Guidebook for Economic and Financial Analysis of Regional Electricity Projects
Economic and financial analysis provides the bridge between the identification of technical options and the development of bankable interconnection project proposals to facilitate cross-border electricity trade. The overarching goal of this guidebook is to document a methodology for economic and financial analysis of potential investments to facilitate regional electricity trade, which serves to inform decision-makers on policy choices, and subsequently to inform the detailed project appraisal. This guidebook has been prepared as part of the work program of the Pan Arab Regional Electricity Trade Platform (PA-RETP).
This guidebook is focused on the appraisal of power-transmission-line investments to facilitate regional electricity trade. While the economic appraisal is largely independent of the specific institutional arrangements for implementing projects, the financial analysis necessarily depends upon the institutional arrangements to deliver the interconnection project. A bankable investment project requires a power purchase agreement (PPA), whose tariff schedules need to be informed by the financial analysis. Consequently, the design of the model needs to include a variety of different models under which transmission investment projects can be realized.
