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The Approach Of Conducting A Cost & Benfit Analysis Of A Renewable Energy Investment Project

Author

Listed:
  • Goran Pichler

    (Moje Sunce Ltd.)

  • Vladimir Grebenar

    (Periska Ltd)

  • Boris Banovic

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.

Suggested Citation

  • Goran Pichler & Vladimir Grebenar & Boris Banovic, 2015. "The Approach Of Conducting A Cost & Benfit Analysis Of A Renewable Energy Investment Project," Economy of eastern Croatia yesterday, today, tommorow, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 4, pages 431-438.
    • Handle: RePEc:osi:eecytt:v:4:y:2015:p:431-438
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