Feasibility study on a CDM project utilizing photovoltaic systems

Abstract

Clean development mechanism (CDM) is expected to facilitate technology transfer from developed to developing countries and to reduce greenhouse gas emissions economically. This article evaluates a CDM project utilizing photovoltaic (PV) systems. For this purpose, we first estimated life cycle CO2 emissions of PV and other power generation systems based on an input-output table for environmental analysis. The cost of the PV systems was also evaluated, taking into consideration the effect of mass production. Next, two dynamic scenarios were developed to disseminate PV systems. One is a scenario only for domestic dissemination, and the other includes a CDM project utilizing PV systems as well as domestic dissemination. We then evaluated a net present value of the CDM as well as CO2 reductions in the dynamic scenarios. A net present value of the CDM project was estimated to be negative at 5% of the discount rate. At the same time, it was shown to be much higher at a lower discount rate and at higher prices of certified emission reduction by the CDM. Accordingly, we proposed new schemes to make the CDM viable. In particular, we discussed how to lower project risks with CDM.