We already know that the project activity must not be financially feasible without the revenues from the certificate trade: Otherwise, it is not additional (the crucial criterion for certificate eligibility). As energy efficiency improvements will ALWAYS return their investment over time (provided a sufficient timescale, and that the equipment does not fall apart), we were wondering how much time we have to take into consideration to determine the financial feasibility of an activity.
I looked into the Project Design Document (PDD) of the OSRAM LIGHTBULB EXCHANGE project. On page 13, you will find a very informative example of how to assess the financial feasibility of a project. I learned two things from that:
- The timeframe for the return of the investment is determined by the project duration / crediting period (which is either 7 years, renewable twice; or a single 10 years, see http://www.cdmrulebook.org/714).
- I had a general misconception of the whole financially-feasible thing. Now I understood the following, which is actually quite obvious: If we “donate” efficient equipment to somebody, it is HIM who gets the benefit of reduced energy bills, NOT US. Hence, our investment WILL NEVER RETURN without the CDM crediting. The question number 1 (about the return on investment timeframe) is therefore completely irrelevant for us. It comes into play only when the beneficiary of the project himself carries out the project.