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Updating a Standardized Baseline

(Photo by Hassan Afridhi on Unsplash)
(Photo by Hassan Afridhi on Unsplash)

Standardized baselines allow emission reductions to be determined in an objective and sensible way. They were developed under the CDM to reduce project transaction costs and simplify the processes. In future, use of standardized baselines may also play a role outside the CDM framework, for example for international climate financing activities and in using the new market mechanisms. Against this backdrop, the BMU commissioned GFA Consulting Group to conduct the research project "Updating the Emission Factor of the Southern African Electricity System and development of a financing mechanism for renewable energy" in which an existing standardized baseline is to be updated with new data. 

During the period 2010-2012 UNEP and GFA supported the Southern African Power Pool in the development of an emission factor for the electricity system of nine interconnected countries. The emission factor was signed by all countries and approved by UNFCCC as ‘Standardized Baseline’ (i.e. national/international GHG benchmark). The benchmark expires in 2017 and the current works envisage its update and the development of a regional financing instrument.

The update of the GHG benchmark requires the collection of detailed data (commissioning date, installed capacity, net generation per annum, fuel consumption of primary and secondary fuels, net calorific values of fuels (all per annum)) for all grid connected power plants, in each of the nine countries. Once singed and submitted by all nine countries and approved by UNFCCC Secretariat, it will serve as official benchmark for the electricity sector for all nine countries.

Based on the benchmark, a concept for a financing instrument shall be developed. The concept shall address the needs of renewable energy projects in the region. It is envisaged that the financing concept will feature a guarantee component (addressing the risk of no payment of PPAs) for all RE technologies/fuels and a Feed In Premium which is specific to each technology (e.g. higher payments for electricity delivered by new biomass projects, lower payments for CSP projects). The payments will be structured against performance, but with a fixed contracting period in order to support independent power producers in the region achieving financial close.

Updating a Standardized Baseline

Executing Organisation: GFA Consulting Group

Lifecycle: 2016 - 2018

Contact: Martin Burian, martin.burian@gfa-group.de