THE APPROACH OF CONDUCTING A COST & BENFIT ANALYSIS OF A RENEWABLE ENERGY INVESTMENT PROJECT

Goran Pichler (), Vladimir Grebenar () and Boris Banovic ()
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Goran Pichler: Moje Sunce Ltd.
Vladimir Grebenar: Periska Ltd

Economy of eastern Croatia yesterday, today, tommorow, 2015, vol. 4, 431-438

Abstract: Compared to other investment projects whose dynamic cost-effectiveness is being measured in cash inflows generated from the commercialization of the project, investment into a solar power facility for own use is rather specific since its dynamic cost-effectiveness is being measured in savings generated over the useful life of the project. This is why a cost and benefit analysis is the most suitable technique to be applied to calculate dynamic costeffectiveness of such a project. Another specificity of such a project is that the unit of measure used to measure generated savings cannot be unambiguously determined, and that such a price has to be corrected. Such corrected prices are another reason why the financial analysis of this investment project is based on a cost-and-benefit-analysis approach. This paper illustrates a methodological approach of a calculation of costs and benefits of an investment project. This paper proves that in case of constant electricity consumption during 24 hours a day, an investment into a solar power facility in Eastern Slavonia can create economic potential which makes such an investment profitable and cost-effective.

Keywords: cost & benefit; solar power plant; dynamic profitability; electricity; methodological approach. (search for similar items in EconPapers)
Date: 2015
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