Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

The critical variables (see above) are: investment costs and electricity and heat selling prices, municipalwaste treatment price, labour costs, costs of elimination of ash and slag waste, together with the yearly rateof growth in production.Table 4.31 Economic sensitivity analysis for ENPVVariable ±1% Sensitivity judgementInvestment 0.6 HighPersonnel 0.1 LowRemediation and decontamination 0.0 LowGas input price 0.0 LowElectricity input price 0.0 LowMaterials 0.0 LowIntermediate services & goods 0.1 LowElimination of ash and slag waste 0.1 LowWaste treatment income 0.2 MediumOther waste treatment income 0.0 LowElectricity 0.6 HighHeat 0.3 HighLocal impact 0.0 LowCO 2 avoided 0.9 HighBased on the sensitivity judgment, investment costs, electricity and heat selling price, the value given tothe benefit of the CO 2 avoided, together with the yearly growth rate for production (see above), are criticalvariables for the social analysis.Table 4.32, obtained by the same method used for the sensitivity analysis above, shows that the sensitivityof performance indices to the variation of the yearly rates set out for some CBA variables, is always verylow.The risk analysis for the incinerator project has been carried out by assigning an appropriate probabilitydistribution to the critical variable, cautiously identified in this case study, with the yearly productiongrowth rate and the other variables classified as ‘High’ or ‘Medium’ sensitivity in the above tables. Table4.33 and Figure 4.7, below, show the hypotheses set for the probability distributions of the variables.Table 4.32 Sensitivity analysis on the variable growth ratesSensitivity of the FNPV(C) ± Sensitivity of the ENPV ±Growth rate 1% 1%Labour cost growth rate 0.03% 0.01%Gas input price growth rate 0.01% 0.00%Electricity input price growth rate 0.02% 0.01%Waste treatment prices growth rate 0.06% 0.02%Produced electricity price growth rate 0.16% 0.06%Produced heat price growth rate 0.11% 0.04%Table 4.33 Risk analysis: variable probability distributionsVariable Range Distribution NotesYearly production growth rate -0,5% ÷ +0,1% TriangularInvestment 145,6 ÷ 236,6 M€ Rectangular See figure 3.7Personnel (labour cost) -5% ÷ +15% TriangularElimination of ash and slag waste 2.500 ÷ 3000 m€/y TriangularMunicipal waste treatment price 11 ÷ 14 €/t TriangularElectricity selling revenue 32 ÷ 62 €/t Gaussian MV = 47,29; SD = 4,73Heat selling revenue 18 ÷ 36 €/t Gaussian MV = 27,02; SD = 4,05CO 2 avoided 0,13 ÷ 0,18 €/kWh TriangularNote: MV = Mean value; SD = Standard deviation.161