Drafting of the Methodology on Assessing Energy Infrastructure Projects for EaP CountriesUploaded: 11 of December, 2018

The goal of this study was to develop a methodology for assessing gas and electricity transportation infrastructure projects in the Eastern Partnership region. The goal of the project was to arrive to a simplified cost-benefit analysis methodology that is following the logic of the EU Regulation 347/2013. The methodological challenge was whether the complex coordinated market modelling exercise carried out by ENTSOG within the EU and by REKK in the Energy Community for PECI/PMI selection could be supplemented with a simplified excel based calculation of monetized indicators.

Within the project, first we provided a pre-screening of EaP countries' energy markets.

Then three possible project evaluation methodologies were tested:

  • evaluation of projects with simple indicators
  • assessment using the methodology of DG Regio, a simplified calculation tool
  • evaluation using stylized modelling in line with the approach followed in PECI/PMI project assessment

A flowchart for project evaluation and the data need for questionnaires was also drafted.

Utilizing the methodology on eaxample projects we concluded that the DG Regio methodology is not applicable for the EaP countries for infrastructure evalauation, since main gains of the infrastructure use do not stem from sustainability (CO2 save) gains.

Simple security of supply or market liquidity indicators have limited applicability for project evaluation, and are not able to provide monezitable results needed for cost-benefit analysis.

To monetize regional market effects, gas and electricity market modelling is a must, therefore if it is possible from a technical point of view, projects must be evaluated with modelling.