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EBRD in ground-breaking power plant project under Kyoto protocol

By Svitlana  Pyrkalo

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A thermal power plant in Azerbaijan, AzDRES, will become the first in the world to be able to sell carbon credits earned thanks to an energy efficiency modernisation project. The project was financed by the EBRD in 2006; the US$ 207 million loan allowed the plant to rehabilitate old and inefficient turbines and boilers, modernise command and control systems, repair chimneys and water cooling systems and make a number of other improvements.

The project, “AzDRES Energy Efficiency Improvement”, has been registered under the Kyoto Protocols’ Clean Development Mechanism (CDM) by the CDM Executive Board. The project – rehabilitation of seven dual fuel, gas and heavy fuel oil units of 300 MW each – is estimated to generate over 10 million carbon credits over the ten-year crediting period. These credits can now be sold on global carbon markets, including the EU’s Emissions Trading Scheme.

The energy efficiency improvement of the AzDRES ThPP is the first power plant rehabilitation project registered under the CDM and the second CDM project in Azerbaijan. It is also the largest CDM-registered project in the Caucasus.

Owned by the national energy operator Azerenerji, the AzDRES thermal power plant (ThPP) is the largest power plant in Azerbaijan, generating half of the country’s electricity. The rehabilitation project significantly increased efficiency and capacity at the plant, which is now better able to meet the increasing demand of a rapidly growing economy. Moreover, the project has improved Azerbaijan’s energy security and increased reliability of its energy infrastructure.

The EBRD’s loan for AzDRES was made under the Bank’s Sustainable Energy Initiative, total investments under which have exceeded €10 billion to date. Apart from the loan, the EBRD provided the power plant with technical assistance funded through the Bank’s multi-donor fund for early transition countries.

“The EBRD consistently pursues the possibility of using carbon markets to make carbon emission reductions projects more profitable,” says Jan-Willem van de Ven, Senior Carbon Manager at the EBRD.

The CDM registration process was initiated by Azerenerji and assisted by clean energy consultants ICF International, engaged by the EBRD.

Since the launch of its Sustainable Energy Initiative in 2006, the EBRD has invested over €10 billion in projects under its umbrella.

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