ACER identifies areas for greater consistency in the energy infrastructure cost-benefit analysis methodologies


ACER identifies areas for greater consistency in the energy infrastructure cost-benefit analysis methodologies

What is it about?

ACER’s Position Paper towards greater consistency of cost benefit analysis methodologies, published today, identifies topics where consistency is needed across the Cost Benefit Analysis methodologies (CBA methodologies) currently under development by the European Commission and the European electricity and gas grid operators.

Greater consistency of CBA methodologies will enable a more efficient energy system across Europe by ensuring similar terms of assessment of projects in a technology neutral way.

Why did ACER issue this Position Paper?

The updated TEN-E Regulation (Regulation (EU) 2022/869) introduced the task of the development of separate CBA methodologies for the various energy infrastructure categories and by different entities:  

  • The EU network of transmission system operators for electricity (ENTSO-E) for electricity transmission projects (including offshore grids);
  • The EU network of transmission system operators for gas (ENTSOG)  for hydrogen projects; and
  • The European Commission (EC) for projects of energy storage, electricity smart grids, gas smart grids, electrolysers and CO2 networks and facilities.

ACER must provide opinions on the ENTSO-E and ENTSOG CBA methodologies and on the draft lists of PCIs prepared by the EC. The Regulation tasks ACER with promoting consistency in the CBA methodologies developed by the EC with the CBA methodologies elaborated by ENTSO-E and ENTSOG.

To this end, ACER’s Position Paper sets out the topics where consistency should be promoted among all CBA methodologies.

Where is consistency of CBA methodologies needed?

  1. Common input data set and assumptions;
  2. Selection and use of scenarios and ways to deal with uncertainty;
  3. Length of assessment period, residual value of projects, and social discount rate;
  4. Definition of reference case networks;
  5. Treatment of interdependency with other projects;
  6. Project implementation status;
  7. Clustering rules;
  8. Criteria to assess the plausibility of projects’ commissioning dates;
  9. Implementation Guidelines;
  10. Definition and handling of capital and operational expenditures;
  11. Consideration of the impact of the future extreme weather events on infrastructure resilience;
  12. Approach to calculate social and environmental impacts of projects;
  13. Methodology to calculate the benefit-to-cost ratio and Net Present Value of projects;
  14. Sensitivities;
  15. Modelling interlinkages of CBA methodologies;
  16. Presentation of CBA results.

Next steps

The ACER Position Paper could serve as a reference document, e.g. during the cooperation with the EC and the ENTSOs during the development phase of their CBA methodologies, as well as when drafting the ACER opinions on the ENTSOs’ CBA methodologies, or when the EC Advisory Board for Climate Change forms their views on the methodologies.

Access the ACER Position Paper.