This RFC is in response to the RFC posted by KlimaDAO on September 7th, 2022: Carbon Project DevelopmentInitiative
### Project Overview
Project Name : Soubré
Project owner : CI-Energies
The fast demographic and socio-economic growth in Africa has resulted in increased energy demand and consumption. To meet the growth in energy demand, energy production sources have increased. However, energy generation has been proven by scientists to be a contributor to global warming and global change, hence the recommendations to use renewable energy to combat climate change. Hydropower is the main renewable energy source globally, in West Africa (WA) and is identified as a major source to mitigate and adapt to climate change. Hydropower is a flexible, reliable, cost-effective, and clean source of energy that could help to reduce greenhouse gas emissions from electricity generation. This source has recorded rapid growth over the world, especially in West African countries. However, in WA, there is a 19% gap between actual and technically feasible hydropower potential. Côte d'Ivoire and other West African countries have unexploited hydropower capacity which could increase access to electricity if they are all put into contribution. (https://iopscience.iop.org/article/10.1088/2515-7620/ac71fa)
Operating since 2017, the hydropower plant of Soubré is a game changer in Ivory Coast in order to reach a low carbon mix in the country. Located on the Sassandra river at about 5km from the town of Soubré, this project is producing 1,170 GWh of electricity on average per year. This hydropower plant is part of the Ivorian’s strategy to promote green energy into their mix.
The Soubré Power Station (the “Project”) is a 275 megawatts hydroelectric power station across the Sassandra River, in the Ivory Coast. The station was commissioned on 2 November 2017, after four years of construction. This renewable energy infrastructure is owned and operated by CI Energies, the Ivorian electric utility parastatal company. The dam and power station were funded 85 percent by Exim Bank of China, through a loan and by the Government of Ivory Coast, through 15 percent equity investment. The power station's 1,200 GWh in annual energy production contributed an estimated 10 percent to national generation capacity in 2017. The station was the largest hydroelectric energy source in Ivory Coast, at the time it was commissioned.
The power station harnesses a cascade of waterfalls that drop 19 metres (62 ft) over 4.5 kilometres (2.8 mi). The water is directed over three groups of Francis type turbines, each rated at 90 MW. A 5 MW generator is also inserted in the instream flow, for an extra boost to the output. The power station generates a calculated annual output in excess of 1,200 GWh.
Other infrastructure installations related to this power house include (a) a spillway, with waterflow at 5,500 cubic meters (5,500,000 L) per second (b) an outflow canal measuring 2.5 kilometres (2 mi) in length (c) a switchyard (d) a 225kiloVolt evacuation power line measuring 380 kilometres (236 mi) from Soubré to Abidjan and (e) a bridge capable of carrying two-way motorised traffic.
The government aims to reduce the thermal share by 50% and reduce the gas bill of households while highlighting the strong commitment of the country to fight climate change. To date, electricity in Ivory Coast is mainly generated from fossil fuels (natural gas and fuel oil) which leads to considerable greenhouse gas emissions. The project activity therefore substitutes fossil-fuel intensive grid-electricity and cuts down corresponding GHG emissions.
CI-Energies is the national grid company from Ivory Coast. Their mission is that 100% of Ivorians have access to electricity (94% to date). CI-Energies emphasizes renewable energy production with 4 projects being developed until 2022.
VCS VERRA program (ID 1522)
The power station lies across the Sassandra River near the city of Soubré, in the Soubré Department of the Nawa Region in the Bas-Sassandra District, in southwestern Ivory Coast Soubré is located approximately 366 kilometers (227 mi), by road, northwest of Abidjan, the financial capital and largest city in the country. The geographical coordinates of this power station are:05°48'09.0"N, 6°39'21.0"W (Latitude:5.802500; Longitude:-6.655833)
Thanks to the plant, more than 120 villages in the Mountains district now have access to electricity.
The local population can now live a modern life using green electricity.
The price of the kilowatt is 20 F CFA Soubre compared to 55 CFA francs from other energy sources.
The project helps the sector to find its financial balance.
CI-Energies used the local workforce to build the plant.
The project hired more than 4,000 people (directly and indirectly) for the construction phase and relies on 50 permanent technicians to ensure operation and maintenance. Through this project and their action, CI-Energies is helping the region.
The project helps the San Pedro region to have a revival of activity, more people are now working and living in this area.
In December 2018, the Ivorian government reported that they had connected 60 new villages to the energy generated at Soubré Hydroelectric Power Station. Using €137.82 million borrowed from the African Development Bank, the authorities plan to transmit power to the cities of Duékoué, San Pedro and Zagné. Through those cities, a total of 252 rural localities in Montagnes District are expected to receive grid electricity for the first time.
Creation of a 200 ha biodiversity conservation area (largest area in Africa). This land will also run a program to raise awareness about biodiversity protection.
Protection of the National Park of Taï by offering 2 trucks, 1 motorcycle and an awareness panel.
The Project will support thousands of African families in receiving access to electricity, improving life and health standards substantially.
Construction in the nearby villages of 5 schools, 3 medical centers, housing and a sports complex. Installation of village pumps that allows 6,000 persons to have access to clean water.
Creation of a dedicated fishing area for the local community and the Soubré fish market that will allow them to generate more revenues.
