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In this webinar Leonardo Meeus (Part-time Professor Florence School of Regulation and Scientific coordinator THINK project) presents the THINK report on Cost Benefit Analysis in the context of the Energy Infrastructure Package. Leonardo explains the relevance of the CBA method in this package as well as the aim to develop a single CBA method to assess benefits and costs of Electricity Projects of Common Interest (CPIs).
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www.!orence-school.eu
FlorenceSchoolof Regulation
Cost Benefit Analysis (CBA) in the context of the Energy Infrastructure Package
Florence School of Regula0on April 30, 2013, Florence
Leonardo Meeus
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Webinar outline
Importance of CBA in the package
Towards a single CBA method for electricity
Q&A
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ExisAng EU policy New EU policy “Projects of Common Interest” • CBA will be used to select PCIs
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Importance of CBA in the package
Focus on priority projects
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ExisAng EU policy New EU policy
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Importance of CBA in the package
Enhanced “10-‐Year Network Development Plan” • Will use the CBA method
developed for PCI selec0on
Indica0ve planning
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ExisAng EU policy New EU policy • European Coordinators
• Na0onal one stop shops, and deadlines for permit gran0ng
• Cost alloca0on procedure – Using the results of the CBA
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European Coordinators
Importance of CBA in the package
Accelerate priority projects
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ExisAng EU policy New EU policy
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Importance of CBA in the package
Grants for feasibility studies Innova0ve financial instruments, one stop shop for EU funding
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Webinar outline
Importance of CBA in the package
Towards a single CBA method for electricity
Q&A
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Towards a single CBA method for electricity Official process
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Towards a single CBA method for electricity ProacAve steps
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Towards a single CBA method for electricity THINK report
1. Scope of the analysis – Project defini0on – Baseline defini0on – Effect mapping – Distribu0onal effects
2. Calcula0on of net benefit – Mone0za0on – Inter-‐temporal discoun0ng of costs and benefits – Uncertainty
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Towards a single CBA method for electricity THINK report
OF
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Towards a single CBA method for electricity Poll to know what you think
• A) Mone0ze all relevant effects • B) Mul0-‐criteria analysis
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Towards a single CBA method for electricity MoneAze all relevant effects
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EXTERNALITIES
MACROECONOMIC EFFECTS
POWER SYSTEM
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Towards a single CBA method for electricity MulA-‐criteria analysis
Source: ENTSO-‐E (2012)
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Towards a single CBA method for electricity Implicit versus explicit moneAzaAon
Mone0zed net benefit
Indicators
Mone0zed net benefit
PCI 1
PCI 2
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Scope of the analysis • (1) project interac0on must be taken into account in the project and baseline defini0on • (2) data consistency and quality should be ensured • (3) the conven0onal 0me horizon is 20-‐25 years • (4) CBA should concentrate on a reduced list of effects and those should be moneAzed • (5) distribu0onal concerns should not be addressed in the calcula0on of net benefits
Calculation net benefit • (6) infrastructure costs need to be disaggregated • (7) the model used to mone0ze the produc0on cost savings and gross consumer surplus
needs to be explicitly stated • (8) a common discount factor should be used for all projects • (9) a stochas0c approach consistent with the Energy Roadmap 2050 should be used to
address uncertainty
Ranking projects • (10) the ranking should be primarily based on the moneAzed net benefit
Towards a single CBA method for electricity THINK recommendaAons
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Webinar outline
Importance of CBA in the package
Towards a single CBA method for electricity
Q&A
www.#lorence-‐school.eu
Thank you very much for your aYenAon [email protected]; hYp://think.eui.eu
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THINK reports (published 2011 -‐ 2013) 1) Public Support of RD&D
2) Smart Ci0es
3) Energy Roadmap for 2050
4) Public Budget of EU Member States
5) Offshore Grids 6) Transmission Grid Tarifica0on
7) Building refurbishment
8) Electricity Storage
9) EU technology policy for 2050
10) CBA for infrastructure package Ongoing (to be published in June)
11) Demand response
12) Role of DSOs
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