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Cost Benefit Analysis (CBA) has proven to be a useful tool to support the economic appraisal of important projects in many sectors. Recently, a single CBA method has been proposed at EU level to evaluate and compare electricity transmission and storage projects from different countries, which is unprecedented anywhere in the world.
The European Commission estimates that about €200 billion needs to be invested in electricity and gas infrastructure in order to achieve the 2020 energy and climate objectives. There is a risk that almost half of this expected investment will be too late or not at all. The Energy Infrastructure Package therefore establishes a process to identify Projects of Common Interest whose development will be accelerated. Projects of Common Interest will be selected based on a Cost Benefit Analysis method.
In a recent THINK report for the European Commission (DG Energy), we conclude that the Cost Benefit Analysis method that has been proposed by the European Network of Transmission System Operators for Electricity (ENTSO-E) at the end of 2012 is an important step in the right direction, but it is still possible to improve.