The Challenge of Low-Carbon Development - World Bank Internet ...

Table I.1Carbon and Economic Returns on Projects (continued)Hydro run-of-river 8.7 76.9 AppraisalHydro run-of river 4.7 71.1 AppraisalMini-hydro 24 61.2 EvaluationWind 11.9 15.0 AppraisalWind 11.3 13.2 AppraisalWind 5.5 14.1 AppraisalWind 7.1 10.0 AppraisalWind 12.5 34.7 AppraisalWind 7.0 16.8 AppraisalWind 14.7 41.0 AppraisalWind 3.9 14.9 EvaluationBRT 81 9.6 AppraisalSource: World Bank data.Note: BRT = bus rapid transit; CFL = compact fluorescent light; T&D = transmission and distribution.Caveats:• These estimates have many limitations and are presented to indicate rough orders of magnitude and to illustrate the need for more thorough andrigorous analysis.• Estimates—all adapted from WBG project documents—are mostly based on ex ante appraisals and could be overly optimistic. They are not producedwith consistent methodologies or rigor.• Carbon reductions per dollar consider only investment costs; operations and maintenance are excluded.• Economic rates of return (ERRs) typically do not include nonmonetized benefits such as reduction in local air pollution or the value of increased energysecurity.• ERRs take the electricity tariff (and any associated capacity payments) to represent the economic value of electricity (except in the case of solar homephotovoltaics). In many cases tariffs are artificially low, so this will be an underestimate.• In this sample, wind projects receive tariffs that are 2.2 times higher, on average, than the tariffs received by hydropower plants. Hence these estimatesshould not be used for a head-to-head comparison of wind and hydro.• Lifetime emission reductions are based on approximations of project lifetime. Grid power plants are assumed to provide emission reductions for20 years; solar home photovoltaic systems 15 years; bus rapid transit 14 years; energy efficiency projects, transmission and distribution projects andoff-grid power have an assumed lifetime of 10 years; compact fluorescent light bulb life is 6 years. To the extent that projects provide emission reductionsbeyond this, emission reductions are understated.• ERR values for compact fluorescent light bulb projects generally include only fuel savings; they do not also include the value of deferring the need forconstruction of peak load plants, or reductions in load shedding.• Much of the variation in emission reductions (particularly for hydro) comes from variation in the carbon intensity of the baseline power generationbeing displaced by the project.• Energy efficiency financial intermediary project ERR counts all benefits from subproject investments, regardless of whether they were triggered byWBG involvement.• For direct investments in energy efficiency, the (relatively small) costs of energy audits are excluded.• Most of the economic benefits from offgrid solar come from studies that find high household willingness to pay for electrical power.114 | Climate Change and the World Bank Group