AITHER - Project Proponent
Aither is a carbon trading and development firm that has been pioneering markets since 2010 and offers access to carbon related services across the carbon value chain. Since inception, we have traded over 3 billion tons of CO2 and developed / advised over 100 projects. Our worldwide presence helps us fortify operations in the projects we source and develop independently, and we continue to maintain a healthy pipeline of projects for the years to come. Throughout the years, we have established a brand that supports activities of our partners and clients that span from NGOs to large blue-chip entities. Today, we are proud to service over 6,000 clients annually through our 10 office locations worldwide and always remain open to identify new paths in helping customers succeed their targets.
We collaborate with local partners to jointly target efficient execution and operation of relevant carbon projects across the world. The latest project we have finalized and await credit issuances would be the Deekali Plastic Recovery West Africa, which is the first plastic credits project in Africa. This project collaborates with the local partner ACC, a Senegalese-based company and subsidiary of Aither Group. ACC is the project developer that initiated and organized local partners, enabling them to apply for plastic credits successfully. ACC also monitors the Deekali project and verifies all project activities. The impacts of project activities (i.e., social, economic, and environmental) are monitored by ACC, which arranges meetings with stakeholders to keep them informed and evaluate their project activities. ACC also provides its partners with administrative, capacity-building, and financial support.
Pool Specifications - UBO
Targeting generation of renewable sources for infrastructure and life standard improvements.
The ACM0002 (version 16.0) methodology is applicable to grid-connected renewable power generation project activities that: (a) install a new power plant at a site where no renewable power plant was operated prior to the implementation of the project activity (greenfield plant); (b) involve a capacity addition; (c) involve a retrofit of (an) existing plant(s); or (d) involve a replacement of (an) existing plant(s). It therefore applies to Soubré HPP, as Greenfield hydropower project providing electricity to Soubré’s substation.
Assuming $500,000 initial investment, 71.400 of credits will be purchasable within the coming 6 months. Please see below the expected timing overview of future credits issuances
Year Credits Issued Notes
2023 700,000 Vintages 2021 and 2022
2024 350,000 Vintage 2023
2025 350,000 Vintage 2024
2026 350,000 Vintage 2025
Please note that the project has also 2 additional years of credits, but we evaluate only from 2023 to 2026.
Credit price of $7.00/tonne
This compares well against current spot prices of $8.00 - $8.50
90% of the proceeds are distributed back to the energy company, which will improve infrastructure in neighboring surroundings by way of:
- Implementation of new schools;
- Implementation of new health center;
- Implementation of new housing for poorer population;
- Creating over 4,000 new jobs directly and indirectly;
- Enabling clean water projects for nearby villages;
- Creating fishing areas in project’s vicinity, opening a new revenue stream for local populations;
- Developing of agriculture and tourism (with the promotion of Nawa falls).
The project supports 3 levels of social development goals and is regarded as a hydro project across Verra project registered.
The global economic year is approaching its end, which was filled with tumultuous occurrences that led financial markets experience price pressures from multiple angles. The war in Ukraine and the end of the pandemic caused inflationary price pressures on imports and raw materials, as well as energy prices; and, paired with ascending salaries and the sudden need for central banks to initiate hawkish rates policies, most countries have or are expected to enter into a mild recession by this year’s end.
Global corporations have been rather caught by surprise on sudden spikes in interest rates, arguably due to a decade of low interest rate periods, which forced an exit of a lethargically comfortable period of free money. As corporate leverage recently exceeded pre-financial crisis levels, stark rising rates forced a large number of companies scramble to maintain targeted profitability levels. Such stark price and rates fluctuations have likely caused a sudden reduction in aspirations for carbon neutrality.
In fact, voluntary carbon markets experienced a demand slump that has crept during the majority of 2022 causing average prices to reduce by almost 50% across certain technologies and geographies. Experts expect corporates and end users requiring to recalibrate profitability forecasts that remain aligned to a newly established rising cost environment. Thus, such corporates are likely to restart climate efforts and VCM related offsetting investments towards the end of Q1.
African linked projects appeared to have remained resilient or even exempt to such negative price fluctuations, likely due to African projects* general beneficial infrastructure and health standards improvements to its nearby communities. The logic conclusion follows that African projects resemble greater embedded value and downside protection that results in firmer price stability during cyclic periods of price contractions.
Furthermore, we believe the current short termed price adaptation suggests a strong buying opportunity for acquiring carbon credits today. We expect prices to experience sudden demand spikes of similar magnitude to last year’s market circumstances, which could see certain projects double in price within next years’ first 6 months.
We therefore rate this African based project as a stark buying opportunity due to its embedded downside protection towards previous price contractions and the momentary buying opportunity during such short termed VCM market volatility could see prices improve during the coming months.
Aither’s history in the carbon market and current efforts to accelerate on-chain carbon adoption make our organization a natural ally to the work that KlimaDAO is undertaking. We believe KlimaDAO’s launch was a watershed moment for the VCM and are hopeful to collaborate with the DAO as we explore pathways to bring our carbon projects toward the digital frontier which is Web3.
As part of this proposal, we pledge to support the launch of liquidity into C3’s new carbon pools via co-marketing activities and by providing a seminar to a large quantum of our 6,000+ existing corporate clients on how digital carbon can be sourced and utilized for their sustainability initiatives.