian Governments.

Emission reduction units (ERU) arising from expected displacement of CO2 achieved in the project in 2008-2012, will be generated by the investor, who is then expected these ERUs to the Canadian Government.

The Kyoto Protocol stipulates that industrialized countries and countries with economies in transition (Annex I to Kyoto Protocol) shall reduce their overall emissions of greenhouse gases by at least 5% as compared to their 1990 emissions levels (for Poland 1998 is chosen as a base year for emission reduction calculations). This should be achieved by the first commitment period from 2008 to 2012.

“In order to meet these targets cost-effectively, the Protocol allows for the use of the market-based instruments known as the “Kyoto mechanism” or “flexible mechanisms”. Joint Implementation (JI) is one of these mechanisms. JI refers to climate change mitigation projects implemented between two Annex I countries and allows for creation, acquisition and transfer of “emission reduction units”.

Poland has been a host for several JI pilot projects in the form of bilateral agreements with such investing countries as Norway, Canada, Finland and The Netherlands. Benefits for Poland include the opportunity to achieve effective technology transfer and gain technical know-how that can stimulate the development of climate-friendly economy. There are also expectations that JI could be a significant source of funding for RES investments in Poland.

RES-e projects in Poland

Potential investors are advised to contact the relevant Polish Embassy in order to receive detailed up-to-date information about procedure for approving RES-e projects in Poland as JI projects and eventually obtaining the relevant financial benefits from participation in this Kyoto flexible mechanism.

Merol Power Polska Ltd

In the late nineties Merol Power Corporation contacted the Polish Embassy in Canada about possibilities to develop environmentally-minded investments in Poland. They were informed about various possibilities to raise external funding for such projects including the use of the Joint Implementation mechanism. Soon after a Polish-Canadian joint venture Merol Power Polska Ltd was set up to initiate construction of a small hydro plant next to a 100 year old dam on the Bobr River in south-west Poland. In 2000 the project has been registered with the JI program and the relevant centres in Canada and Poland.

The 900 kW hydro power plant was constructed next to an existing very old dam and weir on Bobr River. The construction works were completed by a local construction company from Wroclaw (Przedsiebiorstwo Budownictwa Wodno-Inzynieryjnego). The existing dam and weir were incorporated within the new hydro plant. Canadian Hydro Components Ltd supplied turbines and control system. The construction took one year and was finished by hydro plant interconnection to the power grid. The plant will produce about 5000 MWh of electric energy annually. Expected GHG emission reduction is 4685 ton CO2 / year

The total power of river hydro plant is 900 kW. It is provided with two axial flow Kaplan turbines, each 450 kW. One turbine is single regulated, the second turbine is double regulated. Canadian Hydro Components produced turbines and automatic control system. The water head is 5 m and average water flow is 22 m3/s.

The total cost of the Bobr hydro plant was approx. 1,800,000 USD. The financing to the project was arranged from:

• 50% - Soft loan from the Polish National Fund for Environment Protection and Water Management.

• 10% - Commercial loan from Environmental Protection Bank.

• 40% - Canadian company. “Merol Power Corporation” own source (mother company of Merol Power Polska).

Future JI carbon credits generated by the project during the first period of commitment 2008-2012 will be divided into 50% to Poland and 50% to Canada. As such, the investor will be able to sell credits corresponding to the reduction of CO2 emissions in 2008-2012 to the Government of Canada or some interested agencies. The price for reduction of emissions of 1 tonne of CO2 has not been revealed.

This OPET case study document has been part financed by the Welsh Development Agency