Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

Forecasts for price dynamics are critical and require a good understanding of the highly unstable trends inenergy prices.3.3.2.5 Economic analysisEnvironmental impact and risk assessment are essential aspects. Externalities to be considered are:Benefits - the valorisation of the area served, quantifiable by the revaluation of real estate and land pricesCosts3.3.2.6 Risk assessment- the negative externalities of possible impact on the environment (loss of land, spoiling of scenery,naturalistic impact, loss of local land and real estate value due to disamenity, such as noise) and on otherinfrastructure- the negative externalities due to the risk of accident, such as fire and explosions, for regassification plants- the negative externalities due to the opening of building sites, especially for urban networks (negativeimpact on housing, productive and service functions, mobility, agricultural framework and infrastructure)Critical factors- Demand dynamics- Operating costsMainvariablesto consider- Forecasts of growth rates- Forecasts of the elasticity of electricity consumption- The dynamics of purchase prices of gas and electricity, conveyed by thetransport and/or distribution infrastructure and often purchased abroad- The dynamics of the sale prices of substitutes electricity or gasAnother type of risk that my be important (e.g.: for regassification terminals) is the possible adverseattitude of the local population. This risk should be duly considered and appropriate mitigation measuresshould be planned.3.3.3 Energy production and renewable sources3.3.3.1 Project objectivesProjects in this sector may include:- construction of plants to produce electricity from renewable energy sources (RES), such as (EuropeanParliament and Council Directive 2001/77/EC): wind energy, biomass, geothermal energy,hydropower, photovoltaic and solar thermal energy (including also the concentrating solar powerplants), energy from tides and waves 40 ;- investments directed at energy saving by improving energy efficiency (e.g.: co-generation, EuropeanParliament and Council Directive 2004/8/EC);- construction of plants to produce electricity from any other source;- prospecting and drilling for natural gas or oil.40Landfill gas, sewage treatment plant gas and biogases are renewable energy sources, too; the investments dealing with these forms of energygeneration are usually ancillary compared to the main purpose of the installations.110