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India's 192-MW Allain Duhangan largest hydro to win CDM approval

India's 192-MW Allain Duhangan hydroelectric project has become the largest hydro development to date to receive approval to sell carbon emissions credits from the United Nations' Clean Development Mechanism (CDM) agency.

The Executive Board of the U.N. Framework Convention on Climate Change issued a registration in May for Allain Duhangan, which is being developed by AD Hydro Power Ltd. on the Allain and Duhangan rivers in India's Himachal Pradesh State. (HNN 4/5/06)

Statkraft Norfund Power Invest AS (SN Power), which owns 49 percent of the project through its joint venture Malana Power Co., said June 19 Allain Duhangan is expected to produce 500,000 carbon emission reduction credits per year -- at annual value of 7.5 million to 10 million euros (US$10 million to US$13.4 million) -- over a 10-year period.

Documents supporting the CDM application outlined investment barriers to the project that indicated CDM support was needed.

�The project activity is a large-scale hydropower project and there were many barriers faced by project proponents for the project activity implementation,� the document said. �Financial closure is the major barrier faced by the project activity. This is evident by the fact that MOU was signed in 1993 and the implementation agreement was signed in 2001 with the Himachal Pradesh government and despite receiving all other necessary clearances in time; the project has not achieved financial closure until now.�

SN Power said part of the credits already have been sold through a forward contract to the Italian Carbon Fund.

India's Bharat Heavy Electricals Ltd. won a contract last year to supply turbine-generators and other equipment for the project. The run-of-river merchant plant is expected to go on line in mid-2008, selling 800 GWh per year under short-term power purchase agreements to India's northern regional grid.

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