SDA - Electricity generation project finance

Methods
1

Hi,

I am working towards setting a SBT for an Asset Manager. With a lot of solar parks (projects) in our funds, I consider it as correct to choose Electricity generation project finance and set a target for cat. 15 in scope 3. From my understanding, from the SBTi Guidance for FI and Power sector Guidance, I can calculate GHG emissions for scope 1 and 2 of the projects and also calculate the total output (generated MWp). Then enter this into the SBTi-target-setting-tool and get an intesity target as tCO2e/MWh - could this also be zero tCO2e (as I saw from another question here). I am wondering if it is correct, or if I have to follow the all the steps and gather all the data input (p.13-138) from “C. SDA Electricity generation project finance” from p. 135 from the FI guidance?

Thank you.

2

Hello Edvarddr,

Thank you very much for your question.

You need to follow the instructions in the FI Guidance to estimate attributed activity output (MWh) and financed emissions (tCO2e). You can find these steps on page 141:

Calculating the base year financed emissions
The first step is to calculate the annual financed GHG emissions of the portfolio of electricity generation projects in the base year. Specifically, this involves the following steps:

  1. Collecting or estimating the fuel and energy use of each electricity generation project in the portfolio for which the financial institution seeks to set a target.
  2. Calculating the base year scope 1 and 2 emissions per project using fuel- and energy-specific emissions factors, such as those provided by the IEA or national energy agencies.
  3. Attributing the annual scope 1 and 2 emissions per project based on the ratio between the
    institution’s outstanding amount (numerator) and the total equity and debt of the financed
    project (denominator). The result is financed emissions of the financial institution’s project
    finance portfolio.
  4. Summing up all scope 1 and 2 financed emissions per project to derive the total annual scope 1 and 2 financed emissions at portfolio level.

Base year financed emissions of all electricity generation project finance in the portfolio should be assessed at a fixed point in time in line with the financial reporting cycle.

Calculating the base year output

Next to emissions, base year output should also be provided as input in the Science-based Target Setting Tool. Calculating the base year output should involve the following steps:

  1. Collecting or estimating the annual electricity generated (in kWh) of the portfolio of electricity generation projects for which the financial institution seeks to set a target;
  2. Attributing the annual electricity generated (in kWh) based on the ratio between the outstanding amount versus the total project size (equity + debt); and
  3. Summing up the attributed annual electricity generated (in kWh) per project to derive total annual electricity generated (in kWh) at the portfolio level.

I hope this helps to clear your question.
Best regards

Monica

1 Like
3

Dear Monica,

Thank you so much for your reply. I really appreciate it. This was very helpful.

Best regards,
Edvard

1 Like