Webinar on cost benefit analysis in the context of the energy infrastructure package

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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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Webinar on cost benefit analysis in the context of the energy infrastructure package

  1. 1. www.florence-school.euFlorenceSchoolofRegulationCost  Benefit  Analysis  (CBA)    in  the  context  of  the  Energy  Infrastructure  Package  Florence  School  of  Regula0on  April  30,  2013,  Florence  Leonardo  Meeus  
  2. 2. www.#lorence-­‐school.eu   2  Webinar  outline  Importance  of  CBA  in  the  package  Towards  a  single  CBA  method  for  electricity  Q&A  
  3. 3. www.#lorence-­‐school.eu  ExisAng  EU  policy   New  EU  policy  “Projects  of  Common  Interest”  •  CBA  will  be  used  to  select  PCIs                3  Importance  of  CBA  in  the  package  Focus  on  priority  projects    
  4. 4. www.#lorence-­‐school.eu  ExisAng  EU  policy   New  EU  policy  4  Importance  of  CBA  in  the  package  Enhanced  “10-­‐Year  Network  Development  Plan”  •  Will  use  the  CBA  method  developed  for  PCI  selec0on                Indica0ve  planning  
  5. 5. www.#lorence-­‐school.eu  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  5  EuropeanCoordinatorsImportance  of  CBA  in  the  package  Accelerate  priority  projects    
  6. 6. www.#lorence-­‐school.eu  ExisAng  EU  policy   New  EU  policy  6  Importance  of  CBA  in  the  package  Grants  for  feasibility  studies   Innova0ve  financial  instruments,  one  stop  shop  for  EU  funding  
  7. 7. www.#lorence-­‐school.eu   7  Webinar  outline  Importance  of  CBA  in  the  package  Towards  a  single  CBA  method  for  electricity  Q&A  
  8. 8. www.#lorence-­‐school.eu   8  Towards  a  single  CBA  method  for  electricity  Official  process  
  9. 9. www.#lorence-­‐school.eu   9  Towards  a  single  CBA  method  for  electricity  ProacAve  steps  
  10. 10. www.#lorence-­‐school.eu  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  
  11. 11. www.#lorence-­‐school.eu  Towards  a  single  CBA  method  for  electricity  THINK  report  OF
  12. 12. www.#lorence-­‐school.eu  Towards  a  single  CBA  method  for  electricity  Poll  to  know  what  you  think  •  A)  Mone0ze  all  relevant  effects  •  B)  Mul0-­‐criteria  analysis    12  
  13. 13. www.#lorence-­‐school.eu  Towards  a  single  CBA  method  for  electricity  MoneAze  all  relevant  effects  13  EXTERNALITIES  MACROECONOMIC  EFFECTS  POWER  SYSTEM  
  14. 14. www.#lorence-­‐school.eu   14  Towards  a  single  CBA  method  for  electricity  MulA-­‐criteria  analysis  Source:  ENTSO-­‐E  (2012)  
  15. 15. www.#lorence-­‐school.eu   15  Towards  a  single  CBA  method  for  electricity  Implicit  versus  explicit  moneAzaAon  Mone0zed                                        net  benefit        Indicators  Mone0zed                                  net  benefit  PCI  1  PCI  2  
  16. 16. www.#lorence-­‐school.eu  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  
  17. 17. www.#lorence-­‐school.eu   17  Webinar  outline  Importance  of  CBA  in  the  package  Towards  a  single  CBA  method  for  electricity  Q&A  
  18. 18. www.#lorence-­‐school.eu  Thank  you  very  much  for  your  aYenAon  leonardo.meeus@eui.eu;  hYp://think.eui.eu    18  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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