Cost-benefit appraisal of renewable energy technologies for power generation
Cost-benefit analysis is an analytical tool that involves placing monetary values on attributes of human well-being for which no market prices exist. Essentially cost-benefit analysis is used to measure the merit of a technological solution thereby providing a common platform for comparing a range of options. The cost-benefit analysis uses the difference between monetized benefits and costs for evaluating alternatives. It is a formal approach to decision-making, particularly public policy decision-making. In any investment project, apart from project benefits like revenues, there are certain costs (e.g. long-term environmental costs) accruing because of the project. In order to arrive at a considered decision, all the benefits/impacts are weighed against the costs, both investment as well as resultant ones. This sort of analysis will then project the net (positive or negative) benefits of any technological option.
In standard financial analysis, only financial costs and financial benefits are used. It does not take in to account either the cost of environmental damage or the social benefits. The cost-benefit analysis tries to put a financial value on these intangible costs and benefits.
In case of renewables-based power projects also, it is essential to carry out cost-benefit appraisal of different technological options so that a realistic comparison may be made with not only the conventional option but also with other renewables-based options.
With a view to encourage participants to get fully involved in the exercise, it is proposed to adopt a format of focused talks/presentations followed by discussions and exercises. It is proposed to cover the following relevant topics, among others:
Fundamentals of economics
Economic vis-à-vis financial analyses
Types of socio-environmental impacts and their effect on project viability
International practices
Incorporation of such non tangible impacts in to the appraisal process
Appraisal of representative RE power projects
It is proposed to substantiate the introduction to cost-benefit appraisal through problem solving in the form of group-exercises.
In standard financial analysis, only financial costs and financial benefits are used. It does not take in to account either the cost of environmental damage or the social benefits. The cost-benefit analysis tries to put a financial value on these intangible costs and benefits.
In case of renewables-based power projects also, it is essential to carry out cost-benefit appraisal of different technological options so that a realistic comparison may be made with not only the conventional option but also with other renewables-based options.
With a view to encourage participants to get fully involved in the exercise, it is proposed to adopt a format of focused talks/presentations followed by discussions and exercises. It is proposed to cover the following relevant topics, among others:
Fundamentals of economics
Economic vis-à-vis financial analyses
Types of socio-environmental impacts and their effect on project viability
International practices
Incorporation of such non tangible impacts in to the appraisal process
Appraisal of representative RE power projects
It is proposed to substantiate the introduction to cost-benefit appraisal through problem solving in the form of group-exercises.