This report was commissioned by the United Nations Environment Programme (UNEP), and examines how to establish a viable and profitable Clean Development Mechanism (CDM) model for Solar Water Heating (SWH). The CDM is a UN Climate Change Council initiative whereby emission reduction projects in developing countries can earn certified emission reduction credits to be traded, sold and used by industrialised countries to meet a part of their emission reduction targets under the Kyoto Protocol.
Solar Water Heating projects qualify for the CDM, but need several units bundled together to be economically viable. This report uses the experience of India’s Bank of Maharashtra to quantify how large the bundled project should be. It estimates that a CDM project with bundling at an individual bank level with about 86000 installations would just generate enough profit to be economically viable.
However, this profitability could greatly increase by taking advantage of economies of scale and bundling together multiple banks, potentially through a coordinating Association of Banks within a country or region. The report also recommends following a Programme of Activities approach, whereby a private or public entity coordinates and implements multiple GHG reduction projects over a period time. It allows for smaller projects to be bundled together under a single transaction cost, saving money on join initiatives. There is great potential for SWH projects to be profitable through this method.
Author: SVK-CDM Technologies
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