502486 - GEF CEPALCO PV

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Environmental Review Summary

Project Number

502486

Company Name

CAGAYAN ELECTRIC POWER & LIGHT COMPANY, INC.

Date ERS Disclosed

May 30, 2001

Country

Philippines

Region

East Asia and the Pacific

Date Revised ERS Disclosed

Jun 6, 2001

Environmental Category

B - Limited

Status

Completed

Sector

Multi Fuel - Thermal Power Generation

Industry

Infrastructure

Department

Advisory Services

Project Description

Cagayan Electric Power & Light Co., Inc. (CEPALCO) proposes to construct a 1MW photovoltaic (PV) electricity generating power plant in Cagayan de Oro City in the Philippines. The plant will be connected to the CEPALCO distribution system and is to be operated in conjunction with the existing 7MW Bubunawan hydroelectric plant, which supplies electricity to the same distribution system. Adding the PV power plant to CEPALCO''s distribution system will allow the reduction of hydroelectricity generation during daytime, when PV generation is available, in order to augment hydroelectric output from the saved water at night or during dry periods. The project will assist CEPALCO to reduce purchasing diesel-generated electricity. The total project cost is estimated to be US$5.8 million. The International Finance Corporation (IFC), acting as an executing agency on behalf of the International Bank for Reconstruction and Development (World Bank) in its capacity as an Implementing Agency of the Global Environment Facility (GEF), intends to finance up to US$4.0 million from GEF resources. IFC considers that the purpose of the GEF funding is to promote a demonstration plant for grid-connected applications of PV power plants in the developing world and to demonstrate the principle of conjunctive PV-hydro peak power generation.

Environmental and Social

The sponsor prepared a draft "Initial Environmental Examination (IEE) of the Proposed 1MWp Cagayan De Oro Photovoltaic Power Plant Project, April 2001" for IFC to review. This document was prepared to meet the Environmental Assessment requirements of the Government of the Philippines, Department of Environment and Natural Resources (DENR) and IFC. In this document, and through follow-up communications, the sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. The draft Initial Environmental Examination is provided in the attached documentation.

The two hectare site selected for the project is located at Sitio Lomboy, Barangay Indahag, and is about 4.5 km south of Cagayan de Oro City. The surrounding area is mostly agricultural land. There are no houses on the land, which CEPALCO has already purchased from the owner. The project site is relatively flat. The surrounding landscape is open grassland with common grasses and weeds with intermittent crop plants and fruit trees at the property''s margins.

Environmental and social issues during the construction phase include: soil erosion, dust, noise, solid waste/wastewater pollution, workers/residents'' safety, and workers'' health. Environmental and social issues during the operational phase include: aesthetic problem, transformer/switchgear noise, transformer oil, electromagnetic field, and end-of-operation provision. Various mitigation measures are proposed in the IEE as an Environmental Action Plan. These include: civil work requirements to reduce soil erosion, dust suppression measures, scheduling noise-producing works during daytime only, safety awareness lectures to workers, migrant workers to rent houses with sanitary facilities, proper classification of solid waste, enclosure of project area with fence applied with painting, locating substation/switch gears far from residential buildings, use of low-noise transformer/switchgears, use of non-PCB insulating oil, route distribution lines away from areas with human activities, etc. CEPALCO is committed to ensure that the Environmental Action Plan is implemented.

The 7MW Bubunawan hydroelectric power plant, which will be operated in tandem with the 1MW PV plant, is located about 25 km south of Cagayan de Oro City. This hydroelectric power plant received its Environmental Compliance Certificate (ECC) from DENR on April 10, 1995. After issuing the ECC, DENR required Bubunawan Power Corporation (a project company established to promote the Bubunawan project) to prepare an Environmental Management Plan (EMP). The EMP, dated June 1998, was submitted to DENR. The Bubunawan plant is scheduled to be commissioned in June 2001, and CEPALCO is committed to implementing the EMP.

A 1.5 km, 13.8kV distribution line will be constructed to connect from the PV project site to the CEPALCO''s existing line. The new connecting line will follow the existing Barangay road. An existing trail, which passes along the right side of the PV project site and traverses at the back of the property will be converted into a 6-meter wide access road.

The 1MW PV plant is expected to generate 1,100,000 kWh of electricity annually. This amount of electricity will displace about 1,500 barrels of fuel oil per year, reducing carbon dioxide emissions of about 800 tonnes per year.

Consistent with the scoping requirements of DENR, two levels of scoping sessions/meetings were conducted in March and April 2001, one with Environmental Management Bureau of the Government of the Philippines, and the second with representatives of the various stakeholders. Impacts on the electricity price for CEPALCO''s customers was one of the issues raised. The IEE discusses that because of the GEF grant to the PV project, the impact on the electricity rate would be the same whether a PV plant or a less expensive alternative diesel plant is constructed.

At CEPALCO, an Environmental Officer under the Engineering Service Division is assigned to monitor and oversee the company''s compliance with environmental regulations. Also, a Safety Engineer who is under the Administrative Division is designated to take charge of the occupational safety and regulatory compliance aspects.

Conclusion & Monitoring

IFC will evaluate the project''s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering (i) the status of implementation of any measures contained in the Environmental Action Plan, and (ii) ongoing performance of project-specific environmental, health and safety and social activities. Periodic site supervision visits will also be conducted.

Environmental and Social Documentation

File Name	Actions
GEF CEPALCO PV IEE _with annexes_.pdf

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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