Guidelines for conducting a cost-benefit analysis of smart grid projects

Guidelines for conducting a cost-benefit analysis of smart grid projects. Joint Research Centre, 2012, 72 p.

The report provides guidance for those conducting CBA of smart-grid projects and bases its step-by-step CBA framework on work conducted by the Electric Power Research Institute (EPRI). The report reviews cost-benefit literature and the policy background, defines boundary conditions and set parameters, and defines elements of cost-benefit analysis, sensitivity analysis, and qualitative impact analysis, which can be applied to smart grid projects. It concludes with guidelines for CBA assessments, which include: defining assumptions and setting critical parameters; reviewing and describing technologies, elements and goals of the project; mapping assets into functionalities; mapping functionalities onto benefits; establishing baselining; monetizing benefits and identifying beneficiaries; identifying and quantifying costs; comparing costs and benefits; performing sensitivity analyses; and complementing CBA with a qualitative impact analysis including externalities. The Report emphasizes the importance of tailoring assessments to local circumstances. (© European Commission)

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